485BPOS 1 d231171d485bpos.htm WRL FREEDOM PREMIER WRL Freedom Premier
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As filed with the Securities and Exchange Commission on April 28, 2022

Registration No.         333- 249120

811- 05672  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM N-4

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933

Pre-Effective Amendment No. ___

Post-Effective Amendment No. 2

and

REGISTRATION STATEMENT UNDER THE

INVESTMENT COMPANY ACT OF 1940

Amendment No.     354

 

 

WRL SERIES ANNUITY ACCOUNT

(Exact Name of Registrant)

TRANSAMERICA LIFE INSURANCE COMPANY

(Name of Depositor)

6400 C Street SW

Cedar Rapids, IA 52499-0001

(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number: (319) 355-8511

Brian Stallworth, Esquire

Transamerica Life Insurance Company

c/o Office of the General Counsel

6400 C Street SW

Cedar Rapids, IA 52499-4240

(Name and Address of Agent for Service)

Table of Contents

It is proposed that this filing become effective:

    

immediately upon filing pursuant to paragraph (b) of Rule 485

__X__

   

on May 1, 2022 pursuant to paragraph (b) of Rule 485

    

60 days after filing pursuant to paragraph (a)(1) of Rule 485

    

on (date) pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

_____   This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Table of Contents

WRL FREEDOM PREMIER®

Issued by

TRANSAMERICA LIFE INSURANCE COMPANY

WRL Series Annuity Account

 

Supplement Dated May 1, 2022

to the

Prospectus dated May 1, 2022

We will not accept any premium payment that is allocated to the fixed account or the dollar cost averaging fixed account in excess of $500,000. We also will not accept any premium payment or transfer which would result in the aggregate policy value in the fixed account and the dollar cost averaging fixed account exceeding $500,000.

 

 

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

WRL Freedom Premier® dated May 1, 2022

Table of Contents
WRL FREEDOM PREMIER®
Issued Through
WRL SERIES ANNUITY ACCOUNT
By
TRANSAMERICA LIFE INSURANCE COMPANY
Sales of this Policy were discontinued for new purchasers effective May 1, 2009.
This prospectus describes information You should know before You purchase a WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II variable annuity. The prospectus describes a contract between each Owner and joint Owner (“You”) and Transamerica Life Insurance Company (“us,” “we,” “our” or “Company”). This is an individual, deferred, flexible premium variable annuity. This variable annuity allows You to allocate Your premium payments among the Fixed Account(if available) and the Underlying Fund Portfolios.
This prospectus and the underlying fund prospectuses give You important information about the policies and the Underlying Fund Portfolios. Please read them carefully before You invest and keep them for future reference.
The Securities and Exchange Commission has not approved or disapproved these securities, or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
This variable annuity may not be suitable for everyone. This variable annuity may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing or other frequent (disruptive) trading. You will get no additional tax advantage from this variable annuity if You are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or Individual Retirement Account (“IRA”)). This prospectus is not intended to provide tax, accounting or legal advice.
We are not an investment adviser nor are we registered as such with the SEC or any state securities regulatory authority. We are not acting in any fiduciary capacity with respect to Your Policy nor are we acting in any capacity on behalf of any tax-advantaged retirement plan. This information does not constitute personalized investment advice or financial planning advice.
Additional information about certain investment products, including variable annuities, has been prepared by the Securities and Exchange Commission’s staff and is available at Investor.gov.
Prospectus Date: May 1, 2022

 

