FINANCIAL STATEMENTS – STATUTORY BASIS

AND SUPPLEMENTARY INFORMATION

Transamerica Life Insurance Company

Years Ended December 31, 2022, 2021 and 2020

Transamerica Life Insurance Company

Financial Statements – Statutory Basis

and Supplementary Information

Years Ended December 31, 2022, 2021 and 2020

Contents

Report of Independent Auditors	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	4
Statements of Changes in Capital and Surplus – Statutory Basis	5
Statements of Cash Flow – Statutory Basis	7
Notes to Financial Statements – Statutory Basis
1. Organization and Nature of Business	9
2. Basis of Presentation and Summary of Significant Accounting Policies	9
3. Accounting Changes and Correction of Error	25
4. Fair Values of Financial Instruments	26
5. Investments	36
6. Policy and Contract Attributes	58
7. Reinsurance	75
8. Income Taxes	78
9. Capital and Surplus	85
10. Securities Lending	87
11. Retirement and Compensation Plans	88
12. Related Party Transactions	89
13. Managing General Agents and Third-Party Administrators	96
14. Commitments and Contingencies	97
15. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities	102
16. Reconciliation to Statutory Statement	104
17. Subsequent Events	105
Appendix A – Listing of Affiliated Companies	106
Statutory-Basis Financial Statement Schedules
Summary of Investments – Other Than Investments in Related Parties	109
Supplementary Insurance Information	110
Reinsurance	111

Report of Independent Auditors

To the Board of Directors of Transamerica Life Insurance Company

Opinions

We have audited the accompanying statutory basis financial statements of Transamerica Life Insurance Company (the “Company”), which comprise the balance sheets – statutory basis as of December 31, 2022 and 2021, and the related statements of operations - statutory basis, of changes in capital and surplus - statutory basis, and of cash flow - statutory basis for each of the three years in the period ended December 31, 2022, including the related notes and schedules of supplementary insurance information and reinsurance for each of the three years in the period ended December 31, 2022 and summary of investments – other than investments in related parties as of December 31, 2022 listed in the accompanying index (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 and capital and surplus of the Company as of December 31, 2022 and 2021 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in accordance with the accounting practices prescribed or permitted by the Iowa Insurance Division 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, 2022 and 2021, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2022.

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 Iowa Insurance Division, 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.

PricewaterhouseCoopers LLP, One North Wacker, Chicago, IL 60606

T: (312) 298 2000, www.pwc.com/us

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 Iowa Insurance Division. 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:

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

• Identify and assess the risks of material misstatement of the 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 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 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.

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

April 19, 2023

2

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Millions)

	December 31
	2022			2021
Admitted assets
Cash, cash equivalents and short-term investments	$	2,420		$	2,126
Bonds		51,131			49,942
Preferred stocks		61			120
Common stocks		3,251			3,527
Mortgage loans on real estate		9,270			9,153
Real estate		44			52
Policy loans		2,028			1,986
Securities lending reinvested collateral assets		2,115			2,073
Derivatives		2,339			1,760
Receivable for derivative cash collateral		981			217
Other invested assets		2,964			2,837
Total cash and invested assets		76,604			73,793
Accrued investment income		716			694
Premiums deferred and uncollected		169			181
Net deferred income tax asset		739			825
Variable annuity reserve hedge offset deferral		380			—
Other assets		1,596			1,211
Separate account assets		91,494			126,088
Total admitted assets	$	171,698		$	202,792
Liabilities and capital and surplus
Aggregate reserves for policies and contracts	$	57,956		$	51,983
Policy and contract claim reserves		1,098			1,177
Liability for deposit-type contracts		766			824
Other policyholders’ funds		42			38
Transfers from separate accounts due or accrued		(510	)		(658)
Funds held under reinsurance treaties		3,042			3,043
Asset valuation reserve		1,111			1,250
Interest maintenance reserve		407			1,382
Derivatives		3,629			2,360
Payable for collateral under securities loaned and other transactions		2,271			2,312
Borrowed money		3,107			3,870
Variable annuity reserve hedge offset deferral		—			250
Other liabilities		1,622			1,596
Separate account liabilities		91,494			126,088
Total liabilities		166,035			195,515
Total capital and surplus		5,663			7,277
Total liabilities and capital and surplus	$	171,698		$	202,792

See accompanying notes.

3

Transamerica Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Millions)

	Year Ended December 31
	2022			2021			2020
Revenues
Premiums and other considerations	$	19,813		$	14,482		$	16,723
Net investment income		3,297			3,191			3,361
Commissions and expense allowances on reinsurance ceded		1,075			187			661
Reserve adjustment on reinsurance ceded		(147	)		(260	)		(273)
Consideration received on reinsurance recapture and novations		210			963			2,958
Fee revenue and other income		1,982			2,259			2,096
Total revenue		26,230			20,822			25,526
Benefits and expenses
Death benefits		2,650			2,928			2,863
Annuity benefits		1,552			1,798			1,528
Accident and health benefits		1,021			945			1,120
Surrender benefits		20,498			18,145			15,352
Other benefits		244			292			234
Net increase (decrease) in reserves		6,563			942			4,985
Commissions		1,688			1,375			1,435
Taxes, licenses and fees		153			180			163
Funds withheld ceded investment income		98			131			144
Net transfers to (from) separate accounts		(10,952	)		(8,881	)		(4,850)
IMR adjustment due to reinsurance		(432	)		(43	)		—
General insurance expenses and other		1,198			1,107			1,473
Total benefits and expenses		24,281			18,919			24,447
Gain (loss) from operations before dividends and federal income taxes		1,949			1,903			1,079
Dividends to policyholders		10			10			10
Gain (loss) from operations before federal income taxes		1,939			1,893			1,069
Federal income tax (benefit) expense		(80	)		(185	)		(109)
Net gain (loss) from operations		2,019			2,078			1,178
Net realized capital gains (losses), after tax and amounts transferred to interest maintenance reserve		(4,211	)		(1,924	)		113
Net income (loss)	$	(2,192	)	$	154		$	1,291

See accompanying notes.

4

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Millions)

	Common Stock		Surplus Notes			Paid-in Surplus		Special Surplus Funds			Unassigned Surplus			Total Capital and Surplus
Balance at January 1, 2020	$	7	$	60		$	3,857	$	197		$	5,230		$	9,351
Net income (loss)		—		—			—		—			1,291			1,291
Change in net unrealized capital gains/losses, net of taxes		—		—			—		(342	)		216			(126)
Change in net deferred income tax asset		—		—			—		—			(126	)		(126)
Change in nonadmitted assets		—		—			—		—			201			201
Change in reserve on account of change valuation basis		—		—			—		—			14			14
Change in asset valuation reserve		—		—			—		—			69			69
Change in surplus as a result of reinsurance		—		—			—		—			(51	)		(51)
Change in surplus notes		—		(60	)		—		—			—			(60)
Change in letter of credit		—		—			—		—			(1,870	)		(1,870)
Capital contribution		—		—			700		—			—			700
Dividends to stockholders		—		—			—		—			(1,200	)		(1,200)
Other changes - net		—		—			5		—			(88	)		(83)
Balance at December 31, 2020	$	7	$	—		$	4,562	$	(145	)	$	3,686		$	8,110
Net income (loss)		—		—			—		—			154			154
Change in net unrealized capital gains/losses, net of taxes		—		—			—		(105	)		555			450
Change in net deferred income tax asset		—		—			—		—			123			123
Change in nonadmitted assets		—		—			—		—			(73	)		(73)
Change in reserve on account of change valuation basis		—		—			—		—			(60	)		(60)
Cumulative effect of changes in accounting principle		—		—			—		—			(15	)		(15)
Change in asset valuation reserve		—		—			—		—			(52	)		(52)
Change in surplus as a result of reinsurance		—		—			—		—			(256	)		(256)
Dividends to stockholders		—		—			—		—			(761	)		(761)
Distribution of affiliate stock		—		—			—		—			(339	)		(339)
Other changes - net		—		—			3		—			(7	)		(4)
Balance at December 31, 2021	$	7	$	—		$	4,565	$	(250	)	$	2,955		$	7,277

Continued on next page.

5

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Millions)

	Common Stock		Surplus Notes		Paid-in Surplus			Special Surplus Funds			Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2021	$	7	$	—	$	4,565		$	(250	)	$	2,955		$	7,277
Net income (loss)		—		—		—			—			(2,192	)		(2,192)
Change in net unrealized capital gains/losses, net of taxes		—		—		—			630			384			1,014
Change in net deferred income tax asset		—		—		—			—			702			702
Change in nonadmitted assets		—		—		—			—			(834	)		(834)
Change in reserve on account of change valuation basis		—		—		—			—			641			641
Change in asset valuation reserve		—		—		—			—			139			139
Change in surplus as a result of reinsurance		—		—		—			—			(871	)		(871)
Capital contribution		—		—		100			—			—			100
Dividends to stockholders		—		—		—			—			(425	)		(425)
Other changes - net		—		—		(1	)		—			113			112
Balance at December 31, 2022	$	7	$	—	$	4,664		$	380		$	612		$	5,663

See accompanying notes.

6

Transamerica Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Millions)

	Year Ended December 31
	2022			2021			2020
Operating activities
Premiums and annuity considerations	$	14,606		$	15,975		$	16,785
Net investment income		3,146			3,105			2,758
Other income		2,251			2,025			2,311
Benefit and loss related payments		(26,105	)		(24,040	)		(20,629)
Net transfers from separate accounts		11,122			9,042			4,958
Commissions and operating expenses		(2,771	)		(2,799	)		(3,002)
Dividends paid to policyholders		(6	)		(6	)		(7)
Federal income taxes (paid) received		204			148			37
Net cash provided by (used in) operating activities		2,447			3,450			3,211
Investing activities
Proceeds from investments sold, matured or repaid	$	10,356		$	12,231		$	12,107
Costs of investments acquired		(10,957	)		(14,040	)		(16,438)
Net change in policy loans		(35	)		51			25
Net cash provided by (used in) investing activities	$	(636	)	$	(1,758	)	$	(4,306)
Financing and miscellaneous activities
Repayment of surplus notes	$	—		$	—		$	(60)
Capital and paid in surplus received (returned)		101			2			705
Dividends to stockholders		(425	)		(761	)		(1,200)
Net deposits (withdrawals) on deposit-type contracts		(67	)		(143	)		(34)
Net change in borrowed money		(777	)		385			783
Net change in funds held under reinsurance treaties		41			74			(105)
Net change in payable for collateral under securities lending and other transactions		(42	)		(443	)		65
Other cash (applied) provided		(348	)		(512	)		331
Net cash provided by (used in) financing and miscellaneous activities		(1,517	)		(1,398	)		485
Net increase (decrease) in cash, cash equivalents and short-term investments		294			294			(610)
Cash, cash equivalents and short-term investments:
Beginning of year		2,126			1,832			2,442
End of year	$	2,420		$	2,126		$	1,832

See accompanying notes.

7

Transamerica Life Insurance Company

Statements of Cash Flow (supplemental) – Statutory Basis

(Dollars in Millions)

	Year Ended December 31
Supplemental disclosures of cash flow information	2022		2021			2020
Non-cash activities during the year not included in the Statutory Statements of Cash Flows:
Receipt of bonds, other invested assets and interest related to affiliated reinsurance treaty	$	4,706	$	—		$	—
Release of funds withheld related to affiliated reinsurance recaptures		42		963			500
Release of reinsurance payable related to affiliate reinsurance recapture		22		—			—
Assets transfer in for amended reinsurance treaty		—		47			—
Distribution of affiliate stock		—		(339	)		—
Receipt (transfer) of assets related to nonaffiliated reinsurance		—		(1,527	)		310
Transfer of bonds, mortgage loans and interest related to affiliated reinsurance recapture		—		—			2,121
Increase of funds withheld related to affiliated reinsurance agreement		—		—			(76)

See accompanying notes.

8

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

December  31, 2022

1.   Organization and Nature of Business

Transamerica Life Insurance Company (the Company) is a stock life insurance company owned by Commonwealth General Corporation (CGC). CGC is an indirect, wholly-owned subsidiary of Aegon N.V., a holding company organized under the laws of The Netherlands.

On October 1, 2020, the Company completed mergers with Transamerica Premier Life Insurance Company (TPLIC), an Iowa-domiciled affiliate and MLIC Re I, Inc. (MLIC Re), a Vermont-domiciled subsidiary. On December 31, 2020, the Company completed a merger with Pine Falls Re, Inc. (PFRe), a Vermont-domiciled subsidiary.

The mergers were accounted for in accordance with the Statement of Statutory Accounting Principles (SSAP) No. 68, Business Combinations and Goodwill, as statutory mergers. As such, financial statements for periods prior to the mergers were combined and the recorded assets, liabilities and surplus of TPLIC, MLIC Re and PFRe on a US statutory basis were carried forward to the merged company. The common capital stock of TPLIC, MLIC Re and PFRe was deemed cancelled by operation of law under the Plans of Merger. Each share of the Company’s capital stock issued and outstanding immediately before the mergers continues to represent one share of the capital stock. The business the Company previously assumed from TPLIC and the business previously ceded from the Company to TPLIC, MLIC Re and PFRe is no longer reflected as assumed and ceded risks in the restated merged financials.

Nature of Business

The Company sells individual life insurance, including index universal life, whole life, term life, and final expense life. It also sells variable and registered index-linked annuities. In addition, the Company offers supplemental health insurance, group life insurance, group annuity contracts and stable value solutions. The Company is licensed in 49 states and the District of Columbia, Guam, Puerto Rico, and US Virgin Islands. Sales of the Company’s products are primarily through a network of independent agents and broker-dealers, affiliated agencies, and financial institutions.

2.   Basis of Presentation and Summary of Significant Accounting Policies

The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Iowa Insurance Division (IID), which differ from accounting principles generally accepted in the United States of America (GAAP).

The IID recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed practices by the State of Iowa. Prescribed statutory accounting practices include state laws and regulations. Permitted statutory accounting practices encompass accounting practices that are not prescribed. The Commissioner of Insurance has the right to permit specific practices that deviate from prescribed practices.

9

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following is a summary of the accounting practices permitted and prescribed by the IID and reflected in the Company’s financial statements which differs from NAIC SAP:

The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to credit for reinsurance. As prescribed by Iowa Administrative Code 191-5.33 (10)(d), the Commissioner has deemed the book value of assets held in a comfort trust as acceptable security for purposes of taking reserve credit for liabilities ceded to an unauthorized reinsurer while it seeks reciprocal jurisdiction status. Under Statement of Statutory Accounting Principles No. 61R, Life, Deposit-Type and Accident and Health Reinsurance, the market value of trust assets is considered allowable security.

The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to the reported value of the assets supporting the Company’s guaranteed separate accounts. As prescribed by Iowa Administrative Code 508A.1.4, the Commissioner found that the Company is entitled to value the assets of the guaranteed separate account at amortized cost, whereas the assets would be required to be reported at fair value under SSAP No. 56, Separate Accounts, of the NAIC SAP. There is no impact to the Company’s income or surplus as a result of utilizing this prescribed practice.

The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to the reported value of assets supporting the Company’s registered index linked annuity (RILA). In accordance with Iowa Administrative Code 508A.1.4, the Commissioner found that the Company is entitled to use book value accounting treatment for separate account investments backing the Company’s RILA, whereas the assets would be required to be reported at fair value under SSAP No. 56, Separate Accounts of the NAIC SAP. There is no impact to the Company’s income or surplus as a result of utilizing this prescribed practice.

Pursuant to Iowa Administrative Code 521A.5(1)c, the State of Iowa has allowed a permitted accounting practice that differs from that found in NAIC SAP related to the valuation of a foreign insurance subsidiary, controlled and affiliated (SCA) entity. With the explicit permission of the Iowa Insurance Division, the Company values Transamerica Life (Bermuda) Ltd. (TLB), a foreign SCA, in accordance with Statement of Statutory Accounting Principles (SSAP) No 97, Subsidiary, Controlled and Affiliated Entities, paragraph 8.b.i, as a U.S. insurance SCA entity at its underlying audited U.S. statutory equity. In addition, for Risk Based Capital (RBC) calculation purposes, this entity is categorized on page LR042 with Category 2 – Direct U.S. Life Subsidiaries. Absent this permitted practice, TLB would be valued in accordance with SSAP No. 97, paragraph 8.b.iv, as a foreign insurance SCA at its audited foreign statutory basis financial statements with certain adjustments.

A reconciliation of the Company’s net income (loss) and capital and surplus between NAIC SAP and practices prescribed and permitted by the State of Iowa is shown below:

10

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	SSAP #		F/S Page		F/S Line		2022			2021		2020
Net income (loss), State of Iowa basis		XXX		XXX		XXX	$	(2,192	)	$	154	$	1,291
State prescribed practices that are an increase(decrease) from NAIC SAP:
None								—			—		—
State permitted practices that are an increase(decrease) from NAIC SAP:
None								—			—		—
Net income (loss), NAIC SAP		XXX		XXX		XXX	$	(2,192	)	$	154	$	1,291
Statutory surplus, state of Iowa basis		XXX		XXX		XXX	$	5,663		$	7,277	$	8,110
State prescribed practices that are an increase(decrease) from NAIC SAP:
Comfort trust		61		3		1		263			—		—
State permitted practices that are an increase(decrease) from NAIC SAP:
TLB valuation		97		2		2.2		72			—		—
Statutory surplus, NAIC SAP		XXX		XXX		XXX	$	5,328		$	7,277	$	8,110

The IID issued a no objection letter from the year 2020 for the Company to present historical permitted practices that differ from that found in the NAIC SAP related to the admission of letters of credit as admitted assets and as an element of capital surplus. Prior to merging with the Company, MLIC Re and PFRe, with the explicit permission of the Deputy Commissioner of the Captive Insurance Division of the Vermont Department of Financial Regulation, included as admitted assets the value of letters of credit serving as collateral for reinsurance credit taken by affiliates in connection with reinsurance agreements. These historical permitted practices were included on a merged entity basis for periods prior to the effective date of the mergers. The letters of credit were for the benefit of the Company and TPLIC. The permitted practice terminated upon the merger of MLIC Re and PFRe into the Company and had no impact at December 31, 2020.

Use of Estimates

The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

11

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The effects of the following variances from GAAP on the accompanying statutory-basis financial statements have not been determined by the Company, but are presumed to be material. Significant accounting policies and variances from GAAP are as follows:

Investments

Investments in bonds, except those to which the Securities Valuation Office (SVO) of the NAIC has ascribed a NAIC designation of 6, are reported at amortized cost using the interest method. Bonds containing call provisions, except make-whole call provisions, are amortized to the call or maturity value/date which produces the lowest asset value, often referred to as yield-to-worst method. Bonds ascribed a NAIC designation of 6 are reported at the lower of amortized cost or fair value with unrealized gains and losses reported in changes in capital and surplus. Prepayment penalty or acceleration fees received in the event a bond is liquidated prior to its scheduled termination date are reported as investment income.

Hybrid securities, as defined by the NAIC, are securities designed with characteristics of both debt and equity and provide protection to the issuer’s senior note holders. These securities meet the definition of a bond, in accordance with SSAP No. 26R, Bonds, and therefore, are reported at amortized cost or fair value based upon their NAIC rating.

For GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in earnings for those designated as trading and as a separate component of other comprehensive income (OCI) for those designated as available-for-sale.

Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method, including anticipated prepayments, except for those with an initial NAIC designation of 6, which are valued at the lower of amortized cost or fair value. These securities are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium using either the retrospective or prospective methods. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. For statutory reporting, the retrospective adjustment method is used to value all such securities, except principal-only and interest-only securities, which are valued using the prospective method.

For GAAP, all securities purchased or retained that represent beneficial interests in securitized assets, other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If high credit quality securities are adjusted, the retrospective method is used.

The Company closely monitors below investment grade holdings and investment grade issuers where the Company has concerns to determine if an other-than-temporary impairment (OTTI) has occurred. The Company also regularly monitors industry sectors. The Company considers relevant facts and circumstances in evaluating whether the impairment is other-than-temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; (2) the Company’s decision to

12

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

sell a security prior to its maturity at an amount below its carrying amount; and (3) the Company’s ability to hold a structured security for a period of time to allow for recovery of the value to its carrying amount. Additionally, financial condition, near term prospects of the issuer and nationally recognized credit rating changes are monitored. Non-structured securities in unrealized loss positions that are considered other-than-temporary are written down to fair value. The Company will record a charge to the Statements of Operations for the amount of the impairment.

For structured securities, cash flow trends and underlying levels of collateral are monitored. An OTTI is considered to have occurred if the fair value of the structured security is less than its amortized cost basis and the entity intends to sell the security or the entity does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis. An OTTI is also considered to have occurred if the discounted estimated future cash flows are less than the amortized cost basis of the security and the security is in an unrealized loss position. Structured securities considered other-than-temporarily impaired are written down to discounted estimated cash flows if the impairment is the result of cash flow analysis. If the Company has an intent to sell or lack of ability to hold a structured security, it is written down to fair value. The Company will record a charge to the Statements of Operations for the amount of the impairments.

For GAAP, if it is determined that a decline in fair value is other-than-temporary and the entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the OTTI is recognized in earnings equal to the entire difference between the amortized cost basis and its fair value at the impairment date. If the entity does not intend to sell the security or the entity will likely not be required to sell the security before recovery, the OTTI should be separated into a) the amount representing the credit loss, which is recognized in earnings, and b) the amount related to all other factors, which is recognized in OCI, net of applicable taxes.

Investments in both affiliated and unaffiliated redeemable preferred stocks in good standing (those with NAIC designations 1 to 3), are reported at cost or amortized cost, depending on the characteristics of the securities. Investments in both affiliated and unaffiliated redeemable preferred stocks not in good standing (those with NAIC designations 4 to 6), are reported at the lower of cost, amortized cost, or fair value, depending on the characteristics of the securities. Investment in perpetual preferred stocks are reported at fair value, not to exceed any currently effective call price. Investment in mandatory convertible preferred stocks (regardless if the preferred stock is redeemable or perpetual) are reported at fair value, not to exceed any currently effective call price, in the periods prior to conversion. For preferred stocks reported at fair value, the related net unrealized capital gains and losses for all NAIC designations are reported in accordance with SSAP No. 7, Asset Valuation Reserve and Interest Maintenance Reserve.

Common stocks of affiliated noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in net unrealized capital gains or losses and are reported in changes in capital and surplus.

Common stocks of unaffiliated companies, which include shares of mutual funds, are reported at fair value and the related net unrealized capital gains or losses are reported in changes in capital and surplus.

13

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The Company owns stock issued by the Federal Home Loan Bank (FHLB), which is only redeemable at par, and its fair value is presumed to be par, unless other-than-temporarily impaired.