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GLOSSARY OF TERMS
Accumulation Period- The period between the Policy Date and the Maturity Date while the Policy is In Force.
Accumulation Unit Value- An accounting unit of measure we use to calculate Subaccount values during the Accumulation Period.
Administrative Office- Transamerica Life Insurance Company, Attention: Customer Care Group, 6400 C Street SW, Cedar Rapids, IA 52499, (800)851-9777. Please send all Premium Payments, loan repayments, correspondence and notices to the Administrative Office.
Age - The issue Age, which is Annuitant’s Age on his/her birthday immediately preceding the Policy date. Attained Age is the issue Age plus the number of completed Policy years. When we use the term “Age” in this document, it has the same meaning as “attained Age” in the Policy.
Annuitant - The person on whose life any annuity payments involving life contingencies will be based.
Annuitize (Annuitization)- When You switch from the Accumulation Period to the income phase and we begin to make annuity payments to You (or Your designee).
Annuity Unit Value- An accounting unit of measure we use to calculate annuity payments from the Subaccounts after the Maturity Date.
Beneficiary(ies) - The person(s) who has the right to the death benefit as set forth in the Policy.
Cash Value- The Annuity Value less any applicable  less any premium taxes, any Surrender charge, any loans and unpaid accrued interest, the annual Policy charge and any rider charges.
Code - The Internal Revenue Code of 1986, as amended.
Death Report Day- The Valuation Date on which we have received due proof of death.
Fixed Account- One or more Investment Options under the Policy that are part of our general assets and are not in the Separate Account.
Fixed Account Value- During the Accumulation Period, your Policy’s value in the Fixed Account.
In Force- Condition under which the Policy is active and an Owner is entitled to exercise all rights under the Policy.
Maturity Date- The date on which the Accumulation Period ends and annuity payments begin.
Monthiversary - The same day in the month as the Policy Date. When there is no date in a calendar month that coincides with the Policy Date, the Monthiversary is the first day of the next month.
NYSE - New York Stock Exchange.
Owner (You, Your)- The person(s) entitled to exercise all rights and privileges under the Policy. The Annuitant is an Owner unless the application states otherwise, or unless a change of ownership is made at a later time. Joint owners may be named, provided the joint owners are husband and wife. Joint ownership is not available in all states.
Policy - The WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II, an individual deferred, flexible premium variable annuity. Also referred to as the contract.
Policy Anniversary- The same day in each succeeding year as the Policy Date. If there is no day in a calendar year which coincides with the Policy Date, the Policy Anniversary will be the first day of the next month.
Policy Date- The date shown on the contract schedule attached to the Policy and the date on which the Policy becomes effective.
Premium Payments- Amounts paid by an Owner or on an Owner’s behalf to Transamerica Life Insurance Company as consideration for the benefits provided by the Policy. When we use the term “Premium Payment” or “premium” in this prospectus, it has the same meaning as “net payment” in the Policy, which means the Premium Payment less any applicable premium taxes.
Portfolio Company(ies)- The investment company(ies) made available as Investment Options under the Policy. Also referred to as underlying fund portfolios.
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Separate Account- WRL Series Annuity Account, a Separate Account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”), to which Premium Payments under the policies may be allocated.
Separate Account Value- The portion of the Policy Value that is invested in the Separate Account.
Subaccount - A subdivision within the Separate Account, the assets of which are invested in a specified Underlying Fund Portfolio .
Surrender - The termination of a Policy at the option of an Owner.
Underlying Fund Portfolio- Investment companies which are registered with the U.S. Securities and Exchange Commission. The Policy allows You to invest in the Underlying Fund Portfolios through our Subaccounts. We reserve the right to add other Underlying Fund Portfolios as investment choices under the Policy in the future.
Valuation Date- Each day on which the NYSE is open for trading, except when a Subaccount's corresponding portfolio does not value its shares. Transamerica Life Insurance Company is open for business on each day that the NYSE is open. When we use the term “business day,” it has the same meaning as Valuation Date.
Valuation Period- The period of time from one determination of Accumulation Unit Values and Annuity Unit Values to the next subsequent determination of those values. Such determination shall be made generally at the close of business on each business day.
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  FEES AND EXPENSES Location in
Prospectus
Charges for Early Withdrawal If You withdraw money during a specified number of years following each Premium Payment being withdrawn, You may be assessed a surrender charge. The surrender charge is assessed for 7 years with a maximum of 7%.
For example, if You make an early withdrawal, You could pay a surrender charge on a $100,000 investment of up to $7,000. 		Annuity Policy Fee Tables and Expense Examples
Transaction Expenses – Surrender Charge
Access to Your Money Surrenders
Transaction Charges In addition to surrender charges, You also may be assessed a transfer fee and special services fee.
Transfer Fee. We reserve the right to charge for transfers among Investment Options after the first 12 transfers per Policy Year. For each such additional transfer, we may impose a transfer fee of $10. Currently, we do not charge a transfer fee, but reserve the right to do so.
Special Service Fee. We reserve the right to deduct a $50 charge for special services, including overnight delivery, duplicate policies, handling insufficient checks on new business, duplicate Form 1099 and Form 5498 tax forms, check copies, printing and mailing previously submitted forms, and asset verification requests from mortgage companies. 		Annuity Policy Fee Tables and Expense Examples
Expenses – Transaction Expenses
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  FEES AND EXPENSES Location in
Prospectus
Ongoing Fees and Expenses
(annual charges) 		The table below describes the fees and expenses that You may pay each year, depending on the options You choose. Please refer to YourPolicy specifications page for information about the specific fees You will pay each year based on the options You have elected. Annuity Policy Fee Tables and Expense Examples
Base Contract Expenses
Appendix – Portfolio Companies Available Under the Policy
Annual Fee Minimum Maximum
Base Policy1 1.25% 1.65%
Annual Policy Charge3 $0 $30
Portfolio Company (fund fees and expenses)2 0.54% 2.23%
Optional Benefit Expenses (if elected) 0.35% 3 0.50% 3
1 As a percentage of average Separate Account Value.
2 As a percentage of Portfolio Company assets.
3 As a percentage of the Annuity Value.
Because Your Policy is customizable, the choices You make affect how much You will pay. To help You understand the cost of owning Your Policy, the following table shows the lowest and highest cost You could pay each year based on current charges. This estimate assumes that You do not take withdrawals from the Policy, which could add surrender charges that substantially increase costs.
Lowest Annual Cost $1,879 Highest Annual Cost $8,879
Assumes: Assumes:
• Investment of $100,000
• 5% annual appreciation
• Least expensive Portfolio Company fees and expenses
• No optional benefits
• No sales charges
• No additional Premium Payments, transfers, or withdrawals 		• Investment of $100,000
• 5% annual appreciation
• Most expensive combination of optional benefits and Portfolio Company fees and expenses
• No sales charges
• No additional Premium Payments, transfers, or withdrawals
  RISKS Location in
Prospectus
Risk of Loss You can lose money by investing in this Policy. Principal Risks of Investing in the Policy
Not a Short-Term Investment This Policy is not a short-term investment and is not appropriate for an investor who needs ready access to cash.
Surrender charges may apply for several years under the Policy. Surrender charges will reduce the value of Your Policy if You withdraw money during that time.
The benefits of tax deferral and living benefit protection also means the Policy is more beneficial to investors with a long time horizon. 		Principal Risks of Investing in the Policy
Transaction Expenses - Surrender Charges
Tax Information
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  RISKS Location in
Prospectus
Risks Associated with Investment Options • An investment in this Policy is subject to the risk of poor investment performance and can vary depending on the performance of the Investment Options available under the Policy.
• Each Investment Option, including the Fixed Account, has its own unique risks.
• You should review the prospectuses for the available funds before making an investment decision. 		Principal Risks of Investing in the Policy
Investment Risk
Appendix: Portfolio Companies Available Under the Policy
Insurance Company Risks Any obligations (including under the Fixed Account), guarantees, and benefits under the Policy are subject to our claims-paying ability. If we experience financial distress, we may not be able to meet our obligations to You. More information about Transamerica Life Insurance Company, including our financial strength ratings, is available by visiting transamerica.com or by calling toll-free (800)851-9777. Principal Risks of Investing in the Policy
Transamerica Life Insurance Company
Financial Condition
  RESTRICTIONS Location in
Prospectus
Investments • We reserve the right to impose a charge for transfers in excess of 12 transfers per Policy Year.
• We reserve the right to limit transfers in circumstances of large or frequent transfers.
• The Fixed Account option may not be available for investment depending on when You applied for Your Policy and when it was issued.
• We reserve the right to remove or substitute the Portfolio Companies that are available as Investment Options under the Policy. 		Transaction Expenses
Investment Option – Transfers
Market Timing and Disruptive Trading
Optional Benefits • Certain optional benefits limit or restrict the Investment Options that You may select under the Policy. We may change these restrictions in the future.
• Withdrawals that exceed limits specified by the terms of an optional benefit may reduce the value of an optional benefit by an amount greater than the value withdrawn, which could significantly reduce the value or even terminate the benefit.
• We may stop offering an optional benefit at any time for new sales, which includes sales to the Owners who may want to purchase the benefit after they purchase the Policy. 		Investment Restrictions
Benefits Available Under the Policy
Optional Benefit Riders
  TAXES Location in
Prospectus
Tax Implications • Consult with a tax professional to determine the tax implications of an investment in and payments received under the Policy.
• If You purchase the Policy as an individual retirement account or through a tax qualified plan, You do not get any additional tax benefit.
• You will generally not be taxed on increases in the value of Your Policy until they are withdrawn. Earnings on Your Policy are taxed at ordinary income tax rates when withdrawn, and You may have to pay a penalty if You take a withdrawal before Age 59 ½. 		Tax Information
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  CONFLICT OF INTEREST Location in
Prospectus
Investment Professional Compensation Your investment professional may receive compensation for selling this Policy to You, in the form of commissions, additional cash benefits (e.g., bonuses), and non-cash compensation. Our affiliate, Transamerica Capital, Inc. (“TCI”) is the principal underwriter and may share the revenue we earn on this Policy with Your investment professional’s firm. In addition, we may pay all or a portion of the cost of affiliates’ operating and other expenses. This conflict of interest may influence Your investment professional to recommend this Policy over another investment for which the investment professional is not compensated or compensated less. Distribution of the Policies
Exchanges If You already own an insurance Policy, some investment professionals may have a financial incentive to offer You a new Policy in place of the one You own. You should only exchange a Policy you already own if You determine, after comparing the features, fees, and risks of both policies, that it is better for You to purchase the new Policy rather than continue to own Your existing Policy. Exchanges and/or Reinstatements
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Overview of the policy
Purpose
The WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II is a variable annuity Policy. You can use the Policy to accumulate assets for retirement or other long-term financial planning purposes. The amount of money You are able to accumulate in Your Policy depends upon the performance of Your Investment Options. The Policy also offers a death benefit to protect Your designated Beneficiaries.
This Policy may not be appropriate for people who do not have a long investment time horizon and is not appropriate for people who intend to engage in market timing or other frequent (disruptive) trading.
Who the Policy is Appropriate For
The Policy is designed for investors who intend to accumulate assets for retirement or other long-term financial planning best suited for those with a long investment horizon. Although You have the ability to make partial withdrawals and/or Surrender the Policy at any time during the accumulation phase, the Policy should not be viewed as a highly liquid investment. In that regard, withdrawals taken in the near term can result in Your being assessed a surrender charge, which can be a significant amount. In addition, if You participate in certain optional benefits, withdrawals can markedly reduce the benefit’s value. Finally, failure to hold the Policy for the long-term would mean that You lose the opportunity for the performance of Your chosen Investment Options to grow on a tax-deferred basis. Thus, the Policy’s features are appropriate for an investor who does not have significant liquidity needs with respect to money dedicated to the Policy, has a long investment horizon, and has purchased the Policy for retirement purposes or other long-term financial planning purposes.
Phases of the Policy
The Policy has two phases: (1) an accumulation (or savings) phase and (2) and annuity (or income) phase.”
Accumulation Phase: To help You accumulate assets during the accumulation phase, You can invest Your Premium Payments and Policy Value in:
• Underlying Fund Portfolios available under the Policy, each of which has its own investment strategies and risks; investment adviser(s); expense ratio; and performance history; and
• The Fixed Account option, which offers a guaranteed interest rate during a selected period.
A list of Portfolio Companies in which You can invest is provided in an Appendix to this Prospectus. SeeAppendix - Portfolio Companies Available Under the Policy.
Annuity Phase. You can elect to Annuitize Your Policy and turn Your Policy value into a stream of income payments called annuity payments. When You Annuitize Your Policy, the accumulation phase ends, and You will no longer be able to withdraw money from Your Policy. Any guaranteed benefits You elected will terminate without value. You may elect to purchase the Initial Payment Guarantee for an additional fee that provides annually stabilized payments that are guaranteed to never be less than a percentage of the initial variable annuity payment at the time you Annuitize Your Policy.
You can choose from among several Annuity Payment Options, including those guaranteeing payments for life and/or for a fixed time period. If You choose income for a specified period, life income with 10 years certain, life income with guaranteed return of Policy proceeds, or income of a specified amount, and the person receiving annuity payments dies prior to the end of the guaranteed period, then the remaining guaranteed annuity payments will be continued to a new payee, or their present value may be paid in a single sum.
Primary Features and Options of the Policy
Type of Policy. WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II Policy is a flexible premium deferred variable annuity Policy It is a “deferred” annuity because You defer taking annuity payments during the accumulation phase. It is a “flexible premium” annuity because You are generally not required to make any Premium Payments in addition to the initial minimum Premium Payment. The Policy is “variable” because its value can go up or down based on the performance of the Investment Options You choose.The Policy is available as a non-qualified or qualified Policy. The tax treatment of Your Policy may impact the benefits, as well as fees and charges under Your Policy.
Accessing Your Money. Before You Annuitize, You can withdraw money from Your Policy at any time. If You take a withdrawal, You have to pay a surrender charge and/or income taxes, including a tax penalty if You are younger than Age 59½.
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Tax Treatment. You can transfer money between Investment Options without tax implications, and earnings (if any) on Your investments are generally tax-deferred. You are taxed only upon: (1) making a withdrawal; (2) receiving a payment from us; or (3) payment of a death benefit.
Death Benefits. The Policy includes, at no additional cost, a default death benefit that will pay Your designated Beneficiaries at least the Annuity Value. You can purchase a guaranteed minimum death benefit for an additional fee, which may increase the amount of money payable to Your designated Beneficiaries upon Your death. Some of the guaranteed minimum death benefits available to You depend on which, if any, guaranteed lifetime withdrawal benefit You choose.
Optional Additional Earnings Rider: For an additional fee, You can elect this rider that may provide you with a supplemental death benefit to help offset the taxes typically due on annuity death benefits.
Additional Services. At no additional charge, You may select the following additional services:
• Dollar-Cost Averaging. This service allows You to automatically transfer amounts between certain Investment Options on a monthly basis.
• Asset Rebalancing. This service automatically reallocates Your Policy Value among Your Investment Options on a periodic basis to maintain Your standing allocation instructions.
• Systematic Payout Options. This service allows You to receive regular automatic withdrawals from Your Policy either on a monthly, quarterly, semi-annual and annual basis..
• Telephone and Electronic Transactions. This service allows You to make certain transactions by telephone or other electronic means with the appropriate authorization from You.
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The following table describes the fees and expenses that You will pay when buying, owning, and surrendering or making withdrawals from the Policy. Please refer to Your Policy specification page for information about the specific fees You will pay each year based on the options You have elected.
The first table describes the fees and expenses that You will pay at the time that You buy the Policy, surrender or make withdrawals from the Policy, or transfer Cash Value between Investment Options. or request special services. State premium taxes may also apply.
Transaction Expenses:
Sales Load Imposed On Premium Payments None
Maximum Withdrawal Charge (as a % of Premium Payments)(1)(2)(3) 7%
Transfer Charge(4) $10 after 12 per year
Loan Processing Fee(5) $30 per loan
Special Service Fee $25
(1)We may deduct a charge for special services, including overnight delivery, duplicate policies, non-sufficient checks on new business, duplicate 1099 and 5498 tax forms, duplicate disclosure documents and semi-annual reports, check copies, printing and mailing previously submitted forms and asset verification requests from mortgage companies. In addition, we may consider as special services customer initiated changes, modifications and transactions which are submitted in such a manner as to require the Company to incur additional processing costs.
(2)The surrender charge decreases based on the number of years since each Premium Payment was made, from 7% in the first two years after the Premium Payment was made grading down to 0% in the eighth year after the Premium Payment was made. To calculate surrender charges, the first Premium Payment made is considered to come out first. This charge is waived under certain circumstances.
(3)We may reduce or waive the surrender charge and the annual Policy charge for policies sold to groups of employees with the same employer, including our directors, officers and full-time employees, or other groups where sales to the group reduce our administrative expenses.
(4)There is no charge for transfers from the Fixed Account. We do not currently charge for Internet transfers, although we reserve the right to do so in the future.
(5)Loans are available only for certain qualified policies. The loan processing fee is not applicable in all states.
Annual Contract Expenses:
The next table describes the fees and expenses that You will pay each year during the time that You own the Policy, not including portfolio fees and expenses. This table also includes the charges You would pay if You added optional riders to Your Policy.
Annual Policy Charge(1)(2) $30 per Policy yearly
Base Contract Expenses (as a % of average Separate Account Value during the Accumulation Period)(3) 1.25%
With Compounding Minimum Death Benefit Rider Added (optional): 1.65%
With Annual Step-Up Death Benefit Rider Added (optional): 1.65%
Optional Benefit Riders (No Longer Available):  
Additional Earnings Rider Charge(4) 0.35%
Guaranteed Minimum Income Benefit Rider(5)  
Current 0.45%
Maximum 0.50%
(1)The surrender charge decreases based on the number of years since each Premium Payment was made, from 7% in the first two years after the Premium Payment was made grading down to 0% in the eighth year after the Premium Payment was made. To calculate surrender charges, the first Premium Payment made is considered to come out first. This charge is waived under certain circumstances.
(2)We currently waive this charge if either the Annuity Value, or the total Premium Payments, minus all partial Surrenders, including any surrender charges, equals or exceeds $50,000 on the Policy Anniversary for which the charge is payable. However, we will deduct this charge from Your Annuity Value if You Surrender Your Policy completely.
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(3)These charges are assessed on Your assets in each Subaccount . They do not apply to the Fixed Account. The mortality and expense risk charge of 0.85% applies when You have selected the standard death benefit. If You select the compounding minimum death benefit rider or the annual step-up death benefit rider, then the mortality and expense risk charge will increase to 1.25%. These charges apply only during the accumulation period. After the maturity date, if You elect a variable annuity payment option, we will deduct a daily Separate AccountAnnuitization charge from Your Subaccount assets equal to an annual rate of 1.40% in place of the mortality and expense risk and administrative charges.
(4) This rider is no longer available. You may not add this rider if You have already purchased one of the optional death benefit riders. If You add the rider, we will impose during the accumulation period an annual rider charge equal to 0.35% of Your Policy's Annuity Value on each rider anniversary and pro rata on the termination date of the rider, including Policy Surrender. The charge will not increase once the rider has been issued. We deduct the rider charge from the Fixed Account and from each Subaccount in proportion to the amount of the Annuity Value in each account. We do not assess this charge during the income phase. This rider is not available in all states.
(5)This rider is no longer available. The annual rider charge is a percentage of the minimum Annuitization value. If You choose to upgrade the rider, the charge for the rider after the upgrade is currently 0.45%, but, we reserve the right to increase the rider charge after upgrade to 0.50%. Once the rider is issued, the rider charge will not change. Keep in mind that the current rider charge (0.45%) may be higher if You upgrade the rider at a later date because we may increase the rider charge after upgrade up to the maximum (0.50%). We deduct the rider charge from the Fixed Account and from each Subaccount in proportion to the amount of the Annuity Value in each account. If the Annuity Value on any rider anniversary exceeds the rider charge threshold (guaranteed 2.0) times the minimum Annuitization value, we will waive the rider charge otherwise payable on that rider anniversary. If You later choose to Annuitize under a variable annuity payment option of this rider, we will impose a guaranteed minimum payment fee equal to an annual rate of 1.10% of the daily net asset values in the Subaccounts. This charge is assessed in addition to the mortality and expense risk charge of 1.40% annually that is set on the date You Annuitize under the rider. We may change the guaranteed minimum payment fee in the future if You choose to upgrade the minimum Annuitization value, or for future issues of the rider, but it will never be greater than 2.10%. SeeOptional Benefits.
Annual Portfolio Company Expenses:
The next section shows the minimum and maximum total operating expenses charged by the Portfolio Companies that You may pay periodically during the time You own the Policy. A complete list of the Portfolios available under the Policy, including their annual expenses may be found under Appendix - Portfolio Companies Available Under the Policy.
Annual Portfolio Company Expenses Minimum Maximum
Expenses that are deducted from Portfolio Company assets, including management fees, distribution and/or service 12b-1 fees, and other expenses 0.54% 2.23%
Expenses that are deducted from Portfolio Company assets, including management fees, 12b-1 fees, and other expenses, after any waivers or expense reimbursement 0.54% 1.68%
Example(1)
The following Examples are intended to help You compare the cost of investing in the Policy with the cost of investing in other variable annuity policies. These costs include Owner transaction expenses, annual Policy expenses, and annual Portfolio Company operating expenses.
The Examples assume that You invest $100,000 in the Policy for the time periods indicated. The Examples also assume that Your Policy has a 5% return each year and assumes the most expensive combination of annual Portfolio Company expenses and optional benefits available for an additional charge. This includes the maximum annual Portfolio Company expenses, highest death benefit option and Guaranteed Minimum Benefit rider. Although Your actual costs may be higher or lower, based on these assumptions, Your costs would be:
Example (13)   1 Year   3 Years   5 Years   10 Years
If You Surrender the Policy at the end of the applicable time period.   $11,803   $20,525   $28,405   $49,823
If You Annuitize* or remain invested in the Policy at the end of the applicable time period.   $ 4803   $14,525   $24,405   $49,823
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*You cannot Annuitize Your Policy before Your Policy’s fifth anniversary.
(1)Please remember that these Examples are illustrations and do not represent past or future expenses. Your actual expenses may be lower or higher than those reflected in the Examples. Similarly, Your rate of return may be more or less than the 5% assumed in the Examples. Expense Examples: The Example does not reflect premium tax charges, special service fees, or transfer fees. Different fees and expenses not reflected in the Example may be assessed during the income phase of the Policy.
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There are risks associated with investing in the Policy. You can lose money in a variable annuity, including potential loss of Your original investment. The value of Your investment and any returns will depend primarily on the performance of the underlying fund portfolios You select. Each underlying fund portfolio may have its own unique risks.
Variable annuities are not a short-term investment vehicle. The surrender charge applies for a number of years, so that the Policy should only be purchased for the long-term. Under some circumstances, You may receive less than the sum of Your premium payments. In addition, full or partial withdrawals will be subject to income tax and may be subject to a 10% Internal Revenue Service (“IRS”) penalty if taken before age 59½. Accordingly, You should carefully consider Your income and liquidity needs before purchasing a Policy. Additional information about these risks appears in the Tax Information section of this prospectus.
Risks Of An Increase In Current Fees And Expenses. Certain fees and expenses are currently assessed at less than their guaranteed maximum levels. In the future, these charges may be increased up to the guaranteed (maximum) levels.
Investment Risk. You bear the risk of any decline in the Policy Value caused by the performance of the underlying fund portfolios held by the Subaccounts. Those funds could decline in value very significantly, and there is a risk of loss of your entire amount invested. The risk of loss varies with each underlying fund. This risk could have a significant negative impact on the value of certain optional benefits offered under the Policy. The investment risks are described in the prospectuses for the underlying funds.
Risk Associated With Election of Optional Benefits. Several of the optional benefits include a host of requirements that must be adhered to in order to preserve and maximize the guarantees we offer under the benefit. If You fail to adhere to these requirements, that may diminish the value of the benefit and even possibly cause termination of the benefit. In addition, it is possible that You will pay fees for the optional benefit without fully realizing the guarantees available under the optional benefit. For example, such would be the case if You were to hold a Guaranteed Lifetime Withdrawal Benefit for many years yet die sooner than anticipated, without having taken a significant number of lifetime withdrawals.
Risks of Managing General Account Assets. The general account assets of The Company are used to support the payment of guaranteed benefits under the Policy. To the extent that the Company is required to pay amounts in addition to the Policy Value, such amounts will come from our general account assets. You should be aware that the general account assets are exposed to the risks normally associated with a portfolio of fixed-income securities, including interest rate, option, liquidity and credit risk, and are also subject to the claims of the Company’s general creditors. The Company’s financial statements contained in the Statement of Additional Information include a further discussion of risks inherent in the general account investments.
Insurance Company Insolvency. It is possible that we could experience financial difficulty in the future and even become insolvent, and therefore unable to provide all of the guarantees and benefits that exceed the assets in the Separate Account that we promise.
Tax Consequences. Withdrawals are generally taxable to the extent of any earnings in the Policy, and prior to age 59½ a tax penalty may apply. In addition, even if the Policy is held for years before any withdrawal is made, withdrawals are taxable as ordinary income rather than capital gains.
Cybersecurity and Certain Business Continuity Risks
Our operations support complex transactions and are highly dependent on the proper functioning of information technology and communication systems. Any failure of or gap in the systems and processes necessary to support complex transactions and avoid systems failure, fraud, information security failures, processing errors, cyber intrusion, loss of data and breaches of regulation may lead to a materially adverse effect on our results of operations and corporate reputation. In addition, we must commit significant resources to maintain and enhance its existing systems in order to keep pace with applicable regulatory requirements, industry standards and customer preferences. If we fail to maintain secure and well-functioning information systems, we may not be able to rely on information for product pricing, compliance obligations, risk management and underwriting decisions. In addition, we cannot assure investors or consumers that interruptions, failures or breaches in security of these processes and systems will not occur, or if they do occur, that they can be timely detected and remediated. The occurrence of any of these events may have a materially adverse effect on our businesses, results of operations and financial condition.
For additional detail regarding cybersecurity and related risks, please reference the Cyber Security section in the Statement of Additional Information.
Business Continuity
Our business operations may be adversely affected by volatile natural and man-made disasters, including (but not limited to) hurricanes, earthquakes, terrorism, civil unrest, geopolitical disputes. military action, fires and explosions, pandemic diseases, and other catastrophes (“Catastrophic Events”). Over the past several years, changing weather patterns and climatic conditions have added
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to the unpredictability and frequency of natural disasters in certain parts of the world. To date, the COVID-19 pandemic has caused significant uncertainty and disruption to governments, business operations, and consumer behavior on a global scale. Such uncertainty as to future trends and exposure may lead to financial losses to our businesses. Furthermore, Catastrophic Events may disrupt our operations and result in the loss of, or restricted access to, property and information about Transamerica and its clients. Such events may also impact the availability and capacity of our key personnel. If our business continuity plans do not include effective contingencies for Catastrophic Events, we may experience business disruption, damage to corporate reputation, and damage to financial condition for a prolonged period of time.
Transamerica life insurance company, The separate account, and portfolio companies
Transamerica Life Insurance Company, located at 6400 C Street S.W., Cedar Rapids, Iowa 52499, is the insurance company issuing the Policy.