If the Company determines that a decline in the fair value of a common stock or a preferred stock is other-than-temporary, the Company writes it down to fair value as the new cost basis and the amount of the write down is accounted for as a realized loss in the Statements of Operations. The Company considers the following factors in determining whether a decline in value is other-than-temporary: (a) the financial condition and prospects of the issuer; (b) whether or not the Company has made a decision to sell the investment; and (c) the length of time and extent to which the value has been below cost.

Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines the impairment is other-than-temporary, the mortgage loan is written down to realizable value and a realized loss is recognized. Prepayment penalty or acceleration fees received in the event a loan is liquidated prior to its scheduled termination date are reported as investment income.

Valuation allowances are established for mortgage loans, if necessary, based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral.

The initial valuation allowance and subsequent changes in the allowance for mortgage loans are charged or credited directly to unassigned surplus as part of the change in asset valuation reserve (AVR), rather than being included as a component of earnings as would be required under GAAP.

Land is reported at cost. Real estate occupied by the Company is reported at depreciated cost net of encumbrances. Real estate held for the production of income is reported at depreciated cost net of related obligations. Real estate the Company classifies as held for sale is measured at lower of carrying amount or fair value less cost to sell. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. The Company recognizes an impairment loss if the Company determines that the carrying amount of the real estate is not recoverable and exceeds its fair value. The Company deems that the carrying amount of the asset is not recoverable if the carrying amount exceeds the sum of undiscounted cash flows expected to result from the use and disposition. The impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value.

Investments in real estate are reported net of related obligations rather than on a gross basis as for GAAP. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses for statutory reporting include rent for the Company’s occupancy of those properties. Changes

14

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

between depreciated cost and admitted amounts are credited or charged directly to unassigned surplus rather than to income as would be required under GAAP.

The Company has interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying GAAP equity of the investee.

For a decline in the fair value of an investment in a joint venture or limited partnership which is determined to be other-than-temporary, the Company writes it down to fair value as the new cost basis and the amount of the write down is accounted for as a realized loss in the Statements of Operations. The Company considers an impairment to have occurred if it is probable that the Company will be unable to recover the carrying amount of the investment or if there is evidence indicating inability of the investee to sustain earnings which would justify the carrying amount of the investment.

Investments in Low Income Housing Tax Credit (LIHTC) properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company. The carrying value is amortized over the life of the investment. Amortization is calculated as a ratio of the current year tax credits and tax benefits compared to the total expected tax credits and tax benefits over the life of the investment.

Cash equivalents are short-term highly liquid investments with original maturities of three months or less (principally stated at amortized cost) or money market mutual funds which are reported at fair value.

Short-term investments include investments with remaining maturities of one year or less at the time of acquisition and are principally stated at amortized cost.

Other invested assets consist of surplus notes which are valued at cost, as required or permitted by Iowa Insurance Laws.

Policy loans are reported at unpaid principal balances.

Realized capital gains and losses are determined using the specific identification method and are recorded net of related federal income taxes. Changes in admitted asset carrying amounts of bonds, mortgage loans, common and preferred stocks are credited or charged directly to unassigned surplus.

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or real estate where rent is in arrears for more than three months. Income is also not accrued when collection is uncertain. Due and accrued amounts determined to be uncollectible are written off through the Statements of Operations.

Valuation Reserves

Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, primarily bonds and mortgage loans, attributable to changes in the general level of interest rates and amortizes those deferrals into net

15

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

investment income over the remaining period to maturity of the bond or mortgage loan based on groupings of individual securities sold in five year bands. The net deferral is reported as the interest maintenance reserve (IMR) in the accompanying Balance Sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the Statements of Operations on a pre-tax basis in the period that the assets giving rise to the gains or losses are sold.

The AVR provides a valuation allowance for invested assets. The AVR is determined by a NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.

Derivative Instruments

Overview: The Company uses various derivative instruments (options, caps, floors, swaps, forwards, and futures) to manage risks related to its ongoing business operations. On the transaction date of the derivative instrument, the Company designates the derivative as either (A) hedging (fair value, foreign currency fair value, cash flow, foreign currency cash flow, forecasted transactions, or net investment in a foreign operation), (B) replication, (C) income generation, or (D) held for other investment/risk management activities, which do not qualify for hedge accounting under SSAP No. 86, Derivatives.

(A) Derivative instruments used in hedging transactions that meet the criteria of an effective hedge are valued and reported in a manner that is consistent with the hedged asset or liability (amortized cost or fair value). Embedded derivatives are not accounted for separately from the host contract. Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value, and the changes in the fair value are recorded in unassigned surplus as unrealized gains and losses. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of OCI rather than to income as required for fair value hedges, and an embedded derivative within a contract that is not clearly and closely related to the economic characteristics and the risk of the host contract is accounted for separately from the host contract and valued and reported at fair value.

(B) Derivative instruments are also used in replication (synthetic asset) transactions (RSAT). A replication transaction is a derivative transaction entered into in conjunction with a cash instrument to reproduce the investment characteristics of an otherwise permissible investment. In these transactions, the derivative is accounted for in a manner consistent with the cash instrument and replicated asset. For GAAP, the derivative is reported at fair value, with the changes in fair value reported in income.

(C) Derivative instruments used in income generation relationships are accounted for on a basis that is consistent with the associated covered asset or underlying interest to which the derivative relates (amortized cost or fair value).

(D) Derivative instruments held for other investment/risk management activities are measured at fair value with value adjustments recorded in unassigned surplus.

16

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges, consequently, when the value of the hedged asset or liability changes, the value of the hedging derivative is expected to move in the opposite direction. Market risk is a consideration when changes in the value of the derivative and the hedged item do not completely offset (correlation or basis risk) which is mitigated by active measuring and monitoring.

The Company is exposed to credit-related losses in the event of non-performance by counterparties to derivative instruments, but it does not expect any counterparties to fail to meet their obligations given their high credit rating of ‘BBB’ or better. The credit exposure of interest rate swaps and currency swaps is represented by the fair value of contracts, aggregated at a counterparty level, with a positive fair value at the reporting date. The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets on the Company’s behalf. The posted amount is equal to the difference between the net positive fair value of the contracts and an agreed upon threshold that is based on the credit rating of the counterparty. Inversely, if the net fair value of all contracts with this counterparty is negative, then the Company is required to post assets instead.

Instruments:

Interest rate swaps are the primary derivative financial instruments used in the overall asset/liability management process to modify the interest rate characteristics of the underlying asset or liability. These interest rate swaps generally provide for the exchange of the difference between fixed and floating rate amounts based on an underlying notional amount. Typically, no cash is exchanged at the outset of the swap contract and a single net payment is exchanged each due date. Swaps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, on the financial statements. If the swap is terminated prior to maturity, proceeds equal to the fair value of the contract are exchanged. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in unassigned surplus.

Cross currency swaps are utilized to mitigate risks when the Company holds foreign denominated assets or liabilities; therefore, converting the asset or liability to a U.S. dollar denominated security. These cross currency swap agreements involve the exchange of two principal amounts in two different currencies at the prevailing currency rate at contract inception. During the life of the swap, the counterparties exchange fixed or floating rate interest payments in the swapped currencies. At maturity, the principal amounts are again swapped at a pre-determined rate of exchange. Each asset or liability is hedged individually where the terms of the swap must meet the terms of the hedged instrument. For swaps qualifying for hedge accounting, the premium or discount is amortized into income over the life of the contract and the foreign currency translation adjustment is recorded as unrealized gain/loss in capital and surplus. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus. If a swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the hedged instrument receives that treatment.

17

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Total return swaps are used in the asset/liability management process to mitigate the market risk on minimum guarantee insurance contracts linked to an index. These total return swaps generally provide for the exchange of the difference between fixed leg (tied to the Standard & Poor’s (S&P) or other global market financial index) and floating leg (tied to the London Interbank Offered Rate (LIBOR)) amounts based on an underlying notional amount (also tied to the underlying index). Typically, no cash is exchanged at the outset of the swap contract and a single net payment is exchanged each due date. Swaps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, in the financial statements. If the swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus.

Variance swaps are used in the asset/liability management process to mitigate the gamma risk created when the Company has issued minimum guarantee insurance contracts linked to an index. These variance swaps are similar to volatility options where the underlying index provides for the market value movements. Variance swaps do not accrue interest. Typically, no cash is exchanged at the outset of initiating the variance swap, and a single receipt or payment occurs at the maturity or termination of the contract. Variance swaps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, on the financial statements. If terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus.

Bond forwards are used to hedge the interest rate risk that future liability claims increase as rates decrease, leading to higher guarantee values. Bond return swaps are also used to hedge interest rate risk of the underlying liability by exchanging performance and interest of a treasury asset for a funding level plus spread.

Futures contracts are used to hedge the liability risk when the Company issues products providing the customer a return based on various global market indices. Futures are marked to market on a daily basis whereby a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements.

The Company issues products providing the customer a return based on the various global equity market indices. The Company uses options to hedge the liability option risk associated with these products. Options are marked to fair value in the Balance Sheets and fair value adjustments are recorded as capital and surplus in the financial statements. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment.

Caps are used in the asset/liability management process to mitigate the interest rate risk created due to a rapidly rising interest rate environment. The caps are similar to options where the underlying interest rate index provides for the market value movements. The caps do not accrue interest until the interest rate environment exceeds the caps strike rate. Cash is exchanged at the onset, and a single receipt or payment occurs at the maturity or termination of the contract. Caps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, on the financial statements. If terminated prior to maturity, proceeds

18

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Caps that do not meet hedge accounting rules are carried at fair value with fair value adjustments recorded in unassigned surplus.

The Company uses zero cost collars to hedge the interest rate risk associated with rising short term interest rates, whereby the exposure would otherwise adversely impact the Company’s capital generation. The collar position(s) help range bound the floating rate by combining a cap and floor position.

The Company may sell products with expected benefit payments extending beyond investment assets currently available in the market. Because assets will have to be purchased in the future to fund future liability cash flows, the Company is exposed to the risk of future investments made at lower yields than what is assumed at the time of pricing. Forward-starting interest rate swaps are utilized to lock-in the current forward rate. The accrual of income begins at the forward date, rather than at the inception date. These forward-starting swaps meet hedge accounting rules and are carried at cost in the financial statements. Gains and losses realized upon termination of the forward-starting swap are deferred and used to adjust the basis of the asset purchased in the hedged forecasted period. The basis adjustment is then amortized into income as a yield adjustment to the asset over its life.

The Company issues fixed liabilities that have a guaranteed minimum crediting rate. The Company uses receiver swaptions, whereby the swaption is designed to generate cash flows to offset lower yields on assets during a low interest rate environment. The Company pays a single premium at the beginning of the contract and is amortized throughout the life of the swaption. These swaptions are marked to fair value in the Balance Sheets and the fair value adjustment is recorded in unassigned surplus. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment.

The Company replicates investment grade corporate bonds or sovereign debt by combining a highly rated security as a cash component with a written credit default swap which, in effect, converts the high quality asset into an investment grade corporate asset or a sovereign debt. The benefits of using the swap market to replicate credit include possible enhanced relative values as well as ease of executing larger transactions in a shortened time frame. Generally, a premium is received by the Company on a periodic basis and recognized in investment income. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment equal to the notional amount of the contract will be made by the Company and recognized as a capital loss.

Securities Lending Assets and Liabilities

The Company loans securities to third parties under agent-managed securities lending programs accounted for as secured borrowings. Cash collateral received which may be sold or repledged by the Company is reflected as a one-line entry on the Balance Sheets (Securities lending reinvested collateral assets) and a corresponding liability is established to record the obligation to return the cash collateral. Non-cash collateral received which may not be sold or repledged is not recorded on the Company’s Balance Sheets. Under GAAP, the reinvested collateral is included within invested assets and is not reported as a single line item.

19

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Repurchase Agreements

For dollar repurchase agreements accounted for as secured borrowings, the Company receives cash collateral in an amount at least equal to the fair value of the securities transferred by the Company in the transaction as of the transaction date. The securities transferred are not removed from the Balance Sheets, and the cash received as collateral is invested as needed or used for general corporate purposes of the Company. A liability is established to record the obligation to return the cash collateral and included in borrowed money on the Balance Sheets.

Other Assets and Other Liabilities

Other assets consist primarily of cash surrender value of company owned life insurance, receivable from parent, subsidiaries and affiliates, general insurance accounts receivable, and reinsurance receivable.

Other liabilities consist primarily of amounts withheld by the Company, accrued expenses, reinsurance payable, unearned investment income, remittances, payable for securities, custody offset, and municipal repurchase agreements. Municipal repurchase agreements are investment contracts issued to municipalities that pay either a fixed or floating rate of interest on the guaranteed deposit balance. The floating interest rate is based on a market index. The related liabilities are equal to the policyholder deposit and accumulated interest. These municipal repurchase agreements require a minimum of 95% of the fair value of the securities transferred to be maintained as collateral.

Separate Accounts

The majority of separate accounts held by the Company, primarily for individual policyholders as well as for group pension plans, do not have any minimum guarantees, and the investment risks associated with fair value changes are borne by the policyholder. The assets in the accounts, carried at estimated fair value, consist of underlying mutual fund shares, common stocks, long-term bonds and short-term investments.

Certain other separate accounts held by the Company provide a minimum guaranteed return of 3% of the average investment balance to policyholders. The assets consist of long-term bonds and short-term investments which are carried at amortized cost.

Certain other non-indexed guaranteed separate accounts represent funds invested by the Company for the benefit of the contract holders who are guaranteed certain returns as specified in the contracts. Separate account asset performance different than the guaranteed requirements is either transferred to or received from the general account and reported in the Statements of Operations. Non-indexed guaranteed separate account assets and liabilities are carried at fair value. These guarantees are included in the general account due to the nature of the guaranteed return.

Assets held in trust for purchases of variable life, variable universal life, variable annuity, and modified guaranteed annuity contracts and the Company’s corresponding obligation to the

20

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

contract owners are shown separately in the Balance Sheets. The assets in the separate accounts are valued at fair value.

Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the contract owners and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The investment risks associated with fair value changes of the separate accounts are borne entirely by the policyholders except in cases where minimum guarantees exist.

Income and gains and losses with respect to the assets in the separate accounts supporting modified guaranteed annuity contracts are included in the statements of operations as a component of net transfers from separate accounts.

Surplus funds transferred from the general account to the separate accounts, commonly referred to as seed money, and earnings accumulated on seed money are reported as surplus in the separate accounts until transferred or repatriated to the general account. The transfer of such funds between the separate account and the general account is reported as surplus contributed or withdrawn during the year.

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are calculated by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed cash value, or the amount required by law. For direct business issued after October 1964, the Company waives deduction of deferred fractional premiums upon death of the insured and returns any portion of the final premium for periods beyond the month of death. For policies assumed during 1992 from former affiliates, Monumental General Insurance Company and Monumental Life Insurance Group, Inc., and for all business from company mergers occurring in 1998, the Company waives deduction of deferred fractional premium upon death of the insured and returns any portion of the final premium paid beyond the month of death. For fixed premium life insurance business resulting from company mergers occurring in 2004 and 2007, the Company waives deduction of deferred fractional premiums upon death of the insured and refunds portions of premiums unearned after the date of death. Where appropriate, the Company holds a non-deduction and/or refund reserve. The reserve for these benefits is computed using aggregate methods. The reserves are equal to the greater of the cash surrender value and the legally computed reserve.

For GAAP, policy reserves are calculated based on estimated expected experience or actual account balances.

Surrender values are not promised in excess of the legally computed reserves. For annual premium variable life insurance there is an extra premium charged to the policyholder before the premium is transferred to the Separate Accounts. An additional reserve for this policy is held in the General Account that is a multiple of the reserve that would otherwise be held. For interest sensitive whole life, the reserves held in the General Account are equal to the cash surrender value.

21

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

In accordance with SSAP No. 51R, Life Contracts, and No. 54R, Individual and Group Accident and Health Contracts, the Company reports the amount of insurance, if any, for which the gross premiums are less than the net premiums according to the valuation standards and any related premium deficiency reserve established. Anticipated investment income is included as a factor in the health contract premium deficiency calculation.

Policy and Contract Claim Reserves

Claim reserves represent the estimated accrued liability for claims reported to the Company and claims incurred but not yet reported through the Balance Sheets date. These reserves are estimated using either individual case-basis valuations or statistical analysis techniques. These estimates are subject to the effects of trends in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes available.

Deposit-Type Contracts

Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include guaranteed investment contracts (GICs), funding agreements and other annuity contracts. Deposits and withdrawals on these contracts are recorded as a direct increase or decrease, respectively, to the liability balance and are not reported as premiums, benefits or changes in reserves in the Statements of Operations. Interest on these policies is reflected in other benefits.

Premiums and Annuity Considerations

Revenues for life and annuity policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received. Benefits incurred represent surrenders and death benefits paid and the change in policy reserves. Under GAAP, for universal life policies, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies without significant mortality risk, premiums received and benefits paid would be recorded directly to the reserve liability using deposit accounting.

Policyholder Dividends

Policyholder dividends are recognized when declared rather than over the term of the related policies as would be required under GAAP.

Reinsurance

Coinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies and the terms of the reinsurance contracts. Gains associated with reinsurance of in force blocks of business are included in unassigned surplus and amortized into income as earnings emerge on the reinsured block of business. Premiums ceded and recoverable losses have been

22

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

reported as a reduction of premium income and benefits, respectively. Policy liabilities and accruals are reported in the accompanying financial statements net of reinsurance ceded.

Any reinsurance amounts deemed to be uncollectible have been written off through a charge to operations. In addition, a liability for reinsurance balances would be established for unsecured policy reserves ceded to reinsurers not authorized to assume such business. Changes to the liability are credited or charged directly to unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings.

Losses associated with an indemnity reinsurance transaction are reported within income when incurred rather than being deferred and amortized over the remaining life of the underlying reinsured contracts as would be required under GAAP.

Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as would be required under GAAP.

Commissions allowed by reinsurers on business ceded are reported as income when incurred rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP.

Under GAAP, for certain reinsurance agreements 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, the assets and liabilities for these reinsurance arrangements must be adjusted to reflect the fair value of the invested assets. The NAIC SAP does not contain a similar requirement.

Deferred Income Taxes

The Company computes deferred income taxes in accordance with SSAP No. 101, Income Taxes. Unlike GAAP, SSAP No. 101 does not consider state income taxes in the measurement of deferred taxes. SSAP No. 101 also requires additional testing to measure gross deferred tax assets. The additional testing limits gross deferred tax asset admission to 1) the amount of federal income taxes paid in prior years recoverable through hypothetical loss carrybacks of existing temporary differences expected to reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of remaining gross deferred tax assets expected to be realized within three years limited to an amount that is no greater than 15% of current period’s adjusted statutory capital and surplus, plus 3) the amount of remaining gross deferred tax assets that can be offset against existing gross deferred tax liabilities after considering character (i.e. ordinary versus capital) and reversal patterns. The Company’s reported deferred tax asset or liability is the sum of gross deferred tax assets admitted through this three-part test plus the sum of all deferred tax liabilities.

Policy Acquisition Costs

The costs of acquiring and renewing business are expensed when incurred. Under GAAP, incremental costs directly related to the successful acquisition of insurance and investment contracts are deferred. For traditional life insurance and certain long-duration accident and health insurance, to the extent recoverable from future policy revenues, acquisition costs are deferred

23

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality and expense margins.

Value of Business Acquired

Under GAAP, value of business acquired (VOBA) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The estimated fair value of the acquired liabilities is based on projections, by each block of business, of future contracts and contract changes, premiums, mortality and morbidity, separate account performance, surrenders, operation expenses, investment returns, nonperformance risk adjustment and other factors. VOBA is not recognized under the NAIC SAP.

Subsidiaries and Affiliated Companies

Investments in subsidiaries, controlled and affiliated companies (SCA) are stated in accordance with the Purposes and Procedures Manual of the NAIC SVO, as well as SSAP No. 97, Investments in Subsidiary, Controlled and Affiliated Entities (SSAP No. 97).

The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP. Dividends or distributions received from an investee are recognized in investment income when declared to the extent that they are not in excess of the undistributed accumulated earnings attributable to an investee. Changes in investments in SCA’s are recorded as a change to the carrying value of the investment with a corresponding amount recorded directly to unrealized gain/loss (capital and surplus).

Surplus Notes

Surplus notes are reported as surplus rather than as liabilities as would be required under GAAP.

Nonadmitted Assets

Certain assets designed as “nonadmitted”, primarily net deferred tax assets and other assets not specifically identified as an admitted asset within the NAIC SAP, are excluded from the accompanying Balance Sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the Balance Sheets to the extent that they are not impaired.

Statements of Cash Flow

Cash, cash equivalents and short-term investments in the Statements of Cash Flow represent cash balances and investments with initial maturities of one year or less and money market mutual funds. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less.

24

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

3.   Accounting Changes and Correction of Error

The Company’s policy is to disclose recent accounting pronouncements, adopted, with a current year effective date, that have been classified by the NAIC as a new statutory accounting principle (SAP) concept change, as well as items classified by the NAIC as SAP clarification changes that have been adopted and have had a material impact on the financial position or results of operations of the Company.

Recent Accounting Pronouncements

There were no new accounting pronouncements during the period to disclose, based upon the criteria specified above.

Change in Valuation Basis

During 2022, the Company converted its Actuarial Guideline 36 reserve calculation for the Indexed Universal Life block of business to a new actuarial valuation system. At the same time, as a result of increased functionality to allow for more precision and to ensure consistency, the Company refined its statutory valuation rate for specific states to utilize the maximum standard valuation interest rate. This resulted in a reserve decrease of $641 as of January 1, 2022, which has been reported in the Statement of Changes in Capital and Surplus.

Correction of Error

During 2022, the Company identified an error in the way in which it recognized the receipt of certain affiliated distributions in prior years. This error resulted in prior periods’ net investment income being understated by a total of $145, with a corresponding overstatement of the change in unrealized gains/losses. This was corrected as of December 31, 2022 in accordance with SSAP No. 3, Accounting Changes and Corrections of Errors, with the correction reflected in the Statements of Changes in Capital and Surplus in other changes, offset by a corresponding change in net unrealized capital gains/losses. There was no net impact to ending capital or surplus as a result of this error in any period.

During 2020, management identified an error in the Company’s prior year statutory AG38 8C cash flow testing reserves. The error resulted in an understatement of aggregate reserves for life contracts of $116 net of tax at December 31, 2019 which was corrected in accordance with SSAP No. 3 with the income correction reflected in Other changes - net in the Statements of Changes in Capital and Surplus.

In addition to the above, there were additional balances misstated in prior year financial statement balances that have been corrected within the current year financial statements in accordance with SSAP No. 3. These do not have a material impact on the financial statements and therefore have not been separately disclosed

Reclassifications

Certain amounts in prior year financial statement balances and footnote disclosures have been reclassified to conform to the current year presentation.