We are engaged in the sale of life and health insurance and annuity policies. Transamerica Life Insurance Company was incorporated under the laws of the State of Iowa on April 19, 1961 as NN Investors Life Insurance Company, Inc, and is licensed in all states except New York and District of Columbia, Guam, Puerto Rice, and the U.S. Virgin Islands. We are a wholly-owned indirect subsidiary of Transamerica corporation which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. All of the stock of Transamerica Corporation is indirectly owned by Aegon N.V. of The Netherlands, the securities of which are publicly traded. Aegon N.V., a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business.All obligations arising under the policies, including the promise to make annuity payments, are general corporate obligations of ours and subject to our claims paying ability. Accordingly, no financial institution, brokerage firm or insurance agency is responsible for our financial obligations arising under the policies.
We pay benefits under Your Policy from our general account assets and/or from Your Policy Value held in the Separate Account. It is important that You understand that payments of the benefits are not assured and depend upon certain factors discussed below.
Assets in the Separate Account. You assume all of the investment risk for Your Policy Value that is allocated to the Subaccounts of the Separate Account. Your Policy Value in those Subaccounts constitutes a portion of the assets of the Separate Account. These assets are segregated and insulated from our general account, and may not be charged with liabilities arising from any other business that we may conduct.
Assets in the General Account. You also may be permitted to make allocations to Guaranteed Period Options of the Fixed Account, which are supported by the assets in our general account. Any guarantees under a Policy that exceed Policy Value, such as those associated with any lifetime withdrawal benefit riders and any optional death benefits, are paid from our general account (and not the Separate Account). Therefore, any amounts that we may be obligated to pay under the Policy in excess of Policy Value are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. The assets of the Separate Account, however, are also available to cover the liabilities of our general account, but only to the extent that the Separate Account assets exceed the Separate Account liabilities arising under the policies supported by it.
We issue other types of insurance policies and financial products as well, and we also pay our obligations under these products from our assets in the general account.
As an insurance company, we are required by state insurance regulation to hold a specified amount of reserves in order to meet all the contractual obligations of our general account. In order to meet our claims-paying obligation we monitor our reserves so that we hold sufficient amounts to cover actual or expected policy and claims payments. In addition, we hedge our investments in our general account, and may require purchasers of certain benefits of the variable insurance products that we offer to allocate premium payments and Policy Value in accordance with specified investment requirements. However, it is important to note that there is no guarantee that we will always be able to meet our claims-paying obligations, and that there are risks to purchasing any insurance product.
State insurance regulators also require insurance companies to maintain a minimum amount of capital, which acts as a cushion in the event that the insurer suffers a financial impairment, based on the inherent risks in the insurer’s operations. These risks include those associated with losses that we may incur as the result of defaults on the payment of interest or principal on our general account assets, which include bonds, mortgages, general real estate investments, and stocks, as well as the loss in market value of these investments. We may also experience liquidity risk if our general account assets cannot be readily converted into cash to meet obligations to our Policy Owners or to provide the collateral necessary to finance our business operations.
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How to Obtain More Information. We encourage both existing and prospective Policy Owners to read and understand our financial statements. We prepare our financial statements on a statutory basis. Our financial statements, which are presented in conformity with accounting practices prescribed or permitted by the Iowa Department of Insurance as well as the financial statements of the Separate Account are located in the Statement of Additional Information (SAI). For a free copy of the SAI, simply call or write us at the phone number or address of our Administrative Office referenced in this prospectus. In addition, the SAI is available on the SEC's website at sec.gov. Our financial strength ratings which reflect the opinions of leading independent rating agencies of our ability to meet our obligations to our Policy Owners are available on our website https://www.transamerica.com/why-transamerica/financial-strength, and the websites of these nationally recognized statistical ratings organizations – https://www.ambest.com/home/default.aspx, https://www.moodys.com/ and https://www.spglobal.com/ratings/en/.
The Separate Account
The Company established a Separate Account, called WRL Series Annuity Account, under the laws of the State of Ohio on August 4, 2003. The Separate Account receives and invests the Premium Payments that are allocated to it for investment in shares of the underlying fund portfolios.
The Separate Account is registered with the SEC as a unit investment trust under the 1940 Act. However, the SEC does not supervise the management, the investment practices, or the policies of the Separate Account or the Company. Income, gains and losses (whether or not realized), from assets allocated to the Separate Account are, in accordance with the policies, credited to or charged against the Separate Account without regard to the Company's other income, gains or losses.
The assets of the Separate Account are held in the Company's name on behalf of the Separate Account and belong to the Company. However, those assets that underlie the policies are not chargeable with liabilities arising out of any other business the Company may conduct. The Separate Account may include other Subaccounts that are not available under these policies.
The Underlying Funds
At the time you purchase your Policy, you may allocate your premium to Subaccounts. These are subdivisions of our Separate Account, an account that keeps your policy assets separate from our company assets. The Subaccounts then purchase shares of mutual funds set up exclusively for variable annuity or variable life insurance products. These are not the same mutual funds that you buy through your investment professional even though they may have similar investment strategies and the same portfolio managers. Each underlying fund portfolio has varying degrees of investment risk. Underlying fund portfolios are also subject to separate fees and expenses such as management fees and operating expenses. “Master-feeder” or “fund of funds” invest substantially all of their assets in other funds and will therefore bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Read the underlying fund portfolio prospectuses carefully before investing. We do not guarantee the investment results of any underlying fund portfolio. Certain underlying fund portfolios may not be available in all states and in all share classes. Please seeAppendix - Portfolio Companies Available Under the Policy for additional information.
Other Transamerica Policies
We offer a variety of fixed and variable annuity policies. They may offer features, including Investment Options, and have fees and charges, that are different from those in the Policy offered by this prospectus. Not every Policy we issue is offered through every financial intermediary. Some financial intermediaries may not offer and/or limit the offering of certain features or options, as well as limit the availability of the policies, based on issue Age, or other criteria established by the financial intermediary. Upon request, Your financial professional can show You information regarding other Transamerica annuity policies that he or she distributes. You can also contact us to find out more about the availability of any of the Transamerica annuity policies.
You should work with Your financial professional to decide whether this Policy is appropriate for You based on a thorough analysis of Your particular insurance needs, financial objectives, investment goals, time horizons and risk tolerance.
VOTING RIGHTS
To the extent required by law, we will vote the Underlying Fund Portfolios' shares in accordance with instructions we receive from You and other Owners that have voting interest in the portfolios. We will send You and other Owners’ requests for instructions on how to vote those shares. When we receive those instructions, we will vote all of the shares in accordance with those instructions. We will vote shares for which no timely instructions were received in the same proportion as the voting instructions we received. Accordingly, it is possible for a small number of Policy Owners (assuming there is a quorum) to determine the outcome of a vote, especially if they have large Policy values. However, if we determine that we are permitted to vote the shares in our own right, we may do so. Each person having a voting interest will receive proxy material, reports and other materials relating to the appropriate portfolio.
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THE ANNUITY POLICY
This prospectus describes information You should know before You purchase the WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II.
An annuity is a Policy between You (the Owner), and an insurance company (in this case the Company), where the insurance company promises to pay You an income in the form of annuity payments. These payments begin on a designated date, referred to as the Maturity Date. SeeANNUITY PAYMENTS (THE INCOME PHASE). Until the Maturity Date, Your annuity is in the accumulation period and the earnings (if any) are tax deferred. Tax deferral means You generally are not taxed until You take money out of Your annuity. After the Maturity Date, Your annuity switches to the income phase.
The Policy is a flexible premium deferred variable annuity. You can use the Policy to accumulate assets for retirement or other long-term financial planning purposes.
The Policy is a “flexible premium” annuity because after You purchase it, You can generally make additional Premium Payments of $50 or more until the Maturity Date. You are not required to make any additional Premium Payments.
The Policy is a “variable” annuity because the value of Your Policy can go up or down based on the performance of Your Subaccounts. If You invest in the Separate Account, the amount of money You are able to accumulate in Your Policy during the accumulation period depends upon the performance of Your Subaccounts. If You elect to receive variable annuity payments during the income phase of Your Policy, the amount of Your annuity payments will also depend upon the performance of Your Subaccounts for the income phase.
The Policy also contains a Fixed Account. Unless otherwise required by state law, we reserve the right to limit the amount you may allocate or transfer to the Fixed Account. The Fixed Account offers an interest rate that is guaranteed by the Company to equal at least 2% per year. There may be different interest rates for each payment or transfer You direct to the Fixed Account which are equal to or greater than the guaranteed rate. The interest rates we set will be credited for periods of at least one year measured from each payment or transfer date.
Do not purchase this Policy if You plan to use it, or any of its riders, for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme. Your Policy is not intended or designed to be traded on any stock exchange or secondary market. By purchasing this Policy, You represent and warrant that You are not using the Policy, or any of its riders for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme.
PURCHASE
Policy Issue Requirements
We will not issue a Policy unless:
• we receive the information we need to issue the Policy at our Administrative Office in good order;
• we receive a minimum initial Premium Payment (except for the 403(b) policies); and
• the Annuitant is age 85 or younger.
In order to purchase the optional compounding minimum death benefit rider, annual step-up death benefit rider or Additional Earnings Rider, You, a joint Owner and the Annuitant must be age 75 or younger. If You purchase the compounding minimum death benefit rider or the annual step-up death benefit rider, You cannot drop it after we issue Your Policy. You may purchase the Additional Earnings Rider at issue or on any Monthiversary during the accumulation period if You have not already purchased an optional death benefit rider. You may not purchase the Additional Earnings Rider if You have purchased an optional death benefit rider.
Premium Payments
You should make checks or drafts for Premium Payments payable only to Transamerica Life Insurance Company and send them to our Administrative Office. Your check or draft must be honored in order for us to pay any associated annuity payments and benefits due under the Policy.
We do not accept cash or money orders. We reserve the right to not accept third party checks. A third party check is a check that is made payable to one person who endorses it and offers it as payment to a second person. Checks should normally be payable to Transamerica Life Insurance Company, however, in some circumstances, at our discretion we may accept third party checks that are from a rollover or transfer from other financial institutions. Any third party checks not accepted by us will be returned.
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We reserve the right to reject or accept any form of payment. Any unacceptable forms of payment will be returned.
Initial Premium Requirements
The initial Premium Payment for nonqualified policies must be at least $5,000. However, You may make a minimum initial Premium Payment of $1,000, rather than $5,000, if You indicate on Your application that You anticipate making minimum monthly payments of at least $100 by electronic funds transfer. For traditional or Roth IRAs, the minimum initial Premium Payment is $1,000 and for qualified policies other than traditional or Roth IRAs, the minimum initial Premium Payment is $50.
We will credit Your initial Premium Payment to Your Policy within two business days after the day we receive it and Your complete Policy information in good order. If we are unable to credit Your initial Premium Payment, we (or Your agent) will contact You within five business days and explain why. We will also return Your initial Premium Payment at that time unless You tell us (or Your agent) to keep it and to credit it as soon as we receive all necessary application information.
The date on which we credit Your initial Premium Payment to Your Policy is generally the Policy Date. The Policy Date is used to determine Policy years, Policy months and Policy Anniversaries.
Although we do not anticipate delays in processing Your application, we may experience delays if agents fail to forward applications and Premium Payments to our Administrative Office in a timely manner. Any delays will affect when Your Policy can be issued and when Your Premium Payment is allocated among the investment choices.
If You wish to make Premium Payments by bank wire, please contact our Administrative Office at (800)851-9777 (Monday–Friday 8:30 a.m.–7:00 p.m. Eastern Time).
We may reject any application or Premium Payment for any reason permitted by law.
Additional Premium Payments
You are not required to make any additional Premium Payments. However, You can generally make additional Premium Payments as often as You like during the lifetime of the Annuitant and prior to the Maturity Date. We will accept PremiumPayments by bank wire or by check. Additional Premium Payments must be at least $50 ($100 monthly in the case of nonqualified policies with a $1,000 initial Premium Payment and $1,000 if by wire). We reserve the right to refuse any additional Premium Payments in excess of these limits, and if You do not obtain prior approval for Premium Payments in excess of the dollar amounts listed above, the business will be deemed not in good order. We will credit any additional Premium Payments You make to Your Policy at the Accumulation Unit Value computed at the end of the business day on which we receive them in good order at our Administrative Office. Our business day closes when the NYSE closes, usually at 4:00 p.m. Eastern Time. If we receive Your Premium Payments after the close of our business day, we will calculate and credit them as of the close of the next business day. Additional Premium Payments received in good order on non-business days or after our close of business on business days will receive next-day pricing. See Sending Forms and Transaction Requests in Good Order.
Maximum Total Premium Payments
We reserve the right to require prior approval of any cumulative Premium Payments over $1,000,000 (this includes subsequent Premium Payments) for all policies with the same Owner or same Annuitant issued by us or an affiliate. If You do not obtain prior approval for Premium Payments in excess of the dollar amounts listed above, the business will be deemed not in good order.
Allocation of Premium Payments
On the Policy date, we will allocate Your Premium Payment to the investment choices You selected on Your application. Your allocation must be in whole percentages and must total 100%. We will allocate additional Premium Payments as selected on Your application, unless You request a different allocation.
Unless otherwise required by state law, we reserve the right to limit the amount you may allocate or transfer to the fixed account.
If You allocate Premium payments to the Dollar Cost Averaging program, then You must give us instructions regarding the Subaccount(s) to which transfers are to be made or we cannot accept Your Premium Payment.
You may change allocations for future additional Premium Payments by writing or by telephoning the Administrative Office or by visiting our website, tlic.transamerica.com, subject to the limitations described under ADDITIONAL FEATURES - Telephone, Fax and Internet Transactions. The allocation change will apply to Premium Payments received on or after the date we receive the change request at our Administrative Office in good order.
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You should review periodically how Your Premium Payments are divided among the Subaccounts because market conditions and Your overall financial objectives may change.
Annuity Value
You should expect Your annuity value to change from Valuation Period to Valuation Period to reflect the investment performance of the portfolios, the interest credited to Your value in the Fixed Account, and the fees and charges we deduct. A Valuation Period begins at the close of regular trading on each business day and ends at the close of regular trading on the next Valuation Date. A Valuation Date is any day the NYSE is open. Our business day closes when the NYSE closes, usually 4:00 p.m. Eastern Time. We observe the same holidays as the NYSE.
Accumulation Units
We measure the value of Your Policy during the Accumulation Period by using a measurement called an accumulation unit. During the income phase, we use a measurement called an annuity unit. When You direct money into a Subaccount, we credit Your Policy with accumulation units for that Subaccount. We determine how many accumulation units to credit by dividing the dollar amount You direct to the Subaccount by the Subaccount's Accumulation Unit Value as of the end of that Valuation Date. If You withdraw or transfer out of a Subaccount, or if we assess a transfer charge, annual Policy charge, or any surrender charge, or any Additional Earnings Rider charge, we subtract accumulation units from the Subaccounts using the same method.
Each Subaccount's Accumulation Unit Value was set at $10 when the Subaccount started. We recalculate the Accumulation Unit Value for each Subaccount at the close of each Valuation Date. The new Accumulation Unit Value reflects the investment performance and the fees and expenses of the underlying fund portfolio, and the daily deduction of the mortality and expense risk charge and administrative charge. For a detailed discussion of how we determine Accumulation Unit Values, see the SAI.
INVESTMENT CHoices
The WRL Freedom Premier Policy, formerly known as WRL Freedom Premier II variable annuity offers you a means of investing in various Underlying Fund Portfolios offered by different investment companies (by investing in the corresponding Subaccounts). The companies that provide investment advice and administrative services for the Underlying Fund Portfolios offered through this Policy are listed in the Appendix – Portfolio Companies Available Under the Policy.
The general public may not purchase shares of any of these Underlying Fund Portfolios. Their investment objectives and policies may be similar to other Underlying Fund Portfolios and mutual funds managed by the same investment adviser or sub-adviser that are sold directly to the public. You should not expect that the investment results of the other portfolios and mutual funds will be comparable to those portfolios offered by this prospectus.
There is no assurance that an Underlying Fund Portfolio will achieve its stated objective(s). For example, during extended periods of low interest rates, the yield of a money market Subaccount may become extremely low and possibly negative. More detailed information may be found in the underlying fund prospectuses. You should read the underlying fund prospectuses carefully before You invest.
Please contact our Administrative Office at (800)851-9777 (Monday - Friday 8:30 a.m. - 7:00 p.m. Eastern Time) or visit our website http://dfinview.com/Transamerica/TAHD/89358R580?site=VAVUL to obtain an additional copy of the Underlying Fund Portfolio prospectuses containing more complete information concerning the funds and portfolios.
Note: If You received a summary prospectus for any of the underlying fund portfolios listed in Appendix - Portfolio Companies Available Under the Policy, please follow the instructions on the first page of the summary prospectus to obtain a copy of the full underlying fund prospectus or its Statement of Additional Information.
Selection of Underlying Fund Portfolios
The Underlying Fund Portfolios offered through this variable annuity are selected by us, and we may consider various factors, including, but not limited to, asset class coverage, the strength of the adviser's or sub-adviser's reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor that we may consider is whether the Underlying Fund Portfolio or its service providers (e.g., the investment adviser or sub-advisers) or its affiliates will make payments to us or our affiliates. For additional information about these arrangements, seeRevenue We Receive. We review the portfolios periodically and may remove a portfolio, or limit its availability to new premiums and/or transfers of Cash Value if we determine that a portfolio no longer satisfies one or more of the selection criteria, and/or if the portfolio has not attracted significant allocations from Owners. We have included the Transamerica Series Trust (“TST”) Underlying Fund Portfolios at least in part because they are managed by one of our affiliates, Transamerica Asset Management, Inc. (“TAM”), our directly owned subsidiary.
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You are responsible for choosing the Underlying Fund Portfolios, and the amounts allocated to each, that are appropriate for Your own individual circumstances and our investment goals, financial situation, and risk tolerance. Because investment risk is borne by You, decisions regarding investment allocations should be carefully considered.
In making Your investment selections, we encourage You to thoroughly investigate all of the information regarding the Underlying Fund Portfolios that are available to You, including each Underlying Fund Portfolio's prospectus, statement of additional information and annual and semi-annual reports. Other sources such as newspapers and financial and other magazines provide more current information, including information about any regulatory actions or investigations relating to a fund or Underlying Fund Portfolio. After You select Underlying Fund Portfolios for Your initial Premium Payment, You should monitor and periodically re-evaluate Your allocations to determine if they are still appropriate.
You bear the risk of any decline in the Cash Value of Your Policy resulting from the performance of the Underlying Fund Portfolios You have chosen.
We do not recommend or endorse any particular Underlying Fund Portfolio and we do not provide investment advice.
We do not guarantee that each portfolio will always be available for investment through the Policy. We reserve the right, subject to compliance with applicable laws, to add new portfolios or portfolio classes, close existing portfolios or portfolio classes to allocations of new premiums by existing Owners or new Policy Owners at any time, or substitute portfolio shares that are held by any Subaccount for shares of a different portfolio. New or substitute portfolios or portfolio classes may have different fees and expenses and their availability may be limited to certain classes of purchasers. We reserve the right to limit the number of Subaccounts You are invested in at any one time.
Addition, Deletion, or Substitution of Investment Options
We cannot and do not guarantee that any of the Subaccounts will always be available for premium payments, allocations, or transfers. We reserve the right, subject to compliance with applicable law, to add, remove or combine Subaccounts, and substitute the shares that are held by the Separate Account for shares of another portfolio, at our discretion. We reserve the right to eliminate the shares of any portfolios of a fund and to substitute shares of other Underlying Fund Portfolios (or of other open-end registered investment companies). We will not, however, substitute shares attributable to an Owner’s interest in a Subaccount without notice to, and prior regulatory approval of to the extent required by applicable law.
We also reserve the right to establish additional Subaccounts, each of which would invest in a new portfolio of a fund, or in shares of another investment company, with a specified investment objective.
New Subaccounts may be established when, in our sole discretion, marketing, tax, investment or other conditions warrant. Any new Subaccounts may be made available to existing Owners on a basis to be determined by us. Each additional Subaccount will purchase shares in an Underlying Fund Portfolio or other investment vehicle. We may also close one or more Subaccounts if, in our sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any Subaccount is closed, we will notify You and request a reallocation of the amounts invested in the closed Subaccount. If we do not receive new instructions, the requested transaction (including dollar cost averaging transactions or asset rebalance programs transactions) will be cancelled. Any Premium] Payment will be considered not in good order. The value of the closed Subaccount will continue to fluctuate due to portfolio performance, and may exceed the original rebalance percentages You requested. As You consider Your overall investment strategy within Your annuity, You should also consider whether or not to re-allocate the value remaining in the closed Subaccount to another investment choice. If You decide to re-allocate the value of the closed Subaccount, You will need to provide us with instructions to achieve Your goal. Under certain situations involving Annuitizations (e.g., policy reached maximum Maturity Date) if an investment choice is closed to new investment, the amount that would have been allocated thereto will instead be used to purchase annuity units pro-rata in the other investment choices You have purchased accumulation units in and which are open to new investment. Moreover, in certain situations involving death benefit adjustments for continued policies, if an investment choice is closed to new investment, the amount that would have been allocated thereto will instead be allocated pro-rata to the other current investment choices You have allocated to and which are open to new investments.
In the event of any such substitution or change, we may, by appropriate endorsement, make such changes in the policies as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the policies, the Separate Account may be (1) operated as a management company under the 1940 Act, or any other form permitted by law, (2) deregistered under the 1940 Act in the event such registration is no longer required or (3) combined with one or more other Separate Accounts. To the extent permitted by applicable law, we also may (1) transfer the assets of the Separate Account associated with the policies to another account or accounts, (2) restrict or eliminate any voting rights of Owners or other persons who have voting rights as to the Separate Account, (3) create new Separate Accounts, (4) add new Subaccounts to or remove existing Subaccounts from the Separate Account, or combine Subaccounts or (5) add new underlying fund portfolios, or substitute a new Underlying Fund Portfolio for an existing Underlying Fund Portfolio.
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In addition, a Subaccount could become no longer available due to the liquidation of its corresponding Underlying Fund Portfolio. To the extent permitted by applicable law, upon advance notice to You and unless You otherwise instruct us, we will:
1)  Re-allocate any policy value in the liquidated fund to the money market Subaccount or a Subaccount investing in another Underlying Fund Portfolio designated by us; and
2)  Allocate any subsequent Premium Payments and/or transfers (including Dollar Cost Averaging transactions or asset rebalance programs transactions) to the other Subaccounts You have selected
We reserve the right, subject to compliance with applicable law, to make certain changes to the Separate Account and its investments. We reserve the right to add new portfolios (or portfolio classes), close existing portfolios (or portfolio classes), or substitute portfolio shares that are held by any Subaccount for shares of a different portfolio. We will not add, delete or substitute any Underlying Fund Portfolio shares attributable to Your interest in a Subaccount without notice to You and prior approval of the SEC, to the extent required by the 1940 Act or other applicable law.
The Fixed Account
Premium payments allocated and amounts transferred to the Fixed Account become part of our general account. Interests in the general account have not been registered under the Securities Act of 1933 (the “1933 Act”), nor is the general account registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). Accordingly, neither the general account nor any interests therein are generally subject to the provisions of the 1933 or 1940 Acts. We have been advised that the staff of the SEC has not reviewed the disclosure in this prospectus which relates to the Fixed Account.
While we do not guarantee that the Fixed Account will always be available for investment, we do guarantee that the interest credited to the Fixed Account will not be less than 2% (in most states) per year. We have no formula for determining Fixed Account current interest rates. We establish the interest rate, at our sole discretion, for each premium payment or transfer into the Fixed Account. Rates are guaranteed for at least one year, but will never be less than 2% per year.
The minimum Fixed Account Cash Value upon full surrender is 90% of the Fixed Account premium payments less partial surrenders and transfers from the Fixed Account accumulated at 3% per year. Any money you allocate or transfer to the Fixed Account will be placed with our other general assets. All assets in our general account are subject to the general liabilities of our business operations. The amount of money you are able to accumulate in the Fixed Account during the accumulation period depends upon the total interest credited. The amount of annuity payments you receive during the income phase under a fixed annuity option will remain level for the entire income phase.
When you request a transfer, or if we consent to a partial surrender from the Fixed Account, we will account for it on a first-in, first-out (“FIFO”) basis, for purposes of crediting your interest. This means that we will take the deduction from the oldest money you have put in the Fixed Account. You may transfer money from the Fixed Account to the Subaccounts once during each policy year, subject to certain restrictions. You may not transfer money between the Fixed Account and the Subaccounts during the income phase. You may not make partial surrenders from the Fixed Account unless we consent.
Unless otherwise required by state law, we reserve the right to limit the amount you may allocate or transfer to the Fixed Account.
During the Accumulation Period, You or Your agent/registered representative of record may make transfers from any Subaccount. However, if You elect the asset rebalancing program, You may not make any transfers if You want to continue in the program. A transfer would automatically cancel Your participation in the asset rebalancing program.
Currently, we allow You to transfer up to 100% of the amount in the Fixed Account. However, we reserve the right to require that You comply with one or more of the following:
• That You only make one transfer per Policy year. This restriction does not apply if You have selected dollar cost averaging.
• That You request transfers from the Fixed Account in writing;
• That You only make transfers from the Fixed Account during the 30 days following each Policy Anniversary; and
• That You limit the maximum amount You transfer from the Fixed Account to the greater of:
(1) 25% of the amount in the Fixed Account; or
(2) the amount You transferred from the Fixed Account in the immediately prior Policy year.
(Note: This restriction may prolong the period of time it takes to transfer the total Annuity Value allocated to the Fixed Account to other investment choices. You should carefully consider whether investment in the Fixed Account meets Your needs and investment criteria.)
Before affecting any of these requirements, we will notify You in writing, and they will apply uniformly to all Owners.
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Except when used to pay premiums, we may also defer payment of any amounts from the Fixed Account for no longer than six months after we receive written notice of Your request for the transfer. Transfers from the Fixed Account are not available through our website.
During the income phase of Your Policy, You may transfer values from one Subaccount to another. No transfers may be made to or from the Fixed Account during the income phase. The minimum amount that can be transferred during this phase is the lesser of $10 of monthly income, or the entire monthly income of the variable annuity units in the Subaccount from which the transfer is being made. We may limit Subaccount transfers to one per Policy year.