25

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

4.   Fair Values of Financial Instruments

The fair value of a financial instrument is 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.

Determination of Fair Value

The fair values of financial instruments are determined by management after taking into consideration several sources of data. When available, the Company uses quoted market prices in active markets to determine the fair value of its investments. The Company’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are submitted to brokers to obtain quotes. Lastly, securities are priced using internal cash flow modeling techniques. These valuation methodologies commonly use reported trades, bids, offers, issuer spreads, benchmark yields, estimated prepayment speeds, and/or estimated cash flows.

To understand the valuation methodologies used by third-party pricing services, the Company reviews and monitors their applicable methodology documents. Any changes to their methodologies are noted and reviewed for reasonableness. In addition, the Company performs in-depth reviews of prices received from third-party pricing services on a sample basis. The objective for such reviews is to demonstrate the Company can corroborate detailed information such as assumptions, inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

Each month, the Company performs an analysis of the information obtained from indices, third-party services, and brokers to ensure the information is reasonable and produces a reasonable estimate of fair value. The Company considers both qualitative and quantitative factors as part of this analysis, including but not limited to, recent transactional activity for similar securities, review of pricing statistics and trends, and consideration of recent relevant market events. Other controls and procedures over pricing received from indices, third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price changes, stale prices or un-priced securities.

Fair Value Hierarchy

The Company’s financial assets and liabilities carried at fair value are classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100R, Fair Value. 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 Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

26

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets accessible at the measurement date.

Level 2 - Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a) Quoted prices for similar assets or liabilities in active markets

b) Quoted prices for identical or similar assets or liabilities in non-active markets

c) Inputs other than quoted market prices that are observable

d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means

Level 3 - Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect the Company’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash Equivalents and Short-Term Investments: The carrying amounts reported in the accompanying Balance Sheets for these financial instruments is either reported at fair value or amortized cost (which approximates fair value). Cash is not included in the below tables.

Short-Term Notes Receivable from Affiliates: The carrying amounts reported in the accompanying Balance Sheets for these financial instruments approximate their fair value.

Bonds and Stocks: The NAIC allows insurance companies to report the fair value determined by the SVO or to determine the fair value by using a permitted valuation method. The fair values of bonds and stocks are reported or determined using the following pricing sources: indices, third-party pricing services, brokers, external fund managers and internal models.

Fair values for fixed maturity securities (including redeemable preferred stock) actively traded are determined from third-party pricing services, which are determined as discussed above in the description of Level 1 and Level 2 values within the fair value hierarchy. For fixed maturity securities (including redeemable preferred stock) not actively traded, fair values are estimated using values obtained from third-party pricing services, or are based on non-binding broker quotes or internal models. In the case of private placements, fair values are estimated by discounting the expected future cash flows using current market rates applicable to the coupon rate, credit and maturity of the investments.

Mortgage Loans on Real Estate: The fair values for mortgage loans on real estate are estimated utilizing discounted cash flow analyses, using interest rates reflective of current market conditions and the risk characteristics of the loans.

27

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Real Estate: Real estate held for sale is typically valued utilizing independent external appraisers in conjunction with reviews by qualified internal appraisers. Valuations are primarily based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. If such information is not available, other valuation methods are applied, considering the value that the property’s net earning power will support, the value indicated by recent sales of comparable properties and the current cost of reproducing or replacing the property.

Other Invested Assets: The fair values for other invested assets, which include investments in surplus notes issued by other insurance companies and fixed or variable rate investments with underlying characteristics of bonds, are determined primarily by using indices, third-party pricing services and internal models.

Derivative Financial Instruments: The fair value of futures and forwards are based upon the latest quoted market price and spot rates at the Balance Sheets date. The estimated fair values of equity and interest rate options (calls, puts, caps) are based upon the latest quoted market price at the Balance Sheets date. The estimated fair values of swaps, including equity, interest rate and currency swaps, are based on pricing models or formulas using current assumptions. The estimated fair values of credit default swaps are based upon active market data, including interest rate quotes, credit spreads, and recovery rates, which are then used to calculate probabilities of default for the fair value calculation. The Company accounts for derivatives that receive and pass hedge accounting in the same manner as the underlying hedged instrument. If that instrument is held at amortized cost, then the derivative is also held at amortized cost.

Policy Loans: The book value of policy loans is considered to approximate the fair value of the loan, which is stated at unpaid principal balance.

Securities Lending Reinvested Collateral: The cash collateral from securities lending is reinvested in various short-term and long-term debt instruments. The fair values of these investments are determined using the methods described above under Cash Equivalents and Short-Term Investments and Bonds and Stocks.

Separate Account Assets and Annuity Liabilities: The fair value of separate account assets are based on quoted market prices when available. When not available, they are primarily valued either using third-party pricing services or are valued in the same manner as the general account assets as further described in this note. However, some separate account assets are valued using non-binding broker quotes, which cannot be corroborated by other market observable data, or internal modeling which utilizes input that are not market observable. The fair value of separate account annuity liabilities is based on the account value for separate accounts business without guarantees. For separate accounts with guarantees, fair value is based on discounted cash flows.

Investment Contract Liabilities: Fair value for the Company’s liabilities under investment contracts, which include deferred annuities and GICs, are estimated using discounted cash flow calculations. For those liabilities that are short in duration, carrying amount approximates fair value. For investment contracts with no defined maturity, fair value is estimated to be the present surrender value.

28

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Deposit-Type Contracts: The carrying amounts of deposit-type contracts reported in the accompanying Balance Sheets approximate their fair values. These are included in the investment contract liabilities.

Fair values for the Company’s insurance contracts other than investment-type contracts (including separate account universal life liabilities) are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, such that the Company’s exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts.

The Company accounts for its investments in affiliated common stock in accordance with SSAP No. 97, as such, they are not included in the following disclosures.

29

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables set forth a comparison of the estimated fair values and carrying amounts of the Company’s financial instruments, including those not measured at fair value in the Balance Sheets, as of December 31, 2022 and 2021, respectively:

	December 31, 2022
	Aggregate Fair Value			Admitted Value		(Level 1)		(Level 2)			(Level 3)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	2,348		$	2,346	$	557	$	1,791		$	—
Bonds		45,427			51,131		5,621		39,639			167
Preferred stocks, other than affiliates		61			61		—		61			—
Common stocks, other than affiliates		151			151		12		6			133
Mortgage loans on real estate		8,185			9,270		—		—			8,185
Other invested assets		393			441		—		388			5
Derivative assets:
Options		86			86		—		86			—
Interest rate swaps		2,073			2,073		—		2,073			—
Currency swaps		139			67		—		139			—
Credit default swaps		28			38		—		28			—
Equity swaps		65			65		—		65			—
Interest rate futures		1			1		1		—			—
Equity futures		9			9		9		—			—
Derivative assets total		2,401			2,339		10		2,391			—
Policy loans		2,028			2,028		—		2,028			—
Securities lending reinvested collateral		1,738			1,738		1,096		642			—
Separate account assets		89,800			89,891		84,453		5,321			26
Liabilities
Investment contract liabilities		15,026			14,781		—		237			14,789
Derivative liabilities:
Options		47			47		—		47			—
Interest rate swaps		3,903			3,460		—		3,903			—
Currency swaps		2			1		—		2			—
Credit default swaps		(2	)		5		—		(2	)		—
Equity swaps		99			99		—		99			—
Interest rate futures		5			5		5		—			—
Equity futures		12			12		12		—			—
Derivative liabilities total		4,066			3,629		17		4,049			—
Dollar repurchase agreements		95			95		—		95			—
Payable for securities lending		2,115			2,115		—		2,115			—
Payable for derivative cash collateral		156			156		—		156			—
Separate account liabilities		81,449			81,494		—		81,440			9

30

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31, 2021
	Aggregate Fair Value		Admitted Value		(Level 1)		(Level 2)		(Level 3)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	1,885	$	1,885	$	1,790	$	95	$	—
Bonds		57,192		49,942		9,557		47,265		370
Preferred stocks, other than affiliates		120		120		—		120		—
Common stocks, other than affiliates		198		198		16		—		182
Mortgage loans on real estate		9,786		9,153		—		—		9,786
Other invested assets		485		421		—		466		19
Derivative assets:
Options		188		188		—		188		—
Interest rate swaps		1,491		1,487		—		1,491		—
Currency swaps		33		17		—		33		—
Credit default swaps		69		44		—		69		—
Equity swaps		17		17		—		17		—
Interest rate futures		3		2		3		—		—
Equity futures		5		5		5		—		—
Derivative assets total		1,806		1,760		8		1,798		—
Policy loans		1,986		1,986		—		1,986		—
Securities lending reinvested collateral		1,942		1,942		—		1,942		—
Separate account assets		123,841		123,767		117,183		6,658		—
Liabilities
Investment contract liabilities		16,881		15,019		—		247		16,634
Derivative liabilities:
Options		114		114		—		114		—
Interest rate swaps		2,254		1,970		—		2,254		—
Currency swaps		6		17		—		6		—
Credit default swaps		3		12		—		3		—
Equity swaps		235		235		—		235		—
Interest rate futures		7		7		7		—		—
Equity futures		4		4		4		—		—
Derivative liabilities total		2,623		2,359		11		2,612		—
Dollar repurchase agreements		872		872		—		872		—
Payable for securities lending		2,073		2,073		—		2,073		—
Payable for derivative cash collateral		239		239		—		239		—
Separate account liabilities		112,613		112,667		1		112,601		11

31

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables provide information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2022 and 2021:

	2022
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Government	$	—	$	1	$	—	$	1
Industrial and miscellaneous		—		53		1		54
Hybrid securities		—		35		—		35
Total bonds		—		89		1		90
Preferred stock
Industrial and miscellaneous		—		60		—		60
Total preferred stock		—		60		—		60
Common stock
Mutual funds		1		—		—		1
Industrial and miscellaneous		11		7		132		150
Total common stock		12		7		132		151
Cash equivalents and short-term investments
Industrial and miscellaneous		—		2		—		2
Money market mutual funds		531		1,729		—		2,260
Total cash equivalents and short-term investments		531		1,731		—		2,262
Derivative assets		10		2,220		—		2,230
Separate account assets		84,377		4,689		—		89,066
Total assets	$	84,930	$	8,796	$	133	$	93,859
Liabilities:
Derivative liabilities	$	17	$	2,957	$	—	$	2,974
Separate account liabilities		—		2		—		2
Total liabilities	$	17	$	2,959	$	—	$	2,976

32

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	2021
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Government	$	—	$	2	$	—	$	2
Industrial and miscellaneous		—		41		7		48
Hybrid securities		—		—		—		—
Total bonds		—		43		7		50
Preferred stock
Industrial and miscellaneous		—		120		—		120
Total preferred stock		—		120		—		120
Common stock
Mutual funds		3		—		—		3
Industrial and miscellaneous		13		—		182		195
Total common stock		16		—		182		198
Cash equivalents and short-term investments
Industrial and miscellaneous		—		—		—		—
Money market mutual funds		1,790		—		—		1,790
Total cash equivalents and short-term investments		1,790		—		—		1,790
Derivative assets		8		1,685		—		1,693
Separate account assets		117,083		6,010		—		123,093
Total assets	$	118,897	$	7,858	$	189	$	126,944
Liabilities:
Derivative liabilities	$	11	$	1,929	$	—	$	1,940
Separate account liabilities		1		—		—		1
Total liabilities	$	12	$	1,929	$	—	$	1,941

Bonds classified as Level 2 are valued using inputs from third party pricing services or broker quotes. Bonds classified as Level 3 are primarily those valued using non-binding broker quotes, which cannot be corroborated by other market observable data, or internal modeling which utilize significant inputs that are not market observable.

Preferred stock classified as Level 2 are valued using inputs from third party pricing services or broker quotes.

Common stock classified as Level 2 are valued using inputs from third party pricing services or broker quotes. Common stock classified as Level 3 are comprised primarily of shares in the FHLB of Des Moines, which are valued at par as a proxy for fair value as a result of restrictions that allow redemptions only by FHLB.

Money market mutual funds and other cash or cash equivalents classified as Level 2 are valued using inputs from third party pricing services.

Derivatives classified as Level 2 represent over-the-counter (OTC) contracts valued using pricing models based on the net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades, or external pricing services.

33

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Other long-term classified as Level 2 are comprised of surplus debentures, which are valued using inputs from third party pricing services or broker quotes.

Securities lending reinvested collateral is valued and classified in the same way as the underlying collateral, which is primarily composed of cash equivalents and short-term investments.

Separate account assets and liabilities are valued and classified in the same way as general account assets and liabilities (described above).

The following tables summarize the changes in assets classified as Level 3 for 2022 and 2021:

	Beginning Balance at January 1, 2022		Transfers in (Level 3)		Transfers out (Level 3)		Total Gains (Losses) Included in Net income (a)			Total Gains (Losses) Included in Surplus (b)
Bonds
RMBS	$	—	$	—	$	—	$	1		$	(1)
CMBS		—		—		—		—			—
Other		7		—		4		—			—
Common stock		182		—		—		(8	)		(42)
Total	$	189	$	—	$	4	$	(7	)	$	(43)

	Purchases		Issuances		Sales		Settlements		Ending Balance at December 31, 2022
Bonds
RMBS	$	—	$	—	$	—	$	—	$	—
CMBS		—		—		—		—		—
Other		—		—		2		—		1
Common stock		—		—		—		—		132
Total	$	—	$	—	$	2	$	—	$	133

(a) Recorded as a component of Net Realized Capital Gains (Losses) on Investments in the Statements of Operations

(b) Recorded as a component of Change in Net Unrealized Capital Gains (Losses) in the Statements of Changes in Capital and Surplus

	Beginning Balance at January 1, 2021		Transfers in (Level 3)		Transfers out (Level 3)		Total Gains (Losses) Included in Net income (a)		Total Gains (Losses) Included in Surplus (b)
Bonds
RMBS	$	—	$	1	$	—	$	—	$	(1)
CMBS		—		1		—		—		(1)
Other		7		—		—		—		1
Common stock		160		—		—		(1)		3
Total	$	167	$	2	$	—	$	(1)	$	2

34

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	Purchases		Issuances		Sales		Settlements		Ending Balance at   December 31, 2021
Bonds
RMBS	$	—	$	—	$	—	$	—	$	—
CMBS		—		—		—		—		—
Other		—		—		—		1		7
Common stock		20		—		—		—		182
Total	$	20	$	—	$	—	$	1	$	189

(a) Recorded as a component of Net Realized Capital Gains (Losses) on Investments in the Statements of Operations

(b) Recorded as a component of Change in Net Unrealized Capital Gains (Losses) in the Statements of Changes in Capital and Surplus

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.

Nonrecurring Fair Value Measurements

As indicated in Note 2, real estate held for sale is measured at the lower of carrying amount or fair value less cost to sell. As of December 31, 2022 and 2021, the Company held no properties as held-for-sale, where fair value was less than its carrying value. As of December 31, 2022 and 2021, the Company held one property as held-for sale, where carrying amount of $1 and $7, respectively, was equal to fair value.

Fair value was determined by utilizing an external appraisal following the sales comparison approach. The fair value measurements are classified as Level 3 as the comparable sales and adjustments for the specific attributes of these properties are not market observable inputs.

35

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

5. Investments

Bonds and Stocks

The carrying amounts and estimated fair value of investments in bonds and stocks are as follows:

	Book Adjusted Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2022
Bonds:
United States Government and agencies	$	6,180	$	53	$	1,010	$	5,223
State, municipal and other government		3,005		7		545		2,467
Hybrid securities		396		16		32		380
Industrial and miscellaneous		35,212		446		4,183		31,475
Mortgage and other asset-backed securities		6,338		203		659		5,882
Total unaffiliated bonds		51,131		725		6,429		45,427
Unaffiliated preferred stocks		61		—		—		61
	$	51,192	$	725	$	6,429	$	45,488

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Unaffiliated common stocks	$	144	$	7	$	—	$	151

	Book Adjusted Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2021
Bonds:
United States Government and agencies	$	7,140	$	2,004	$	13	$	9,131
State, municipal and other government		2,477		257		22		2,712
Hybrid securities		267		65		1		331
Industrial and miscellaneous		33,840		4,663		163		38,340
Mortgage and other asset-backed securities		6,218		500		40		6,678
Total unaffiliated bonds		49,942		7,489		239		57,192
Unaffiliated preferred stocks		120		—		—		120
	$            50,062		$        7,489		$        239		$        57,312

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Unaffiliated common stocks	$	151	$	47	$	—	$	198

36

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The carrying amount and estimated fair value of bonds at December 31, 2022 by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	2022
December 31:	Carrying Value		Fair Value
Due in one year or less	$	780	$	774
Due after one year through five years		6,838		6,696
Due after five years through ten years		9,579		8,840
Due after ten years		27,596		23,235
Subtotal		44,793		39,545
Mortgage and other asset-backed securities		6,338		5,882
Total	$	51,131	$	45,427

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2022 and 2021 is as follows:

	2022
	Equal to or Greater than 12 Months				Less than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
United States Government and agencies	$	149	$	70	$	4,489	$	940
State, municipal and other government		330		120		1,992		425
Hybrid securities		79		16		223		16
Industrial and miscellaneous		3,475		1,312		21,368		2,871
Mortgage and other asset-backed securities		1,034		210		4,143		449
Total bonds		5,067		1,728		32,215		4,701
Preferred stocks-unaffiliated		16		—		44		—
Common stocks-unaffiliated		—		—		138		—
	$	5,083	$	1,728	$	32,397	$	4,701

37

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	2021
	Equal to or Greater than 12 Months				Less than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
United States Government and agencies	$	118	$	11	$	106	$	2
State, municipal and other government		64		10		318		12
Hybrid securities		14		1		3		—
Industrial and miscellaneous		553		41		4,609		122
Mortgage and other asset-backed securities		299		15		1,907		25
Total bonds		1,048		78		6,943		161
Preferred stocks-unaffiliated		—		—		10		—
Common stocks-unaffiliated		—		—		3		—
	$	1,048	$	78	$	6,956	$	161

During 2022, 2021 and 2020, respectively, there were $2, $62 and $0, of loan-backed or structured securities with a recognized OTTI due to intent to sell or lack of intent and ability to hold for a period of time to recover the amortized cost basis.

For loan-backed and structured securities with a recognized OTTI due to the Company’s cash flow analysis, in which the security is written down to estimated future cash flows discounted at the security’s effective yield, in 2022, 2021 and 2020, the Company recognized OTTI of $1, $7 and $4, respectively.

The following loan-backed and structured securities were held at December 31, 2022, for which an OTTI was recognized during the current reporting period:

CUSIP	Amortized Cost Before Current Period OTTI		Present Value of Projected Cash Flows		Recognized OTTI		Amortized Cost After OTTI		Fair Value at Time of OTTI		Date of   Financial   Statement   Where   Reported
026935AC0	$	2	$	1	$	—	$	1	$	1	3/31/2022
026935AC0		1		1		—		1		1	6/30/2022
126670FC7		2		2		—		2		2	6/30/2022
78449KAD2		2		2		—		2		2	6/30/2022
12667GCH4		1		1		—		1		1	9/30/2022
126670FC7		2		2		—		2		2	9/30/2022
12667GCH4		1		1		—		1		1	12/31/2022
					$	—

38

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The unrealized losses of loan-backed and structured securities where fair value is less than cost or amortized cost for which an OTTI has not been recognized in earnings as of December 31, 2022 and 2021 is as follows:

	2022				2021
	Losses 12 Months or More		Losses Less Than 12 Months		Losses 12 Months or More		Losses Less Than 12 Months
Year ended December 31:
The aggregate amount of unrealized losses	$	224	$	449	$	14	$	44
The aggregate related fair value of securities with unrealized losses		1,034		4,121		299		1,942

At December 31, 2022 and 2021, respectively, for bonds and preferred stocks that have been in a continuous loss position for greater than or equal to twelve months, the Company held 1,012 and 180 securities with a carrying amount of $6,809 and $1,126, and an unrealized loss of $1,728 and $78. Of this portfolio, at December 31, 2022 and 2021, 92.0% and 82.5% were investment grade with associated unrealized losses of $1,621 and $56, respectively.

At December 31, 2022 and 2021, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 3,939 and 978 securities with a carrying amount of $36,960 and $7,114, and an unrealized loss of $4,701 and $161. Of this portfolio, at December 31, 2022 and 2021, 95.8% and 93.9% were investment grade with associated unrealized losses of $4,520 and $144, respectively.

At December 31, 2022, for common stocks that have been in a continuous loss position for greater than or equal to twelve months, the Company held 7 securities with an insignificant unrealized loss. At December 31, 2021 , there were no common stocks that have been in a continuous loss position for greater than or equal to twelve months.

At December 31, 2022 and 2021, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 30 and 13 securities with a cost of $139 and $3 and an unrealized loss of $1 and $0, respectively.

The following table provides the number of 5GI securities, aggregate book adjusted carrying value and aggregate fair value by investment type:

	Number of 5GI Securities		Book / Adjusted Carrying Value		Fair Value
December 31, 2022
Bond, amortized cost		3	$	4	$	4
Total		3	$	4	$	4
December 31, 2021
Bond, amortized cost		3	$	9	$	9
Total		3	$	9	$	9

39

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The Company did not have any offsetting assets and liabilities at December 31, 2022 and 2021.

During 2022 and 2021, respectively, the Company sold, redeemed or otherwise disposed of 75 and 153 securities as a result of a callable feature which generated investment income of $28 and $100 as a result of a prepayment penalty and/or acceleration fee.

Proceeds from sales and other disposals of bonds and preferred stock and related gross realized capital gains and losses are reflected in the following table. The amounts exclude maturities and include transfers associated with reinsurance agreements, if applicable.

	Year Ended December 31
	2022			2021			2020
Proceeds	$	8,218		$	10,570		$	8,747
Gross realized gains	$	69		$	437		$	232
Gross realized losses		(624	)		(108	)		(37)
Net realized capital gains (losses)	$	(555	)	$	329		$	195

The Company had gross realized losses, which relate to losses recognized on other-than-temporary declines in the fair value of bonds and preferred stocks, for the years ended December 31, 2022, 2021 and 2020 of $54, $15 and $161, respectively.

At December 31, 2022 and 2021, the Company had no investments in restructured securities.

40

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Mortgage Loans

The credit quality of mortgage loans by type of property for the years ended December 31, 2022 and 2021 were as follows:

December 31, 2022
	Farm		Commercial		Total
AAA - AA	$	1	$	5,139	$	5,140
A		31		3,389		3,420
BBB		7		653		660
BB		—		50		50
	$	39	$	9,231	$	9,270

December 31, 2021
	Farm		Commercial		Total
AAA - AA	$	4	$	5,342	$	5,346
A		36		3,136		3,172
BBB		5		567		572
BB		8		54		62
	$	53	$	9,099	$	9,152

The above tables exclude residential mortgage loans.

The credit quality for commercial and farm mortgage loans was determined based on an internal credit rating model which assigns a letter rating to each mortgage loan in the portfolio as an indicator of the credit quality of the mortgage loan. The internal credit rating model was designed based on rating agency methodology, then modified for credit risk associated with the Company’s mortgage lending process, taking into account such factors as projected future cash flows, net operating income and collateral value. The model produces a credit rating score and an associated letter rating which is intended to align with S&P ratings as closely as possible. Information supporting the credit risk rating process is updated at least annually.

During 2022, the Company issued mortgage loans with a maximum interest rate of 6.05% and a minimum interest rate of 2.80% for commercial loans. The maximum percentage of any one admitted loan to the value of the security (exclusive of insured or guaranteed or purchase money mortgages) originated or acquired during the year ending December 31, 2022 at the time of origination was 65%. During 2021, the Company issued mortgage loans with a maximum interest rate of 5.88% and a minimum interest rate of 2.58% for commercial loans. The maximum percentage of any one admitted loan to the value of the security (exclusive of insured or guaranteed or purchase money mortgages) originated or acquired during the year ending December 31, 2021 at the time of origination was 81%.

41

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

During 2022, the Company issued agricultural mortgage loans with a maximum interest rate of 5.55% and a minimum interest rate of 5.55%. During 2021, the Company issued agricultural mortgage loans with a maximum interest rate of 4.45% and a minimum interest rate of 4.45%.

During 2022 and 2021, the Company did not reduce the interest rate on any outstanding mortgage loans.

The age analysis of mortgage loans and identification in which the Company is a participant or co-lender in a mortgage loan agreement is as follows for December 31, 2022 and 2021:

			Residential		Commercial
	Farm		All Other		All Other		Total
December 31, 2022
Recorded Investment (All)
Current	$	39	$	—	$	9,231	$	9,270
30-59 Days Past Due		—		—		—		—
Participant or Co-lender in Mortgage Loan Agreement
Recorded Investment	$	14	$	—	$	854	$	868

			Residential		Commercial
	Farm		All Other		All Other		Total
December 31, 2021
Recorded Investment (All)
Current	$	53	$	—	$	9,099	$	9,152
30-59 Days Past Due		—		1		—		1
Participant or Co-lender in Mortgage Loan Agreement
Recorded Investment	$	14	$	—	$	871	$	885

At December 31, 2022 and 2021, the Company held no mortgage loans that were non-income producing for the previous 180 days. There was no accrued interest related to these mortgage loans at December 31, 2022 and 2021. The Company has a mortgage or deed of trust on the property thereby creating a lien which gives it the right to take possession of the property (among other things) if the borrower fails to perform according to the terms of the loan documents. The Company requires all mortgaged properties to carry fire insurance equal to the value of the underlying property. At December 31, 2022 and 2021, there were no taxes, assessments and other amounts advanced and not included in the mortgage loan total.

42

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

At December 31, 2022 and 2021, the Company held no impaired loans with or without a related allowance for credit losses. There were no impaired mortgage loans held without an allowance for credit losses as of December 31, 2022 and 2021, respectively, that were subject to participant or co-lender mortgage loan agreement for which the Company is restricted from unilaterally foreclosing on the mortgage loans. There were no average recorded investments in impaired loans during 2022 and 2021.

The following table provides a reconciliation of the beginning and ending balances for the allowance for credit losses on mortgage loans:

	Year Ended December 31
	2022		2021		2020
Balance at beginning of period	$	—	$	—	$	—
Additions, net charged to operations		—		—		1
Recoveries in amounts previously charged off		—		—		(1	)
Balance at end of period	$	—	$	—	$	—

As of December 31, 2022 and 2021, the Company had no mortgage loans derecognized as a result of foreclosure.

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. For the years ended December 31, 2022, 2021 and 2020, the Company has recognized no interest income on impaired loans or on a cash basis.

At December 31, 2022 and 2021, the Company held a mortgage loan loss reserve in the AVR of $98 and $97, respectively.

43

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The Company’s mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:

Geographic Distribution							Property Type Distribution
	December 31							December 31
	2022			2021				2022			2021
Pacific		29	%		30	%	Apartment		53	%		53	%
South Atlantic		22			21		Office		16			17
Middle Atlantic		12			13		Retail		14			15
E. North Central		10			9		Industrial		17			13
W. South Central		8			8		Medical		—			1
Mountain		8			8		Agricultural		—			1
W. North Central		6			6
E. South Central		3			3
New England		2			2

At December 31, 2022 and 2021, the Company had mortgage loans with a total net admitted asset value of $2 and $14, respectively, which had been restructured in accordance with SSAP No. 36, Troubled Debt Restructuring. There were no realized losses during the years ended December 31, 2022, 2021 and 2020 related to such restructurings. At December 31, 2022 and 2021, there were no commitments to lend additional funds to debtors owing receivables.

Real Estate

The fair value of property is determined based on an appraisal from a third-party appraiser, along with information obtained from discussions with internal asset managers and a listing broker regarding recent comparable sales data and other relevant property information. Impairment losses of $1, $9 and $1 were taken on real estate in 2022, 2021 and 2020, respectively, to write the book value down to the current fair value, and included in net realized capital gains (losses), within the Statements of Operations, for the year ended December 31, 2022.

As of December 31, 2022, there was one property classified as held for sale. As of December 31, 2021, there were seven properties classified as held for sale. The Company is working with an external commercial real estate advisor firm to actively market the property and negotiate with potential buyers. During 2022, seven properties classified as held for sale were disposed, resulting in a net realized gain of $2. During 2021, one property classified as held for sale was disposed. Any associated gains and losses from these held for sale disposals were included in net realized capital gains (losses) within the Statements of Operations.

On October 28, 2020, the Company sold the Transamerica Pyramid Property located in San Francisco, CA, resulting in a realized gain of $255. As part of the sale transaction, the Company issued mortgage loans supporting the property at commercial rates in the amount of $427. The Company also disposed of other properties during 2022, 2021 and 2020 resulting in net realized gains of $0, $0 and $3, respectively. These gains and losses were included in net realized capital gains (losses) within the Statements of Operations.

44

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The carrying value of the Company’s real estate assets at December 31, 2022 and 2021 was as follows:

	2022		2021
Home office properties	$	43	$	45
Properties held for sale		1		7
	$	44	$	52

Accumulated depreciation on real estate at December 31, 2022 and 2021, was $29 and $29, respectively.

Other Invested Assets

The Company recorded impairments of $4, $13 and $19 throughout years 2022, 2021 and 2020, respectively. These impairments were primarily related to private equity funds. The impairments were taken because the decline in fair value of the funds were deemed to be other than temporary and a recovery in value from the remaining underlying investments in the funds were not anticipated. These write-downs are included in net realized capital gains (losses) within the Statements of Operations.

Tax Credits

At December 31, 2022, the Company had ownership interests in 52 LIHTC investments with a carrying value of $88. The remaining years of unexpired tax credits ranged from one to eleven, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to fifteen years. The amount of contingent equity commitments expected to be paid during the years 2023 to 2029 is $4. Tax credits recognized in 2022 were $33 and other tax benefits recognized in 2022 were $2. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

At December 31, 2021, the Company had ownership interests in fifty-five LIHTC investments with a carrying value of $87. The remaining years of unexpired tax credits ranged from two to twelve, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to sixteen years. The amount of contingent equity commitments expected to be paid during the years 2022 to 2029 is $21. Tax credits recognized in 2021 were $28 and other tax benefits recognized in 2021 were $4. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

45

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables provide the carrying value of transferable state tax credits gross of any related tax liabilities and total unused transferable tax credits by state and in total as of December 31, 2022 and 2021:

		December 31, 2022
Description of State Transferable and Non- transferable Tax Credits	State	Carrying Value		Unused Amount*
Low-Income Housing Tax Credits	MA	$	—	$	—
Economic Redevelopment and Growth Tax Credits	NJ		10		34
Total		$	10	$	34

		December 31, 2021
Description of State Transferable and Non- transferable Tax Credits	State	Carrying Value		Unused Amount
Low-Income Housing Tax Credits	MA	$	—	$	2
Economic Redevelopment and Growth Tax Credits	NJ		7		35
Total		$	7	$	37

*The unused amount reflects credits that we deem will be realizable in the period 2022-2030.

The Company did not have any non-transferable state tax credits.

The Company estimated the utilization of the remaining state transferable tax credits by projecting a future tax liability based on projected premium, tax rates and tax credits, and comparing the projected future tax liability to the availability of remaining state transferable tax credits. The Company had no impairment losses related to state transferable tax credits.

Derivatives

Amounts disclosed in this Derivatives section do not include derivatives utilized in the hedging of variable annuity guarantees in accordance with SSAP No. 108. Please see the subsequent section “Derivatives Hedging Variable Annuity Guarantees” for results associated with those derivatives.

The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets (cash or securities) on the Company’s behalf in an amount equal to the difference between the net positive fair value of the contracts and an agreed upon threshold based on the credit rating of the counterparty. If the net fair value of all contracts with this counterparty is negative, then the Company is required to post similar assets (cash or securities). Fair value of derivative contracts, aggregated at a counterparty level at December 31, 2022 and 2021 was as follows:

	2022			2021
Fair value - positive	$	409		$	2,171
Fair value - negative		(1,324	)		(2,988	)

At December 31, 2022, 2021 and 2020, the Company has recorded unrealized gains (losses) of ($23), ($173) and ($334), respectively, for the component of derivative instruments utilized for

46

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized gain (loss). The Company did not recognize any unrealized gains or losses during 2022, 2021 and 2020 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

The maximum term over which the Company is hedging its exposure to the variability of future cash flows is approximately 22 years for forecasted hedge transactions. At December 31, 2022 and 2021, none of the Company’s cash flow hedges have been discontinued as it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship. As of December 31, 2022 and 2021, the Company has no accumulated deferred gains related to the termination of swaps that were hedging forecasted transactions. It is expected that these gains will be used as basis adjustments on future asset purchases expected to transpire throughout 2023.

Summary of realized gains (losses) by derivative type for the years ended December 31, 2022, 2021 and 2020:

	2022			2021			2020
Options:
Calls	$	—		$	6		$	(805	)
Puts		—			(6	)		(299	)
Collars		—			—			(62	)
Total options	$	—		$	—		$	(1,166	)
Swaps:
Interest rate	$	(1	)	$	87		$	—
Credit		—			—			(6	)
Total return		1,054			(1,752	)		(851	)
Total swaps	$	1,053		$	(1,665	)	$	(857	)
Futures - net positions		(376	)		110			480
Total realized gains (losses)	$	677		$	(1,555	)	$	(1,543	)

The average estimated fair value of derivatives held for other than hedging purposes is presented in the following table for the years ended December 31, 2022 and 2021:

	Asset(1)				Liability(1)
	2022		2021		2022		2021
Derivative component of RSATs
Credit default swaps	$	29	$	67	$	—	$	(8	)
Interest rate swaps		6		6		—		—
(1) Asset and liability classification is based on the positive (asset) or negative (liability) book/adjusted carrying value of each derivative.

47

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The estimated fair value of derivatives held for other than hedging purposes is presented in the following table for the years ended December 31, 2022 and 2021:

	Asset(1)				Liability(1)
	2022		2021		2022			2021
Derivative component of RSATs
Credit default swaps	$	24	$	69	$	(2	)	$	(7	)
Interest rate swaps		6		7		—			—
Total	$	30	$	76	$	(2	)	$	(7	)

⁽¹⁾  Asset and liability classification is based on the positive (asset) or negative (liability) book/adjusted carrying value of each derivative.

The net realized gains (losses) on the derivatives held for other than hedging purposes is presented in the following table for the years ended December 31, 2022, 2021 and 2020:

	2022		2021		2020
Derivative component of RSATs
Credit default swaps	$	—	$	—	$	(6	)
Interest rate swaps		—		—		—
Total	$	—	$	—	$	(6	)

As stated in Note 2, the Company replicates investment grade corporate bonds, sovereign debt, or commercial mortgage backed securities by writing credit default swaps. As a writer of credit swaps, the Company actively monitors the underlying asset, being careful to note any events (default or similar credit event) that would require the Company to perform on the credit swap. If such events would take place, a payment equal to the notional amount of the contract, less any potential recoveries as determined by the underlying agreement, will be made by the Company to the counterparty to the swap.

48

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables present the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at December 31, 2022 and 2021:

		2022
Rating Agency Designation of       Referenced Credit Obligations (1)	NAIC   Designation	Estimated   Fair Value of   Credit Default Swaps			Maximum Amount of Future Payments  under Credit  Default Swaps		Weighted Average Years to  Maturity (2)
AAA/AA/A	1
Single name credit default swaps (3)		$	9		$	948		3.2
Credit default swaps referencing indices			—			45		30.6
Subtotal			9			993		4.4
BBB	2
Single name credit default swaps (3)			6			1,801		2.4
Credit default swaps referencing indices			13			1,717		2.4
Subtotal			19			3,518		2.4
BB	3
Single name credit default swaps (3)			(1	)		120		2.2
Subtotal			(1	)		120		2.2
B	4
Single name credit default swaps (3)			—			15		1.0
Subtotal			—			15		1.0
Total		$	27		$	4,646		2.8

⁽¹⁾  The rating agency designations are based on availability and the blending of the applicable ratings among Moody’s Investors Service (“Moody’s”), Standard and Poor’s Rating Services (“S&P”), and Fitch Ratings. If no rating is available from a rating agency, then an internally derived rating is used.

⁽²⁾  The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.

⁽³⁾  Includes corporate, foreign government and state entities.

49

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

		2021
Rating Agency Designation of     Referenced Credit Obligations (1)	NAIC   Designation	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to   Maturity (2)
AAA/AA/A	1
Single name credit default swaps (3)		$	15	$	770		3.4
Credit default swaps referencing indices			—		45		31.6
Subtotal			15		815		4.9
BBB	2
Single name credit default swaps (3)			33		1,914		3.0
Credit default swaps referencing indices			24		1,736		2.1
Subtotal			57		3,650		2.6
BB	3
Single name credit default swaps (3)			2		135		1.2
Subtotal			2		135		1.2
B	4
Single name credit default swaps (3)			1		37		1.1
Subtotal			1		37		1.1
Total		$	75	$	4,637		3.0

⁽¹⁾  The rating agency designations are based on availability and the blending of the applicable ratings among Moody’s Investors Service (“Moody’s”), Standard and Poor’s Rating Services (“S&P”), and Fitch Ratings. If no rating is available from a rating agency, then an internally derived rating is used.

⁽²⁾  The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.

⁽³⁾  Includes corporate, foreign government and state entities.

The Company may enter into credit default swaps to purchase credit protection on certain of the referenced credit obligations in the table above. At December 31, 2022, there were not any potential future recoveries available to offset the $4,646 from the table above. At December 31, 2021, there were not any potential future recoveries available to offset the $4,637 from the table above.

50

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

At December 31, 2022 and 2021, the Company’s outstanding derivative instruments, shown in notional or contract amounts and fair value, are summarized as follows:

	Contract or Notional Amount*						Fair Value
	2022			2021			2022			2021
Derivative assets:
Credit default swaps	$	4,445		$	4,020		$	28		$	69
Currency swaps		747			641			139			34
Equity futures		—			—			9			5
Equity swaps		2,169			1,294			65			17
Interest rate futures		—			—			—			—
Interest rate swaps		35			81			8			11
Options		1,859			3,724			86			188
Derivative liabilities:
Credit default swaps		733			1,411			(2	)		3
Currency swaps		44			664			2			6
Equity futures		—			—			12			4
Equity swaps		3,785			6,885			99			235
Interest rate futures		—			—			—			—
Interest rate swaps		7,096			6,677			1,091			684
Options		(2,078	)		(1,724	)		47			114

*Futures are presented in contract format. Swaps and options are presented in notional format.

Derivatives Hedging Variable Annuity Guarantees

The hedged obligation consists of guaranteed benefits on variable annuity contracts and resembles a long dated put option where claim payment is made whenever account value is less than a guaranteed amount, adjusted for applicable fees. Changes in interest rates impact the present value of future product cash flows (discount rate) as well as the value of investments comprising the account value to be assessed against the guarantee. Under this VM-21 compliant clearly defined hedging strategy, interest rate risk may be hedged by a duration matched portfolio of interest sensitive derivatives such as treasury bond forwards, treasury futures, interest rate swaps, interest rate swaptions or treasury future options. Retroactive to January 1, 2020, the Company re-designated the portfolio of contracts giving rise to the hedged item. The re-designation will more acutely reflect alignment between hedge performance and reserve valuations pertaining to the hedged item on a forward-looking basis. Also retroactive to January 1, 2020, the Company also elected to immediately amortize the full $195 SSAP No. 108 asset balance associated with the former designated portfolio through realized loss. The Company received approval from the IID for the redesignation and application of this accounting treatment on June 26, 2020. Effective October 1, 2021 the guaranteed benefits included was expanded to include variable annuity contracts with Guaranteed Minimum Death Benefit and Guaranteed Minimum Income Benefit riders, excluding contracts assumed via reinsurance along with the originally included Guaranteed Minimum Withdrawal Benefit and Guaranteed Minimum Account Benefit riders. The Company received approval from the IID on September 28, 2021 for the expansion of the program. Total return on the designated portfolio of derivatives remains highly effective in covering the interest rate risk (rho) of the hedged obligation. Hedge effectiveness is measured in accordance with the requirements outlined under SSAP No. 108 and

51

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

entails assessment of the total return on the designated portfolio of derivatives against changes in the fair value of the hedged obligation due to interest rate movements on a cumulative basis.

The Company accelerated the amortization of its SSAP 108 variable annuity deferred interest rate position reported on December 31, 2021. The Company fully amortized the $250 unamortized liability balance as of December 31, 2021 to zero, in 2022. The acceleration of the amortization of the SSAP 108 deferral is consistent with SSAP 108, Paragraph 14 Section c. i. that allows the accelerating of amortization of the deferral, if consistently done between deferred assets and deferred liabilities within its hedging strategy. The Company did not change any accounting practices under SSAP 108. The Company’s Clearly Defined Hedge Strategy is not being revised.

Scheduled amortization for SSAP No. 108 derivatives as of December 31, 2022 is as follows:

Amortization Year	Deferred Assets			Deferred Liabilities
2023	$	(40	)	$	—
2024		(40	)		—
2025		(40	)		—
2026		(40	)		—
2027		(40	)		—
2028		(40	)		—
2029		(40	)		—
2030		(40	)		—
2031		(40	)		—
2032		(20	)		—
Total	$	(380	)	$	—

The following table is a reconciliation of the total deferred balance (net of tax) of SSAP No. 108 derivatives:

	Total Deferred   Balance
1. Balance at January 1, 2021	$	(145)
2. Amortization		(14)
3. Deferred Recognition		119
4. Balance at December 31, 2021 [1-(2+3)]	$	(250)
5. Amortization		(230)
6. Deferred Recognition		(400)
7. Balance at December 31, 2022 [4-(5+6)]	$	380

The following tables provide information regarding SSAP No. 108 hedging instruments:

	2022			2021
Amortized cost	$	—		$	1
Fair value		(750	)		(95	)

52

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

December 31, 2022
	Net Investment Income			Realized Gain (Loss)			Unrealized     Gain (Loss)			Total*
Derivative performance	$	(34	)	$	(3,736	)	$	(654	)	$	(4,424	)
SSAP No. 108 Adjustments
Portion of the derivative performance attributed to natural offset		84			2,275			1,559			3,918
Deferred		(50	)		1,461			(905	)		506
*Totals shown are pre-tax

December 31, 2021
	Net Investment Income			Realized Gain (Loss)			Unrealized     Gain (Loss)			Total*
Derivative performance	$	6		$	(504	)	$	(41	)	$	(539	)
SSAP No. 108 Adjustments
Portion of the derivative performance attributed to natural offset		(4	)		338			355			689
Deferred		(2	)		166			(314	)		(150	)
*Totals shown are pre-tax

	Year Ended December 31
	2022			2021
Prior year fair value of hedged item	$	(3,847	)	$	(3,778	)
Current year fair value of hedged item		938			(3,026	)
Change in fair value attributable to interest rates	$	4,785		$	752
Portion of the fair value change attributed to the hedged risk	$	4,785		$	753

53

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Restricted Assets

The following tables show the pledged or restricted assets as of December 31, 2022 and 2021, respectively:

	Gross Restricted (Admitted & Nonadmitted)
	2022
Restricted Asset Category	Total General  Account (G/A)		G/A Supporting Separate Account (S/A) Activity		Total S/A  Restricted  Assets		S/A Assets Supporting G/A Activity		Total
Collateral held under security lending agreements	$	2,115	$	—	$	—	$	—	$	2,115
Subject to repurchase agreements		251		—		—		—		251
Subject to dollar repurchase agreements		96		—		—		—		96
FHLB capital stock		130		—		—		—		130
On deposit with states		38		—		—		—		38
Pledged as collateral to FHLB (including assets backing funding agreements)		5,335		—		—		—		5,335
Pledged as collateral not captured in other categories		2,268		—		—		—		2,268
Other restricted assets		5,983		—		—		—		5,983
Total restricted assets	$	16,216	$	—	$	—	$	—	$	16,216

	Gross (Admitted & Nonadmitted) Restricted									Percentage
Restricted Asset Category	Total From Prior Year (2021)		Increase/ (Decrease)			Total Nonadmitted Restricted		Total Admitted  Restricted		Gross (Admitted &  Nonadmitted)  Restricted to Total Assets		Admitted  Restricted to  Total Admitted Assets
Collateral held under security lending agreements	$	2,073	$	42		$	—	$	2,115		1.22%		1.23%
Subject to repurchase agreements		187		64			—		251		0.15%		0.15%
Subject to dollar repurchase agreements		878		(782	)		—		96		0.06%		0.06%
FHLB capital stock		130		—			—		130		0.08%		0.08%
On deposit with states		38		—			—		38		0.02%		0.02%
Pledged as collateral to FHLB (including assets backing funding agreements)		4,226		1,109			—		5,335		3.08%		3.11%
Pledged as collateral not captured in other categories		1,818		450			—		2,268		1.31%		1.32%
Other restricted assets		1,392		4,591			—		5,983		3.46%		3.48%
Total restricted assets	$	10,742	$	5,474		$	—	$	16,216		9.38%		9.45%

The amounts reported as other restricted assets in the table above represent assets held in trust related to reinsurance.