Transfers may be made by telephone, fax or Internet, subject to limitations described under ADDITIONAL FEATURES – Telephone, Fax and Internet Transactions. We consider all transfers made in any one day to be a single transfer.
If You make more than 12 transfers from the Subaccounts in any Policy year, we may charge You $10 for each additional transfer You make during that year. There is no charge for transfers from the Fixed Account, however, they will be counted toward the 12 free transfers allowed per Policy year. We do not currently charge for transfers, although we reserve the right to do so in the future.
Transfers to and from the Subaccounts will be processed based on the accumulation unit values determined at the end of the business day on which we receive Your written, telephoned, or faxed request, provided we receive Your request in good order before the close of regular trading (usually 4:00 p.m. Eastern Time). If we receive Your request after the close of our business on market day we will process the transfer request using next day pricing.
The market timing policy and the related procedures (discussed below) do not apply to the ProFunds Subaccounts because the corresponding portfolios are specifically designed to accommodate frequent transfer activity. If You invest in the ProFunds Subaccounts, You should be aware that You may bear the costs and increased risks of frequent transfers discussed below.
Statement of Policy. This variable annuity was not designed to accommodate market timing or frequent or large transfers among the Subaccounts or between the Subaccounts and the Fixed Account. (Both frequent and large transfers may be considered disruptive.)
Market timing and disruptive trading can adversely affect You, other Owners,Beneficiaries and Underlying Fund Portfolios. The adverse effects may include: (1) dilution of the interests of long-term investors in a Subaccount if purchases or transfers into or out of an Underlying Fund Portfolio are made at prices that do not reflect an accurate value for the Underlying Fund Portfolio’s investments (some market timers attempt to do this through methods known as “time-zone arbitrage” and “liquidity arbitrage”); (2) an adverse effect on portfolio management, such as (a) impeding a portfolio manager’s ability to seek or sustain an investment objective; (b) causing the Underlying Fund Portfolio to maintain a higher level of cash than would otherwise be the case; or (c) causing an Underlying Fund Portfolio to liquidate investments prematurely (or otherwise at an inopportune time) in order to pay Surrenders or transfers out of the Underlying Fund Portfolio; and (3) increased brokerage and administrative expenses. These costs are borne by all Owners invested in those Subaccounts, not just those making the transfers.
We have developed policies and procedures with respect to market timing and disruptive trading (which vary for certain Subaccounts at the request of the corresponding Underlying Fund Portfolios) and we do not make special arrangements or grant exceptions to accommodate market timing or potentially disruptive trading. As discussed herein, we cannot detect or deter all market timing or potentially disruptive trading. Do not invest with us if You intend to conduct market timing or potentially disruptive trading.
Detection. We employ various means in an attempt to detect and deter market timing and disruptive trading. However, despite our monitoring we may not be able to detect nor halt all harmful trading. In addition, because other insurance companies (and retirement plans) with different policies and procedures may invest in the Underlying Fund Portfolios, we cannot guarantee that all harmful trading will be detected or that an Underlying Fund Portfolio will not suffer harm from market timing and disruptive trading among Subaccounts of variable products issued by these other insurance companies or retirement plans.
Deterrence. If we determine You or anyone acting on Your behalf is engaged in market timing or disruptive trading, we may take one or more actions in an attempt to halt such trading. Your ability to make transfers is subject to modification or restriction if we determine, in our sole opinion, that Your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other Owners (or others having an interest in the variable insurance products). As described below, restrictions may take various forms, but under our current policies and procedures will include loss of expedited transfer privileges. We consider transfers by telephone, fax, overnight mail, or the Internet to be “expedited” transfers. This means that we would accept only written transfer requests with an original signature transmitted to us only by U.S. mail. We may also restrict the transfer privileges of others acting on Your behalf, including Your registered representative or an asset allocation or investment advisory service.
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We reserve the right to reject any Premium Payment or transfer request from any person without prior notice, if, in our judgment, (1) the Premium Payment or transfer, or series of Premium Payments or transfers, would have a negative impact on an Underlying Fund Portfolio's operations, or (2) if an Underlying Fund Portfolio would reject or has rejected our purchase order or has instructed us not to allow that purchase or transfer, or (3) because of a history of market timing or disruptive trading. We may impose other restrictions on transfers, or even prohibit transfers for any Owner who, in our view, has abused, or appears likely to abuse, the transfer privilege on a case-by-case basis. We may, at any time and without prior notice, discontinue transfer privileges, modify our procedures, impose holding period requirements or limit the number, size, frequency, manner, or timing of transfers we permit. Because determining whether to impose any such special restrictions depends on our judgment and discretion, it is possible that some Owners could engage in disruptive trading that is not permitted for others. We also reserve the right to reverse a potentially harmful transfer if an Underlying Fund Portfolio refuses or reverses our order; in such instances some Owners may be treated differently than others in that some transfers may be reversed and others allowed. For all of these purposes, we may aggregate two or more trades or variable insurance products that we believe are connected by Owner or persons engaged in trading on behalf of Owners.
In addition, transfers for multiple policies invested in the Transamerica Series Trust Underlying Fund Portfolios which are submitted together may be disruptive at certain levels. At the present time, such aggregated transactions likely will not cause disruption if less than one million dollars total is being transferred with respect to any one Underlying Fund Portfolio (a smaller amount may apply to smaller portfolios). Please note that transfers of less than one million dollars may be disruptive in some circumstances and this general amount may change quickly.
Please note: If You engage a third party investment adviser for asset allocation services, then You may be subject to these transfer restrictions because of the actions of Your investment adviser in providing these services.
In addition to our internal policies and procedures, we will administer Your variable annuity to comply with any applicable state, federal, and other regulatory requirements concerning transfers. We reserve the right to implement, administer, and charge You for any fee or restriction, including redemption fees, imposed by any Underlying Fund Portfolio. To the extent permitted by law, we also reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Underlying Fund Portfolios.
Under our current policies and procedures, we do not:
• impose redemption fees on transfers; or
• expressly limit the number or size of transfers in a given period except for certain Subaccounts where an Underlying Fund Portfolio has advised us to prohibit certain transfers that exceed a certain size; or
• provide a certain number of allowable transfers in a given period.
Redemption fees, transfer limits, and other procedures or restrictions imposed by the underlying funds or our competitors may be more or less successful than ours in deterring market timing or other disruptive trading and in preventing or limiting harm from such trading.
In the absence of a prophylactic transfer restriction (e.g., expressly limiting the number of trades within a given period or limiting trades by their size), it is likely that some level of market timing and disruptive trading will occur before it is detected and steps taken to deter it (although some level of market timing and disruptive trading can occur with a prophylactic transfer restriction). As noted above, we do not impose a prophylactic transfer restriction and, therefore, it is likely that some level of market timing and disruptive trading will occur before we are able to detect it and take steps in an attempt to deter it.
Please note that the limits and restrictions described herein are subject to our ability to monitor transfer activity. Our ability to detect market timing or disruptive trading may be limited by operational and technological systems, as well as by our ability to predict strategies employed by Owners (or those acting on their behalf) to avoid detection. As a result, despite our efforts to prevent harmful trading activity among the variable investment choices available under this variable insurance product, there is no assurance that we will be able to detect or deter market timing or disruptive trading by such Owners or intermediaries acting on their behalf. Moreover, our ability to discourage and restrict market timing or disruptive trading may be limited by decisions of state regulatory bodies and court orders that we cannot predict.
Furthermore, we may revise our policies and procedures in our sole discretion at any time and without prior notice, as we deem necessary or appropriate (1) to better detect and deter harmful trading that may adversely affect other Owners, other persons with material rights under the variable insurance products, or underlying fund shareholders generally, (2) to comply with state or federal regulatory requirements, or (3) to impose additional or alternative restrictions on Owners engaging in market timing or disruptive trading among the investment choices under the variable insurance product. In addition, we may not honor transfer requests if any variable investment choices that would be affected by the transfer is unable to purchase or redeem shares of its corresponding Underlying Fund Portfolio.
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Underlying Fund Portfolio Frequent Trading Policies. The Underlying Fund Portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. Underlying Fund Portfolios may, for example, assess a redemption fee (which we reserve the right to collect) on shares held for less than a certain period of time. The prospectuses for the Underlying Fund Portfolios describe any such policies and procedures. The frequent trading policies and procedures of an Underlying Fund Portfolio may be different, and more or less restrictive, than the frequent trading policies and procedures of other Underlying Fund Portfolios and the policies and procedures we have adopted for our variable insurance products to discourage market timing and disruptive trading. Owners should be aware that we do not monitor transfer requests from Owners or persons acting on behalf of Owners against, nor do we apply, the frequent trading policies and procedures of the respective Underlying Fund Portfolios that would be affected by the transfers.
Owners should be aware that we are required to provide to an Underlying Fund Portfolio or its payee, promptly upon request, certain information about the trading activity of individual Owners, and to restrict or prohibit further purchases or transfers by specific Owners or persons acting on their behalf, identified by an Underlying Fund Portfolio as violating the frequent trading policies established for the Underlying Fund Portfolio.
Omnibus Orders. Owners and other persons with material rights under the variable insurance products also should be aware that the purchase and redemption orders received by the Underlying Fund Portfolios generally are “omnibus” orders from intermediaries such as retirement plans and separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and individual Owners of variable insurance products. The omnibus nature of these orders may limit the Underlying Fund Portfolios' ability to apply their respective frequent trading policies and procedures.
We cannot guarantee that the Underlying Fund Portfolios will not be harmed by transfer activity relating to the retirement plans or other insurance companies that may invest in the Underlying Fund Portfolios. These other insurance companies are responsible for their own policies and procedures regarding frequent transfer activity. If their policies and procedures fail to successfully discourage harmful transfer activity, it may affect other Owners of Underlying Fund Portfolio shares, as well as the Owners of all of the variable annuity or life insurance policies, including ours, whose variable Investment Options correspond to the affected Underlying Fund Portfolios. In addition, if an Underlying Fund Portfolio believes that an omnibus order we submit may reflect one or more transfer requests from Owners engaged in market timing and disruptive trading, the Underlying Fund Portfolio may reject the entire omnibus order and thereby delay or prevent us from implementing Your request.
Third Party Investment Services
The Company or an affiliate may provide administrative or other support services to independent third parties You authorize to conduct transfers on Your behalf, or who provide recommendations as to how Your Subaccount values should be allocated. This includes, but is not limited to, transferring Subaccount values among Subaccounts in accordance with various investment allocation strategies that these third parties employ.
The Company does not engage any third parties to offer investment allocation services of any type, so that persons or firms offering such services do so independent from any agency relationship they may have with us for the sale of policies. We, therefore, takes no responsibility for the investment allocations and transfers transacted on Your behalf by such third parties or any investment allocation recommendations made by such parties.
The Company does not currently charge You any additional fees for providing these support services. We reserve the right to discontinue providing administrative and support services to owners utilizing independent third parties who provide investment allocation and transfer recommendations.
Note carefully:
• We do not offer, and do not engage any third parties to offer, investment allocation services of any type for use with the Policy.
• We are not party to any agreement that You may have with any third parties that offer investment allocation services for use with Your Policy. We are not responsible for any recommendations such investment advisers make, any investment strategies they choose to follow, or any specific transfers they make on Your behalf.
• Any fee that is charged by third parties offering investment allocation services for use with Your Policy is in addition to the fees and expenses that apply under Your Policy.
• If You make withdrawals from Your Policy Value to pay advisory fees, then taxes may apply to any such Surrenders and tax penalties may be assessed on Surrenders made before You attain age 59½.
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EXPENSES
There are charges and expenses associated with Your Policy that reduce the return on Your investment in the Policy. Unless we indicate otherwise, the expenses described below apply only during the accumulation period. The charges we deduct are used to pay aggregate Policy costs and expenses that we incur in providing the services and benefits under the Policy and assuming the risks associated with the Policy and riders. The charges may result in a profit to us.
During the accumulation period, except under certain qualified policies, You may Surrender part or all of the Policy's annuity value. We impose a surrender charge to help us recover sales expenses, including broker/dealer compensation and printing, sales literature and advertising costs. We expect to profit from this charge. We deduct this charge from Your annuity value at the time You request a partial withdrawal or complete Surrender.
Unless we otherwise consent, the minimum amount available each time You request a partial withdrawal is $500.
If You take a partial withdrawal or if You Surrender Your Policy completely, we will deduct a surrender charge of up to 7% of premium payments surrendered within seven years after we receive a premium payment. We calculate the surrender charge on the full amount we must withdraw from Your annuity value in order to pay the Surrender amount, including the surrender charge. To calculate surrender charges, we treat Surrenders as coming first from the oldest premium payment, then the next oldest and so forth.
The following schedule shows the surrender charges that apply during the seven years following each premium payment:
Number of Months Since Premium Payment Date   Surrender Charge
12 or less   7%
13 through 24   7%
25 through 36   6%
37 through 48   5%
49 through 60   4%
61 through 72   3%
73 through 84   2%
85 or more   0%
For example, assume Your premium is $100,000, You have taken no partial withdrawals, Your annuity value is $106,000 in the 15th Policy month and You request a full Surrender. You would pay a surrender charge of $7,000 on the $100,000 premium, (7% of $100,000). Likewise, if there was a market loss and You requested a full Surrender (annuity value is $80,000), You would pay a surrender charge of $7,000 (7% of $100,000).
Keep in mind that partial withdrawals and complete Surrenders may be taxable, and if made before age 59½, may be subject to a 10% federal penalty tax. For tax purposes, partial withdrawals and complete Surrenders are considered to come from earnings first.
There are several ways that You may make a partial withdrawal and we will not deduct the full surrender charge. See Partial Withdrawals Up to the Free Amount below,Systematic Partial Withdrawals,Nursing Care Facility Waiver and Terminal Condition Waiver sections.
Partial Withdrawals Up to the Free Amount
During any Policy year, You may request a partial withdrawal and we will not impose a surrender charge on any amount up to the maximum free amount. However, if You later completely Surrender Your Policy while surrender charges still apply, we will deduct from Your annuity value the charge we would have deducted if there had been no free amount (does not apply to New Jersey residents).
For partial withdrawals under the Policy, the maximum free amount You can partially withdraw without a surrender charge is equal to (a) plus (b) where:
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(a) is equal to:
(i) the annuity value on the date of the partial withdrawal: plus;
(ii) any amounts previously surrendered from the Policy under (b) below: plus.
(iii) any amounts previously surrendered from the Policy that were subject to surrender charges; minus
(iv) the total of all premiums paid for the Policy.
AND
(b) is equal to:
(i) 10% of the remaining annuity value following the determination of (a) above on the date of the partial withdrawal: minus;
(ii) any amounts partially surrendered under (b)(i) above during the Policy year in which the partial withdrawal is requested.
For example, assume that You make a $100,000 premium payment to Your Policy at issue and make no more premium payments. Also assume at the end of the 13th Policy month there is an annuity value of $108,000 before a partial withdrawal of $11,000 is taken out surrender charge free ($8,000 is surrender charge free under (a) ($108,000 - $100,000 = $8,000)), and $3,000 is surrender charge free under (b) ($100,000 x 10% = $10,000 maximum amount under (b)). If, at the end of the 19th Policy month, there is an annuity value of $106,000 before a partial withdrawal of $20,000 is taken out, the surrender charge on this partial withdrawal will be calculated as follows:
(a)(i) $106,000 is the annuity value on the date of the partial withdrawal; and is added to
(a)(ii) $3,000 is the amount of the Surrender that occurred in the 13th month surrendered under (b) of the formula (see paragraph above); plus
(a)(iii) $0 are amounts previously surrendered that were subject to surrender charges; minus
(a)(iv) $100,000 is the total of all premiums paid.
The total for (a) is: $106,000 + $3,000 + $0 - $100,000 = $9,000
AND
(b)(i) $9,700 is 10% of the remaining annuity value following the determination of (a) above on the date of partial withdrawal [$106,000 - $9,000 = $97,000 (remaining annuity value) x 10% = $9,700]; minus
(b)(ii) $3,000 is the amount partially surrendered under (b)(i) above during the Policy year in which the current partial withdrawal is requested.
The total for (b) is: $9,700 - $3,000 = $6,700
The maximum amount of this partial withdrawal available without a surrender charge is $9,000 (a) = $6,700 (b) = $15,700.
The portion of this partial withdrawal which is subject to a surrender charge is $20,000 - $15,700 = $4,300.
The surrender charge is calculated to be $323.66 (7% of $4,624).
The total amount we will deduct from Your annuity value for the Surrender will be $20,323.66 which includes the surrender charge. You will receive $20,000.
Premium Taxes
Some states assess premium taxes on the premium payments You make. A premium tax is a regulatory tax that some states assess on the premium payments made into a Policy. If we should have to pay any premium tax, we may deduct the tax from each premium payment or from the Accumulation Unit Value as we incur the tax. We may deduct the total amount of premium taxes, if any, from the Annuity Value when:
• You elect to begin receiving annuity payments;
• You Surrender the Policy;
• You request a Surrender; or
• a death benefit is paid.
Generally, premium taxes range from 0% to 3.50%, depending on the state.
Federal, State and Local Taxes
We may in the future deduct charges from the Policy for any taxes we incur because of the Policy. However, no deductions are being made at the present time.
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Special Service Fees
We currently deduct a charge for overnight delivery and duplicate policies. We reserve the right to deduct a charge for special services in the future, including non-sufficient checks on new business; duplicate Form 1099 and Form 5498 tax forms; check copies; printing and mailing previously submitted forms; and asset verification requests from mortgage companies. We may charge a fee for each service performed and fees may vary based on the type of service but will not exceed the maximum Special Service Fee shown above.
Transfer Charge
You are generally allowed to make 12 free transfers among the Subaccounts per Policy year. If You make more than 12 transfers per Policy year, we reserve the right to charge $10 for each additional transfer. We deduct the charge from the amount transferred. Dollar cost averaging transfers and asset rebalancing transfers are considered transfers for this purpose. All transfer requests made on the same day are treated as a single request. There is no charge for transfers from the Fixed Account, however, they will be counted towards the 12 free allowed per Policy year. We do not currently charge for transfers among Subaccounts, although we reserve the right to do so in the future. We deduct the charge to compensate us for the cost of processing the transfer.
Loan Processing Fee
If You take a Policy loan, we will impose a $30 loan processing fee. We deduct this fee from the loan amount. This fee is not applicable in all states. This fee covers loan processing and other expenses associated with establishing and administering the loan reserve. Policy loans are available only under certain types of qualified policies.
Base Contract Expenses:
Mortality and Expense Risk Fees
We charge a fee as compensation for bearing certain mortality and expense risks under the Policy. Examples include a guarantee of annuity rates, the death benefits, certain Policy expenses, and assuming the risk that the current charges will be insufficient in the future to cover costs of administering the Policy. The mortality and expense risk charge is equal, on an annual basis, to 0.85% of the average daily net assets that You have invested in each Subaccount. If You add the compounding minimum death benefit or annual step-up death benefit, the mortality and expense risk charge increases to 1.25%. This charge is deducted daily from the Subaccounts during the accumulation period. During the income phase, if You elect a variable annuity option, we deduct a daily Separate Account Annuitization charge from Your Subaccount assets equal to an annual rate of 1.40% in place of the mortality and expense risk and administrative charges.
If these charges do not cover our actual mortality and expense risk costs, we absorb the loss. Conversely, if these charges more than cover actual costs, the excess is added to our surplus. We expect to profit from these charges. We may use any profits to cover distribution costs.
Administrative Charges
We deduct an annual administrative charge to cover the costs of supporting and administering the policies. This charge is assessed daily and is equal to 0.40% per year of the average daily net assets that You have invested in each Subaccount.
Annual Policy Charge
We deduct an annual Policy charge of $30 from your Annuity Value on each Policy Anniversary during the accumulation period and at Surrender. We deduct this charge from the Fixed Account and each Subaccount in proportion to the amount of Annuity Value in each account. We deduct the charge to cover our costs of administering the Policy. We currently waive this charge if either Your annuity value, or the total premiums You have paid us, minus all partial surrenders (including surrender charges), equals or exceeds $50,000 on the Policy anniversary when this charge is payable. However, we will deduct this charge from Your annuity value if You surrender Your Policy completely.
Additional Earnings Rider Charge
If You select the Additional Earnings Rider, there is an annual charge during the accumulation period of 0.35% of Your Policy's Annuity Value. The charge will not be increased once the rider has been issued. We deduct the rider charge from your Annuity Value on each rider anniversary and pro rata on the termination date of the rider, including Policy Surrender. We do not assess this charge during the income phase.
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Portfolio Management Fees
The value of the assets in each Subaccount is reduced by the management fees and expenses paid by the portfolios. Some portfolios also deduct 12b-1 fees from portfolio assets. These fees and expenses reduce the value of your portfolio shares. A description of these fees and expenses is found in the underlying fund prospectuses.
This prospectus describes generally the payments that we (and/or our affiliates) may directly or indirectly receive from the Underlying Fund Portfolios, their advisers, sub-advisers, distributors or affiliates thereof, in connection with certain administrative, marketing and other support services we (and/or our affiliates) provide and expenses we incur in offering and selling our variable insurance products. These arrangements are described further below. While only certain of the types of payments described below may be made in connection with your particular Policy, all such payments may nonetheless influence or impact actions we (and/or our affiliates) take, and recommendations we (and our affiliates) make, regarding each of the variable insurance products that we (and our affiliates) offer, including Your Policy.
We (and/or our affiliates) may receive some or all of the following types of payments:
• Rule 12b-1 Fees. We and/or our affiliate, Transamerica Capital, Inc. (“TCI”) who is the principal underwriter for the policies, indirectly receive 12b-1 fees from certain Underlying Fund Portfolios available as investment choices under our variable insurance products. Any 12b-1 fees received by TCI that are attributable to our variable insurance products are then credited to us as an administrative expense. These fees range from 0.00% to 0.45% of the average daily assets of those Underlying Fund Portfolios that are attributable to the policies and to certain other variable insurance products that we and our affiliates issue. These fees are paid from the Underlying Fund Portfolios assets. Policy Owners through their indirect investment in the Underlying Fund Portfolios, bear the cost of 12b-1 fees (see the prospectuses for the underlying funds for more information).
• Administrative, Marketing and Support Service Fees (“Support Fees”). As noted above, an investment adviser, sub-adviser, administrator and/or distributor (or affiliates thereof) of the Underlying Fund Portfolios may make payments to us and/or our affiliates, including TCI. These payments may be derived, in whole or in part, from the profits the investment adviser or sub-adviser realized on the advisory fee deducted from Underlying Fund Portfolio assets. Policy Owners, through their indirect investment in the Underlying Fund Portfolios, bear the costs of these advisory fees (see the prospectuses for the underlying funds for more information). However, amounts paid from an investment adviser’s or sub-adviser’s (or other service provider’s) revenues are not paid from the underlying portfolio’s assets. The amount of the payments we (or our affiliates) receive is generally based on a percentage of the assets of the particular Underlying Fund Portfolios attributable to the Policy and to certain other variable insurance products that our affiliates and we issue. These percentages differ and the amounts may be significant. Some advisers or sub-advisers (or other affiliates) pay us more than others.
The following chart provides the maximum combined percentages of Support Fees and Underlying Fund Portfolio fees (i.e. sub-transfer agent, Rule 12b-1, and Shareholder Services) that we anticipate will be paid to us on an annual basis.
Please Note: Some of the underlying funds listed in the chart below may not currently be available under Your Policy:
Incoming Payments to the Company and/or TCI
Underlying Fund Portfolio   Maximum Fee % of assets
ACCESS ONE TRUST   0.50%
TRANSAMERICA SERIES TRUST (“TST”)   0.25%
PROFUNDS   0.50%
FIDELITY ® VARIABLE INSURANCE PRODUCTS FUND   0.395%
NOTES TO INCOMING PAYMENTS TABLE:
Maximum Fee % of Assets: Payments are based on a percentage of the average assets of each Underlying Fund Portfolio owned by the Subaccounts available under this Policy and under certain other variable insurance products offered by our affiliates and us. We and/or TCI may continue to receive 12b-1 fees and administrative fees on assets that invest in Subaccounts that are closed to new premium payments, depending on the terms of the agreements supporting those payments and on the services provided.
TST: Because TST is managed by TAM, an affiliate of ours, there are additional benefits to us and our affiliates for amounts You allocate to the TST Underlying Fund Portfolios, in terms of our and our affiliates’ overall profitability. These additional benefits may be significant. Payments or other benefits may be received from TAM. Such payments or benefits may be entered into for a variety of purposes, such as to allocate resources to us and to provide administrative services to the policyholders who invest in Subaccounts that invest in the TST Underlying Fund Portfolios. These payments or benefits may take the form of internal credits, recognition, or cash payments. A variety of financial and accounting methods may be
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used to allocate resources and profits to us. Additionally, if a TST portfolio is sub-advised by an entity that is affiliated with us, we may retain more revenue than on those TST portfolios that are sub-advised by non-affiliated entities. During 2021 we and TCI received approximately approximately $250.1 million in benefits from TAM pursuant to these arrangements. This includes the 0.25% amount in the above chart. We anticipate receiving comparable amounts in the future.
Fidelity ® Variable Insurance Products Fund: We receive this percentage once $100 million in shares are held by the Subaccounts of the Company and its affiliates.
Other Payments. We and our affiliates, including TCI and Transamerica Financial Advisors, Inc. (“TFA”), also directly or indirectly receives additional amounts or different percentages of assets under management from certain advisers and sub-advisers to the underlying fund portfolios (or their affiliates) with regard to variable insurance products and/or mutual funds that are issued by us and our affiliates. These amounts may be derived, in whole or in part, from the profits the investment adviser or sub-adviser receives from the advisory fee deducted from underlying fund portfolio assets. Owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees. Certain advisers and sub-advisers of the underlying fund portfolios (or their affiliates):
• may each directly or indirectly pay TCI conference sponsorship or marketing allowance payments that provides such advisers and sub-advisers with access to TCI's wholesalers at TCI's national and regional sales conferences as well as internal and external meetings and events that are attended by TCI's wholesalers and/or other TCI employees.
• may pay TFA varying amounts to obtain access to TFA’s wholesaling and selling representatives;
• may provide us and/or certain affiliates and/or selling firms with occasional gifts, meals, tickets or other compensation as an incentive to market the underlying fund portfolios and to assist with their promotional effort; and
• may reimburse our affiliated selling firms for exhibit booths and other items at national conferences of selling representatives. The amounts may be significant and provide the adviser or sub-adviser (or other affiliates) with increased access to us and to our affiliates involved in the distribution of the policy.
For the calendar year ended December 31, 2021, TCI and its affiliates did not receive any payments to participate in TCI sponsored events.
Please note some of the aforementioned managers and/or sub-advisers may not be associated with underlying fund portfolios currently available in this product.
Proceeds from certain of these payments by the underlying fund portfolios, the advisers, the sub-advisers and/or their affiliates may be used for any corporate purpose, including payment of expenses (1) that we and our affiliates incur in promoting, marketing, and administering the policy, and (2) that we incur, in our role as intermediary, in promoting, marketing, and administering the underlying fund portfolios. We and our affiliates may profit from these payments.