54

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables show the pledged or restricted assets in other categories as of December 31, 2022 and 2021, respectively:

	Gross Restricted (Admitted & Nonadmitted)
	2022
Description of Assets	Total General Account (G/A)		G/A Supporting Separate Account (S/A) Activity		Total S/A   Restricted   Assets		S/A Assets Supporting G/A Activity		Total
Derivatives	$	2,251	$	—	$	—	$	—	$	2,251
Secured funding agreements		17		—		—		—		17
AMBAC		—		—		—		—		—
Total	$	2,268	$	—	$	—	$	—	$	2,268

	Gross (Admitted & Nonadmitted) Restricted									Percentage
Description of Assets	Total From Prior Year (2021)		Increase/  (Decrease)			Total Nonadmitted Restricted		Total Admitted  Restricted		Gross (Admitted &  Nonadmitted) Restricted to Total Assets		Admitted  Restricted to  Total Admitted Assets
Derivatives	$	1,800	$	451		$	—	$	2,251		1.30%		1.31%
Secured funding agreements		17		—			—		17		0.01%		0.01%
AMBAC		1		(1	)		—		—		0.00%		0.00%
Total	$	1,818	$	450		$	—	$	2,268		1.31%		1.32%

55

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables show the collateral received and reflected as assets within the financial statements as of December 31, 2022 and 2021:

2022
Collateral Assets	Carrying Value		Fair Value		% of CV to Total Assets   (Admitted and   Nonadmitted)		% of CV to   Total Admitted   Assets
Cash	$	249	$	243		0.31 %		0.31 %
Securities lending collateral assets		2,115		2,115		2.59		2.64
Other		—		—		—		—
Total collateral assets	$	2,364	$	2,358		2.90 %		2.95 %

	Amount		% of Liability     to Total Liabilities
Recognized obligation to return collateral asset	$	2,367		3.17%

2021
Collateral Assets	Carrying Value		Fair Value		% of CV to Total Assets (Admitted and   Nonadmitted)		% of CV to Total       Admitted       Assets
Cash	$	1,094	$	1,094		1.42 %		1.43 %
Securities lending collateral assets		2,073		2,073		2.69		2.70
Other		17		17		0.02		0.02
Total collateral assets	$	3,184	$	3,184		4.13 %		4.15 %

	Amount		% of Liability     to Total Liabilities
Recognized obligation to return collateral asset	$	3,186		4.59  %

56

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Net Investment Income

Detail of net investment income is presented below:

	Year Ended December 31
	2022		2021		2020
Income:
Bonds	$	2,029	$	2,151	$	2,025
Preferred stocks		3		4		9
Common stocks		343		228		57
Mortgage loans on real estate		415		483		378
Real estate		13		25		40
Policy loans		108		112		116
Cash, cash equivalents and short-term investments		26		1		24
Derivatives		273		89		606
Other invested assets		180		155		214
Gross investment income		3,390		3,248		3,469
Less: investment expenses		178		167		210
Net investment income before amortization of IMR		3,212		3,081		3,259
Amortization of IMR		85		110		102
Net investment income	$	3,297	$	3,191	$	3,361

Realized Capital Gains (Losses)

Net realized capital gains (losses) on investments, including OTTI, are summarized below:

	Realized
	Year Ended December 31
	2022			2021			2020
Bonds	$	(614	)	$	311		$	53
Preferred stocks		—			2			(20)
Common stocks		56			11			(13)
Mortgage loans on real estate		—			—			(1)
Real estate		1			(9	)		257
Cash, cash equivalents and short-term investments		—			—			(1)
Derivatives		(4,555	)		(2,474	)		249
Variable annuity reserve hedge offset		229			15			(192)
Other invested assets		169			488			43
Change in realized capital gains (losses), before taxes		(4,714	)		(1,656	)		375
Federal income tax effect		45			(122	)		(128)
Transfer from (to) interest maintenance reserve		458			(146	)		(134)
Net realized capital gains (losses) on investments	$	(4,211	)	$	(1,924	)	$	113

57

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Unrealized Capital Gains (Losses)

The changes in net unrealized capital gains and losses on investments, including the changes in net unrealized foreign capital gains and losses were as follows:

	Change in Unrealized
	Year Ended December 31
	2022			2021			2020
Bonds	$	197		$	150		$	53
Preferred stocks		(11	)		15			9
Common stocks		(40	)		2			22
Affiliated entities		(278	)		(46	)		182
Derivatives		1,142			262			(364)
Other invested assets		51			139			3
Change in unrealized capital gains (losses), before taxes		1,061			522			(95)
Taxes on unrealized capital gains (losses)		(47	)		(72	)		(31)
Change in unrealized capital gains (losses), net of tax	$	1,014		$	450		$	(126)

6. Policy and Contract Attributes

Insurance Liabilities

Policy reserves, deposit-type contracts and policy claims at December 31, 2022 and 2021 were as follows:

	Year Ended December 31
	2022		2021
Life insurance reserves	$	33,013	$	26,749
Annuity reserves and supplementary contracts with life contingencies		17,894		18,289
Accident and health reserves (including long term care)		7,049		6,945
Total policy reserves	$	57,956	$	51,983
Deposit-type contracts		766		824
Policy claims		1,098		1,177
Total policy reserves, deposit-type contracts and claim liabilities	$	59,820	$	53,984

58

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Life Insurance Reserves

The aggregate policy reserves for life insurance policies are based upon the 1941, 1958, 1980, 2001 and 2017 Commissioner’s Standard Ordinary Mortality Tables, the 1912, 1941 and 1961 Standard Industrial Mortality Tables, the 1960 Commissioner’s Standard Group Mortality Table, the American Men, Actuaries and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 0.75 to 6.50 percent and are computed principally on the Net Level Premium Valuation and the Commissioner’s Reserve Valuation Method. Reserves for universal life policies are based on account balances adjusted for the Commissioner’s Reserve Valuation Method or Actuarial Guideline XXXVIII. Effective July 1, 2017, term insurance issued follows Valuation Manual section 20 (VM-20) reserve requirements.

Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula.

The Company waives deduction of deferred fractional premiums upon death of the insured and returns any portion of the final premium for periods beyond the date of death.

Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. Generally, reserves are determined by computing the regular reserve for the plan at the true age and holding, in addition, the unearned portion of the extra premium charge for the year. Effective July 1, 2017, for substandard term insurance policies, per VM-20 requirements, the substandard rating is applied to the reserve mortality. For certain flexible premium and fixed premium universal life insurance products, reserves are calculated utilizing the Commissioner’s Reserve Valuation Method for universal life policies and recognizing any substandard ratings.

As of December 31, 2022 and 2021, the Company had insurance in force aggregating $39,639 and $48,379, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the IID. The Company established policy reserves of $1,506 and $1,549 to cover these deficiencies as of December 31, 2022 and 2021, respectively.

Participating life insurance policies were issued by the Company in prior years which entitle policyholders to a share in the earnings of the participating policies, provided that a dividend distribution, which is determined annually based on mortality and persistency experience of the participating policies, is authorized by the Company. Participating insurance constituted less than 0.05% of ordinary life insurance in force at December 31, 2022 and 2021.

Annuity Reserves and Supplementary Contracts Involving Life Contingencies

Deferred annuity reserves are calculated according to the Commissioner’s Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest.

59

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Reserves for immediate annuities and supplementary contracts with and without life contingencies are equal to the present value of future payments assuming interest rates ranging from 2.50 to 11.75 percent and mortality rates, where appropriate, from a variety of tables.

Annuity reserves also include GICs and funding agreements classified as life-type contracts as defined in SSAP No. 50, Classifications of Insurance or Managed Care Contracts. These liabilities have annuitization options at guaranteed rates and consist of floating interest rate and fixed interest rate contracts. The contract reserves are carried at the greater of the account balance or the value as determined for an annuity with cash settlement option, on a change in fund basis, according to the Commissioner’s Annuity Reserve Valuation Method.

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with VM-21. VM-21 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The VM-21 reserve calculation covers all variable annuity products. Examples of covered guaranteed benefits include guaranteed minimum accumulation benefits, return of premium death benefits, guaranteed minimum income benefits, guaranteed minimum withdrawal benefits and guaranteed payout annuity floors. The aggregate reserve for contracts falling within the scope of VM-21 is equal to the stochastic reserves plus the additional standard projection amount. During 2022, the Company established a voluntary reserve in addition to the reserve required under VM-21 to help manage volatility associated with unhedged base contract cashflows. The VA voluntary reserve totaled $507 as of December 31, 2022.

Both the stochastic reserves and the standard projection are determined as the conditional tail expectation (CTE)-70 of the scenario reserves. To determine the CTE-70 values, the Company used 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) and Society of Actuaries. The stochastic reserves uses prudent estimate assumptions based on Company experience, while the standard projection uses the assumptions prescribed in VM-21 for determining the additional standard projection amount.

Accident and Health Liabilities

Accident and health policy reserves are equal to the greater of the gross unearned premiums or any required mid-terminal reserves plus net unearned premiums and the present value of amounts not yet due on both reported and unreported claims.

At December 31, 2022 and 2021, the Company had no premium deficiency reserve related to accident and health policies.

The Company’s primary method utilized to estimate premium adjustments for contracts subject to redetermination is to review experience periodically and to adjust premiums for differences between the experience anticipated at the time of redetermination and that underlying the original premiums. The Company has not limited its degree of discretion contractually; however, in some states it has agreed not to raise premiums in order to recoup past losses. The Company forgoes premium changes on existing policies at its option if the administrative cost and other business issues associated with the change outweigh the direct financial impact of the change. Also, the Company has extra-contractually guaranteed the current premium scale for certain policies.

60

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

For indeterminate premium products, a full schedule of current and anticipated premium rates is developed at the point of issue. Premium rate adjustments are considered when anticipated future experience foretells deviations from the original profit standards. The source of deviation (mortality, persistency, expense, etc.) is an important consideration in the re-rating decision as well as the potential effect of a rate change on the future experience of the existing block of business.

The Company does not write any accident and health business that is subject to the Affordable Care Act risk sharing provisions.

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business. Unpaid claims include amounts for losses and related adjustment expenses and are estimates of the ultimate net costs of all losses, reported and unreported. These estimates are subject to the impact of future changes in claim severity, frequency and other factors.

Activity in the liability for unpaid claims and related processing costs net of reinsurance is summarized as follows:

	Unpaid Claims   Liability Beginning   of Year		Claims     Incurred			Claims     Paid		Unpaid Claims     Liability End of     Year
Year ended December 31, 2022
2022	$	—	$	1,141		$	444	$	697
2021 and prior		1,941		(49	)		598		1,294
		1,941	$	1,092		$	1,042		1,991
Active life reserve	$	5,442						$	5,476
Total accident and health reserves	$	7,383						$	7,467

	Unpaid Claims   Liability Beginning   of Year		Claims     Incurred			Claims     Paid		Unpaid Claims     Liability End of     Year
Year ended December 31, 2021
2021	$	—	$	1,122		$	430	$	692
2020 and prior		1,995		(165	)		581		1,249
		1,995	$	957		$	1,011		1,941
Active life reserve	$	5,342						$	5,442
Total accident and health reserves	$	7,337						$	7,383

The change in the Company’s unpaid claims reserve was ($49) and ($165) for the years ended December 31, 2022 and 2021, respectively, for health claims that were incurred prior to those Balance Sheets date. The change in 2022 and 2021 was due to better than expected experience primarily due to reduced medical claims and accidental deaths.

61

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Activity in the liability for unpaid claims adjustment expense is summarized as follows:

	Liability Beginning of Year		Incurred			Paid		Liability   End of Year
Year ended December 31, 2022
2022	$	—	$	25		$	10	$	15
2021 and prior		37		8			18		27
	$	37	$	33		$	28	$	42
Year ended December 31, 2021
2021	$	—	$	22		$	9	$	13
2020 and prior		43		(2	)		17		24
	$	43	$	20		$	26	$	37

The Company increased the claim adjustment expense provision for insured events of prior years during 2022.

Premium and Annuity Considerations Deferred and Uncollected

Reserves on the Company’s traditional life insurance products are computed using mean and interpolated or mid-terminal reserving methodologies. The mean methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy’s paid-through date to the policy’s next anniversary date. The interpolated methodologies do not require the establishment of such assets, however, it is required to hold unearned premium liabilities. At December 31, 2022 and 2021, the gross premiums and net of loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:

	2022				2021
	Gross		Net of Loading		Gross		Net of Loading
Life and annuity:
Ordinary first-year business	$	1	$	—	$	1	$	—
Ordinary renewal business		142		115		154		126
Group life direct business		15		11		16		11
	$	158	$	126	$	171	$	137

Deposit-type Contracts

Tabular interest on funds not involving life contingencies has been determined primarily by formula.

The Company issues certain funding agreements with well-defined class-based annuity purchase rates defining either specific or maximum purchase rate guarantees. However, these funding agreements are not issued to or for the benefit of an identifiable individual or group of individuals. These contracts are classified as deposit-type contracts in accordance with SSAP No. 50.

62

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Included in the liability for deposit-type contracts at December 31, 2022 and 2021 are approximately $11 and $11, respectively, of funding agreements issued to special purpose entities in conjunction with non-recourse medium-term note programs. Under these programs, the proceeds from each note series issuance are used to purchase a funding agreement from the Company which secures that particular series of notes. In general, the payment terms of the note series match the payment terms of the funding agreement that secures that series. Claims for the principal and interest for these funding agreements are afforded equal priority as other policyholders.

Withdrawal Characteristics of Annuity Reserves and Deposit Funds

A portion of the Company’s policy reserves and other policyholders’ funds (including separate account liabilities) relates to liabilities established on a variety of the Company’s annuity, deposit fund and life products. There may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on annuity and deposit fund products, by withdrawal characteristics, is summarized as follows:

	December 31 2022
Individual Annuities:	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	368	$	137	$	—	$	505		1 %
At book value less surrender charge of 5% or more		1,193		—		—		1,193		1
At fair value		6		—		56,032		56,038		83
Total with adjustment or at fair value		1,567		137		56,032		57,736		85
At book value without adjustment (minimal or no charge or adjustment)		7,190		—		—		7,190		11
Not subject to discretionary withdrawal provision		2,484		—		408		2,892		4
Total individual annuity reserves		11,241		137		56,440		67,818		100 %
Less reinsurance ceded		2,736		—		—		2,736
Net individual annuities reserves	$	8,505	$	137	$	56,440	$	65,082
Amount included in book value less surrender charge above that will move to book value without adjustment in the year after the statement date	$	2	$	—	$	—	$	2

63

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31
	2022
Group Annuities:	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	3,641	$	16	$	—	$	3,657		11 %
At book value less surrender charge of 5% or more		20		—		—		20		—
At fair value		—		—		24,776		24,776		71
Total with adjustment or at fair value		3,661		16		24,776		28,453		82
At book value without adjustment (minimal or no charge or adjustment)		4,116		—		—		4,116		12
Not subject to discretionary withdrawal provision		1,946		—		58		2,004		6
Total group annuities reserves		9,723		16		24,834		34,573		100 %
Less reinsurance ceded		334		—		—		334
Net group annuities reserves	$	9,389	$	16	$	24,834	$	34,239

	December 31
	2022
Deposit-type contracts (no life contingencies):	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	5	$	—	$	—	$	5		1 %
Total with adjustment or at fair value		5		—		—		5		1
At book value without adjustment (minimal or no charge or adjustment)		237		—		—		237		28
Not subject to discretionary withdrawal provision		533		53		14		600		71
Total deposit-type contracts		775		53		14		842		100 %
Less reinsurance ceded		9		—		—		9
Net deposit-type contracts	$	766	$	53	$	14	$	833

64

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Reconciliation to the Annual Statement:	Amount
Life & Accident & Health Annual Statement:
Exhibit 5, Annuities section, total (net)	$	16,961
Exhibit 5, Supp contracts with life contingencies section, total (net)		933
Exhibit 7, Deposit-type contracts, net balance at the end of the current year after reinsurance		766
Subtotal		18,660
Separate Accounts Annual Statement:
Exhibit 3, Annuities section, total		80,995
Exhibit 3, Supp contracts with life contingencies section, total		432
Other contract deposit funds		67
Subtotal		81,494
Combined total	$	100,154

	December 31
	2021
Individual Annuities:	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	390	$	7	$	—	$	397		— %
At book value less surrender charge of 5% or more		1,531		—		—		1,531		2
At fair value		5		—		74,491		74,496		86
Total with adjustment or at fair value		1,926		7		74,491		76,424		88
At book value without adjustment (minimal or no charge or adjustment)		7,413		—		—		7,413		8
Not subject to discretionary withdrawal provision		2,710		—		575		3,285		4
Total individual annuity reserves		12,049		7		75,066		87,122		100 %
Less reinsurance ceded		2,968		—		—		2,968
Net individual annuity reserves	$	9,081	$	7	$	75,066	$	84,154

65

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31
	2021
Group Annuities:	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	2,373	$	20	$	—	$	2,393		5 %
At book value less surrender charge of 5% or more		21		—		—		21		—
At fair value		—		—		37,440		37,440		80
Total with adjustment or at fair value		2,394		20		37,440		39,854		85
At book value without adjustment (minimal or no charge or adjustment)		5,128		—		—		5,128		11
Not subject to discretionary withdrawal provision		2,029		—		46		2,075		4
Total group annuity reserves		9,551		20		37,486		47,057		100 %
Less reinsurance ceded		343		—		—		343
Net group annuity reserves	$	9,208	$	20	$	37,486	$	46,714

	December 31
	2021
Deposit-type contracts (no life contingencies):	General   Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal with adjustment:
With fair value adjustment	$	5	$	—	$	—	$	5		1 %
Total with adjustment or at fair value		5		—		—		5		1
At book value without adjustment (minimal or no charge or adjustment)		246		—		—		246		27
Not subject to discretionary withdrawal provision		583		66		21		670		72
Total deposit-type contracts		834		66		21		921		100 %
Less reinsurance ceded		10		—		—		10
Net deposit-type contracts	$	824	$	66	$	21	$	911

66

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Reconciliation to the Annual Statement:	Amount
Life & Accident & Health Annual Statement:
Exhibit 5, Annuities section, total (net)	$	17,324
Exhibit 5, Supp contracts with life contingencies section, total (net)		965
Exhibit 7, Deposit-type contracts, net balance at the end of the current year after reinsurance		824
Subtotal		19,113
Separate Accounts Annual Statement:
Exhibit 3, Annuities section, total		112,005
Exhibit 3, Supp contracts with life contingencies section, total		574
Other contract deposit funds		87
Subtotal		112,666
Combined total	$	131,779

The amount of reserves on life products, by withdrawal characteristics, is summarized as follows:

	December 31
	2022
	General Account
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Term policies with cash value	$	313	$	313	$	442
Universal life		14,590		13,706		14,639
Universal life with secondary guarantees		5,822		5,760		13,570
Indexed universal life with secondary guarantees		6,612		4,539		5,344
Other permanent cash value life insurance		4,698		4,698		7,148
Variable universal life		672		673		1,491
Not subject to discretionary withdrawal or no cash values
Term policies without cash value		—		—		8,085
Accidental death benefits		—		—		50
Disability - active lives		—		—		37
Disability - disabled lives		—		—		163
Miscellaneous reserves		—		—		1,573
Total (gross)		32,707		29,689		52,542
Reinsurance ceded		4,620		4,621		20,036
Total (net)	$	28,087	$	25,068	$	32,506

67

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31
	2022
	Separate Account - Guaranteed
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Variable universal life		$                    677		$                    677		$                    677
Total (net)		$                    677		$                    677		$                    677

	December 31
	2022
	Separate Account - Nonguaranteed
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Variable universal life		$                 6,989		$                 6,983		$                 8,072
Total (net)		$                 6,989		$                 6,983		$                 8,072

Reconciliation to the Annual Statement:	Amount
Life & Accident & Health Annual Statement:
Exhibit 5, Life insurance section, total (net)		$                31,686
Exhibit 5, Accidental death benefits section total (net)		26
Exhibit 5, Disability - active lives section, total (net)		17
Exhibit 5, Disability - disabled lives section, total (net)		142
Exhibit 5, Miscellaneous reserves section, total (net)		635
Subtotal		32,506
Separate Accounts Annual Statement:
Exhibit 3, Life insurance section, total		8,749
Subtotal		8,749
Combined total		$                41,255

68

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31
	2021
	General Account
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Term policies with cash value		$                 291		$                 291		$                 425
Universal life		9,159		8,738		9,629
Universal life with secondary guarantees		5,763		5,626		13,350
Indexed universal life with secondary guarantees		5,803		3,953		5,328
Other permanent cash value life insurance		4,640		4,640		7,094
Variable universal life		656		722		1,496
Not subject to discretionary withdrawal or no cash values
Term policies without cash value		—		—		8,140
Accidental death benefits		—		—		51
Disability- active lives		—		—		40
Disability- disabled lives		—		—		164
Miscellaneous reserves		—		—		1,871
Total (gross)		26,312		23,970		47,588
Reinsurance ceded		4,592		4,592		20,839
Total (net)		$            21,720		$            19,378		$            26,749

	December 31
	2021
	Separate Account - Guaranteed
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Variable universal life		$                   669		$                   669		$                   669
Total (net)		$                   669		$                   669		$                   669

	December 31
	2021
	Separate Account - Nonguaranteed
	Account Value		Cash Value		Reserve
Subject to discretionary withdrawal, surrender values, or policy loans:
Variable universal life		$                8,979		$                8,969		$              10,471
Total (net)		$                8,979		$                8,969		$              10,471

69

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Reconciliation to the Annual Statement:	Amount
Life & Accident & Health Annual Statement:
Exhibit 5, Life insurance section, total (net)		$                25,835
Exhibit 5, Accidental death benefits section total (net)		26
Exhibit 5, Disability - active lives section, total (net)		20
Exhibit 5, Disability - disabled lives section, total (net)		144
Exhibit 5, Miscellaneous reserves section, total (net)		724
Subtotal		26,749
Separate Accounts Annual Statement:
Exhibit 3, Life insurance section, total		11,140
Subtotal		11,140
Combined total		$                37,889

Separate Accounts

Certain separate and variable accounts held by the Company relate to individual variable life insurance policies. The benefits provided on the policies are determined by the performance and/or fair value of the investments held in the separate account. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. The assets of these separate accounts are carried at fair value. The life insurance policies typically provide a guaranteed minimum death benefit.