For further details about the compensation payments we make in connection with the sale of the policies, see OTHER INFORMATION - Distribution of the Policies in this prospectus.
general description of the policy
Ownership
You, as Owner of the Policy, exercise all rights under the Policy, including the right to transfer ownership (subject to any assignee or irrevocable Beneficiary’s consent). . You can generally change the Owner at any time by notifying us in writing at our Administrative Office in good order. If we do not have an originating signature or guaranteed signature on file or if the Company suspects fraud, we may require a notarized signature. There may be limitations on Your ability to change the ownership of a qualified Policy. An ownership change may be a taxable event.
Annuitant
The Annuitant is the person named in the application to receive annuity payments. If no person is named, the Owner will be the Annuitant. As of the Maturity Date, and upon our agreement, the Owner may change the Annuitant or, if either annuity payment Option C or Option E has been selected, add a joint Annuitant. On the Maturity Date, the Annuitant(s) will become the payee(s) and receive the annuity payments.
Beneficiary
A Beneficiary is the person who receives the death benefit when an Owner who is also the Annuitant dies. You may change Beneficiary(ies) during the lifetime of the Annuitant, subject to the rights of any irrevocable Beneficiary. Any change must be made in writing and received by us at our Administrative Office in good order. Before the Maturity Date, if an Owner who is the Annuitant
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dies, and no Beneficiary is alive on the Death Report Day, benefits payable at death will be paid to the Owner’s estate. In the case of certain qualified policies, the Treasury Regulations prescribe certain limitations on the designation of a Beneficiary.
Assignment
You can also generally assign the Policy any time during Your lifetime. We reserve the right, except to the extent prohibited by applicable laws, regulations, or actions of the state insurance commissioner, to require that an assignment will be effective only upon acceptance by us, and to refuse assignments or transfers at any time on a non-discriminatory basis. We will not be liable for any payment or other action we take in accordance with the Policy before we approve the assignment. There may be limitations on Your ability to assign a qualified Policy and such assignments may be subject to tax penalties and taxed as distributions under the Code. An assignment may have tax consequences.
Termination for Low Value
If a withdrawal or fee (including an optional rider fee, administrative fee, or Owner transaction fee) reduces Your Cash Value below the minimum specified in Your Policy, we reserve the right to terminate Your Policy and send You a full distribution of Your remaining Cash Value. All benefits associated with Your annuity Policy will be terminated. Federal law may impose restrictions on our right to terminate certain qualified policies. We do not currently anticipate exercising this right if You have certain optional benefits, however, we reserve the right to do so. For all other policies, including policies with certain other optional benefits, we intend to exercise this termination provision.
Certain Offers
From time to time, we have (and we may again) offered You some form of payment or incentive in return for terminating or modifying certain guaranteed benefits.
When we make an offer, we may vary the offer amount, up or down, among the same group of Policy Owners based on certain criteria such as account value, the difference between account value and any applicable benefit base, investment allocations and the amount and type of withdrawals taken. For example, for guaranteed benefits that have benefit bases that can be reduced on either a pro rata or dollar-for-dollar basis depending on the amount of withdrawals taken, we may consider whether You have taken any withdrawal that has caused a pro rata reduction in Your benefit base, as opposed to a dollar-for-dollar reduction. Also, we may increase or decrease offer amounts from offer to offer. In other words, we may make an offer to a group of Policy Owners based on an offer amount, and, in the future, make another offer based on a higher or lower offer amount to the remaining Policy Owners in the same group.
If You accept an offer that requires You to terminate a guaranteed benefit and You retain Your Policy, we will no longer charge You for the benefit, and You will not be eligible for any future offers related to that type of guaranteed benefit, even if such future offer would have included a greater offer amount or different payment or incentive.
We may also make an offer to You to exchange an existing rider for a different rider.
You can generally exchange a nonqualified annuity Policy for another in a “tax-free exchange” under Section 1035 of the Internal Revenue Code or transfer qualified policies directly to another life insurance company as a “trustee-to-trustee transfer”. Before making an exchange or transfer, You should compare both annuities carefully. Remember that if You exchange or transfer another annuity for the one described in this prospectus, then You may pay a surrender charge on the other annuity, and there may be a new surrender charge period under this annuity and other charges may be higher (or lower) and the benefits under this annuity may be different. You should not exchange or transfer another annuity for this one unless You determine, after knowing all the facts, that the exchange or transfer is in Your best interest and not just better for the person trying to sell You this Policy (that person will generally earn a commission if You buy this Policy through an exchange, transfer or otherwise).
You may ask us to reinstate Your Policy after such an exchange, transfer, withdrawal or Surrender and in certain limited circumstances we will allow You to do so by returning the same total dollar amount of funds distributed to the applicable investment options. The dollar amount will be used to purchase new accumulation units at the then current price. In the event any subaccount previously invested in is closed and we don’t receive additional instructions, funds will be reallocated to the remaining available investment options according to the investment allocation instructions You previously provided. Because of changes in market value, Your new accumulation units may be worth more or less than the units You previously owned. Generally for non-qualified annuity reinstatements, unless You return the original company check, if a portion of the prior withdrawal was taxable, we are required to report the taxable amount from the distribution even though the funds have been reinstated. The cost basis will be adjusted
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accordingly. The taxable amount will be reported on Form 1099-R which You will receive in January of the year following the distribution. Qualified annuity reinstatements may be subject to the same tax reporting requirements. We recommend that You consult a tax professional to explain the possible tax consequences of reinstatements.
Surrenders
During the accumulation period, You can have access to the money in Your Policy by making either a partial Surrender or complete Surrender.
If You want to Surrender Your Policy completely, You will receive Your Cash Value, which equals the Annuity Value of Your Policy minus:
• any Surrender charges;
• any premium taxes;
• any loans;
• any unpaid accrued interest;
• the annual Policy charge;
• the pro rata Additional Earnings Rider charge, if applicable; and
• the GMIB fee, if applicable seeOptional Benefit Riders.
The minimum fixed account Cash Value upon full Surrender is 90% of the fixed account premium payments less partial Surrenders and transfers from the Fixed Account accumulated at 3% per year.
The Cash Value will be determined at the accumulation unit value next determined as of the end of the business day (usually 4:00 p.m. Eastern Time) on which we receive Your request for Surrender at our Administrative Office in good order, unless You specify a later date in Your request. Please note: All Surrender requests must be submitted in good order to avoid a delay in processing Your request.
No partial Surrender is permitted if it would reduce the Cash Value below $5,000. You may not make partial Surrenders from the Fixed Account unless we consent. Unless You tell us otherwise, we will take the partial Surrender from each of the investment choices in proportion to the Annuity Value.
Unless we otherwise consent, the minimum amount available each time You request a partial Surrender is $500.
Remember that any partial Surrender You make will reduce the Annuity Value and also may have a negative impact on certain benefits and guarantees of Your Policy. Under some circumstances, a partial Surrender will reduce the death benefit by more than the dollar amount of the Surrender. SeeDEATH BENEFIT, and the SAI for more details.
Income taxes, federal tax penalties and certain restrictions may apply to any partial Surrender or complete Surrender You make. If Your Policy was issued pursuant to a 403(b) plan, we generally are required to confirm, with Your 403(b) plan sponsor or otherwise, that withdrawals or transfers You request comply with applicable tax requirements and to decline requests that are not in compliance. We will defer such payments You request until all information required under the tax law has been received. By requesting a withdrawal or transfer, You consent to the sharing of confidential information about You, the Policy, and transactions under the Policy and any other 403(b) policies or accounts You have under the 403(b) plan among us, Your employer or plan sponsor, any plan administrator or recordkeeper, and other product providers.
We must receive at our Administrative Office in good order a properly completed Surrender (partial or full) request by mail or fax. We will accept telephone requests for partial withdrawals as long as the Surrender proceeds are being sent to the address of record. The maximum Surrender amount You may request by telephone is under $50,000.
When we incur extraordinary expenses, such as wire transfers or overnight mail expenses, for expediting delivery of Your partial Surrender or complete Surrender payment, we will deduct that charge from the payment. We charge $25 for a wire transfer and $20 for an overnight delivery.
If the Policy's Owner is not an individual, additional information may be required. If You own a qualified Policy, the Code may require Your spouse to consent to any Surrender. Other restrictions will apply to Section 403(b) qualified policies and Texas Optional Retirement Program policies. For more information, call us at (800)851-9777 (Monday-Friday 8:30 a.m.-7:00 p.m. Eastern Time).
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Delay of Payment and Transfer
Payment of any amount due from the Separate Account for a Surrender, a complete Surrender, a death benefit, loans or on the death of an Owner of a nonqualified Policy, will generally occur within seven days from the date we receive in good order all required information at our Administrative Office. We may be permitted to defer such payment from the Separate Account if:
• the New York Stock Exchange is closed other than for usual weekends or holidays or trading on the NYSE is otherwise restricted; or
• an emergency exists as defined by the SEC or the SEC requires that trading be restricted; or
• the SEC permits a delay for the protection of Owners.
Transfers of amounts from the Subaccounts also may be deferred under these circumstances. In addition, if, pursuant to SEC rules, the Transamerica BlackRock Government Money Market VP portfolio (or any money market portfolio offered under this Policy) suspends payment of redemption proceeds in connection with a liquidation of the portfolio, then we may delay payment of any transfer, Surrender, Surrender, loan, or death benefit from the TA BlackRock Government Money Market subaccount until the portfolio is liquidated.
Pursuant to the requirements of certain state laws, we reserve the right to defer payment of transfers, Surrenders, surrenders, death benefits and loan amounts from the Fixed Account for up to six months.
If mandated under applicable law or by regulation, we may be required to reject a Premium Payment. We may be required to provide additional information about You or Your account to governmental regulators. In addition, we may be required to block a Policy Owner's account and thereby refuse to pay any request for transfers, Surrenders, surrenders, loans, annuity payments or death benefits until instructions are received from the appropriate regulators.
Signature Guarantee
As a protection against fraud, we require a signature guarantee (i.e., Medallion Signature Guarantee as required by us) for the following transaction requests:
• Any Surrender over $250,000 unless it is a custodial owned annuity;
• Any non-electronic disbursement request made on or within 15 days of a change to the address of record for a Policy Owner’s account;
• Any electronic fund transfer instruction changes on or within 15 days of an address change;
• Any Surrender when we have been directed to send proceeds to a different personal address from the address of record for that contract Owner's account. PLEASE NOTE: This requirement will not apply to requests made in connection with exchanges of one annuity for another with the same Owner in a “tax-free exchange”;
• Any Surrender when we do not have an originating or guaranteed signature on file unless it is a custodial owned annuity;
• Any other transaction we require.
We may change the specific requirements listed above, or add signature guarantees in other circumstances, at our discretion if we deem it necessary or appropriate to help protect against fraud. For current requirements, please refer to the requirements listed on the appropriate form or call us at (800)851-9777.
You can obtain a Medallion signature guarantee from more than 7,000 financial institutions across the United States and Canada that participate in a Medallion signature guarantee program. The best source of a Medallion signature guarantee is a bank, savings and loan association, brokerage firm, or credit union with which you do business. A notary public cannot provide a Medallion signature guarantee. Notarization will not substitute for a Medallion signature guarantee.
You can generally change the Maturity Date by giving us 30 days notice with the new date or age. Unless required by state law, the Maturity Date cannot be earlier than the end of the fifth Policy year. The latest Maturity Date generally cannot be after the date specified in Your Policy unless a later date is agreed to by us.
Election of Annuity Payment Option. Before the Maturity Date, if the Annuitant is alive, You may choose an annuity payment option or change Your option. If You do not choose an annuity option by the Maturity Date, we will make payments under Option D (see below) as a Variable Life Income with 10 years of guaranteed payments subject to certain exceptions for qualified policies. You cannot change the annuity payment option after the Maturity Date.
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If You choose a variable payment option, You must specify how You want the annuity proceeds divided among the Subaccounts as of the Maturity Date. If You do not specify, we will allocate the annuity proceeds in the same proportion as the Annuity Value is allocated among the investment option available on the Maturity Date. Any portion of the annuity proceeds in the Fixed Account will not be used to purchase variable annuity units and will be allocated to a fixed payout. After the Maturity Date, You may make transfers among the Subaccounts, but You may not make transfers from or to the Fixed Account; we may limit Subaccount transfers to one per Policy year.
As of the Maturity Date and so long as we agree, You may elect a different Annuitant or add a joint Annuitant who will be a joint payee under a joint and survivor life income payment option. If You do not choose an Annuitant, we will consider You to be the Annuitant.
Supplemental Policy. Once You Annuitize and if You have selected a fixed annuity payment option, the Policy will end and we will issue a supplemental Policy to describe the terms of the option You selected. The supplemental Policy will name who will receive the annuity payments and describe when the annuity payments will be made.
Your Policy may not be “partially” Annuitized, i.e., You may not apply a portion of Your Policy Value to an annuity option while keeping the remainder of Your Policy In Force.
The Policy provides several annuity payment options that are described below. You may choose any annuity payment option available under Your Policy. You can choose to receive payments monthly, quarterly, semi-annually or annually.
We will use Your “annuity proceeds” to provide these payments. The “annuity proceeds” is Your Annuity Value on the Maturity Date, less any premium tax that may apply. If Your annuity payment would be less than $20, then we will pay You the annuity proceeds in one lump sum.
Fixed Annuity Income Payments. If You choose annuity payment Option A, B or C, the dollar amount of each annuity payment will be fixed on the Maturity Date and guaranteed by us. The payment amount will generally depend on the following:
• the amount of the annuity proceeds on the Maturity Date;
• the interest rate we credit on those amounts; and
• the specific payment option You choose.
Variable Annuity Income Payments. If You choose variable annuity payment Option D or E, the dollar amount of the first variable payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the Policy. The dollar amount of each additional variable payment will vary based on the investment performance of the Subaccount(s) You invest in and the Policy's assumed investment return of 5%. The dollar amount of each variable payment after the first may increase, decrease or remain constant. If, after all charges are deducted, the actual investment performance exactly matches the Policy's assumed investment return of 5% at all times, then the dollar amount of the next variable annuity payment would remain the same. If actual investment performance, after all charges are deducted, exceeds the assumed investment return, then the dollar amount of the variable annuity payments would increase. But, if actual investment performance, less charges, is lower than the 5% assumed investment return, then the dollar amount of the variable annuity payments would decrease. The portfolio in which You are invested must grow at a rate at least equal to the 5% assumed investment return (plus the daily Separate Account Annuitization charge equal to an annual rate of 1.40%  of Subaccount assets) in order to avoid a decrease in the dollar amount of variable annuity payments. For more information on how variable annuity income payments are determined, see the SAI. If You elect a variable annuity payment option, we deduct a daily Separate Account Annuitization charge from Your Subaccount assets equal to an annual rate of 1.40%.
The annuity payment options are explained below. Some of the annuity payment options may not be available for all policies, all ages, or in all states. Options A, B, and C are fixed only. Options D and E are variable only.
Fixed Annuity Payment Options
Payment Option A – Fixed Installments. We will pay the annuity in equal payments over a fixed period of 5, 10, 15 or 20 years or any other fixed period acceptable to us.
If Your Policy is a qualified Policy, payment option A may not satisfy minimum required distribution rules. Consult a financial professional before electing that payment option.
Payment Option B – Life Income Fixed Payments.
• No Period Certain: We will make level payments only during the Annuitant's lifetime; or
• 10 Years Certain: We will make level payments for the longer of the Annuitant's lifetime or 10 years; or
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• Guaranteed Return of Annuity Proceeds: We will make level payments for the longer of the Annuitant's lifetime or until the total dollar amount of payments we made to You equals the annuity proceeds.
Payment Option C – Joint and Survivor Life Income: Fixed Payments. We will make level payments during the joint lifetime of the Annuitant and a joint Annuitant of Your choice. Payments will be made as long as either person is living.
For more information on how the fixed annuity payments are determined, see the SAI.
Variable Annuity Payment Options
Payment Option D – Variable Life Income. The annuity proceeds are used to purchase variable annuity units in the Subaccounts You select. You may choose between:
• No Period Certain: We will make variable payments only during the Annuitant's lifetime; or
• 10 Years Certain: We will make variable payments for the longer of the Annuitant's lifetime or 10 years.
Payment Option E – Variable Joint and Survivor Life Income. We will make variable payments during the joint lifetime of the Annuitant and a joint Annuitant of Your choice. Payments will be made as long as either person is living.
Other annuity payment options may be arranged by agreement with us. The death benefit payable after the Maturity Date will be affected by the annuity option you choose.
NOTE CAREFULLY
IF:
• You choose Life Income with No Period Certain or a Joint and Survivor Life Income (fixed or variable); and
• the Annuitant(s) dies for example, before the due date of the second annuity payment;
THEN:
• we may make only one annuity payment and there will be no death benefit payable.
IF:
• You choose Fixed Installments, Life Income with 10 Years Certain, Life Income with Guaranteed Return of Annuity Proceeds, or Variable Life Income with 10 Years Certain; and
• the person receiving payments dies prior to the end of the guaranteed period;
THEN:
• the remaining guaranteed payments will be continued to that person’s Beneficiary, or their value (determined at the date of death) may be paid in a single sum.
We will not pay interest on amounts represented by uncashed annuity payment checks if the postal or other delivery service is unable to deliver checks to the Annuitant’s address of record. The Annuitant is responsible for keeping us informed of the Annuitant’s current address of record.
The following table summarizes information about the benefits available under the Policy.
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Name of Benefit Purpose Standard
or
Optional 		Maximum
Annual Fee 		Brief Description of
Restrictions/Limitations
Standard Death Benefit Pays base death benefit generally equal to the greater of the Annuity Value of Your Policy or the total Premium Payments reduced by adjusted partial Surrenders. Standard 1.25% annually of average Separate Account Value during the Accumulation Period • Death benefit may be paid as a lump sum or as equal payments while the Policy continues in the Accumulation Period.
• If Owner who is the Annuitant dies before the Maturity Date when death benefit proceeds are payable:
(1) You will receive the greater of the Annuity Value on the Death Report Day; or
(2) the total Premium Payments reduced by adjusted partial Surrenders.
Compounding Minimum Death Benefit Provides a death benefit equal to the highest Annuity Value on any Policy Anniversary up to age 81. Optional 1.65% annually of average Separate Account Value • The Compounding Minimum Death Benefit is available through age 80.
• Accumulated at an effective annual rate of 5% from each Premium Payment date and any adjusted partial Surrenders to the earlier of the Annuitant’s death or their 81st birthday.
• Withdrawals can significantly reduce benefit value or terminate benefit.
• Cannot change death benefit once elected.
• The death benefit will not exceed 200% of total Premium Payments less withdrawals.
• Terminates upon Annuitization.
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Name of Benefit Purpose Standard
or
Optional 		Maximum
Annual Fee 		Brief Description of
Restrictions/Limitations
Annual Step-Up Death Benefit Pays death benefit equal to highest Annuity Value on any Policy Anniversary prior to Annuitant’s 81st birthday (adjusted for Premium Payments and withdrawals). Optional 1.65% annually of average Separate Account Value • Not available if You or Annuitant is 81 or older on Policy Date.
• Withdrawals can significantly reduce benefit value or terminate benefit.
• Cannot change death benefit once elected.
ctag:t-bul]The death benefit will not exceed 200% of total Premium Payments less withdrawals.
• Terminates upon Annuitization.
Additional Earnings Rider Pays a supplemental death benefit to help offset the taxes typically due on annuity death benefits. Optional 0.35% annually of the Annuity Value • This rider is no longer available.
• Was available only for issue ages 75 and younger at Policy issue or on any Monthiversary during the Accumulation Period.
• Rider may continue if the surviving spouse is eligible and elects to continue the Policy.
• If Policy has multiple Beneficiaries, each Beneficiary may choose individually whether to receive any benefit under this rider thereby terminating the rider.
• If the multiple Beneficiaries continue the rider, the rider benefit will be paid upon the Beneficiary’s death.
• May not be available in all states.
Nursing Care Facility Waiver Waives Surrender Charges if You are confined to a nursing care facility. Standard No charge • Must be confined to nursing care facility for 30 consecutive days or longer.
• The confinement began after the Policy date; and
• You provide us with satisfactory written evidence of Your confinement.
• May not be available in all states.
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Name of Benefit Purpose Standard
or
Optional 		Maximum
Annual Fee 		Brief Description of
Restrictions/Limitations
Terminal Condition Wavier. Waives Surrender Charges if certain medically related circumstances occur. Standard No charge • Must be diagnosed with terminal condition after the Policy date.
• Must provide written statement acceptable to us and signed by a physician that includes diagnosis and prognosis of non-correctable medical condition that will result in death within 12 months of written statement.
• May not be available in all states.
Dollar Cost Averaging Program. Allows You to automatically make transfers into one or more Subaccounts Standard No charge • Traditional – A minimum of $500 per transfer is required.
• Minimum and maximum number of transfers.
• Special – Limited to six month or twelve-month transfer program and only available for new Premium Payments.
• May not be available in all states.
Asset Rebalancing Automatically rebalances the amounts in Your Subaccounts to maintain Your desired asset allocation percentages Standard No charge • Does not include any amounts allocated to the Fixed Account.
Systematic Partial Surrenders Provides monthly, quarterly, semi-annual or annual withdrawals. Optional No Charge • Subject to $40 minimum withdrawals.
• Systematic surrenders may not exceed 10% of the Annuity Value at the time of surrender divided by the number of surrenders made per calendar year.
• We reserve the right to discontinue surrenders if that surrender would reduce Your Annuity Value below $5,000.
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Name of Benefit Purpose Standard
or
Optional 		Maximum
Annual Fee 		Brief Description of
Restrictions/Limitations
Guaranteed Minimum Income Benefit Assures You of a minimum level of income in the future by guaranteeing a minimum Annuitization value. Optional (No longer offered) Current = 0.45%.
Maximum = 0.50%. 		• This rider is no longer available.
• Was available for Annuitant issue ages 0-90.
• You can Annuitize if rider is held for 10 years without any restrictions.
• Provides an annual growth rate of 6% per year which we can change at our discretion. Will never be less than 3% per year.
• Offers fixed and variable annuity payment options.
• May not be available in all states.
We will pay a death benefit to Your Beneficiary(ies), under certain circumstances, if, if You are both an Owner and Annuitant, and You die during the accumulation period (that is before the Maturity Date). The Beneficiary may choose to receive payment of his or her portion of the death benefit proceeds under a life annuity payment option, to continue the Policy in the accumulation period for a specified number of years, or to receive a lump sum payment. Death benefit provisions may differ from state to state. The guarantees of these death benefits are based on our claims-paying ability.
We will determine the amount of and process the death benefit proceeds, if any are payable on a Policy, upon receipt at our Administrative Office of satisfactory proof of the Annuitant's death, directions regarding how to process the death benefit, and any other documents, forms and information that we need (collectively referred to as “due proof of death”). For policies with multiple Beneficiaries, we will process the death benefit when the first Beneficiary provides us with due proof of their share of the death proceeds. We will not pay any remaining Beneficiary their share until we receive due proof of death from that Beneficiary. Such Beneficiaries continue to bear the investment risk until they submit due proof of death. Please note, we may be required to remit the death benefit proceeds to a state prior to receiving “due proof of death.” SeeAbandoned or Unclaimed Property.
Please Note: Such due proof of death must be received in good order to avoid a delay in processing the death benefit claim. SeeSending Forms and Transaction Requests in Good Order.
Payments upon death are subject to certain distribution requirements under the Code. See the SAI for more details.
An additional death benefit may be payable if the Additional Earnings Rider was purchased and is in effect at the time of death benefit proceeds become payable. SeeAdditional Earnings Rider for details.
The death benefit proceeds remain invested in the Separate Account in accordance with the allocations made by the Policy Owner until the Beneficiary has provided us with due proof of death. Once we receive due proof of death, investments in the Separate Account may be reallocated in accordance with the Beneficiary's instructions.
We may permit the Beneficiary to give a “one-time” written instruction to reallocate the investments in the Separate Account to the money market fund after the death of the Annuitant. If there is more than one Beneficiary, all Beneficiaries must agree to the reallocation instructions. This one-time reallocation will be permitted if the Beneficiary provides satisfactory evidence of the Annuitant's death.
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Before the Maturity Date. Payment of the death benefit proceeds depends on the status of the person who dies, as shown below:
IF:
• an Owner and the Annuitant ARE the same person and that person dies;
THEN:
• we pay the death benefit proceeds to the Beneficiaries, if alive,(1)(2)(3)(4)(5) and in some cases, reset the death benefit.(4) If the surviving spouse is the joint Owner and the Policy continues (or if the surviving spouse is sole Beneficiary and elects to continue the Policy) then the Annuity Value is adjusted to equal the death benefit proceeds and the death benefit is reset.(3)
IF:
• the surviving spouse who continued the Policy dies;
THEN:
• we pay the death benefit proceeds to the Beneficiaries, if alive,(1)(2)(3)(4(5)(6)(7) otherwise to the estate of the surviving spouse.
IF:
• an Owner and an Annuitant ARE NOT the same person, and an Annuitant dies first;
THEN:
• An Owner becomes the Annuitant and the Policy continues. In the event of joint Owners, the younger joint Owner will automatically become the new Annuitant and the Policy will continue.
IF:
• an Owner and an Annuitant ARE NOT the same person, and an Owner dies first;
THEN:
• We pay the Cash Value to the Beneficiary(1)(5)(8)(9), or if the sole Beneficiary is the surviving spouse, the Policy continues.(10) In the event of joint Owners, the surviving joint Owner becomes the sole Owner and the Policy will continue. If the Policy continues, we will not adjust the annuity value to equal the death benefit proceeds.(10)
(1)The Code requires that payment to the Beneficiaries be made in a certain manner and within certain strict timeframes. We discuss these timeframes in Alternate Payment Elections Before the Maturity Date below.
(2)If no Beneficiary is alive on the Death Report Day, then the death benefit proceeds are paid to the Owner's estate. If the sole Beneficiary was living on the Owner's date of death, but died before the Death Report Day, the death benefit is paid to the Owner's estate, not to the Beneficiary's estate.
(3)If the sole Beneficiary is the deceased Owner/Annuitant's surviving spouse, the surviving spouse, if eligible, may elect to continue the Policy in force as the new Owner and Annuitant. Likewise, if the joint Owner is the deceased Owner’s surviving spouse, the Policy will continue in force with the surviving spouse, if eligible, as the new Owner and Annuitant. We will adjust the annuity value as of the Death Report Day to equal the death benefit proceeds as of the Death Report Day. We will reset the Age used in the death benefit provisions under the continuing Policy as of the Death Report Day so that the death benefit is based on the Age of the surviving spouse. Consequently, if You purchase the optional compounding minimum death benefit or annual step-up death benefit, the phrase “the Annuitant's 81st birthday” will refer to the Age of the surviving spouse. If the surviving spouse is over Age 81 on the Death Report Day of the first deceased Owner, then we will calculate the death benefit paid on the death of the surviving spouse by taking the highest annuity value (i.e., the annuity value as of the Death Report Day) and adding any subsequent premium payments and subtracting the total partial surrenders following the Death Report Day of the first deceased Owner.
(4)If a Beneficiary elects to receive his or her portion of the death benefit proceeds within five years of the date of death of the Annuitant or over a period that does not exceed such Beneficiary's life expectancy (the “distribution period”), then the Policy will continue with some modifications until the end of the elected distribution period. We will adjust the annuity value as of the Death Report Day to equal the death benefit proceeds as of the Death Report Day. We will pay a death benefit if such Beneficiary dies during the distribution period, and we will revise the way we calculate the death benefit so that it is based on the Age of such Beneficiary. The Policy will terminate at the end of the distribution period.
(5)If there are multiple Beneficiaries, each Beneficiary may elect, individually, how he or she wishes to receive his or her proportionate share of the death benefit proceeds.
(6)If the sole primary Beneficiary of the Policy is a revocable grantor trust and the spouse of the Owner/Annuitant is the sole grantor, trustee, and Beneficiary of the trust and the trust is using the spouse of the Owner/Annuitant’s social security number at the time of
37

 

claim, she or he shall be treated as the Owner/Annuitant’s spouse. In those circumstances, the Owner/Annuitant’s spouse will be treated as the Beneficiary of the Policy for purposes of applying the spousal continuation provisions of the Policy.
(7)If the Owner is an individual retirement account within the meaning of IRC sections 408 or 408A, if the Annuitant’s spouse is the sole primary Beneficiary of the Annuitant’s interest in such account. In those circumstances, the Policy will continue after the Annuitant’s death and the Annuitant’s spouse will be treated as the Beneficiary of the Policy for purposes of applying the spousal continuation provision of the Policy.
(8)If any Beneficiary is alive, but is not the deceased Owner’s spouse at the time of the deceased Owner’s death, then the Beneficiary must receive the cash value in the manner and within the timeframes discussed below in Alternate Payment Elections Before the Maturity Date.
(9)If no Beneficiary is alive, the Owner’s estate will become the new Owner and the cash value must be distributed within 5 years of the deceased Owner’s death.
(10)If the sole Beneficiary is alive and is the deceased Owner’s surviving spouse at the time of the deceased Owner’s death, then the Policy will continue with the spouse as the new Owner.
The death benefit proceeds are reduced by any outstanding Policy loans plus accrued interest and premium taxes due.
Different rules apply if an Owner or Beneficiary is not a natural person. Please consult the SAI, Your Policy or Your agent for more details.
After the Maturity Date. The death benefit paid after the start of annuity payments depends upon the annuity option You selected. SeeANNUITY PAYMENTS (THE INCOME PHASE) - Fixed Annuity Payment Options and Variable Annuity Payment Options. Not all payment options provide for a death benefit.
If any Owner dies on or after the start of annuity payments, the remaining portion of any interest in the Policy will be distributed at least as rapidly as under the method of distribution being used as of the date of the Annuitant's death.
Standard Death Benefit
Death benefit provisions may differ from state to state. The death benefit proceeds may be paid as a lump sum, as substantially equal payments while the Policy continues in the accumulation period for a specified number of years, as annuity payments, or as otherwise permitted by the Company in accordance with applicable law.
If an Owner who is the Annuitant dies before the Maturity Date and if the death benefit proceeds are payable, the standard death benefit proceeds will be the greater of:
• The Annuity Value of Your Policy on the Death Report Day; or
• The total premium payments You make to the Policy as of the Death Report Day, reduced by adjusted partial Surrenders.
The standard death benefit proceeds are not payable after the Maturity Date.
Optional Death Benefit Riders
On the Policy application, You may add either the compounding minimum death benefit rider or the annual step-up death benefit rider. These riders are not available if You, a joint Owner or the Annuitant is Age 76 or older on the Policy Date. These riders are only payable during the accumulation period and are not payable after the Maturity Date. You may not select an optional death benefit rider after the Policy has been issued. If You purchase one of these riders, You cannot drop it after we issue Your Policy. You may not add the Additional Earnings Rider if You have purchased an optional death benefit rider.
Compounding Minimum Death Benefit Rider. If an Owner who is the Annuitant dies during the accumulation period and if the death benefit proceeds are payable, then the compounding minimum death benefit proceeds are the greater of:
• the standard death benefit; or
• the compounding minimum death benefit: This benefit equals total premium payments, plus interest at an effective annual rate of 5% (in most states) from the date of the premium payment to the date of death, less any adjusted partial Surrender(s), including interest on any adjusted partial Surrender at the 5% rate from the date of partial Surrender to the date of death. Interest is not credited after the Annuitant’s 81st birthday. This death benefit will not exceed 200% of total premium payments less partial Surrenders.
Annual Step-Up Death Benefit Rider. If an Owner who is the Annuitant dies during the accumulation period and if the death benefit proceeds are payable, then the annual step-up death benefit proceeds are the greater of:
• the standard death benefit; or
• the annual step-up death benefit: This benefit equals the highest Annuity Value on any Policy Anniversary prior to the
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  Annuitant’s 81st birthday. The highest Annuity Value will be increased for premium payments You have made and decreased for any adjusted partial Surrenders we have paid to You following the Policy Anniversary on which the highest Annuity Value occurs. This death benefit will not exceed 200% of total premium payments less partial Surrenders.
If You select either of these options, then the mortality and expense risk charge will increase to 1.25%
When You request a partial withdrawal, we will reduce the death benefit under the Policy by an “adjusted partial withdrawal.” An adjusted partial withdrawal will reduce the death benefit proceeds by the amount of the partial withdrawal times the ratio of:
• the amount of the death benefit proceeds on the same date as, but immediately before, the processing of the partial withdrawal, to
• the Annuity Value immediately before the partial withdrawal.
We have included a more detailed explanation of this adjustment in the SAI.
If the death benefit proceeds are greater than the Annuity Value prior to the partial withdrawal, the adjusted partial withdrawal may be more than the amount of Your request. For this reason, if a death benefit is paid after You have made a partial withdrawal, then the total of that partial withdrawal and the death benefit could be less than the death benefit immediately before You have made a partial withdrawal. If the death benefit proceeds are less than the Annuity Value prior to the partial withdrawal, the adjusted partial withdrawal will reduce the death benefit dollar for dollar.
Additional Benefits with Spousal Continuation
If an Owner who is the Annuitant dies before the Maturity Date, and if the surviving spouse of the deceased Owner continues (if a joint Owner) or elects to continue (if a sole Beneficiary) the Policy, the surviving spouse becomes the sole Owner and Annuitant. We will increase the Annuity Value of the Policy as of the Death Report Day to equal the death benefit proceeds as of the Death Report Day. We will pay a death benefit on the death of the surviving spouse and revise the way we calculate the death benefit so that it is based on the Age of the surviving spouse.
Additional Death Benefit on Beneficiary's Death
If an Owner who is the Annuitant dies before the Maturity Date, and if the deceased Owner's spouse is not named as the joint Owner or as the sole Beneficiary who elects to continue the Policy, then each Beneficiary can elect to keep the Policy in the accumulation period (with some restrictions) and to receive his or her portion of the death benefit proceeds over a period not to exceed the Beneficiary's life expectancy (the “distribution period”). We will pay a death benefit if the Beneficiary dies during the distribution period and permit such Beneficiary to name a new Beneficiary. We will revise the way we calculate that death benefit so that it is based on the Age of such Beneficiary.
If a Beneficiary is entitled to receive the death benefit proceeds, a Beneficiary may elect to receive the death benefit in a lump sum payment or to receive payment under one of the following options that provides for complete distribution and termination of this Policy at the end of the distribution period:
1. within 5 years of the date of an Owner's death;
2. over the Beneficiary's lifetime, with payments beginning within one year of the deceased Owner's death; or
3. over a specified number of years, not to exceed the Beneficiary's life expectancy, with payments beginning within one year of an Owner's death.
To determine payments, we may use the “account-based” method under which we recalculate the amount of the payment each year by dividing the remaining unpaid proceeds by the Beneficiary's current life expectancy, with payments beginning within one year of the deceased Owner's death.
Different rules may apply if the Policy is a qualified Policy.
Multiple Beneficiaries may choose individually among any of these options.
If the deceased Annuitant was an Owner, and one or more Beneficiaries chooses one of the above options instead of a lump sum payment, we will “reset” the Age used in the death benefit provisions under the new option as of the Death Report Day, so that the death benefit is based on the Age of the particular new Annuitant (i.e., the Beneficiary). As a result, if You purchased an optional death benefit rider, the phrase “the Annuitant's 81st birthday” will refer to the Age of the particular Beneficiary. If the Beneficiary is over Age 81 on the Death Report Day of the first deceased Owner, then we will calculate the death benefit paid on the death of the
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particular Beneficiary by taking the highest Annuity Value (i.e., the Annuity Value as of the Death Report Day) and adding any subsequent Premium Payments and subtracting the total Surrenders following the Death Report Day of the first deceased Owner. This option applies to both spousal and non-spousal Beneficiaries.
If a Beneficiary chooses 1 or 3 above, this Policy remains in effect and remains in the Accumulation Period until it terminates at the end of the elected period. The Beneficiary's proportionate share of the death benefit proceeds becomes the new Annuity Value. Any payments made to a beneficiary under the option 3 will be treated as adjusted partial surrenders. See Effect of Adjusted Partial Surrender on Certain Death Benefits. If a Beneficiary chooses 2 above, the Policy remains in effect, but moves into the income phase with the Beneficiary receiving payments under a life annuity payout option. Special restrictions apply to options 1 and 3 above. See the SAI for more details.
These Alternate Payment Elections do not apply if the sole Beneficiary is the surviving spouse of the deceased Owner and the surviving spouse is eligible to and elected to continue the Policy. These Alternate Payment Elections do apply when we pay the Cash Value to the Beneficiary on the death of an Owner who is not the Annuitant. When an Owner who is not the Annuitant dies, we do not increase the Annuity Value to equal the death benefit proceeds.
You may have elected one of the following optional riders previously available for purchase which are no longer available. The following rider sections describes the material features of each of those riders. Please refer to Your personal rider pages and any supplemental mailings for Your specific coverage and features regarding these riders.
Additional Earnings Rider (No Longer Available)
The optional Additional Earnings Rider may pay an Additional Earnings Rider Amount when the Owner who is the Annuitant dies and death benefit proceeds are paid under Your Policy. You may elect the rider when we issue the policy or on any monthiversary during the accumulation period before you, a joint owner or the annuitant reach age 76 and if you have not already purchased an optional death benefit rider.
The Additional Earnings Rider may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly: For more information on the options available for electing a benefit, please contact Your financial intermediary or our Administrative Office.
In order to buy this rider:
• You must purchase it when we issue the Policy;
• You must both be the Owner and Annuitant (except in the case of a trust or employer sponsored plan); and
• You and the Annuitant must be age 75 or younger.
Unless we otherwise consent, we limit the number of Additional Earnings Riders to one per Annuitant. This rider may not be issued or added to Inherited IRAs (sometimes also referred to as Beneficiary IRAs) or a non-qualified annuity under which death benefits are being distributed under a stretch withdrawal option. The Additional Earnings Rider is based on our claims-paying ability.
The date You add the rider to the Policy is the rider date.
We will pay the Additional Earnings Rider Amount under this rider only if:
• the rider is In Force at the time of death;
• death benefit proceeds are payable under the Policy; and
• there are rider earnings when the death benefit proceeds are calculated.
Additional Earnings Rider Amount. The Additional Earnings Rider Amount is equal to the additional earnings factor (see below), multiplied by the lesser of:
• the rider earnings on the date we calculate the death benefit proceeds (the Death Report Day); or
• the rider earnings limit (shown on Your rider) multiplied by the rider base on the Death Report Day.
The maximum we will pay under this rider is $1 million.
Rider earnings equal:
• the death benefit proceeds payable under the Policy; minus
• the rider base, which is:
• the greater of the death benefit proceeds on the rider date or the Annuity Value on the rider date (this rider is no longer available after issue); plus
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• the premium payments made after the rider date; less
• the amount of each Surrender made after the rider date, multiplied by the ratio of the rider base to the Annuity Value immediately before the Surrender.
Example: A person aged 60 purchases a Policy with the Additional Earnings Rider. On the date of the purchase (rider date) the Annuity Value and death benefit value were equal to the premium payment of $40,000 (the rider base). The rider has an additional earnings factor of 40% and rider earnings limit of 250%. The maximum benefit we will pay under the rider is $1,000,000.
At the time of the Owner's death, the death benefit proceeds are valued at $75,000. To calculate the benefit we will pay under the Additional Earnings Rider (that is, the Additional Earnings Rider Amount), first we subtract the rider base ($40,000), assuming no Surrenders or additional premium payment have been made since the rider date, from the death benefit proceeds to get the rider earnings ($75,000—$40,000=$35,000).
Then we perform several additional calculations. The benefit we pay under the Additional Earnings Rider is the lesser of a), b), or c):
a) The rider earnings ($35,000) multiplied by the additional earnings factor (40%) = $14,000;
b) The rider earnings limit (250%) multiplied by the rider base ($40,000) multiplied by the additional earnings factor (40%) = $40,000; or
c) The maximum benefit under the rider=$1,000,000.
The Additional Earnings Rider Amount (that is, the benefit we will pay under the Additional Earnings Rider) is $14,000. The total death benefit under these circumstances (that is, the death benefit proceeds plus the Additional Earnings Rider Amount) is $89,000 ($75,000 + $14,000).
For additional examples, seeAppendix B.
We will not pay a benefit under the Additional Earnings Rider if there are no rider earnings on the date we calculated the death benefit proceeds. If You purchased Your Policy as part of a 1035 exchange, rider earnings do not include any gains before the rider is added to Your Policy. As with all insurance, You may not realize a benefit from the purchase of this rider.
The additional earnings factors are as follows:
Owner/Annuitant’s Age on the Rider Date   Percent
0-65   40%
66-67   35%
68-69   30%
70-75   25%
For purposes of computing taxable gains payable on the death benefit proceeds, both the death benefit proceeds payable under the Policy and the Additional Earnings Rider Amount will be considered.
SeeAppendix B for an example which illustrates the Additional Earnings Rider Amount payable as well as the effect of a Surrender on the Additional Earnings Rider Amount.
Continuation . If an Owner who is the Annuitant dies during the accumulation period and the deceased Owner's spouse is the sole Beneficiary and is eligible to and elects to continue the Policy, the Annuity Value is adjusted to equal the death benefit proceeds, the deceased Owner's spouse will have the following options:
• terminate the Additional Earnings Rider and receive a one-time Annuity Value increase equal to the Additional Earnings Rider Amount. All future Surrender charges on this amount, if any, will be waived; or
• continue the Additional Earnings Rider (with fees) without the one-time Annuity Value increase. An Additional Earnings Rider Amount would then be paid upon the death of the spouse who continued the Policy. Because we have not issued a new rider, but simply continued the rider purchased by the deceased Owner, we will calculate the Additional Earnings Rider Amount using the additional earnings factor and other calculation factors applicable to the original rider.
Alternate Election. If an Owner who is the Annuitant dies during the accumulation period and one or more of the Beneficiaries elect to receive the complete distribution of the death proceeds under alternate payment option (1) or (3), then that Beneficiary will have the following options:
• terminate the Additional Earnings Rider and receive a one-time increase in death benefit proceeds equal to a proportionate share of the Additional Earnings Rider Amount. All Surrender charges on this amount, if any, will be waived; or
• continue the Additional Earnings Rider (with fees) without the one-time Annuity Value increase. An Additional Earnings Rider Amount would then be paid in a lump sum upon the death of the Beneficiary and the Policy will terminate. This amount will be
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  calculated using the additional earnings factor and other calculation factors determined under the original rider. The required annual distributions under the alternate payment elections are likely to reduce significantly the value of this rider during this period.
Rider Fee. There is an annual charge during the accumulation period of 0.35% of Your Policy's Annuity Value. The charge will not be increased once the rider has been issued. We deduct the rider charge from Your Annuity Value on each rider anniversary and pro rata on the termination date of the rider. We will deduct this fee from each subaccount and the fixed account in proportion to the amount of the Annuity Value in each account. We do not assess this charge during the income phase. The rider fee is deducted even during periods when the rider would not pay any benefit because there are no rider earnings.
Termination. The rider will remain in effect until:
• we receive Your written notice at our Administrative Office to cancel the rider;
• You Annuitize or Surrender the Policy; or
• the Additional Earnings Rider Amount is paid or added to the Annuity Value under a continuation, as described above.
Once you terminate the rider, you may re-select it during the accumulation period, if we are still offering the rider; however, a new rider will be issued and the Additional Earnings Rider Amount will be redetermined. Please note that if you terminate the rider and re-select it, the rider will only cover gains, if any, since it was re-selected, and the terms and charges of the new rider may differ from those of the terminated rider.
It is possible that the Internal Revenue Service may take a position that charges for the Additional Earnings Rider should be treated as taxable distributions to You. Although we do not believe that a rider charge under the Policy should be treated as a taxable distribution, You should consult Your tax adviser before selecting this rider under the Policy.
guaranteed minimum income benefit rider (No longer available)
The following discussion is related to the Guaranteed Minimum Income Benefit Rider being issued on or after May 1, 2002. If You purchased a Guaranteed Minimum Income Benefit Rider before May 1, 2002, please consult the prospectus You received when You purchased that rider for details on the terms of Your rider. If You have questions, please contact us at (800)851-9777, Ext. 6538 (Monday-Friday 8:00 a.m. – 8:00 p.m.). If You upgrade Your rider, You will receive the rider discussed below. See Minimum Annuitization Value Upgrade below for more information about the rider upgrade.
The Guaranteed Minimum Income Benefit Rider assures You of a minimum level of income in the future by guaranteeing a “minimum Annuitization value.'' By selecting this rider, You are guaranteed a future minimum level of income under the rider's fixed or variable payment options based on the minimum Annuitization value, regardless of the performance of the underlying investment portfolios. (If You select the Guaranteed Minimum Income Benefit Rider, we may restrict the Subaccounts to which You may allocate premium payments or transfer annuity value. Any such restriction will not affect the allocations You made before we put the restriction in place.)
You may purchase the rider when we issue Your Policy or any time before the Annuitant's 90th birthday.
You can Annuitize under the rider (subject to the conditions described below) using the greater of the annuity value or the minimum Annuitization value. If You Annuitize under the rider before the 10th rider anniversary, the following restrictions will apply:
• You may not Annuitize under the Term Certain fixed annuity payment option;
• we will adjust the age(s) we use to determine the applicable annuity factors by adjusting them down by one year for each complete year that the rider is short of being in force for 10 years at the time You Annuitize. This will reduce the amount of Your annuity payments.
See Annuity Payment Options Under the Rider below, and Annuity Factor Age Adjustment in the SAI for more information.
Minimum Annuitization Value. If You purchase the rider at issue, the minimum Annuitization value is the annuity value on that date. If You purchase the rider at a future date, the minimum Annuitization value would be:
• the annuity value on the date the rider is issued, plus
• any additional premiums paid after the rider date, minus
• an adjustment for any partial surrenders made after the rider date
• accumulated at the annual growth rate, plus
• any premium taxes.
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The annual growth rate is currently 6% per year. For policies issued in a few states, this rate will be less than 6%. We may, at our discretion, change the rate in the future for new riders, including upgrades, but the rate will never be less than 3% per year. Once the rider is added to Your Policy, the annual growth rate, the rider charge, the rider charge waiver threshold, the guaranteed minimum payment fee and the waiting period before You can Annuitize under the rider, without the annuity factor age adjustment, will not change unless You upgrade the rider. Partial surrenders may reduce the minimum Annuitization value on a basis greater than dollar-for-dollar.
The minimum Annuitization value is used solely to calculate the annuity payments and charges under the rider and adjustments to partial withdrawals. This value does not establish or guarantee an annuity value or guarantee performance of any Subaccount. If You choose to Annuitize under the rider, we will use the greater of Your annuity value or Your minimum Annuitization value (less any outstanding loan amount and any loan interest You owe) to determine the amount of Your fixed or variable annuity payments under the rider. The minimum Annuitization value may not be used to Annuitize with any of the annuity payment options under the Policy.
Annuity Payment Options Under the Rider. The only payment options available under the rider are the following fixed and variable annuity options:
Fixed Annuity Payment Options:
• Term Certain – Level payments will be made for 15 years based on a guaranteed interest rate of 3%. This interest rate will not increase even if current interest rates are higher when You Annuitize. This annuity payment option is not available if You Annuitize under the rider before the 10th anniversary of rider purchase or later upgrade.
Variable Annuity Payment Options:
• Life Income - An election may be made for “No Period Certain,'' “10 Years Certain,'' or ”Installment Refund.'' Installment Refund is an annuity payment option that guarantees the return of the minimum Annuitization value. The period certain for an installment refund is the shortest period, in months, that guarantees the return of the minimum Annuitization value. Payments will be made as long as the Annuitant is living. In the event of the death of the Annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the Beneficary.
• Joint and Full Survivor - An election may be made for “No Period Certain,'' ”10 Years Certain,'' or “Installment Refund.'' Payments will be made as long as either the Annuitant or joint Annuitant is living. In the event of the death of both the Annuitant and joint Annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the Beneficary.
Before You Annuitize under the rider’s variable annuity options, You may transfer values from one Subaccount to another. In the future, we may restrict the Subaccounts to which You may transfer annuity value. After the Maturity Date, no transfers may be made to or from the fixed account, and we reserve the right to limit transfers among the Subaccounts to once per year.
Note Carefully: The death benefit payable after You Annuitize under the rider will be affected by the annuity option You choose.
If:
• You choose Life Income with No Period Certain or Joint and Full Survivor with No Period Certain; and
• the Annuitant dies, for examples, before the due date of the second annuity payment,
Then:
• we will make only one annuity payment and there will be no death benefit payable.
Annuity Factor Age Adjustment. If You Annuitize under one of the rider's variable options before the 10th rider anniversary, the first payment will be calculated with an annuity factor age adjustment which subtracts up to 9 years from the Annuitant's age (age 85 if the Annuitant's age is at least 85). This results in all payments being lower than if an annuity factor age adjustment was not used. See the SAI for information concerning the calculation of the initial payment. The age adjustment is as follows:
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Number of Complete Years
Since the Rider Date 		  Age Adjustment: Number of Years
Subtracted From Your Age
1   9
2   8
3   7
4   6
5   5
6   4
7   3
8   2
9   1
10 or more   0
Minimum Annuitization Value Upgrade. You can elect, in writing, to upgrade the minimum Annuitization value to the current annuity value at any time after the first rider anniversary and before the Annuitant's 85th birthday (earlier if required by Your state). For Your convenience, we will put the last date to upgrade on page one of the rider.
If You elect to upgrade, the current rider will terminate, we will assess the rider charge, and a new rider will be issued. The new rider will have a new rider date, a new waiting period before You can Annuitize under the rider, a new annual growth rate, a new rider charge waiver threshold and new guaranteed benefits and charges. The rider anniversary will be measured from the new rider's issue date, so that Annuitizing prior to the new rider's 10th anniversary will result in an annuity factor age adjustment, and the term certain fixed annuity payment option may not be selected. The benefits and charges under the new rider may not be as advantageous as the previous rider's benefits and charges prior to upgrading.
It generally will not be to Your advantage to upgrade unless Your annuity value exceeds Your minimum Annuitization value on the applicable rider anniversary.
Conditions to Annuitize Under the Rider. You can only Annuitize under the rider within 30 days after a rider anniversary. In the case of an upgrade of the minimum Annuitization value, You cannot Annuitize before the new rider's first rider anniversary. You cannot Annuitize under the rider after the 30-day period following the rider anniversary after the Annuitant's 89th birthday (earlier if required by Your state). For Your convenience, we will put the last date to Annuitize under the rider on page one of the rider.
Note Carefully:
• You may only Annuitize under the rider at the times indicated above. If You Annuitize at any other time, You lose the benefit of the rider.
• If You Annuitize under the rider before the 10th rider anniversary, there will be an annuity factor age adjustment. See Annuity Factor Age Adjustment above.
Payments under the Rider. If You elect a variable annuity payment option under the rider, we guarantee that future annuity payments under the rider will never be less than the initial annuity payment. See the SAI for information concerning the calculation of the initial payment. We will also “stabilize'' the payments (hold them constant) during each rider year.
During the first rider year after You Annuitize under the rider, each payment will equal the initial payment. On each rider anniversary thereafter, the variable annuity payment will increase or decrease (but never below the initial payment) depending on the performance of the Subaccounts You selected, and then be held constant at that amount for that rider year. The payments starting on each rider anniversary will equal the greater of the initial variable annuity payment or the payment that can be supported by the number of annuity units in the Subaccounts on the rider anniversary. We will calculate each subsequent payment using a 5% assumed investment return. The portfolio in which You are invested must grow at a rate greater than the 5% assumed investment return, plus the separate guaranteed minimum payment fee of 1.10% and mortality and expense risk and administrative charges of 1.40% annually, in order to increase the dollar amount of variable annuity payments. Annuity payments may decline in value if investment returns do not grow at this rate, but Your payment will never be less than the initial payment. See the SAI for additional information concerning how payments are determined under the rider.
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Rider Charge Before Annuitization. Prior to Annuitization, a rider charge, currently 0.45% annually of the minimum Annuitization value, is deducted from the annuity value on each rider anniversary and pro rata on the termination date of the rider (including Policy surrender and upgrades of the minimum Annuitization value). The annual rider charge after an upgrade is currently 0.45%, but we reserve the right to increase the rider charge after upgrade to 0.50%. Once the rider is issued, the rider charge will not change. Keep in mind that the current rider charge (0.45%) may be higher if You upgrade the rider at a later date because we may increase the rider charge after an upgrade up to the maximum (0.50%). We deduct the rider charge from the fixed account and from each Subaccount in proportion to the amount of annuity value in each account. This charge is deducted even if the annuity value exceeds the minimum Annuitization value.
We will waive the rider charge on any rider anniversary if the annuity value exceeds the rider charge waiver threshold (guaranteed 2.0) times the minimum Annuitization value. For instance, if Your annuity value on the seventh rider anniversary is $100,000, Your minimum Annuitization value is $45,000 and the rider charge waiver threshold is 2.0, we will waive the rider charge on that anniversary because $100,000 is greater than $90,000 ($45,000 X 2.0). We may, at our discretion, change the rider charge waiver threshold in the future if You choose to upgrade the minimum Annuitization value, or for future issues of the rider, but it will never be greater than 2.5.
Rider Charge After Annuitization. If You Annuitize under a variable annuity payment option of the rider, a daily guaranteed minimum payment fee, equal to an annual rate of 1.10% of the daily net asset values in the Subaccounts, plus the mortality and expense risk and administrative charges of 1.40%, are reflected in the amount of the variable payments You receive. We may change the guaranteed minimum payment fee in the future, if You choose to upgrade the minimum Annuitization value or for future issues of the rider, but it will never be greater than 2.10%.
Termination. You have the option to terminate the rider at any time after the first rider anniversary by sending us written notification to our Administrative Office. You have the option not to Annuitize under the rider but we will not refund any charges You have paid and You will not be able to use the minimum Annuitization value. The rider will terminate upon the earliest of the following:
• Annuitization that is not under the rider;
• the date You elect to upgrade (although a new rider will be issued);
• the date we receive Your complete written request to terminate the rider;
• the date Your Policy terminates or is surrendered;
• 30 days following the rider anniversary after the Annuitant's 94th birthday (earlier if required by Your state); or
• the date of death of Annuitant when the death benefit proceeds are payable to the Beneficary.
However, if the change in Annuitant is due to the death of an Annuitant who is not an Owner, then You may name a new Annuitant and the then-current rider will remain in effect.
The rider does not establish or guarantee annuity value or guarantee performance of any Subaccount. Because the rider guarantees a minimum level of income, the level of income that it guarantees may be less than the level that might be provided by application of the annuity value at the Policy's applicable annuity factors. Therefore, the rider should be regarded as a safety net. The costs of Annuitizing under the rider include the guaranteed minimum payment fee, the mortality and expense risk and administrative charges and also the lower levels inherent in the annuity tables used for the minimum payouts. These costs should be balanced against the benefits of a minimum payout level.
The rider may vary by state and is not available in all states. We recommend that You consult Your tax adviser before You purchase this rider.
During the accumulation period, You can elect to receive regular payments from Your Policy, up to the amount permitted under the terms of Your Policy, without paying Surrender charges by using systematic Surrenders. Unless You specify otherwise, we will deduct systematic Surrender amounts from each Subaccount (and, if we consent, the Fixed Account) in proportion to the value each Subaccount bears to the Annuity Value at the time of the Surrender. You can partially surrender up to 10% of your Annuity Value annually (or up to 10% of your initial premium payment if a new Policy) in equal monthly, quarterly, semi-annual or annual payments of at least $40. Your initial Premium Payment, if a new Policy, or Your Annuity Value, if an existing Policy, must equal at least $25,000. We will not process a systematic Surrender if the Annuity Value for the entire Policy would be reduced below $5,000. No systematic partial surrenders are permitted from the Fixed Account without our prior consent.
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There is no charge for taking systematic Surrenders. You may stop systematic Surrenders at any time. We reserve the right to discontinue offering systematic Surrenders 30 days after we send You written notice.
You can take systematic Surrenders during the accumulation period only. On the Maturity Date, You must Annuitize the Policy and systematic Surrender payments must stop.
Income taxes, federal tax penalties and other restrictions may apply to any systematic Surrender You receive.
If Your Policy contains a nursing care facility waiver, we will waive the surrender charge, provided:
• You (or any joint Owner) have been confined to a nursing care facility for 30 consecutive days or longer;
• Your confinement began after the Policy Date; and
• You provide us with satisfactory written evidence of Your confinement, including dates, at the time You make each request for partial surrender or complete surrender.
We will waive the surrender charge under this waiver only for partial surrender and complete surrenders made during Your confinement or within two months after Your confinement ends.
There is no restriction on the maximum amount You may withdraw under this benefit.
The Nursing Care Facility Waiver may vary for certain policies and may not be available for all policies, in all states or at all times.
If Your Policy contains a terminal condition waiver, we will waive the surrender charge upon a complete surrender or partial surrender, provided:
• You (or any joint Owner) is diagnosed with a terminal condition after the Policy Date;
• You (or any joint Owner) provide a written statement acceptable to us and signed by a physician;
• the written statement provides the physician’s diagnosis and prognosis of Your (or any joint Owner’s) non-correctable medical condition; and
• the written statement says with reasonable medical certainty that the non-correctable medical condition will result in death within 12 months from the date of the written statement, taking into consideration ordinary and reasonable medical care, advice and treatment available in the same or similar communities.
We will waive all surrender charges upon receipt of a complete surrender or partial surrender request if You include such a written statement from a physician with Your request. The minimum amount that You may partially surrender under this waiver is $1,000. If You request a complete surrender, or a partial surrender for an amount that reduces the annuity value below the minimum balance required under Your Policy, we will pay You the Policy’s complete annuity value and Your Policy will terminate.
There is no restriction on the maximum amount You may withdraw under this benefit.
The Terminal Condition Waiver may vary for certain policies and may not be available for all policies, in all states or at all times.
Dollar Cost Averaging Program
During the Accumulation period, You may instruct us to automatically make transfers into one or more Subaccounts in accordance with Your allocation instructions. This is known as Dollar Cost Averaging. While Dollar Cost Averaging buys more accumulation units when prices are low and fewer accumulation units when prices are high, it does not guarantee profits or assure that You will not experience a loss.
Dollar Cost Averaging programs that may be available under Your Policy:
• Traditional—You may specify the dollar amount to be transferred or the number of transfers. Transfers will begin as soon as the program is started. A minimum of $500 per transfer is required. The minimum number of transfers is 6 monthly or 4 quarterly, and the maximum is 24 monthly or 8 quarterly. You can elect to transfer from the Fixed Account, money market or other specified Subaccount.
• Special —You may only elect either a six or twelve month program. Transfers will begin as soon as the program is started. You cannot transfer from another Investment Option into a Special Dollar Cost Averaging program. This program is only available for new Purchase Payments, requires transfers from a fixed source, and may credit a higher or lower interest rate than a traditional program. A minimum of $500 per transfer is required ($3,000 or $6,000 to start a 6-month or 12-month program, respectively).
A Dollar Cost Averaging program will begin the next business day after we have received in good order all necessary information and
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the minimum required amount. SeeSending Forms and Transaction Requests in Good Order. Please note, Dollar Cost Averaging programs will not begin on the 29th, 30th, or 31st. If a program would have started on one of those dates, it will start on the 1st business day of the following month. If we receive additional Premium Payments while a Dollar Cost Averaging program is running, absent new instructions to the contrary, the amount of the Dollar Cost Averaging transfers will increase, but the length of the Dollar Cost Averaging program will not.
NOTE CAREFULLY:
New Dollar Cost Averaging instructions are required to start a new Dollar Cost Averaging program once the previous Dollar Cost Averaging program has completed. Additional Premium Payments, absent new allocation instructions, received after a Dollar Cost Averaging program has completed, will be allocated according to the current Premium Payment allocations at that time but will not reactivate a completed Dollar Cost Averaging program.
IF:
• we do not receive all necessary information to begin or restart a Dollar Cost Averaging program;
THEN:
• any amount allocated to a fixed source will be invested in that fixed source but will be transferred to the money market Investment Option within 30 days of allocation to fixed source if new Dollar Cost Averaging instructions are not received;
• any amount in a variable source will be invested in that variable source and will remain in that variable Investment Option; and
• new Dollar Cost Averaging instructions will be required to begin a Dollar Cost Averaging program.
You should consider Your ability to continue a Dollar Cost Averaging program during all economic conditions. Transfers from a Dollar Cost Averaging fixed source are not subject to an Excess Interest Adjustment. A Dollar Cost Averaging program can be used in conjunction with Asset Rebalancing and a guaranteed lifetime withdrawal benefit (subject to any Investment Restrictions involving the source). There is no charge for this benefit.
The Dollar Cost Averaging Program may vary for certain policies and may not be available for all policies, in all states or at all times. See Your Policy for availability of the Fixed Account options. We reserve the right to terminate the availability of any Dollar Cost Averaging program at any time.
Asset Rebalancing
During the Accumulation Period You can instruct us to automatically rebalance the amounts in Your Subaccounts to maintain Your desired asset allocation. This feature is called asset rebalancing. To enter into asset rebalancing, You must submit a completed request form, signed by the Owner to our Administrative Office. To end participation in asset rebalancing, You or Your authorized registered representative may call or write to our Administrative Office. Entrance to the asset rebalancing program is limited to once per Policy year. However, we will not rebalance if You are in the dollar cost averaging program or systematic Surrender program, if You elect to participate in any asset allocation service provided by a third party or if You request any other transfer, or if we receive Your request to discontinue participation at our Administrative Office. Asset rebalancing ignores amounts in the Fixed Account. You can choose to rebalance monthly, quarterly, semi-annually, or annually.
If You request the Asset Rebalancing program, we will change Your future payment allocation to match the Subaccounts in Your Asset Rebalancing program.
To qualify for asset rebalancing, a minimum Annuity Value of $5,000 for an existing Policy, or a minimum initial premium payment of $5,000 for a new Policy is required. Any Annuity Value in the Fixed Account Value may not be included in the asset rebalancing program. Asset rebalancing does not guarantee gains, nor does it assure that any Subaccount will not have losses.
There is no charge for this program. However, each reallocation which occurs under asset rebalancing will be counted towards the 12 free transfers allowed during each Policy year.
We reserve the right to discontinue, modify or suspend the asset rebalancing program at any time.
Telephone, Fax and Internet Transactions
Currently, certain transactions may be made by telephone or other electronic means acceptable to us upon our receipt of the appropriate authorization. We may discontinue this option at any time.
Upon instructions from You, the registered representative/agent of record for Your Policy may also make telephonic transfers for You. If You do not want the ability to make transfers by telephone, You should notify us in writing.
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Except for the restrictions regarding the Fixed Account noted above, You may make telephonic transfers, allocation changes or request withdrawals by calling our toll-free number: (800)851-9777 (Monday-Friday 8:30 a.m.- 7:00 p.m. Eastern Time). You will be required to provide certain information for identification purposes when You request a transaction by telephone. We may also require written confirmation of Your request. We will not be liable for losses resulting from telephone requests that we believe are genuine. Telephone transfers for policies owned by trust will only be allowed if a current trust certification form with a signature guarantee is on file at our Administrative Office. If we do not employ reasonable confirmation procedures, we may be liable for losses due to unauthorized or fraudulent transactions.
Telephone, fax and Internet orders must be received in good order at our Administrative Office while the New York Stock Exchange is open for regular trading to receive same-day pricing. Orders received in good order at our office on non-business days or after the close of business on business days will get next – day pricing. See Sending Forms and Transactions in Good Order.
We may deny the telephone transaction privileges to market timers and frequent or disruptive traders.
To request a transfer or Surrender, please fax Your request to us at (877)355-4385. We will not be responsible for same-day processing of transfers or Surrenders if You fax Your request to a number other than this fax number.
You may make transfers and change premium allocations through our website - tlic.transamerica.com.
We will not be responsible for transmittal problems which are not reported to us by the following business day. Any reports must be accompanied by proof of the faxed transmittal.
We cannot guarantee that telephone, fax or Internet transactions will always be available. For example, our Administrative Office may be closed during severe weather emergencies or there may be interruptions in telephone service or problems with computer systems that are beyond our control. If the volume of calls is unusually high, we might not have someone immediately available to receive Your order. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. Outages or slowdowns may prevent or delay our receipt of Your order or request.
We may discontinue the availability of telephone, fax or Internet transactions at any time.
Loans
Policy Loans for Certain Qualified Policies
You can take Policy loans during the Accumulation Period after the right to cancel period has expired when the Policy is used in connection with a tax-sheltered annuity plan under Section 403(b) of the Code (limit of one Policy loan per Policy year). If Your Policy was issued pursuant to a 403(b) plan, starting January 1, 2009, we generally are required to confirm, with Your 403(b) plan sponsor or otherwise, that loans You request comply with applicable tax requirements and to decline requests that are not in compliance. No additional loans will be allowed if there is a defaulted loan. There can be no more than two outstanding loans at any given time.
The maximum amount You may borrow against the Policy is the lesser of:
• 50% of the Annuity Value; or
• $50,000 reduced by the highest outstanding loan balance during the one-year period immediately prior to the loan date. However, if the Annuity Value is less than $20,000, the maximum You may borrow against the Policy is the lesser of 80% of the Annuity Value or $10,000.
The minimum loan amount is $1,000 (unless otherwise required by state law). You are responsible for requesting and repaying loans that comply with applicable tax requirements, and other laws, such as the Employee Retirement Income Security Act of 1974 (“ERISA”). In addition, the Department of Labor has issued regulations governing loans taken by plan participants under retirement plans subject to ERISA. These regulations require, in part, that a loan from an ERISA-governed plan be made under an enforceable agreement, charge a reasonable rate of interest, be adequately secured, provide a reasonable repayment schedule, and be made available on a basis that does not discriminate in favor of employees who are officers or shareholders or who are highly compensated.
Failure to comply with these requirements may result in penalties under the Code and ERISA. You and Your employer are responsible for determining whether Your plan is subject to, and complies with, ERISA and the Department of Labor's regulations governing plan loans and the tax rules applicable to loans. Accordingly, You should consult a competent financial professional before requesting a Policy loan.
The loan amount will be withdrawn from Your investment choices and transferred to the loan reserve. The loan reserve is part of the Fixed Account and is used as collateral for all Policy loans. We reserve the right to postpone distributing the loan amount from the Fixed Account for up to six months, if required.
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On each Policy Anniversary we will compare the amount of the Policy loan to the amount in the loan reserve. If all Policy loans and unpaid accrued interest due on the loan exceed the amount in the loan reserve, we will withdraw the difference and transfer it to the loan reserve. If the amount of the loan reserve exceeds the amount of the outstanding Policy loan, we will withdraw the difference from the loan reserve and transfer it in accordance with Your current Premium Payment allocation. We reserve the right to transfer  the excess to the Fixed Account if the amount used to establish the loan reserve was transferred from the Fixed Account. If all Policy loans and unpaid interest due on the loan exceeds the Cash Value, we will mail to your last known address and to any assignee of record a notice stating the amount due in order to reduce the loan amount to that the loan no longer exceeds the Cash Value. If the excess amount is not paid within 31 days after we mail the notice, the Policy will terminate without value.
If all Policy loans and unpaid interest due on the loan exceed the Cash Value, we will mail to Your last known address and to any assignee of record a notice stating the amount due in order to reduce the loan amount so that the loan amount no longer exceeds the Cash Value. If the excess amount is not paid within 31 days after we mail the notice, the Policy will terminate without value.
You can repay any Policy loan in full (prior to loan default):
• while the Policy is In Force; and
• during the accumulation period.
Note Carefully: If You do not repay Your Policy loan, we will deduct an amount equal to the unpaid loan balance plus any unpaid accrued interest from:
• the amount of any death benefit proceeds; or
• the amount we pay upon a Surrender or complete surrender; or
• the amount we apply on the Maturity Date to provide annuity payments.
You must pay interest on the loan at the rate of 6% per year. You are responsible for determining whether this interest rate is reasonable under ERISA. We deduct interest in arrears. Amounts in the loan reserve will earn interest at a minimum guaranteed effective annual interest rate of 4%. Principal and interest must be repaid:
• in substantially level quarterly payments over a 5-year period; or
• over a 10, 15 or 20-year period, if the loan is used to buy Your principal residence.
Please Note: Once established, You cannot change the due date or payment method. An extended repayment period cannot go beyond the year You turn 72(or age 70 ½ if the Annuitant attained 70 ½ before 1/1/2020).
IF:
• a repayment is not received within 31 days from the original due date;
THEN:
• under federal tax law You will be treated as having a deemed distribution of all Policy loans and unpaid accrued interest, and any applicable charges, including any Surrender charge
This distribution will be reported as taxable to the Internal Revenue Service, may be subject to income and penalty tax, and may cause the Policy to not qualify under Section 403(b) of the Code.
You may fax Your loan request to us at (866)-671-9215.
The loan date is the date we process the loan request. We impose a $30 fee to cover loan processing and expenses associated with establishing and administering the loan reserve (not applicable in all states). For Your protection, we will require a signature guarantee for any loan request within 30 days of an address change. We reserve the right to limit the number of Policy loans to one per Policy year.
Policy loans may not be available in all states.
NOTE: We have prepared the following information on federal taxes as a general discussion of the subject. It is not intended as tax advice to any taxpayer. The federal tax consequences discussed herein reflects our understanding of current law, and the law may change. No representation is made regarding the likelihood of continuation of the present federal tax law or of the current interpretations by the Internal Revenue Service. The discussion briefly references federal estate, gift and generation-skipping transfer taxes, but principally discusses federal income taxes. No attempt is made to consider any applicable state or other income tax laws, any state and local estate or inheritance tax, or other tax consequences of ownership or receipt of distributions under the Policy. You should consult Your own financial professional about Your own circumstances.
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Introduction
Deferred annuity policies are a way of setting aside money for future needs like retirement. Congress recognized how important saving for retirement is and provided special rules in the Internal Revenue Code (the “Code”) for annuities. Simply stated, these rules generally provide that individuals will not be taxed on the earnings, if any, on the money held in an annuity Policy until withdrawn. This is referred to as tax deferral. When a non-natural person (e.g., corporation or certain trusts) owns a nonqualified Policy, the Policy will generally not be treated as an annuity for tax purposes. Thus, the Owner must generally include in income any increase in the Policy value over the investment in the Policy during each taxable year.