70

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Certain separate accounts held by the Company represent funds which are administered for pension plans. The assets consist primarily of fixed maturities and equity securities and are carried at fair value. The Company provides a minimum guaranteed return to policyholders of certain separate accounts. Certain other separate accounts do not have any minimum guarantees and the investment risks associated with fair value changes are borne entirely by the policyholder. Information regarding the separate accounts of the Company as of and for the years ended December 31, 2022, 2021 and 2020 is as follows:

			Nonindexed		Nonindexed
			Guarantee		Guarantee		Nonguaranteed
	Guaranteed		Less Than or		Greater		Separate
	Indexed		Equal to 4%		Than 4%		Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2022	$	—	$	—	$	10	$	7,663	$	7,673
Reserves for separate accounts as of December 31, 2022 with assets at:
Fair value	$	132	$	75	$	—	$	89,360	$	89,567
Amortized cost		—		677		—		—		677
Total as of December 31, 2022	$	132	$	752	$	—	$	89,360	$	90,244
Reserves for separate accounts by withdrawal characteristics as of December 31, 2022:
With fair value adjustment	$	132	$	22	$	—	$	—	$	154
At fair value		—		—		—		88,880		88,880
At book value without fair value adjustment and with current surrender charge of less than 5%		—		677		—		—		677
Subtotal		132		699		—		88,880		89,711
Not subject to discretionary withdrawal		—		53		—		479		532
Total separate account reserve liabilities at December 31, 2022	$	132	$	752	$	—	$	89,359	$	90,243

71

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

			Nonindexed		Nonindexed
			Guarantee		Guarantee		Nonguaranteed
	Guaranteed		Less Than or		Greater		Separate
	Indexed		Equal to 4%		Than 4%		Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2021	$	—	$	—	$	11	$	8,076	$	8,087
Reserves for separate accounts as of December 31, 2021 with assets at:
Fair value	$	—	$	93	$	—	$	123,046	$	123,139
Amortized cost		—		669		—		—		669
Total as of December 31, 2021	$	—	$	762	$	—	$	123,046	$	123,808
Reserves for separate accounts by withdrawal characteristics as of December 31, 2021:
With fair value adjustment	$	—	$	26	$	—	$	—	$	26
At fair value		—		—		—		122,404		122,404
At book value without fair value adjustment and with current surrender charge of less than 5%		—		669		—		—		669
Subtotal		—		695		—		122,404		123,099
Not subject to discretionary withdrawal		—		66		—		643		709
Total separate account reserve liabilities at December 31, 2021	$	—	$	761	$	—	$	123,047	$	123,808

72

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

			Nonindexed		Nonindexed
			Guarantee		Guarantee		Nonguaranteed
	Guaranteed		Less Than or		Greater		Separate
	Indexed		Equal to 4%		Than 4%		Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2020	$	—	$	1	$	12	$	9,402	$	9,415
Reserves for separate accounts as of December 31, 2020 with assets at:
Fair value	$	—	$	80	$	2	$	119,013	$	119,095
Amortized cost		—		665		—		—		665
Total as of December 31, 2020	$	—	$	745	$	2	$	119,013	$	119,760
Reserves for separate accounts by withdrawal characteristics as of December 31, 2020:
With fair value adjustment	$	—	$	30	$	—	$	—	$	30
At fair value		—		—		—		118,457		118,457
At book value without fair value adjustment and with current surrender charge of less than 5%		—		665		—		—		665
Subtotal		—		695		—		118,457		119,152
Not subject to discretionary withdrawal		—		50		2		556		608
Total separate account reserve liabilities at December 31, 2020	$	—	$	745	$	2	$	119,013	$	119,760

A reconciliation of the amounts transferred to and from the Company’s separate accounts is presented below:

	Year Ended December 31
	2022		2021		2020
Transfer as reported in the Summary of Operations of the separate accounts statement:
Transfers to separate accounts		$                7,757		$                8,164		$                9,484
Transfers from separate accounts		(18,692)		(17,029)		(14,305)
Net transfers from separate accounts		(10,935)		(8,865)		(4,821)
Miscellaneous reconciling adjustments		(17)		(16)		(29)
Net transfers as reported in the Summary of Operations of the life, accident and health annual statement		$            (10,952)		$              (8,881)		$              (4,850)

73

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The legal insulation of separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account. At December 31, 2022 and 2021, the Company’s separate account statement included legally insulated assets of $91,338 and $126,074, respectively. The assets legally insulated from general account claims at December 31, 2022 and 2021 are attributed to the following products:

	2022		2021
Group annuities	$	22,949	$	35,216
Variable annuities		58,923		78,162
Fixed universal life		717		700
Variable universal life		7,584		10,366
Variable life		1,105		1,526
Modified separate accounts		47		79
Registered market value annuity product - SPL		6		13
WRL asset accumulator		7		12
Total separate account assets	$	91,338	$	126,074

At December 31, 2022 and 2021, the Company held separate account assets not legally insulated from the general account in the amount of $156 and $14, respectively.

Some separate account liabilities are guaranteed by the general account. 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. To compensate the general account for the risk taken, the separate account paid risk charges of $584, $579, $565, $552 and $550, to the general account in 2022, 2021, 2020, 2019 and 2018, respectively. During the years ended December 31, 2022, 2021, 2020, 2019 and 2018 the general account of the Company had paid $56, $45, $75, $75 and $69 respectively, toward separate account guarantees.

At December 31, 2022 and 2021, the Company reported guaranteed separate account assets at amortized cost in the amount of $705 and $674, respectively, based upon the prescribed practice granted by the State of Iowa as described in Note 2. These assets had a fair value of $617 and $748 at December 31, 2022 and 2021, respectively, which would have resulted in an unrealized gain/(loss) of $(87) and $74, respectively, had these assets been reported at fair value.

The Company does not participate in securities lending transactions within the separate account.

74

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

7.     Reinsurance

Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The Company reinsures portions of the risk on certain insurance policies which exceed its established limits, thereby providing a greater diversification of risk and minimizing exposure on larger risks. The Company remains contingently liable with respect to any insurance ceded, and this would become an actual liability in the event that the assuming insurance company became unable to meet its obligation under the reinsurance treaty.

Premiums and annuity considerations include the following reinsurance amounts:

	Year Ended December 31
	2022			2021			2020
Direct premiums	$	15,957		$	17,591		$	19,191
Reinsurance assumed - non affiliates		1,017			1,272			1,248
Reinsurance assumed - affiliates		5,366			(1	)		2
Reinsurance ceded - non affiliates		(1,819	)		(3,594	)		(2,612	)
Reinsurance ceded - affiliates		(708	)		(786	)		(1,106	)
Net premiums earned	$	19,813		$	14,482		$	16,723

The Company received reinsurance recoveries in the amount of $3,764, $3,824 and $4,316 during 2022, 2021 and 2020, respectively. At December 31, 2022 and 2021, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $987 and $1,053, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2022 and 2021 of $34,508 and $36,616, respectively, of which $12,465 and $13,078 were ceded to affiliates, respectively.

During 2022, 2021 and 2020, amortization of deferred gains associated with previously transacted reinsurance agreements was released into income in the amount of $869 ($574 after tax), $195 ($127 after tax) and $274 ($179 after tax), respectively.

On October 31, 2022, the Company executed an affiliated coinsurance arrangement, effective July 1, 2022, under which it assumes the remaining in force universal life business from TLB net of third-party reinsurance. The Company received consideration of $4,974 in the form of cash and invested assets and assumed $5,543 in policy and contract reserves along with $6 in policy loans. After establishing a $432 interest maintenance reserve deferral related to the asset transfers, this transaction resulted in a pre-tax loss of $131 which has been included in the Summary of Operations. This transaction is secured by a comfort trust equal to 100% of the Company’s U.S. statutory reserves.

Effective April 1, 2022, LIICA Re II, an affiliate, executed a recapture of a specific list of policies to the Company. The Company received consideration of $186 in the form of cash and recaptured policyholder reserves of $838. The transaction resulted in a pre-tax loss of $652 which has been included in the Statements of Operations.

Effective December 31, 2021, the Company ceded universal life with secondary guarantee insurance business to an unaffiliated entity. The Company paid considerations of $1,738 in assets

75

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

and cash, ceded $1,470 of reserves and $13 of policy loans. After a $55 realized gain release, the transaction resulted in a pre-tax loss of $243 which has been included in the Statement of Operations. There was a reversal of tax timing differences and release of risk based capital required that offset the pre-tax loss resulting in a neutral impact to the Risk Based Capital ratio.

Effective October 1, 2021, the Company recaptured a block of universal life business from an affiliate, TLIC Oakbrook Reinsurance, Inc. (TORI). The Company received consideration of $963 in the form of released funds withheld and recaptured policyholder reserves of $1,229 and claims reserves of $7. The transaction resulted in a pre-tax loss of $272 which has been included in the Statements of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cessions of this business to TORI in the amount of $173 with a corresponding charge to unassigned surplus.

Effective May 31, 2021, the Company amended and restated the Military Life and Affinity reinsurance agreements with Ironwood Re Corp, an affiliate, which changed the funds withheld calculation from a GAAP reserve valuation to a Gross Premium Valuation. As a result, the Company increased the funds withheld liability by $43. The transaction resulted in no pre-tax gain or loss.

Effective December 31, 2020, the Company ceded certain term insurance business to an unaffiliated entity. The Company paid cash consideration of $201, ceded $439 of reserves and $2 of due and deferred premium. The transaction resulted in a pre-tax gain of $236 which has been recorded directly to unassigned surplus. Recognition of the surplus increase as income shall be reflected on a net of tax basis as earnings emerge from the business reinsured.

Effective October 1, 2020, the Company recaptured several blocks of life insurance business from an affiliate, Ironwood Re Corp. The Company released funds withheld of $313 and recaptured policyholder reserves of $385 and claims reserves of $4. The transaction resulted in a pre-tax loss of $76 which has been included in the Statements of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cessions of this business to Ironwood in the amount of $125 with a corresponding charge to unassigned surplus.

Also effective October 1, 2020, an amendment was made to the military life reinsurance agreement with Ironwood Re Corp. to increase the cession percentage to 100%. As a result of this amendment, the Company ceded additional policyholder reserves of $201 and due premiums of $7 and provided net consideration of $76 which was retained as funds withheld by the Company. The transaction resulted in a pre-tax gain of $118 which was charged directly to unassigned surplus. Recognition of the surplus increase as income shall be reflected on a net of tax basis as earnings emerge from the business reinsured.

Effective October 1, 2020, the Company recaptured term insurance business from Ironwood Re Corp. The Company received consideration of $206 in the form of released funds withheld and a cash payment, recaptured $445 of policy holder and claim reserves and $2 of due premiums. The transaction resulted in a pre-tax loss of $237 which has been included in the Statements of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cessions of this business to Ironwood in the amount of $106 with a corresponding charge to unassigned surplus.

76

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

On June 30, 2020, the Company, Transamerica Pacific Re, Inc. (TPRe), and Transamerica Pacific Insurance Company (TPIC) entered into a novation agreement whereby the Company consented to TPIC’s assignment and transfer of its rights and obligations under the universal life coinsurance agreements to TPRe. The novation resulted in no gain or loss. Also on June 30, 2020, the Company recaptured certain universal life policy risks not associated with the secondary guarantee from TPRe for consideration of $2,124 equal to the statutory reserves recaptured resulting in no gain loss and amended and restated the universal life coinsurance agreements to cede only certain universal life secondary guarantee risks to TPRe.

In January 2018, Scottish Re Group announced a sale and restructuring plan and commenced Chapter 11 (reorganization) procedures for some of its subsidiaries. In December 2018, the Delaware Department of Insurance began oversight procedures of Scottish Re (U.S.), Inc. (SRUS), with whom the Company is a counterparty for some of its reinsurance activities. SRUS was ordered into receivership for the purposes of rehabilitation on March 6, 2019. On May 16, 2019, the IID suspended the certificate of authority for SRUS but later clarified that reserve credit could be taken on reinsurance agreements entered into prior to the revocation date if a recovery analysis could be illustrated. Now, with the continued delays of the reorganization legal proceedings and with no reliable financial information being provided by the receiver or SRUS, the Company has determined it is unable to support a favorable recovery analysis. Therefore, the Company did not take statutory reserve credit and established a loss contingency allowance for doubtful recoveries of billed and unbilled claims in its December 31, 2022 financial statements. The impact was a $125 charge reported in the Statements of Operations.

77

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

8.     Income Taxes

The net deferred income tax asset at December 31, 2022 and 2021 and the change from the prior year are comprised of the following components:

	December 31, 2022
	Ordinary		Capital			Total
Gross Deferred Tax Assets	$	2,487	$	191		$	2,678
Statutory Valuation Allowance Adjustment		—		—			—
Adjusted Gross Deferred Tax Assets		2,487		191			2,678
Deferred Tax Assets Nonadmitted		1,006		—			1,006
Subtotal (Net Deferred Tax Assets)		1,481		191			1,672
Deferred Tax Liabilities		642		291			933
Net Admitted Deferred Tax Assets (Liabilities)	$	839	$	(100	)	$	739

	December 31, 2021
	Ordinary		Capital			Total
Gross Deferred Tax Assets	$	1,915	$	181		$	2,096
Statutory Valuation Allowance Adjustment		11		—			11
Adjusted Gross Deferred Tax Assets		1,904		181			2,085
Deferred Tax Assets Nonadmitted		264		—			264
Subtotal (Net Deferred Tax Assets)		1,640		181			1,821
Deferred Tax Liabilities		701		295			996
Net Admitted Deferred Tax Assets (Liabilities)	$	939	$	(114	)	$	825

	Change
	Ordinary		Capital			Total
Gross Deferred Tax Assets	$	572	$	10		$	582
Statutory Valuation Allowance Adjustment		(11)		—			(11	)
Adjusted Gross Deferred Tax Assets		583		10			593
Deferred Tax Assets Nonadmitted		742		—			742
Subtotal (Net Deferred Tax Assets)		(159)		10			(149	)
Deferred Tax Liabilities		(59)		(4	)		(63	)
Net Admitted Deferred Tax Assets (Liabilities)	$	(100)	$	14		$	(86	)

78

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The main components of deferred income tax amounts are as follows:

	Year Ended December 31
	2022		2021		Change
Deferred Tax Assets:
Ordinary
Policyholder reserves	$	830	$	745	$	85
Investments		257		208		49
Deferred acquisition costs		702		574		128
Policyholder dividends accrual		4		4		—
Compensation and benefits accrual		34		40		(6	)
Receivables - nonadmitted		58		37		21
Net operating loss carry-forward		269		50		219
Tax credit carry-forward		231		166		65
Contingent experience rate refunds		—		22		(22	)
Bad debt allowance		—		23		(23	)
Litigation reserve		—		19		(19	)
Other		102		27		75
Subtotal		2,487		1,915		572
Statutory valuation allowance adjustment		—		11		(11	)
Nonadmitted		1,006		264		742
Admitted ordinary deferred tax assets		1,481		1,640		(159	)
Capital
Investments		191		181		10
Other		—		—		—
Subtotal		191		181		10
Statutory valuation allowance adjustment		—		—		—
Nonadmitted		—		—		—
Admitted capital deferred tax assets		191		181		10
Admitted deferred tax assets	$	1,672	$	1,821	$	(149	)

	Year Ended December 31
	2022		2021		Change
Deferred Tax Liabilities:
Ordinary
Investments	$	420	$	521	$	(101	)
Policyholder reserves		216		168		48
Other		6		12		(6	)
Subtotal		642		701		(59	)
Capital
Investments		291		295		(4	)
Other		—		—		—
Subtotal		291		295		(4	)
Deferred tax liabilities		933		996		(63	)
Net admitted deferred tax assets (liabilities)	$	739	$	825	$	(86	)

79

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

As a result of the 2017 Tax Cuts and Jobs Act (TCJA), the Company’s tax reserve deductible temporary difference decreased by ($396). This change results in an offsetting $396 deductible temporary difference that will be amortized into taxable income evenly over the eight years subsequent to 2017. The remaining amortizable balance is included within the Policyholder Reserves line items above.

At December 31, 2022, the Company recorded no valuation allowance. The Company’s valuation allowance decreased by ($11) in 2022 from adjustments to prior year tax returns which reduced the Company’s foreign tax credit carryover as of 2022. Additionally, the Company expects an increase in future foreign source income driven by a 2022 reinsurance transaction increasing its ability to utilize its foreign tax credit carryovers.

The Inflation Reduction Act was enacted during the third quarter reporting period on August 16, 2022. The act included a provision which subjects high earning corporate taxpayers to the Corporate Alternative Minimum Tax (CAMT). The Company is part of an affiliated group that has not determined if it will be liable for CAMT in 2023 and has not included any estimated impacts of the CAMT in the financial statements, due to the inability to create a reasonable estimate, as of December 31, 2022.

As discussed in Note 2, for the years ended December 31, 2022 and 2021, the Company admits deferred income tax assets pursuant to SSAP No. 101. The amount of admitted adjusted gross deferred income tax assets under each component of SSAP No. 101 is as follows:

	December 31, 2022
	Ordinary		Capital		Total
Admission Calculation Components SSAP No. 101
2(a)  Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	—	$	—	$	—
2(b)  Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		717		22		739
1.  Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		1,129		22		1,151
2.  Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX		XXX		739
2(c)  Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		764		169		933
2(d)  Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	1,481	$	191	$	1,672

80

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

		December 31, 2021
		Ordinary		Capital		Total
Admission Calculation Components SSAP No. 101
2(a)	Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	—	$	3	$	3
2(b)	Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		777		44		821
	1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		777		44		821
	2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX		XXX		968
2(c)	Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		862		134		996
2(d)	Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	1,639	$	181	$	1,820

		Ordinary			Change Capital			Total
Admission Calculation Components SSAP No. 101
2(a)	Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	—		$	(3	)	$	(3	)
2(b)	Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		(60	)		(22	)		(82	)
	1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		352			(22	)		330
	2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX			XXX			(229	)
2(c)	Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		(98	)		35			(63	)
2(d)	Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	(158	)	$	10		$	(148	)

81

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31
	2022			2021			Change
Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount		726	%		709	%		17	%
Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold Limitation in 2(b)2 Above	$	4,924		$	6,452		$	(1,528	)

The impact of tax planning strategies at December 31, 2022 and 2021 was as follows:

	December 31, 2022
	Ordinary			Capital			Total
	Percent			Percent			Percent
Impact of Tax Planning Strategies:
(% of Total Adjusted Gross DTAs)		0	%		0	%		0	%
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		0	%		0	%

	December 31, 2021
	Ordinary			Capital			Total
	Percent			Percent			Percent
Impact of Tax Planning Strategies:
(% of Total Adjusted Gross DTAs)		0	%		0	%		0	%
(% of Total Net Admitted Adjusted Gross DTAs)		12	%		0	%		12	%

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

Current income taxes incurred consist of the following major components:

	Year Ended December 31
	2022			2021			Change
Current Income Tax
Federal	$	(80	)	$	(185	)	$	105
Subtotal		(80	)		(185	)		105
Federal income tax on net capital gains		(45	)		122			(167	)
Federal and foreign income taxes incurred	$	(125	)	$	(63	)	$	(62	)

82

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	Year Ended December 31
	2021			2020			Change
Current Income Tax
Federal	$	(185	)	$	(109	)	$	(76	)
Subtotal		(185	)		(109	)		(76	)
Federal income tax on net capital gains		122			128			(6	)
Federal and foreign income taxes incurred	$	(63	)	$	19		$	(82	)

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate to income before tax as follows:

	Year Ended December 31
	2022			2021			2020
Current income taxes incurred	$	(125	)	$	(63	)	$	19
Change in deferred income taxes		(702	)		(123	)		126
(without tax on unrealized gains and losses)
Total income tax reported	$	(827	)	$	(186	)	$	145
Income before taxes	$	(3,207	)	$	194		$	1,444
Federal statutory tax rate		21.00	%		21.00	%		21.00	%
Expected income tax expense (benefit) at statutory rate	$	(673	)	$	41		$	303
Increase (decrease) in actual tax reported resulting from:
Pre-tax income of disregarded subsidiaries	$	24		$	15		$	17
Dividends received deduction		(98	)		(94	)		(59	)
Tax-exempt income		(3	)		(74	)		(3	)
Nondeductible expenses		5			5			6
Pre-tax items reported net of tax		(201	)		(77	)		(35	)
Tax credits		(29	)		(38	)		(40	)
Prior period tax return adjustment		22			3			(11	)
Change in statutory valuation allowance		(11	)		11			(14	)
Change in uncertain tax positions		—			(3	)		—
Deferred tax change on other items in surplus		140			24			(20	)
Other		(3	)		1			1
Total income tax reported	$	(827	)	$	(186	)	$	145

The Company’s federal income tax return is consolidated with other includible affiliated companies. Please see the listing of companies in Appendix A. The method of allocation between the companies is subject to a written tax allocation agreement. Under the terms of the tax allocation agreement, allocations are based on separate income tax return calculations. The Company is entitled to recoup federal income taxes paid in the event the future losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in the year generated. The Company is also entitled to recoup federal

83

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

income taxes paid in the event the losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in any carryback or carryforward year when so applied. Intercompany income tax balances are settled within thirty days of payment to or filing with the Internal Revenue Service. A tax return has not been filed for 2022.

The amounts, origination dates and expiration dates of operating loss and tax credit carryforwards available for tax purposes:

Description	Amount		Origination Dates	Expiration Dates
Operating Loss	$	126	12/31/2021	N/A
Operating Loss		1,156	12/31/2022	N/A
Operating Loss Total	$	1,282
Foreign Tax Credit	$	14	12/31/2022	12/31/2032
Foreign Tax Credit Total	$	14
General Business Credit	$	19	12/31/2012	12/31/2032
General Business Credit		40	12/31/2013	12/31/2033
General Business Credit		25	12/31/2014	12/31/2034
General Business Credit		56	12/31/2015	12/31/2035
General Business Credit		7	12/31/2016	12/31/2036
General Business Credit		10	12/31/2017	12/31/2037
General Business Credit		7	12/31/2018	12/31/2038
General Business Credit		8	12/31/2019	12/31/2039
General Business Credit		14	12/31/2020	12/31/2040
General Business Credit		17	12/31/2021	12/31/2041
General Business Credit		15	12/31/2022	12/31/2042
General Business Credit Total	$	218

The following is income tax expense for current year and preceding years that is available for recoupment in the event of future losses:

	Total
2020	$	29
2021	$	—
2022	$	—

The total amount of the unrecognized tax benefits that if recognized would affect the effective income tax rate:

84

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	Unrecognized     Tax Benefits
Balance at January 1, 2021	$	21
Tax positions taken during prior period		(3)
Balance at December 31, 2021	$	18
Tax positions taken during prior period		—
Balance at December 31, 2022	$	18

The Company classifies interest and penalties related to income taxes as income tax expense. The amount of interest and penalties accrued on the Balance Sheets as income taxes includes the following:

	Interest		Penalties		Total payable   (receivable)
Balance at January 1, 2020	$	9	$	—	$	9
Interest expense (benefit)		—		—		—
Cash received (paid)		—		—		—
Balance at December 31, 2020	$	9	$	—	$	9
Interest expense (benefit)		1		—		1
Cash received (paid)		(9)		—		(9)
Balance at December 31, 2021	$	1	$	—	$	1
Interest expense (benefit)		1		—		1
Cash received (paid)		—		—		—
Balance at December 31, 2022	$	2	$	—	$	2

The Internal Revenue Service (IRS) completed its examination for 2009 through 2013 for which an appeals conference is in process. The IRS opened an exam for the 2014 through 2018 amended tax returns. Federal income tax returns filed in 2019 through 2021 remain open, subject to potential future examination. The Company believes there are adequate defenses against, or sufficient provisions established related to any open or contested tax positions.

9.    Capital and Surplus

The Company has authorized 1,000,000 common stock shares at $10 per share par value of which 676,190 shares were issued and outstanding at December 31, 2022 and 2021.

The Company has 42,500 Series A preferred shares authorized, of which 0 shares were issued and outstanding at December 31, 2022 and 2021. The Company repurchased its Series A preferred shares for $58,000 on December 26, 2006 and previously reported 42,500 shares of Series A preferred stock outstanding at $10 par, carried as treasury stock. It was determined that these shares were cancelled by operation of law as they were not stipulated by the Board of Directors to be treasury shares at the time they were repurchased. The cancellation and removal of the preferred stock had no impact to capital and surplus of the Company. The Company also has 250,000 Series B preferred non-voting shares authorized at $10 per share par value, of which 0 shares were issued and outstanding at December 31, 2022 and 2021.

The Company is subject to limitations, imposed by the State of Iowa, on the payment of dividends to its stockholders. Generally, dividends during any twelve-month period may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of the

85

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

Company’s statutory surplus as of the preceding December 31 or (b) the Company’s statutory gain from operations before net realized capital gains (losses) on investments for the preceding year. Subject to the availability of earned surplus at the time of such dividend, the maximum payment which may be made in 2023, without the prior approval of insurance regulatory authorities, is $2,019.

On December 15, 2022, the Company paid an ordinary common stock dividend of $275 to CGC.

On June 30, 2022, the Company received a return of contributed surplus of $165 from LIICA Re II, Inc.

On June 21, 2022, the Company paid an ordinary common stock dividend of $150 to CGC.

On March 29 2022, the Company received a capital contribution of $100 from CGC.

On December 15, 2021, the Company paid an ordinary dividend of $411 to CGC.

On December 13, 2021, the Company paid a common stock dividend of stock ownership of $339 to CGC.

On June 21 2021, the Company paid an ordinary common stock dividend of $350 to CGC.

On December 7, 2020, the Company paid an ordinary common stock dividend of $500 to CGC.

On May 13, 2020, TPLIC paid a dividend to its parent company, CGC, in the amount of $700. CGC then contributed this amount to the Company. The dividend and contribution included $77 in cash and $623 in securities. This transaction occurred prior to the merger of TPLIC and the Company. This transaction had no overall impact to capital and surplus of the merged Company.

Life and health insurance companies are subject to certain RBC requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life or health insurance company is to be determined based on various risk factors. At December 31, 2022 and 2021, the Company met the minimum RBC requirements.

The Company’s surplus notes were held by CGC and Transamerica Corporation (TA Corp). These notes were due 20 years from the date of issuance at an interest rate of 6% and were subordinate and junior in right of payment to all obligations and liabilities of the Company. In the event of liquidation of the Company, full payment of the surplus notes was to be made before the holders of common stock become entitled to any distribution of the remaining assets of the Company.

On June 22, 2020, the Company repaid in full its $60 surplus note with CGC. The Company received approval from IID for this transaction as well as prior to making quarterly interest payments.

86

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

10.  Securities Lending

The Company participates in an agent-managed securities lending program in which the Company primarily loans out US Treasuries and other bonds. The Company receives collateral equal to 102% of the fair value of the loaned government or other domestic securities as of the transaction date. If the fair value of the collateral is at any time less than 102% of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 102% of the fair value of the loaned government or other domestic securities. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105% of the fair value of the loaned security.

At December 31, 2022 and 2021, respectively, securities with a fair value of $2,141 and $1,919 were on loan under securities lending agreements. At December 31, 2022 and 2021, the collateral the Company received from securities lending activities was in the form of cash and on open terms. This cash collateral is reinvested and is not available for general corporate purposes. The reinvested cash collateral has a fair value of $2,115 and $2,073 at December 31, 2022 and 2021, respectively.

The contractual maturities of the securities lending collateral positions are as follows:

	Fair Value
	2022		2021
Open	$	2,115	$	2,073
Securities received		—		—
Total collateral received	$	2,115	$	2,073

The Company receives primarily cash collateral in an amount in excess of the fair value of the securities lent. The Company reinvests the cash collateral into higher yielding securities than the securities which the Company has lent to other entities under the arrangement.

87

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The maturity dates of the reinvested securities lending collateral are as follows:

	2022				2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Open	$	99	$	99	$	123	$	123
30 days or less		661		661		675		675
31 to 60 days		375		375		511		511
61 to 90 days		242		242		208		208
91 to 120 days		217		217		100		100
121 to 180 days		521		521		356		356
181 to 365 days		—		—		100		100
Total		2,115		2,115		2,073		2,073
Securities received		—		—		—		—
Total collateral reinvested	$	2,115	$	2,115	$	2,073	$	2,073

For securities lending, the Company’s source of cash used to return the cash collateral is dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $2,124 (fair value of $2,115) that are currently tradable securities that could be sold and used to pay for the $2,115 in collateral calls that could come due under a worst-case scenario.

11.  Retirement and Compensation Plans

Defined Contribution Plans

The Company’s employees participate in a contributory defined contribution plan sponsored by TA Corp which is qualified under Section 401(k) of the Internal Revenue Code. Generally, employees of the Company who customarily work at least 20 hours per week and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to 100% of eligible earnings, subject to government or other plan restrictions for certain key employees. The Company will contribute an amount up to four percent of the participant’s eligible earnings per the plan’s matching formula. Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. Benefits expense of $18, $13 and $14 was allocated to the Company for the years ended December 31, 2022, 2021 and 2020, respectively.

Defined Benefit Plans

The Company’s employees participate in a qualified defined benefit pension plan sponsored by TA Corp. Generally, employees of the Company who customarily work at least 20 hours per week and complete six months of continuous service and meet the other eligibility requirements are participants of the plan. The Company has no legal obligation for the plan. The benefits are based on the employee’s eligible compensation. The plan provides benefits based on a cash balance formula. The plan is subject to the reporting and disclosure requirements of the ERISA.

88

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

TA Corp sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The Company has no legal obligation for the plan. The plans are noncontributory. The benefits are based on the employee’s eligible compensation. The plans provide benefits based on a cash balance formula. The plans are unfunded and nonqualified under the Internal Revenue Code.

The Company recognizes pension expense equal to its allocation from TA Corp. The pension expense related to both the qualified defined pension plan and the supplemental retirement plans is allocated among the participating companies based on International Accounting Standards 19 (IAS 19), Accounting for Employee Benefits, and based upon actuarial participant benefit calculations, which is within the guidelines of SSAP No. 102, Pensions. Pension expenses were $17, $28 and $27 for the years ended December 31, 2022, 2021 and 2020, respectively.

In addition to pension benefits, TA Corp sponsors unfunded plans that provide health care and life insurance benefits to retired Company employees meeting certain eligibility requirements. The Company has no legal obligation for the plan. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans are allocated among the participating companies based on IAS 19 and based upon actuarial participant benefit calculations which is within the guidelines of SSAP No. 92, Postretirement Benefits Other Than Pensions. The Company’s allocation of postretirement expenses was $4, $5 and $5 for the years ended December 31, 2022, 2021 and 2020, respectively.

Other Plans

TA Corp has established deferred compensation plans for certain key employees of the Company. The Company’s allocation of expense for these plans for each of the years ended December 31, 2022, 2021 and 2020 was insignificant.

12.  Related Party Transactions

The Company shares certain officers, employees and general expenses with affiliated companies.

The Company is party to a shared services and cost sharing agreement among and between the Transamerica companies, under which various affiliated companies may perform specified administrative functions in connection with the operation of the Company, in consideration of reimbursement of actual costs of services rendered. Effective August 1, 2020, the Company, and an affiliate, Transamerica Financial Life Insurance Company, entered into a Shared Services and Cost Sharing Agreement for both parties to provide accounting, administrative, and other advisory services in accordance with the agreement. The agreement, filed and approved by the IID, replaces prior agreements between the entities. The amount received by the Company as a result of being a party to these agreements was $564, $690 and $703 during 2022, 2021 and 2020, respectively. The amount paid as a result of being a party to these agreements was $605, $679 and $698 during 2022, 2021 and 2020, respectively. Fees charged between affiliates approximate their cost.

The Company is party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors (AURA), LLC whereby AURA serves as the administrator and

89

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

advisor for the Company’s mortgage loan operations. The Company paid $31, $29 and $20 for these services during 2022, 2021 and 2020, respectively.

The Company is party to an Investment Management Agreement with AEGON USA Investment Management (AUIM), LLC whereby AUIM acts as a discretionary investment manager for the Company. The Company paid $89, $89 and $89 for these services during 2022, 2021 and 2020, respectively.

The Company has an administration service agreement with Transamerica Asset Management (TAM) to provide administrative services to the Transamerica Series Trust. The Company received $130, $168 and $149 for these services during 2022, 2021 and 2020, respectively.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $6, $9 and $43 for the years ended December 31, 2022, 2021 and 2020, respectively.

Receivables from (payables to) affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. During 2022, 2021 and 2020, the Company received (paid) net interest of ($5), $0 and $0 from (to) affiliates, respectively. At December 31, 2022 and 2021, respectively, the Company reported net receivables (payables) from (to) affiliates of $466 and $118. Terms of settlement require that these amounts are settled within 90 days of quarter-end per the requirements of SSAP No. 25, Affiliates and Other Related Parties.

In accordance with SSAP No. 25, the Company reports short-term intercompany notes receivable as short-term investments. At December 31, 2022, the Company has one short-term intercompany notes receivable. On December 30, 2022, the Company issued a variable funding promissory note valued at $97 to ULI Funding LLC. The terms of the loan include a 5.20% annual interest rate and maturity date at December 30, 2023. At December 31, 2021, the Company had no short-term intercompany notes receivable.

On December 20, 2022, the Company purchased all 2,520 common shares held by Aegon International B.V. of TLB at its economic value for a total of $61. The Company now has 100% ownership of TLB.

On June 23, 2020, the Company provided $5 to TPRe in consideration for 5,000 shares of its stock becoming the sole shareholder of TPRe. The Company provided an additional capital contribution of $70 to TPRe on June 26, 2020.

90

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The Company utilizes the look-through approach in valuing its investment in the following entities.

	Book Adjusted     Carrying Value
Real Estate Alternatives Portfolio 2, LLC	$	19
Real Estate Alternatives Portfolio 3, LLC		162
Real Estate Alternatives Portfolio 4 HR, LLC		231
Real Estate Alternatives Portfolio 4 MR, LLC		49
Aegon Workforce Housing Fund 2, L.P.		203
Aegon Workforce Housing Fund 3, L.P.		20
Natural Resources Alternatives Portfolio I, LLC		293
Natural Resources Alternatives Portfolio II, LLC		62
Natural Resources Alternatives Portfolio 3, LLC		261
TA Private Equity Assets LLC		255
Zero Beta Fund, LLC		21
TA-APOP I, LLC		86
TA-APOP II, LLC		137

These entity’s financial statements are not audited and the Company has limited the value of its investment in these entities to the value contained in the audited financial statements of the underlying LP/LLC investments, including adjustments required by SSAP No. 97 entities and/or non-SCA SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies, entities owned by these entities. All liabilities, commitments, contingencies, guarantees or obligations of these entities which are required to be recorded as liabilities, commitments, contingencies, guarantees or obligations under applicable accounting guidance, are reflected in the Company’s determination of the carrying value of the investment in these entities.

91

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables show the disclosures for all SCA investments, except 8bi entities, Balance Sheets value (admitted and nonadmitted) and the NAIC responses for the SCA filings as of December 31, 2022 and 2021:

December 31, 2022
SCA Entity	Percentage of SCA Ownership		Gross Amount		Admitted Amount		Nonadmitted   Amount
SSAP No. 97 8a Entities
None		—  %	$	—	$	—	$	—
Total SSAP No. 97 8a Entities		XXX	$	—	$	—	$	—
SSAP No. 97 8b(ii) Entities
None		—  %	$	—	$	—	$	—
Total SSAP No. 97 8b(ii) Entities		XXX	$	—	$	—	$	—
SSAP No. 97 8b(iii) Entities
AEGON Direct Marketing Services, Inc.		73  %	$	—	$	—	$	—
AEGON Financial Services Group, Inc.		100		—		—		—
Garnet Assurance Corporation		100		—		—		—
Garnet Assurance Corporation III		100		—		—		—
Life Investors Alliance LLC		100		—		—		—
Real Estate Alternatives Portfolio 3A, Inc.		91		—		—		—
Transamerica Asset Management, Inc.		77		124		124		—
Transamerica Fund Services, Inc.		44		—		—		—
Total SSAP No. 97 8b(iii) Entities		XXX	$	124	$	124	$	—
SSAP No. 97 8b(iv) Entities
Transamerica Bermuda Re, Ltd.		100  %	$	10	$	10	$	—
Total SSAP No. 97 8b(iv) Entities		XXX	$	10	$	10	$	—
Total SSAP No. 97 8b Entities (except 8bi entities)		XXX	$	134	$	134	$	—
Aggregate Total		XXX	$	134	$	134	$	—

92

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

December 31, 2021
SCA Entity	Percentage of SCA Ownership		Gross Amount		Admitted Amount		Nonadmitted   Amount
SSAP No. 97 8a Entities
None		—  %	$	—	$	—	$	—
Total SSAP No. 97 8a Entities		XXX	$	—	$	—	$	—
SSAP No. 97 8b(ii) Entities
None		—  %	$	—	$	—	$	—
Total SSAP No. 97 8b(ii) Entities		XXX	$	—	$	—	$	—
SSAP No. 97 8b(iii) Entities
AEGON Direct Marketing Services, Inc.		73  %	$	—	$	—	$	—
AEGON Financial Services Group, Inc.		100		—		—		—
Garnet Assurance Corporation		100		—		—		—
Garnet Assurance Corporation III		100		—		—		—
Intersecurities Insurance Agency, Inc.		100		—		—		—
Life Investors Alliance LLC		100		—		—		—
Real Estate Alternatives Portfolio 3A, Inc.		91		—		—		—
Transamerica Asset Management, Inc.		77		121		121		—
Transamerica Fund Services, Inc.		44		—		—		—
Total SSAP No. 97 8b(iii) Entities		XXX	$	121	$	121	$	—
SSAP No. 97 8b(iv) Entities
Transamerica Life (Bermuda) Ltd.		94  %	$	1,358	$	1,358	$	—
Total SSAP No. 97 8b(iv) Entities		XXX	$	1,358	$	1,358	$	—
Total SSAP No. 97 8b Entities (except 8bi entities)		XXX	$	1,479	$	1,479	$	—
Aggregate Total		XXX	$	1,479	$	1,479	$	—

93

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following table shows the NAIC responses for the SCA filings (except 8bi entities):

December 31, 2022

SCA Entity	Type of NAIC Filing*	Date of Filing to the NAIC	NAIC Valuation Amount		NAIC Response Received Y/N	NAIC Disallowed Entities Valuation Method, Submission Required Y/N	Code**
SSAP No. 97 8a Entities
None			$	—	—	—	—
Total SSAP No. 97 8a Entities	—	—	$	—	—	—	—
SSAP No. 97 8b(ii) Entities
None			$	—	—	—	—
Total SSAP No. 97 8b(ii) Entities	—	—	$	—	—	—	—
SSAP No. 97 8b(iii) Entities
AEGON Direct Marketing Services, Inc.	NA		$	—			I
AEGON Financial Services Group, Inc.	NA			—			I
Garnet Assurance Corporation	NA			—			I
Garnet Assurance Corporation III	NA			—			I
Life Investors Alliance LLC	NA			—			I
Real Estate Alternatives Portfolio 3A, Inc.	NA			—			I
Transamerica Asset Management, Inc.	S2	12/5/2022		121	Y	N	I
Transamerica Fund Services, Inc.	NA			—			I
Total SSAP No. 97 8b(iii) Entities	—	—	$	121	—	—	—
SSAP No. 97 8b(iv) Entities
Transamerica Bermuda Re, Ltd.	S1	4/6/2023	$	—	Y	N	I
Total SSAP No. 97 8b(iv) Entities	—	—	$	—	—	—	—
Total SSAP No. 97 8b Entities (except 8bi entities)	—	—	$	121	—	—	—
Aggregate Total	—	—	$	121	—	—	—

*S1 - Sub1, S2 - Sub2 or RDF - Resubmission of Disallowed Filing

** I - Immaterial or M - Material

⁽¹⁾ NAIC Valuation Amount is as of the Filing Date to the NAIC

94

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

December 31, 2021

SCA Entity	Type of NAIC Filing*	Date of Filing to the NAIC	NAIC Valuation Amount		NAIC Response Received Y/N	NAIC Disallowed Entities Valuation Method, Submission Required Y/N	Code**
SSAP No. 97 8a Entities
None			$	—	—	—	—
Total SSAP No. 97 8a Entities	—	—	$	—	—	—	—
SSAP No. 97 8b(ii) Entities
None			$	—	—	—	—
Total SSAP No. 97 8b(ii) Entities	—	—	$	—	—	—	—
SSAP No. 97 8b(iii) Entities
AEGON Direct Marketing Services, Inc.	NA		$	—	—	—	I
AEGON Financial Services Group, Inc.	NA			—	—	—	I
Garnet Assurance Corporation	NA			—	—	—	I
Garnet Assurance Corporation III	NA			—	—	—	I
Intersecurities Insurance Agency, Inc.	NA			—	—	—	I
Life Investors Alliance LLC	NA			—	—	—	I
Real Estate Alternatives Portfolio 3A, Inc.	NA			—	—	—	I
Transamerica Asset Management, Inc.	S2	12/16/2021		99	Y	N	I
Transamerica Fund Services, Inc.	NA			—	—	—	I
Total SSAP No. 97 8b(iii) Entities	—	—	$	99	—	—	—
SSAP No. 97 8b(iv) Entities
Transamerica Life (Bermuda) Ltd.	S2	2/15/2022	$	1,187	Y	N	I
Total SSAP No. 97 8b(iv) Entities	—	—	$	1,187	—	—	—
Total SSAP No. 97 8b Entities (except 8bi entities)	—	—	$	1,286	—	—	—
Aggregate Total	—	—	$	1,286	—	—	—

*S1 - Sub1, S2 - Sub2 or RDF - Resubmission of Disallowed Filing

** I - Immaterial or M - Material

⁽¹⁾ NAIC Valuation Amount is as of the Filing Date to the NAIC

The Company reports an investment in the following insurance SCAs for which the reported statutory equity reflects a departure from NAIC SAP. Each of the insurance SCAs listed in the table below reflects an admitted asset, equal to the value of the excess of loss reinsurance asset provided by an unaffiliated company, whereas this would not be an admitted asset recognized by SSAP No. 4, Assets and Non Admitted Assets.

LIICA Re II, Inc.	Excess of loss reinsurance asset
Transamerica Pacific Reinsurance, Inc.	Excess of loss reinsurance asset

95

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The Company has two Limited Purpose Subsidiaries (LPS) with prescribed practices whereby under Iowa Administrative Code 191-99.11(3), the LPS are entitled to admit the following assets that would not be admissible under the NAIC SAP:

TLIC Oakbrook Reinsurance, Inc.	Credit linked note
TLIC Watertree Reinsurance, Inc.	Excess of loss reinsurance asset

The monetary effect on net income and surplus as a result of using an accounting practice that differed from NAIC SAP, the amount of the investment in the insurance SCA per reported statutory equity, and amount of the investment if the insurance SCA has completed statutory financial statements in accordance with the NAIC SAP. The SCAs are valued in the Company’s financial statements at zero in accordance with SSAP No. 97.

	Monetary Effect on NAIC SAP				Amount of Investment
SCA Entity (Investments in Insurance SCA Entities)	Net Income Increase (Decrease)		Surplus Increase (Decrease)		Per Reported Statutory Equity		If the Insurance SCA Had Completed Statutory Financial Statements*
LIICA Re II**	$	—	$	(1,828)	$	—	$	—
Transamerica Pacific Reinsurance, Inc.**		—		(1,330)		—		—
TLIC Oakbrook Reinsurance, Inc.		—		(3,384)		1,165		—
TLIC Watertree Reinsurance, Inc.		—		(1,157)		589		—

*Per AP&P Manual (without permitted or prescribed practices)

**The SCA is valued at zero in the Company’s financial statements

Had the above SCA entities not been permitted to recognize the excess of loss reinsurance assets or the credit linked note as admitted assets in the financial statements, the risk-based capital would have been below the mandatory control level which would have triggered a regulatory event.

Information regarding the Company’s affiliated reinsurance transactions is available in Note 7. Reinsurance.

Information regarding the Company’s affiliated guarantees is available in Note 14. Commitments and Contingencies.

13. Managing General Agents and Third-Party Administrators

The Company utilizes managing general agents (MGA) and third-party administrators (TPA) in its operation. There were no MGA’s/TPA’s that wrote premiums in excess of 5% of the Company’s surplus.

96

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

14. Commitments and Contingencies

At December 31, 2022 and 2021, the Company has mortgage loan commitments of $110 and $284, respectively.

The Company has contingent commitments of $1,038 and $832, as of December 31, 2022 and 2021, respectively, to provide additional funding for joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $4 and $21, respectively.

The Company leases office buildings and equipment under various non-cancelable operating lease agreements. Rental expense for the years 2022 and 2021 was $13 and $22, respectively.

Private placement commitments outstanding as of December 31, 2022 and 2021 were $141 and $174, respectively.

The Company sold ($63) and ($26) of “to-be-announced” (TBA) securities as of December 31, 2022 and 2021, respectively. Due to different counterparties, the receivable related to these TBAs was not reclassed.

The Company may pledge cash as collateral for derivative transactions. When cash is pledged as collateral, it is derecognized and a receivable is recorded to reflect the eventual return of that cash by the counterparty. The amount of cash collateral pledged by the Company as of December 31, 2022 and 2021, respectively, was $981 and $217.

At December 31, 2022 and 2021, securities in the amount of $27 and $76, respectively, were posted to the Company as collateral from derivative counterparties. The securities were not included on the Company’s Balance Sheets as the Company does not have the ability to sell or repledge the collateral.