There are different rules as to how You will be taxed depending on how You take the money out and the type of Policy-qualified or nonqualified.
If You purchase the Policy as an individual retirement annuity or as a part of a 403(b) plan, 457 plan, a pension plan, a profit sharing plan (including a 401(k) plan), or certain other employer sponsored retirement programs, Your Policy is referred to as a qualified Policy. There is no additional tax deferral benefit derived from placing qualified funds into a variable annuity. Features other than tax deferral should be considered in the purchase of a qualified Policy. There are limits on the amount of contributions You can make to a qualified Policy. Other restrictions may apply including terms of the plan in which You participate. To the extent there is a conflict between a plan's provisions and a Policy's provisions, the plan's provisions will control.
If You purchase the Policy other than as part of any arrangement described in the preceding paragraph, the Policy is referred to as a nonqualified Policy.
You will generally not be taxed on increases in the value of Your Policy, whether qualified or nonqualified, until a distribution occurs (e.g., as a Surrender, withdrawal, or as annuity payments). However, You may be subject to current taxation if You assign or pledge or enter into an agreement to assign or pledge any portion of the Policy. You may also be subject to current taxation if You make a gift of a nonqualified Policy without valuable consideration. All amounts received from the Policy that are includible in income are taxed at ordinary income rates; no amounts received from the Policy are taxable at the lower rates applicable to capital gains.
The Internal Revenue Service (“IRS”) has not reviewed the Policy for qualification as an IRA annuity, and has not addressed in a ruling of general applicability whether the death benefit options and riders available, with the Policy, if any, comport with IRA qualification requirements.
The value of living and death benefit options and riders elected may need to be taken into account in calculating minimum required distributions from a qualified plan/or Policy.
We may occasionally enter into settlements with Owners and Beneficiaries to resolve issues relating to the Policy. Such settlements will be reported on the applicable tax form (e.g., Form 1099) provided to the taxpayer and the taxing authorities.
Taxation of Us
We are at present taxed as a life insurance company under part I of Subchapter L of the Code. The Separate Account is treated as a part of us and, accordingly, will not be taxed separately as a “regulated investment company” under Subchapter M of the Code. We do not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the Separate Account retained as part of the reserves under the Policy. Based on this expectation, it is anticipated that no charges will be made against the Separate Account for federal income taxes. If in future years, any federal income taxes are incurred by us with respect to the Separate Account, we may make a charge to that account. We may benefit from any dividends received or foreign tax credits attributable to taxes paid by certain Underlying Fund Portfolios to foreign jurisdictions to the extent permitted under federal tax law.
Tax Status of a Nonqualified Policy
Diversification Requirements. In order for a nonqualified variable Policy which is based on a segregated asset account to qualify as an annuity Policy under Section 817(h) of the Code, the investments made by such account must be “adequately diversified” in accordance with Treasury Regulations. The Regulations apply a diversification requirement to each of the Subaccounts. Each Separate Account, through its Underlying Fund Portfolios and their portfolios, intends to comply with the diversification requirements of the Regulations. We have entered into agreements with each Underlying Fund Portfolio company that require the portfolios to be operated in compliance with the Regulations but we do not have control over the Underlying Fund Portfolio companies. The Owners bear the risk that the entire Policy could be disqualified as an annuity Policy under the Code due to the failure of a Subaccount to be deemed to be “adequately diversified.”
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Owner Control. In some circumstances, Owners of variable policies who retain excessive control over the investment of the underlying Separate Account assets may be treated as the Owners of those assets and may be subject to tax on income produced by those assets. In Revenue Ruling 2003-91, the IRS stated that whether the Owner of a variable Policy is to be treated as the Owner of the assets held by the insurance company under the Policy will depend on all of the facts and circumstances.
Revenue Ruling 2003-91 also gave an example of circumstances under which the Owner of a variable Policy would not possess sufficient control over the assets underlying the Policy to be treated as the Owner of those assets for federal income tax purposes. To the extent the circumstances relating to the issuance and ownership of a Policy vary from those described in Revenue Ruling 2003-91, Owners bear the risk that they will be treated as the Owner of Separate Account assets and taxed accordingly.
We believe that the Owner of a Policy should not be treated as the Owner of the underlying assets. We reserve the right to modify the policies to bring them into conformity with applicable standards should such modification be necessary to prevent Owners of the policies from being treated as the Owners of the underlying Separate Account assets. Concerned Owners should consult their own financial professional regarding the tax matter discussed above.
Distribution Requirements . The Code requires that nonqualified policies contain specific provisions for distribution of Policy proceeds upon the death of any Owner. In order to be treated as an annuity Policy for federal income tax purposes, the Code requires that such policies provide that if any Owner dies on or after the annuity starting date and before the entire interest in the Policy has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such Owner's death. If any Owner dies before the annuity starting date, the entire interest in the Policy must generally be distributed (1) within 5 years after such Owner's date of death or (2) be used to provide payments to a designated Beneficiary for the life of the Beneficiary or for a period not extending beyond the life expectancy of the Beneficiary. The designated Beneficiary must be an individual and payments must begin within one year of such Owner’s death. However, if upon such Owner's death the Owner's surviving spouse is the sole Beneficiary of the Policy, then the Policy may be continued with the surviving spouse as the new Owner. If any Owner is a non-natural person (except in the case of certain grantor trusts), then for purposes of these distribution requirements, the primary Annuitant shall be treated as an Owner and any death or change of such primary Annuitant shall be treated as the death of an Owner.
In certain instances a designated Beneficiary may be permitted to elect a “stretch” payment option as a means of disbursing death proceeds from a nonqualified annuity. The only method we use for making distribution payments from a nonqualified “stretch” payment option is the required minimum distribution method as set forth in Revenue Ruling 2002-62. The applicable payments are calculated using the Single Life Expectancy Table set forth in Treasury Regulation § 1.401(a)(9)-9, A-1.
The nonqualified policies contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the policies satisfy all such Code requirements. The provisions contained in the policies will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise.
Taxation of Nonqualified Annuities
The following discussion assumes the Policy qualifies as an annuity Policy for federal income tax purposes.
In General. Code Section 72 governs taxation of annuities in general. We believe that an Owner who is an individual will not be taxed on increases in the value of a Policy until such amounts are Surrendered or distributed. For this purpose, the assignment, pledge, or agreement to assign or pledge any portion of the Policy Value as collateral for a loan generally will be treated as a distribution of such portion. You may also be subject to current taxation if You make a gift of a nonqualified Policy without valuable consideration. The taxable portion of a distribution is taxable as ordinary income.
Non-Natural Persons. Pursuant to Section 72(u) of the Code, a nonqualified Policy held by a taxpayer other than a natural person generally will not be treated as an annuity Policy under the Code; accordingly, an Owner who is not a natural person will recognize as ordinary income for a taxable year the excess, if any, of the Policy Value over the “investment in the Policy.” There are some exceptions to this rule and a prospective purchaser of the Policy that is not a natural person should discuss these rules with a competent financial professional. A Policy owned by a trust using the grantor's social security number as its taxpayer identification number will be treated as owned by the grantor (natural person) for the purposes of our application of Section 72 of the Code. Consult a financial professional for more information on how this may impact Your Policy.
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Different Individual Owner and Annuitant
If the Owner and Annuitant on the Policy are different individuals, there may be negative tax consequences to the Owner and/or Beneficiaries under the Policy if the Annuitant predeceases the Owner including, but not limited, to the assessment of penalty tax and the loss of certain death benefit distribution options. You may wish to consult Your legal counsel or financial professional if You are considering designating a different individual as the Annuitant on Your Policy to determine the potential tax ramifications of such a designation.
Annuity Starting Date
This section makes reference to the annuity starting date as defined in Section 72 of the Code and the applicable regulations. Generally, the definition of annuity starting date will correspond with the definition of Maturity Date used in Your Policy and the dates will be the same. However, in certain circumstances, Your annuity starting date and Maturity Date will not be the same date. If there is a conflict between the definitions, we will interpret and apply the definitions in order to ensure Your Policy maintains its status as an annuity Policy for federal income tax purposes. You may wish to consult a financial professional for more information on when this issue may arise.
It is possible that at certain advanced ages a Policy might no longer be treated as an annuity Policy if the Policy has not been Annuitized before that age or have other tax consequences. You should consult with a financial professional about the tax consequences in such circumstances.
Taxation of Annuity Payments
Although the tax consequences may vary depending on the annuity payment option You select, in general, for nonqualified and certain qualified policies, only a portion of the annuity payments You receive will be includable in Your gross income.
In general, the excludable portion of each annuity payment You receive will be determined as follows:
• Fixed payments-by dividing the “investment in the Policy” on the annuity starting date by the total expected return under the Policy (determined under Treasury regulations) for the term of the payments. This is the percentage of each annuity payment that is excludable.
• Variable payments-by dividing the “investment in the Policy” on the annuity starting date by the total number of expected periodic payments. This is the amount of each annuity payment that is excludable.
The remainder of each annuity payment is includable in gross income. Once the “investment in the Policy” has been fully recovered, the full amount of any additional annuity payments is includable in gross income and taxed as ordinary income. The “investment in the Policy” is generally equal to the premiums You pay for the Policy, reduced by any amounts You have previously received from the Policy that are excludible from gross income.
If You select more than one annuity payment option, special rules govern the allocation of the Policy's entire “investment in the Policy” to each such option, for purposes of determining the excludable amount of each payment received under that option. We advise You to consult a competent financial professional as to the potential tax effects of allocating amounts to any particular annuity payment option.
If, after the annuity starting date, annuity payments stop because an Annuitant died, the excess (if any) of the “investment in the Policy” as of the annuity starting date over the aggregate amount of annuity payments received that was excluded from gross income may possibly be allowable as a deduction on Your tax return.
Taxation of Surrenders and Withdrawals - Nonqualified Policies
When You Surrender Your Policy, You are generally taxed on the amount that Your Surrender proceeds exceeds the “investment in the Policy.” The “investment in the Policy” is generally equal to the premiums You pay for the Policy, reduced by any amounts You have previously received from the Policy that are excludible from gross income. Withdrawals are generally treated first as taxable income to the extent of the excess in the Policy Value over the “investment in the Policy.” Distributions made under the systematic payout option are treated for tax purposes as withdrawals, not annuity payments. In general, loans, pledges and collateral assignments as security of a loan are taxed in the same manner as withdrawals and Surrenders. You may also be subject to current taxation if You make a gift of a nonqualified Policy without valuable consideration. All taxable amounts received under a Policy are subject to tax at ordinary rather than capital gain tax rates.
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If Your Policy contains an excess interest adjustment feature (also known as a market value adjustment), then Your Policy Value immediately before a Policy withdrawal (or transaction taxed like a withdrawal) may have to be increased by any positive excess interest adjustments that result from the transaction. There is, however, no definitive guidance on the proper tax treatment of excess interest adjustments, and You may want to discuss the potential tax consequences of an excess interest adjustment with Your financial professional.
The Code also provides that amounts received from the Policy that are includible in gross income (including the taxable portion of some annuity payments) may be subject to a penalty tax. The amount of the penalty tax is equal to 10% of the amount that is includable in income. Some Surrender withdrawals and other amounts will be exempt from the penalty tax. Amounts received that are not subject to the penalty tax include, among others, any amounts: (1) paid on or after the taxpayer reaches age 59½; (2) paid after an Owner (or where the Owner is a non-natural person, an Annuitant) dies; (3) paid if the taxpayer becomes disabled (as that term is defined in the Code); (4) paid in a series of substantially equal payments made annually (or more frequently) over the life of the taxpayer or the joint life of the taxpayer and the taxpayer's designated Beneficiary; (5) paid under an immediate annuity; or (6) which come from Premium Payments made prior to August 14, 1982. Regarding the disability exception, because we cannot verify that the Owner is disabled, we will report such withdrawals to the IRS as early withdrawals with no known exception from the penalty tax.
Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. You may wish to consult a financial professional for more information regarding the imposition of penalty tax.
Aggregation
All nonqualified deferred annuity policies that are issued by us (or our affiliates) to the same Owner (policyholder) during the same calendar year are treated as one annuity for purposes of determining the amount includable in the Owner's income when a taxable distribution (other than annuity payments) occurs. If You are considering purchasing multiple policies from us (or our affiliates) during the same calendar year, You may wish to consult with Your financial professional regarding how aggregation will apply to Your policies.
Tax-Free Exchanges of Nonqualified Policies
We may issue the nonqualified Policy in exchange for all or part of another annuity Policy that You own. Such an exchange will be tax free if certain requirements are satisfied. If the exchange is tax free, Your investment in the Policy immediately after the exchange will generally be the same as that of the annuity Policy exchanged, increased by any additional Premium Payment made as part of the exchange. Your Policy value immediately after the exchange may exceed Your investment in the Policy. That excess may be includable in income should amounts subsequently be withdrawn or distributed from the Policy (e.g., as a withdrawal, Surrender, annuity income payment or death benefit).
If You exchange part of an existing Policy for the Policy, and within 180 days of the exchange You received a payment other than certain annuity payments (e.g., You make a withdrawal) from either Policy, the exchange may not be treated as a tax free exchange. Rather, some or all of the amount exchanged into the Policy could be includible in Your income and subject to a 10% penalty tax.
You should consult Your financial professional in connection with an exchange of all or part of an annuity Policy for the Policy, especially if You may make a withdrawal from either Policy within 180 days after the exchange.
Medicare Tax
Distributions from nonqualified annuity policies are considered “investment income” for purposes of the Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts. We are required to report distributions made from nonqualified annuity policies as being potentially subject to this tax. While distributions from qualified policies are not subject to the tax, such distributions may be includable in income for purposes of determining whether certain Medicare Tax thresholds have been met. As such, distributions from Your qualified Policy could cause Your other investment income to be subject to the tax. Please consult a financial professional for more information.
Same Sex Relationships
Same sex couples have the right to marry in all states. The parties to each marriage that is valid under the law of any state will each be treated as a spouse as defined in this Policy. Individuals in other arrangements, such as civil unions, registered domestic partnerships, or other similar arrangements, that are treated as spouses under the applicable state law, will each be treated as spouse as defined in this Policy for state law purposes. However, individuals in other arrangements, such as civil unions, registered domestic partnerships,
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or other similar arrangements, that are not recognized as marriage under the relevant state law, will not be treated as married or as spouses as defined in this Policy for federal tax purposes. Therefore, exercise of the spousal continuation provisions of this Policy or any riders by individuals who do not meet the definition of “spouse” may have adverse tax consequences and/or may not be permissible. Please consult a financial professional for more information on this subject.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the Policy because of Your death or the death of the Annuitant. Generally, such amounts should be includable in the income of the recipient: (1) if distributed in a lump sum, these amounts are taxed in the same manner as a Surrender; (2) if distributed via withdrawals, these amounts are taxed in the same manner as a Surrender; or (3) if distributed under an annuity payment option, these amounts are taxed in the same manner as annuity payments.
Transfers, Assignments or Exchanges of Policies
A transfer of ownership or assignment of a Policy, the designation of an Annuitant or payee or other Beneficiary who is not also the Owner, the exchange of a Policy and certain other transactions, or a change of Annuitant other than the Owner, may result in certain income or gift tax consequences to the Owner that are beyond the scope of this discussion. An Owner contemplating any such transaction or designation should contact a competent financial professional with respect to the potential tax effects.
Charges
It is possible that the IRS may take a position that fees for certain optional benefits (e.g., death benefits other than the Return of Premium death benefit) are deemed to be taxable distributions to You. In particular, the IRS may treat fees associated with certain optional benefits as a taxable withdrawal, which might also be subject to a tax penalty if the withdrawal occurs prior to age 59½. Although we do not believe that the fees associated with any optional benefit provided under the Policy should be treated as taxable withdrawals, the tax rules associated with these benefits are unclear, and we advise that You consult Your financial professional prior to selecting any optional benefit under the Policy.
Federal Estate, Gift and Generation-Skipping Transfer Taxes
The estate and gift tax unified credit basic exclusion amount is $10,000,000, subject to inflation adjustments (using the C-CPI-U), for taxable years beginning after December 31, 2017, and before January 1, 2026. The maximum rate is 40%.
There is no guarantee that the transfer tax exemptions and maximum rates will remain the same in the future. The uncertainty as to how the current law might be modified in coming years underscores the importance of seeking guidance from a competent legal adviser to help ensure that Your estate plan adequately addresses Your needs and that of Your Beneficiaries under all possible scenarios.
Federal Estate Taxes. While no attempt is being made to discuss the Federal estate tax implications of the Policy in detail, a purchaser should keep in mind that the value of an annuity Policy owned by a decedent and payable to a Beneficiary by virtue of surviving the decedent is included in the decedent's gross estate. Depending on the terms of the annuity Policy, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated Beneficiary or the actuarial value of the payments to be received by the Beneficiary. Consult an estate planning adviser for more information.
Generation-Skipping Transfer Tax. Under certain circumstances, the Code may impose a “generation skipping transfer tax” when all or part of an annuity Policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Code may require us to deduct the tax from Your Policy, or from any applicable payment, and pay it directly to the IRS.
Qualified Policies
The qualified Policy is designed for use with several types of tax-qualified retirement plans which are briefly described below. The tax rules applicable to participants and Beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits, distributions prior to age 59½ (subject to certain exceptions), distributions that do not conform to specified commencement and minimum distribution rules, and in other specified circumstances. The distribution rules under Section 72(s) of the Code do not apply to annuities provided under a plan described in Sections 401(a), 403(a), 403(b), 408 or 408A of the Code, but other similar rules may. Some retirement plans are subject to distribution and other requirements that are not incorporated into the policies or our Policy administration procedures. Owners, employers, participants, and Beneficiaries are responsible for determining that contributions, distributions, and other transactions with respect to the policies comply with applicable law.
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Traditional Individual Retirement Annuities. In order to qualify as a traditional individual retirement annuity under Section 408(b) of the Code, a Policy must satisfy certain conditions: (i) the Owner must be the Annuitant; (ii) the Policy generally is not transferable by the Owner, e.g., the Owner may not designate a new Owner, designate a contingent Owner or assign the Policy as collateral security; (iii) subject to special rules, the total Premium Payments for any calendar year may not exceed the amount specified in the Code for the year, except in the case of a rollover amount or contribution under Section 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) or 457(e)(16) of the Code; (iv) annuity payments or Surrenders according to the requirements in the IRS regulations (minimum required distributions) must begin no later than April 1 of the calendar year following the calendar year in which the Annuitant attains age 72 (or age 70 ½ if the Annuitant attained 70 ½ before 1/1/2020); (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the Annuitant and the Beneficiary may not be selected; (vi) certain payments of death benefits must be made in the event the Annuitant dies prior to the distribution of the Policy value; (vii) the entire interest of the Owner is non-forfeitable; and (viii) the premiums must not be fixed. Policies intended to qualify as traditional individual retirement annuities under Section 408(b) of the Code contain such provisions. Amounts in the individual retirement annuity (other than nondeductible contributions) generally are taxed only when distributed from the annuity. Distributions prior to age 59½ (unless certain exceptions apply) are subject to a 10% penalty tax.
SIMPLE and SEP IRAs are types of IRAs that allow employers to contribute to IRAs on behalf of their employees. SIMPLE IRAs permit certain small employers to establish SIMPLE plans as provided by section 408(p) of the Code, under which employees may elect to defer to a SIMPLE IRA a specified percentage of compensation. The sponsoring employer is required to make matching or non-elective contributions on behalf of employees. Distributions from SIMPLE IRAs are subject to the same restrictions that apply to IRA distributions. Subject to certain exceptions, distributions prior to age 59½ are subject to a 10 percent penalty tax, which is increased to 25 percent if the distribution occurs within the first two years after the commencement of the employee's participation in the plan. SEP IRAs permit employers to make contributions to IRAs on behalf of their employees, up to a specified dollar amount for the year and subject to certain eligibility requirements as provided by Section 408(k) of the Code. Distributions from SEP IRAs are subject to the same rules that apply to IRA distributions and are taxed as ordinary income.
The IRS has not reviewed this Policy for qualification as a traditional IRA, SIMPLE IRA or SEP IRA, and has not addressed in a ruling of general applicability whether any death benefits available under the Policy comport with qualification requirements.
Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA, a traditional IRA or other allowed qualified plan. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax. The ability to make cash contributions to Roth IRAs is available to individuals with earned income and whose modified adjusted gross income is under a specified dollar amount for the year. Subject to special rules, the amount per individual that may be contributed to all IRAs (Roth and traditional) is an amount specified in the Code for the year. Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made 5 tax years after the first contribution to any Roth IRA of the individual and made after one of the following: attaining age 59½, to pay for qualified first time home buyer expenses (lifetime maximum of $10,000), or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a penalty tax unless an exception applies. Please note that specific tax ordering rules apply to Roth IRA distributions. Unlike the traditional IRA, there are no minimum required distributions during the Owner's lifetime; however, minimum required distributions at death are generally the same as for traditional IRAs.
The IRS has not reviewed this Policy for qualification as a ROTH IRA, and has not addressed in a ruling of general applicability whether any death benefits available under the Policy comport with qualification requirements.
Section 403(b) Plans. Under Section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase policies for their employees are generally excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to Federal Insurance Contributions Act (FICA or Social Security) taxes. The Policy includes a death benefit that in some cases may exceed the greater of the Premium Payments or the Policy value. Additionally, in accordance with the requirements of the Code, Section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, and (ii) earnings on those contributions, and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989, unless certain events have occurred. Specifically, distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59½, severance from employment, disability, or financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. These rules may prevent the payment of guaranteed withdrawals under a guaranteed lifetime withdrawal benefit prior to age 59½. For policies issued after 2008, amounts attributable to non-elective contributions may be subject to distribution restrictions specified in the employer's section 403(b) plan. Employers using the Policy in connection with Section 403(b) plans may wish to consult with their financial professional.
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Pursuant to tax regulations, we generally are required to confirm, with Your 403(b) plan sponsor or otherwise, that Surrenders, loans or transfers You request from a 403(b) Policy comply with applicable tax requirements before we process Your request. We will defer such payments You request until all information required under the tax law has been received. By requesting a Surrender or transfer, You consent to the sharing of confidential information about You, the Policy, and transactions under the Policy and any other 403(b) policies or accounts You have under the 403(b) plan among us, Your employer or plan sponsor, any plan administrator or record keeper, and other product providers.
Pension and Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the policies to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the Policy is assigned or transferred to any individual as a means to provide benefit payments. Contributions to and distributions from such plans are limited by the Code and may be subject to penalties.
Deferred Compensation Plans. Section 457(b) of the Code, while not actually providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans established and maintained by state and local governments (and their agencies and instrumentalities) and tax exempt organizations. Under such plans a participant may be able to specify the form of investment in which his or her participation will be made. For non-governmental Section 457(b) plans, all such investments, however, are typically owned by, and are subject to, the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-government employer may be entitled to draw on deferred amounts for purposes unrelated to its Section 457(b) plan obligations. In general, all amounts received under a non-governmental Section 457 plan are taxable in the year paid (or in the year paid or made available in the case of a non-governmental 457(b) plan). Distributions from non-governmental 457(b) plans are subject to federal income tax withholding as wages, distributions from governmental 457(b) plans are subject to withholding as “eligible rollover distributions” as described in the section entitled Withholding below. Contributions to and distributions from such plans are limited by the Code and may be subject to penalties. Deferred compensation plans of governments and tax-exempt entities that do not meet the requirements of Section 457(b) are taxed under Section 457(f), which means compensation deferred under the plan is included in gross income in the first year in which the compensation is not subject to substantial risk of forfeiture.
Ineligible Owners-Qualified
We currently will not issue new policies to/or for the following plans: 403(a), 403(b), 412(i)/412(e)(3), 419, 457 (we will in certain limited circumstances accept 457(f) plans), employee stock ownership plans, Keogh/H.R.-10 plans and any other types of plans at our sole discretion.
Taxation of Surrenders and Withdrawals - Qualified Policies
In the case of a withdrawal under a qualified Policy (other than from a deferred compensation plan under Section 457 of the Code), a pro rata portion of the amount You receive is taxable, generally based on the ratio of Your “investment in the Policy” to Your total account balance or accrued benefit under the retirement plan. Your “investment in the Policy” generally equals the amount of any non-deductible Premium Payments made by You or on Your behalf. If You do not have any non-deductible Premium Payments, Your investment in the Policy will be treated as zero.
In addition, a penalty tax may be assessed on amounts withdrawn from the Policy prior to the date You reach age 59½, unless You meet one of the exceptions to this rule which are similar to the penalty exceptions for distributions from nonqualified policies discussed above. However, the exceptions applicable for qualified policies differ from those provided to nonqualified policies. You may wish to consult a financial professional for more information regarding the application of these exceptions to Your circumstances. You may also be required to begin taking minimum distributions from the Policy by a certain date. The terms of the plan may limit the rights otherwise available to You under the Policy.
Qualified Plan Required Distributions
For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the Owner (or plan participant) (i) reaches age 72 (or 70½ if the Owner/participant attained age 70½ prior to 1/1/2020) or (ii) retires, and must be made in a specified form or manner. If a participant is a “5 percent Owner” (as defined in the Code), or in the case of an IRA (other than a Roth IRA which is not subject to the lifetime required minimum distribution rules), distributions generally must begin no later than April 1 of the year following the calendar year in which the Owner (or plan participant) reaches age 72 (or 70½ if the Owner/participant attained age 70½ prior to 1/1/2020). The actuarial present value of death and/or living benefit options and riders elected may need to be taken into account in calculating required minimum distributions. Please consult with Your financial professional to learn more about an optional living or death benefit prior to purchase.
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Each Owner is responsible for requesting distributions under the Policy that satisfy applicable tax rules. We do not attempt to provide more than general information about the use of the Policy with the various types of retirement plans. Purchasers of policies for use with any retirement plan should consult their legal counsel and financial professional regarding the suitability of the Policy.
The Code generally requires that interest in a qualified Policy be non-forfeitable. If Your Policy contains a bonus rider with a recapture, forfeiture, or “vesting” feature, it may not be consistent with those requirements. Consult a financial professional before purchasing a bonus rider as part of a qualified Policy.
You should consult Your legal counsel or financial professional if You are considering purchasing an enhanced death benefit or other optional rider, or if You are considering purchasing a Policy for use with any qualified retirement plan or arrangement.
Optional Living Benefits
For policies with a guaranteed lifetime withdrawal benefit or a guaranteed maximum accumulation benefit the application of certain tax rules, particularly those rules relating to distributions from Your Policy, are not entirely clear. The tax rules for qualified policies may impact the value of these optional benefits. Additionally, the actions of the qualified plan as Policy holder may cause the qualified plan participant to lose the benefit of the guaranteed lifetime withdrawal benefit. In view of this uncertainty, You should consult a financial professional before purchasing this Policy as a qualified Policy.
Withholding
The portion of any distribution under a Policy that is includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld. Election forms will be provided at the time distributions are requested or made. The amount of withholding varies according to the type of distribution. The withholding rates applicable to the taxable portion of periodic payments (other than eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. A 10% withholding rate applies to the taxable portion of non-periodic payments. Regardless of whether You elect not to have federal income tax withheld, You are still liable for payment of federal income tax on the taxable portion of the payment. For qualified policies taxable, “eligible rollover distributions” from Section 401(a) plans, Section 403(a) annuities, Section 403(b) tax-sheltered annuities, and governmental 457 plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is any distribution from such a plan, other than specified distributions such as distributions required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, to nontaxable distributions or if (i) the employee (or employee's spouse or former spouse as Beneficiary or alternate payee) chooses a “direct rollover” from the plan to a tax-qualified plan, IRA, Roth IRA or 403(b) tax-sheltered annuity or to a governmental 457 plan that agrees to separately account for rollover contributions; or (ii) a non-spouse Beneficiary chooses a “direct rollover” from the plan to an IRA established by the direct rollover.
Annuity Purchases by Residents of Puerto Rico
The IRS has announced that income received by residents of Puerto Rico under life insurance or annuity policies issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.
Annuity Policies Purchased by Non-resident Aliens and Foreign Corporations
The discussion above provided general information (but not tax advice) regarding U.S. federal income tax consequences to annuity Owners that are U.S. persons. Taxable distributions made to Owners who are not U.S. persons will generally be subject to U.S. federal income tax withholding at a 30% rate, unless a lower treaty rate applies. In addition, distributions may be subject to state and/or municipal taxes and taxes that may be imposed by the Owner's country of citizenship or residence. Prospective foreign Owners are advised to consult with a qualified financial professional regarding U.S., state, and foreign taxation for any annuity Policy purchase.
Foreign Account Tax Compliance Act (“FATCA”)
If the payee of a distribution from the Policy is a foreign financial institution (“FFI”) or a non-financial foreign entity (“NFFE”) within the meaning of the Code as amended by the Foreign Account Tax Compliance Act (“FATCA”), the distribution could be subject to U.S. federal withholding tax on the taxable amount of the distribution at a 30% rate irrespective of the status of any Beneficial Owner of the Policy or the distribution. The rules relating to FATCA are complex, and a financial professional should be consulted if an FFI or NFFE is or may be designated as a payee with respect to the Policy.
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Possible Tax Law Changes
Although the likelihood and nature of legislative or regulatory changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation, regulation, or otherwise. You should consult a financial professional with respect to legal or regulatory developments and their effect on the Policy.
We have the right to modify the Policy to meet the requirements of any applicable laws or regulations, including legislative changes that could otherwise diminish the favorable tax treatment that annuity Owners currently receive.
OTHER INFORMATION
Variations in Policy Provisions
Certain provisions of the policies may vary from the descriptions in this prospectus in order to comply with different state laws. See Your Policy for variations, since any such state variations will be included in Your Policy or in riders or endorsements attached to Your Policy.
The Fixed Account is not available in all states. If Your Policy was issued in Washington, Oregon, New Jersey or Massachusetts, You may not direct or transfer any money to the Fixed Account.
For general information concerning Policy WL18 please see Appendix C in addition to your Policy.
We cannot process Your requests for transactions relating to the Policy until they are received in good order. “Good order” means the actual receipt of the instructions relating to the requested transaction in writing (or, when appropriate, by telephone or electronically), along with all forms, information and supporting legal documentation necessary to effect the transaction. This information and documentation generally includes, to the extent applicable to the transaction: Your completed application; the Policy number; the transaction amount (in dollars or percentage terms); the names and allocations to and/or from the Subaccouns affected by the requested transaction; the dated signatures of all Owners (exactly as registered on the Policy) if necessary; Social Security Number or Taxpayer I.D.; and any other information or supporting documentation that we may require, including any spousal or joint Owner's consents. With respect to purchase requests, “good order” also generally includes receipt of sufficient funds to effect the purchase. We may, in our sole discretion, determine whether a particular transaction request is in good order, and we reserve the right to change or waive any good order requirements at any time.
“Received” or receipt in good order generally means that everything necessary must be received by us, at our Administrative Office specified in the Glossary of Terms. We reserve the right to reject electronic transactions that do not meet our requirements.
Regulatory Modifications to Policy
We reserve the right to amend the Policy or any riders attached thereto as necessary to comply with specific direction provided by state or federal regulators, through change of law, rule, regulation, bulletin, regulatory directives or agreements.
Mixed and Shared Funding
The Underlying Fund Portfolios may serve as investment vehicles for variable life insurance policies, variable annuity policies and retirement plans (“mixed funding”) and shares of the Underlying Fund Portfolios also may be sold to Separate Accounts of other insurance companies (“shared funding”). While we currently do not foresee any disadvantages to Owners and participants arising from either mixed or shared funding, it is possible that the interests of Owners of various policies and/or participants in various plans for which the Underlying Fund Portfolios serve as investments might at some time be in conflict. We and each Underlying Fund Portfolio’s Board of Directors intend to monitor events in order to identify any material conflicts and to determine what action, if any, to take. Such action could include the sale of Underlying Fund Portfolio shares by one or more of the Separate Accounts, which could have adverse consequences. Such action could also include a decision that separate funds should be established for variable life and variable annuity Separate Accounts. In such an event, we would bear the attendant expenses, but Owners and plan participants would no longer have the economies of scale resulting from a larger combined fund. Please read the prospectuses for the Underlying Fund Portfolios, which discuss the Underlying Fund Portfolios’ risks regarding mixed and shared funding, as applicable.
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Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including proceeds of annuity, life and other insurance policies) under various circumstances. In addition to the state unclaimed property laws, we may be required to escheat property pursuant to regulatory demand, finding, agreement or settlement. To help prevent such escheatment, it is important that You keep Your contact and other information on file with us up to date, including the names, contact information and identifying information for Owners, insureds, Annuitants, beneficiaries and other payees. Such updates should be communicated in a form and manner satisfactory to us.
Legal Proceedings
We, like other life insurance companies, are subject to regulatory and legal proceedings in the ordinary course of our business. Such legal and regulatory matters include proceedings specific to us and other proceedings generally applicable to business practices in the industry in which we operate. In some lawsuits and regulatory proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation or regulatory proceeding cannot be predicted with certainty, at the present time, we believe that there are no pending or threatened proceedings or lawsuits that are likely to have a material adverse impact on the Separate Account, on TCI's ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the Policy.
Distribution and Principal Underwriting Agreement. We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (TCI), for the distribution and sale of the policies. We pay commissions to TCI which are passed through to selling firms. (See below). We also pay TCI an “override” that is a percentage of total commissions paid on sales of our policies which is not passed through to the selling firms and we may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies. TCI may market the policies through bank affiliated firms, national brokerage firms, regional and independent broker-dealers and independent financial planners.
We have discontinued new sales of the policies. You may, however, continue to make Premium Payments to fund Your Policy pursuant to its terms, and exercise all other rights and options under Your Policy - such as reallocating Your Policy Value among investment choices, making Surrenders and full surrenders, and making changes of ownership of Your Policy.
Compensation to Broker-Dealers Who Sold the Policies. The policies have been offered to the public through broker-dealers (“selling firms”) that are licensed under the federal securities laws; the selling firm and/or its affiliates are also licensed under state insurance laws. The selling firms have entered into written selling agreements with us and with TCI as principal underwriter for the policies. We pay ongoing commissions through TCI to the selling firms for their past sales of the policies.
The selling firms were paid commissions for the promotion and sale of the policies according to one or more schedules. The amount and timing of commissions varies depending on the selling agreement, but the maximum commission is 7.7% of Premium Payment (additional amounts may be paid as overrides to wholesalers).
To the extent permitted by Financial Industry Regulatory Authority (FINRA) rules, the Company, TCI, Transamerica Financial Advisors, Inc. (TFA) and other affiliated parties may pay (or allow other broker-dealers to provide) promotional incentives or payments in the form of cash or non-cash compensation or reimbursement to some, but not all, selling firms and their sales representatives. These arrangements are described further below.
The sales representative who sold You the Policy may receive a portion of the compensation we (and our affiliates) pay to the selling firms, depending on the agreement between the selling firm and its registered representative and the firm's internal compensation program. These programs may include other types of cash and non-cash compensation and other benefits. Ask Your sales representative for further information about the compensation Your sales representative, and the selling firm that employs Your sales representative, may continue to receive in connection with Your Policy. Also inquire about any ongoing compensation arrangements that we and our affiliates may have with the selling firm, including the conflicts of interests that such arrangements may create.
You should be aware that a selling firm or its sales representatives may have received different compensation or incentives for selling one product over another. In some cases, these differences may have created an incentive for the selling firm or its sales representatives to have recommended or sold this Policy to You.
Special Compensation Paid to Affiliated Firms. We and/or our affiliates may provide paid-in capital to TCI. We and/or our affiliates also provide TCI with a percentage of total commissions paid on sales of our policies and provide TCI with capital payments that are not contingent on sales.
The Company’s main distribution channel is TFA, an affiliate, who sell the Company’s products.
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The Company covers the cost of TFA’s various facilities, third-party services and internal administrative functions, including employee salaries, sales representative training and computer systems that are provided directly to TFA. These facilities and services are necessary for TFA’s administration and operation, and the Company is compensated by TFA for these expenses based on TFA’s usage. In addition, the Company and other affiliates pay for certain sales expenses of TFA, including the costs of preparing and producing prospectuses and other documents for the Policy that are distributed to current Owners of the Policy.
TFA pays its branch managers a portion of the commissions received from the Company for the sale of the policies. Sales representatives receive a portion of the commissions for their sales of policies in accordance with TFA’s internal compensation programs.
Sales representatives and their managers at TFA may receive, directly or indirectly, additional cash benefits and non-cash compensation or reimbursements from us or our affiliates. Additional compensation or reimbursement arrangements may include payments in connection with TFA's conferences or seminars, sales or training programs for invited selling representatives and other employees, seminars for the public, trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items, and payments, loans, loan guaranties, or loan forgiveness to assist a firm or a representative in connection with systems, operating, marketing and other business expenses. The amounts may be significant and may provide us with increased access to the sales representatives.
In addition, TFA’s managers and/or sales representatives who meet certain productivity standards may be eligible for additional compensation. Sales of the policies by affiliated selling firms may help sales representatives and/or their managers qualify for certain cash and non-cash benefits, and may provide such persons with special incentive to sell our policies. For example, TFA’s registered representatives, general agents, marketing directors and supervisors may be eligible to participate in a voluntary stock purchase plan that permits participants to purchase stock of Aegon N.V. (the Company’s ultimate parent) by allocating a portion of the commissions they earn to purchase such shares. A portion of the contributions of commissions by TFA’s representatives may be matched by TFA.
TFA’s registered representatives may also be eligible to participate in a stock option and award plan. Registered representatives who meet certain production goals will be issued options on the stock of Aegon N.V.
Additional Compensation that We, TCI and/or our Affiliates Pay to Selected Selling Firms. We may continue to pay certain selling firms additional cash amounts in order to receive enhanced marketing services and increased access to their sales representatives. These special compensation arrangements are not offered to all selling firms, and the terms of such arrangements may differ between selling firms.
Special compensation arrangements are calculated in different ways by different selling firms and may be based on past sales of the policies or other criteria. Overrides we paid on certain products to our affiliates, TFA and Transamerica Agency Network, in 2021.
No specific charge is assessed directly to Policy Owners or the Separate Account to cover commissions and other incentives or payments described above. We do intend to recoup commissions and other sales expenses and incentives we pay, however, through fees and charges deducted under the Policy and other corporate revenue.
You should be aware that a selling firm or its sales representatives may receive different compensation or incentives for selling one product over another. In some cases, these differences may have created an incentive for the selling firm or its sales representatives to have recommended or sold the Policy to You.
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APPENDIX
The following is a list of current Portfolio Companies available under the Policy, which are subject to change as discussed in this prospectus.
Certain Subaccounts may not be available in all states, at all times or through all financial intermediaries. We may discontinue offering any Subaccount at any time. In some cases, a Subaccount not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a Subaccount, please contact Your financial intermediary or our Administrative Office.
More information about the Portfolio Companies is available in the prospectuses for the Portfolio Companies, which may be amended from time to time and can be found online at http://dfinview.com/Transamerica/TAHD/89358R580?site=VAVUL. You can also request this information at no cost by calling our Administrative Office at (800)851-9777.
The current expenses and performance below reflects fee and expenses of the Portfolio Companies, but do not reflect the other fees and expenses that your Policy may charge. Expenses would be higher and performance would be lower if these other charges were included. Each Portfolio Company’s past performance is not necessarily an indication of future performance.
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks to provide investment results that correspond generally to the total return of the high yield market, consistent with maintaining reasonable liquidity. ProFund Access VP High Yield
 