The Company has provided back-stop guarantees for the performance of non-insurance affiliates or subsidiaries that are involved in the guaranteed sale of investments in low-income housing tax credit partnerships. The nature of the obligation is to provide third party investors with a minimum guaranteed annual and cumulative return on their contributed capital which is based on tax credits and tax losses generated from the low income housing tax credit partnerships. Guarantee payments arise if low income housing tax credit partnerships experience unexpected significant decreases in tax credits and tax losses or there are compliance issues with the partnerships. A significant portion of the remaining term of the guarantees is between 13-18 years. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as a decrease in net investment income. No payments are required as of December 31, 2022 and 2021. The current assessment of risk of making payments under these guarantees is remote.

The Company has guaranteed to the Hong Kong Insurance Authority that it will provide the financial support to TLB for maintaining TLB’s solvency at all times so as to enable TLB to promptly meet its obligations and liabilities. If at any time the value of TLB’s assets do not exceed its liabilities by the prevailing acceptable level of solvency, the Company will increase the paid up share capital of TLB or provide financial assistance to TLB to maintain the acceptable level of solvency. An acceptable level of solvency is net assets at one hundred and fifty percent of

97

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

the required margin of solvency as stipulated under the Insurance Companies (Margin of Solvency) Regulation. As of December 31, 2022 and 2021, there is no payment or performance risk because TLB is able to meet its obligations and has assets in excess of its liabilities by the prevailing level of solvency as of this date.

The Company has guaranteed that TLB will (1) maintain tangible net worth of at least equal to the greater of 165% of Standard & Poor’s Risk-Based Capital and the minimum required by regulatory authorities in all jurisdictions in which TLB operates, (2) have, at all times, sufficient cash to pay all contractual obligations in a timely manner and (3) have a maximum operating leverage ratio of 20 times. The Company can terminate this agreement upon thirty days written notice, but not until TLB attains a rating from Standard & Poor’s the same as without the support from this agreement, or the entire book of TLB business is transferred provided that it is transferred to an entity with a rating from S&P that is the same as or better than the Company’s then current rating or AA, whichever is lower. As of December 31, 2022 and 2021, there is no payment or performance risk because TLB has adequate tangible net worth, sufficient cash to meet its obligations and an operating leverage ratio not in excess of 20 times as of this date.

The Company is not able to estimate the financial statement impact or the maximum potential amount of future payments it could be required to make under these two guarantees as they are considered to be unlimited under the provisions of SSAP No. 5R.

The Company has provided a guarantee to TLB’s (Singapore Branch) policyholders. If TLB fails to pay a valid claim solely by reason of it becoming insolvent as defined by Bermuda law, then the Company shall pay directly to the policy owner or named beneficiary the amount of the valid claim. At December 31, 2022 and 2021, TLB holds related statutory-basis policy and claim reserves of $55 and $2,328, respectively, which would be the maximum potential amount of future payments the Company could be required to make under this guarantee. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as an increase to incurred claims. As of December 31, 2022 and 2021, there is no payment or performance risk because TLB is not insolvent as of this date.

The Company has provided a guarantee to TLB’s (Hong Kong Branch) policyholders. If TLB fails to pay a valid claim solely by reason of it becoming insolvent as defined by Bermuda law, then the Company shall pay directly to the policy owner or named beneficiary the amount of the valid claim. At December 31, 2022 and 2021, TLB policies covered by this guarantee would have resulted in US statutory policy and claim reserves of $125 and $3,504, respectively, which would represent a fair measure of the maximum potential amount of future payments the Company under this guarantee based on the US statutory reserve requirements. TLB is a subsidiary of the Company and TLB has invested assets supporting these policies which mitigates this risk. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as an increase to incurred claims. As of December 31, 2022 and 2021, there is no payment or performance risk because TLB is not insolvent as of this date.

The Company did not recognize a liability for any of the TLB guarantees due to the adoption of SSAP No. 5R, as a liability is not required for guarantees to or on behalf of a wholly-owned subsidiary. Management monitors TLB’s financial condition, and there are no indications that

98

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

TLB will become insolvent. As such, management feels the risk of payment under these guarantees on behalf of TLB is remote.

The Company is a party to a fee agreement with TLB whereby the Company continues to provide the guarantees with respect to TLB described in the paragraphs above. The Company received $1 and $1 under this agreement in 2022 and 2021, respectively.

The Company has provided guarantees for the obligations of noninsurance third party assignment companies who have accepted assignments of structured settlement payment obligations from the Company and have purchased structured settlement insurance policies issued by the Company that match those obligations. The guarantees made by the Company are specific to each structured settlement contract and vary in date and duration of the obligation. These are numerous and are backed by the reserves established by the Company to represent the present value of the future payments for those contracts. The direct statutory reserve established at December 31, 2022 and 2021 for the total payout block is $4,880 and $4,990, respectively. As this reserve is already recorded on the Balance Sheets of the Company, there was no additional liability recorded due to the adoption of SSAP No. 5R.

During 2019, the Company entered into an agreement with Aegon USA Realty Advisors, LLC to commit to purchase certain tax credit investments up to a maximum of $100,000. Under the terms of the agreement, the Company provides certain commitments to purchase tax credit investments that are part of tax credit funds in the event certain conditions are met. The Company did not acquire any tax credit investments during 2022 or 2021 under this agreement. As of December 31, 2022 and 2021, there is no amount committed to these purchases.

The following table provides an aggregate compilation of guarantee obligations as of December 31, 2022 and 2021:

	December 31
	2022		2021
Aggregate maximum potential of future payments of all guarantees (undiscounted)	$	179	$	5,832
Current liability recognized in financial statements:
Noncontingent liabilities		—		—
Contingent liabilities		—		—
Ultimate financial statement impact if action required:
Incurred claims		179		5,832
Other		—		—
Total impact if action required	$	179	$	5,832

The Company is a member of the FHLB of Des Moines. Through its membership, the Company has conducted business activity (borrowings) with the FHLB. It is part of the Company’s strategy to utilize these funds for asset and liability management and spread lending purposes. The Company has determined the actual/estimated long-term maximum borrowing capacity as $5,585 and $5,674 at December 31, 2022 and 2021, respectively. The Company calculated this amount in accordance with the terms and conditions of agreement with FHLB of Des Moines.

99

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

At December 31, 2022 and 2021, the Company purchased/owned the following FHLB stock as part of the agreement:

	Year Ended December 31
	2022		2021
Membership Stock:
Class A	$	—	$	—
Class B		10		10
Activity Stock		120		120
Excess Stock		—		—
Total	$	130	$	130

At December 31, 2022 and 2021, Membership Stock (Class A and B) Eligible for Redemption and the anticipated timeframe for redemption was as follows:

	Less Than 6 Months		6 Months to Less Than 1 Year		1 to Less Than 3 Years		3 to 5 Years
December 31, 2022
Membership Stock
Class A	$	—	$	—	$	—	$	—
Class B		—		—		—		10
Total	$	—	$	—	$	—	$	10

	Less Than 6 Months		6 Months to Less Than 1 Year		1 to Less Than 3 Years		3 to 5 Years
December 31, 2021
Membership Stock
Class A	$	—	$	—	$	—	$	—
Class B		—		—		—		10
Total	$	—	$	—	$	—	$	10

At December 31, 2022 and 2021, the amount of collateral pledged and the maximum amount pledged to the FHLB was as follows:

	Fair Value		Carry Value
December 31, 2022
Total Collateral Pledged	$	4,704	$	5,335
Maximum Collateral Pledged		4,704		5,335

	Fair Value		Carry Value
December 31, 2021
Total Collateral Pledged	$	4,575	$	4,226
Maximum Collateral Pledged		4,893		4,486

100

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

At December 31, 2022 and 2021, the borrowings from the FHLB were as follows:

	December 31, 2022				December 31, 2021
	General Account		Funding Agreements Reserves Established		General Account		Funding Agreements Reserves Established
Debt 1	$	2,995	$	—	$	2,995	$	—
Funding agreements 2		—		—		—		—
Other		—		—		—		—
Total	$	2,995	$	—	$	2,995	$	—

¹ The maximum amount of borrowing during 2022 was $2,995

² The maximum amount of borrowing during 2022 was $0

As of December 31, 2022, the weighted average interest rate on FHLB advances was 4.550% with a weighted average term of 2.5 years. As of December 31, 2021, the weighted average interest rate on FHLB advances was 0.409% with a weighted average term of 2.3 years.

At December 31, 2022 and 2021, the borrowings from the FHLB were not subject to prepayment penalties.

The Company has issued synthetic GIC contracts to benefit plan sponsors totaling $55,298 and $53,440 as of December 31, 2022 and 2021, respectively. A synthetic GIC is an off-balance sheet fee-based product sold primarily to tax qualified plans, where the plan sponsor retains ownership and control of the related plan assets and the Company provides book value benefit responsiveness to qualified participant withdrawals, in the event withdrawals requested exceeds plan cash flows. In certain contracts, the Company agrees to make advances to meet benefit withdrawal needs and earns a market interest rate on these advances. A periodically adjusted contract-crediting rate is a means by which investment and benefit responsiveness experience is passed through to participants. In return for the book value benefit responsiveness guarantee, the Company receives a premium that varies based on such elements as benefit responsiveness exposure and contract size. The Company underwrites the plans for the possibility of having to make benefit payments and also must agree to the investment guidelines ensuring the appropriate credit quality and cash flow. Funding requirements to date have been minimal and management does not anticipate any future material funding requirements to have a material impact on the reported financial results. In compliance with statutory guidelines, related reserves of $10 and $0 were recorded at December 31, 2022 and 2021, respectively.

The Company is party to legal proceedings involving a variety of issues incidental to its business, including class action lawsuits. Lawsuits may be brought in any federal or state court in the United States or in an arbitral forum. In addition, there continues to be significant federal and state regulatory activity relating to financial services companies. The Company’s legal proceedings are subject to many variables, and given their complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes includes substantial

101

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

demands for compensatory and punitive damages, and injunctive relief, damages arising from such demands are typically not material to the Company’s financial position.

The Company had been named in two class actions, as well as several individual lawsuits, relating to increases in monthly deduction rates (MDR) on universal life products. The Company settled the two class actions, one in January 2019 and one in April 2020. In connection with the class actions, the Company continues to defend against lawsuits by opt out class members. In October 2022, the Company was named in a putative class action relating to rolling MDR increases initiated in 2022 and continuing on a rolling basis. The Company held provisions totaling $53 and $69 for these lawsuits as of December 31, 2022, and December 31, 2021, respectively.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company, except where right of offset against other taxes paid is allowed by law. Amounts available for future offsets are recorded as an asset on the Company’s Balance Sheets. The future obligation for known insolvencies has been accrued based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $8 and $8 and an offsetting premium tax benefit $6 and $6 at December 31, 2022 and 2021, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund (benefit) expense was $3 for the years ended December 31, 2022, 2021 and 2020.

15. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities

The Company is party to municipal repurchase agreements which were established via bilateral trades and accounted for as secured borrowings. For municipal repurchase agreements, the Company rigorously manages asset/liability risks via an integrated risk management framework. The Company’s liquidity position is monitored constantly, and factors heavily in the management of the asset portfolio. Projections comparing liquidity needs to available resources in both adverse and routine scenarios are refreshed monthly. The results of these projections on time horizons ranging from 16 months to 24 months are the basis for the near-term liquidity planning. This liquidity model excludes new business (non applicable for the spread business), renewals and other sources of cash and assumes all liabilities are paid off on the earliest dates required. Interest rate risk is carefully managed, in part through rigorously defined and monitored derivatives programs.

102

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

The following tables provide information on the securities sold under the municipal repurchase agreements for four quarters of 2022 and 2021:

December 31, 2022
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Maximum Amount
BACV		XXX		XXX		XXX	$	256
Fair Value	$	167	$	245	$	250	$	252
Ending Balance
BACV		XXX		XXX		XXX	$	256
Fair Value	$	167	$	245	$	250	$	251

December 31, 2021
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Maximum Amount
BACV		XXX		XXX		XXX	$	204
Fair Value	$	230	$	204	$	231	$	227
Ending Balance
BACV		XXX		XXX		XXX	$	187
Fair Value	$	220	$	204	$	227	$	208

	2022						2021
	NAIC 1		NAIC 2		Total		NAIC 1		NAIC 2		Total
Bonds - BACV	$	217	$	39	$	256	$	140	$	47	$	187
Bonds - FV		211		40		251		159		49		208

These securities have maturity dates that range from 2022 to 2097.

The following table provides information on the cash collateral received and liability to return collateral under the municipal repurchase agreements for four quarters of 2022 and 2021:

December 31, 2022
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Maximum Amount
Cash	$	141	$	177	$	199	$	106
Ending Balance (1)
Cash	$	141	$	177	$	199	$	106

⁽¹⁾ The remaining collateral held was greater than 90 days from contractual maturity.

103

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

December 31, 2021
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Maximum Amount
Cash	$	136	$	169	$	190	$	103
Ending Balance (1)
Cash	$	136	$	169	$	79	$	103

⁽¹⁾ The remaining collateral held was greater than 90 days from contractual maturity.

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2022 and 2021, the Company had dollar repurchase agreements outstanding in the amount of $95 and $873, respectively, which is included in borrowed money on the Balance Sheets. Those amounts include accrued interest of $1 and $2, at December 31, 2022 and 2021, respectively. At December 31, 2022, securities with a book value of $96 and a fair value of $88 were subject to dollar repurchase agreements. These securities have maturity dates that range from October 14, 2025 to November 1, 2052. At December 31, 2021, securities with a book value of $878 and a fair value of $872 were subject to dollar repurchase agreements. The Company does not have the legal right to recall or substitute the underlying assets prior to the transaction’s scheduled termination. Upon scheduled termination, the counterparty is obligated to return substantially similar assets.

The contractual maturities of the dollar repurchase agreement positions are as follows:

	Fair Value
	2022		2021
Open	$	93	$	872
Securities received		—		—
Total collateral received	$	93	$	872

In the course of the Company’s asset management, securities are sold and reacquired within 30 days of the sale date to enhance the Company’s yield on its investment portfolio. The details by NAIC designation 3 or below of securities sold during 2022 and reacquired within 30 days of the sale date are:

	Number of Transactions		Book Value of Securities Sold		Cost of Securities Repurchased		Gains (Losses)
Bonds:
NAIC		—	$	—	$	—	$	—
Common stocks		—	$	—	$	—	$	—

16. Reconciliation to Statutory Statement

The following is a reconciliation of amounts previously reported to the Iowa Department of Financial Regulation in the 2020 Annual Statement, to those reported in the accompanying statutory-basis financial statements. There are no reconciling items for 2022 or 2021.

104

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

	December 31 2020
Statements of Operations
Statutory net income as reported in the Company’s Annual Statement	$	1,291
Increase in commissions and expense allowances on reinsurance ceded		(69)
Increase in reserve adjustment on reinsurance ceded		193
Decrease in fee revenue and other income		3
Increase in commissions		69
Increase in general insurance expenses and other		(196)
Total net income as reported in the accompanying audited statutory basis statement of operations	$	1,291

The reconciling differences to the Annual Statement for 2020 is driven by elimination of affiliated activity for the merged entities in 2020.

17. Subsequent Events

The financial statements are adjusted to reflect events that occurred between the Balance Sheets date and the date when the financial statements are available to be issued, provided they give evidence of conditions that existed at the Balance Sheets date (Type I). The Company has not identified any Type 1 subsequent events for the year ended December 31, 2022 through April 19, 2023.

Events that are indicative of conditions that arose after the Balance Sheets dates are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). The Company has identified a Type II subsequent event for the year ended December 31, 2022. On January 6, 2023, the Company repaid advances of $252 and $323 to FHLB of Des Moines. On January 11, 2023, the Company repaid a net of $133 for multiple advances to the FHLB of Des Moines. The pay down of these FHLB advances reduces the amount borrowed from FHLB to approximately $2,300 in aggregate.

105

Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies

Transamerica Corporation EIN:     42-1484983 AFFILIATIONS SCHEDULE YEAR ENDED DECEMBER 31, 2022
Entity Name	FEIN
Transamerica Corporation		42-1484983
AEGON Asset Management Services Inc		39-1884868
AEGON Direct Marketing Services Inc		42-1470697
AEGON Financial Services Group Inc		41-1479568
AEGON Institutional Markets Inc		61-1085329
AEGON Management Company		35-1113520
AEGON USA Real Estate Services Inc		61-1098396
AEGON USA Realty Advisors of CA		20-5023693
AUSA Properties Inc		27-1275705
Commonwealth General Corporation		51-0108922
Creditor Resources Inc		42-1079584
CRI Solutions Inc		52-1363611
Financial Planning Services Inc		23-2130174
Garnet Assurance Corporation		11-3674132
Garnet Assurance Corporation II		14-1893533
Garnet Assurance Corporation III		01-0947856
Ironwood Re Corp		47-1703149
LIICA RE II		20-5927773
Massachusetts Fidelity Trust		42-0947998
Money Services Inc		42-1079580
Monumental General Administrators Inc		52-1243288
Pearl Holdings Inc I		20-1063558
Pearl Holdings Inc II		20-1063571
Real Estate Alternatives Portfolio 3A Inc		20-1627078
River Ridge Insurance Company		20-0877184
Stonebridge Benefit Services Inc		75-2548428
TLIC Oakbrook Reinsurance Inc.		47-1026613
TLIC Watertree Reinsurance, Inc.		81-3715574
Transamerica Affordable Housing Inc		94-3252196
Transamerica Asset Management		59-3403585
Transamerica Capital Inc		95-3141953
Transamerica Casualty Insurance Company		31-4423946
Transamerica Corporation (OREGON)		98-6021219

106

Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies

Transamerica Corporation EIN:     42-1484983 AFFILIATIONS SCHEDULE YEAR ENDED DECEMBER 31, 2022
Entity Name	FEIN
Transamerica Finance Corporation		95-1077235
Transamerica Financial Advisors		59-2476008
Transamerica Financial Life Insurance Company		36-6071399
Transamerica Fund Services Inc		59-3403587
Transamerica International Re (Bermuda) Ltd		98-0199561
Transamerica Investors Securities Corp		13-3696753
Transamerica Life Insurance Company		39-0989781
Transamerica Pacific Re, Inc.		85-1028131
Transamerica Resources Inc		52-1525601
Transamerica Stable Value Solutions Inc		27-0648897
United Financial Services Inc		52-1263786
World Fin Group Ins Agency of Massachusetts Inc		04-3182849
World Financial Group Inc		42-1518386
World Financial Group Ins Agency of Hawaii Inc		99-0277127
World Financial Group Insurance Agency of WY Inc		42-1519076
Zahorik Company Inc		95-2775959
Zero Beta Fund LLC		26-1298094

107

Statutory-Basis Financial

Statement Schedules

108

Transamerica Life Insurance Company

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Millions)

December 31, 2022

SCHEDULE I

Type of Investment	Cost (1)		Fair Value		Amount at   Which Shown   in the   Balance Sheet (2)
Fixed maturities
Bonds:
United States government and government agencies and authorities	$	5,483	$	5,235	$	6,193
States, municipalities and political subdivisions		2,541		2,079		2,541
Foreign governments		762		662		762
Hybrid securities		399		379		395
All other corporate bonds		41,329		37,070		41,240
Preferred stocks		63		61		61
Total fixed maturities		50,577		45,486		51,192
Equity securities
Common stocks:
Industrial, miscellaneous and all other		144		150		150
Total equity securities		144		150		150
Mortgage loans on real estate		9,270				9,270
Real estate		44				44
Policy loans		2,028				2,028
Other long-term investments		1,437				1,437
Receivable for securities		7				7
Receivable for derivative cash collateral posted to counterparty		—				—
Securities lending		2,115				2,115
Cash, cash equivalents and short-term investments		2,420				2,420
Total investments	$	68,042			$	68,663

(1) Equity securities are reported at original cost. Fixed maturities are reported at original cost reduced by repayments and adjusted for amortization of premiums and accrual of discounts.

(2) Bonds of $50 are held at fair value rather than amortized cost. Preferred stock of $120 are held at fair value.

109

Transamerica Life Insurance Company

Supplementary Insurance Information

(Dollars in Millions)

SCHEDULE III

	Future Policy Benefits and Expenses		Unearned Premiums		Policy and Contract Liabilities		Premium Revenue		Net Investment Income*		Benefits, Claims Losses and Settlement Expenses		Other Operating Expenses*
Year ended December 31, 2022
Individual life	$	30,960	$	—	$	580	$	8,576	$	1,626	$	9,716	$	1,201
Individual health		5,993		112		327		710		406		822		226
Group life and health		2,469		21		128		806		170		509		360
Annuity		18,401		—		63		9,721		1,095		21,481		(10,034)
	$	57,823	$	133	$	1,098	$	19,813	$	3,297	$	32,528	$	(8,247)
Year ended December 31, 2021
Individual life	$	25,206	$	—	$	664	$	1,673	$	1,600	$	4,243	$	1,086
Individual health		5,871		115		342		737		441		703		220
Group life and health		2,480		22		134		801		166		530		320
Annuity		18,289		—		37		11,271		984		19,574		(7,757)
	$	51,846	$	137	$	1,177	$	14,482	$	3,191	$	25,050	$	(6,131)
Year ended December 31, 2020
Individual life	$	24,275	$	—	$	685	$	2,264	$	1,460	$	5,342	$	1,388
Individual health		5,760		112		401		750		423		908		405
Group life and health		2,468		23		138		841		159		496		347
Annuity		18,328		—		33		12,868		1,319		19,336		(3,775)
	$	50,831	$	135	$	1,257	$	16,723	$	3,361	$	26,082	$	(1,635)

*Allocations of net investment income and other operating expenses are based on a number of assumptions and estimates, and the results would change if different methods were applied.

110

Transamerica Life Insurance Company

Reinsurance

(Dollars in Millions)

SCHEDULE IV

	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year ended December 31, 2022
Life insurance in force	$	776,124	$	616,800	$	319,443	$	478,767		67%
Premiums:
Individual life	$	4,547	$	2,316	$	6,345	$	8,576		74%
Individual health		758		60		12		710		2%
Group life and health		927		135		14		806		2%
Annuity		9,725		16		12		9,721		0%
	$	15,957	$	2,527	$	6,383	$	19,813		32%
Year ended December 31, 2021
Life insurance in force	$	760,949	$	700,434	$	367,342	$	427,857		86%
Premiums:
Individual life	$	4,460	$	4,016	$	1,229	$	1,673		73%
Individual health		787		62		12		737		2%
Group life and health		920		136		17		801		2%
Annuity		11,424		166		13		11,271		0%
	$	17,591	$	4,380	$	1,271	$	14,482		9%
Year ended December 31, 2020
Life insurance in force	$	739,067	$	736,338	$	397,134	$	399,863		99%
Premiums:
Individual life	$	4,173	$	3,106	$	1,197	$	2,264		53%
Individual health		797		61		14		750		2%
Group life and health		948		133		26		841		3%
Annuity		13,273		418		13		12,868		0%
	$	19,191	$	3,718	$	1,250	$	16,723		7%

111