Advised by: ProFund Advisors LLC 		1.72% 0.27% 3.25% 5.11%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the ProFunds Asia 30 Index (the “Index”). ProFund VP Asia 30
 
Advised by: ProFund Advisors LLC 		1.62% -18.52% 8.58% 6.04%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. Basic MaterialsSM.Index (the “Index”). ProFund VP Basic Materials
 
Advised by: ProFund Advisors LLC 		1.68% 25.63% 11.77% 8.80%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the S&P 500® (the “Index”). ProFund VP Bull
 
Advised by: ProFund Advisors LLC 		1.63% 26.33% 16.17% 14.30%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. Consumer ServicesSM Index (the “Index”). ProFund VP Consumer Services
 
Advised by: ProFund Advisors LLC 		1.68% 10.23% 16.00% 15.97%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of BNY Mellon Emerging Markets 50 ADR® Index (the “Index”). ProFund VP Emerging Markets
 
Advised by: ProFund Advisors LLC 		1.69% -18.01% 7.82% 2.56%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the ProFunds Europe 30 Index (the “Index”). ProFund VP Europe 30
 
Advised by: ProFund Advisors LLC 		1.69% 24.53% 6.48% 5.47%
Investment Objective: ProFund VP Falling U.S. Dollar (the “Fund”) seeks investment results, before fees and expenses, that correspond to the daily performance of the basket of non-U.S. currencies included in the U.S. Dollar Index® (the “Index”) ProFund VP Falling U.S. Dollar
 
Advised by: ProFund Advisors LLC 		2.23% -8.03% -0.89% -3.66%
Investment Objective: ProFund VP Financials (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. FinancialsSM Index (the “Index”). ProFund VP Financials
 
Advised by: ProFund Advisors LLC 		1.66% 30.10% 12.00% 14.05%
Investment Objective: Seeks a high level of current income consistent with liquidity and preservation of capital. ProFund VP Government Money Market(2)
 
Advised by: ProFund Advisors LLC 		1.53% 0.01% 0.25% 0.14%
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PORTFOLIO COMPANIES AVAILABLE UNDER THE POLICY — (Continued)
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the MSCI EAFE Index (the “Index”). ProFund VP International
 
Advised by: ProFund Advisors LLC 		1.60% 8.82% 6.91% 5.45%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Nikkei 225 Stock Average (the “Index”). ProFund VP Japan
 
Advised by: ProFund Advisors LLC 		1.69% 3.89% 8.63% 11.70%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the S&P MidCap 400® (the “Index”). ProFund VP Mid-Cap
 
Advised by: ProFund Advisors LLC 		1.61% 22.21% 10.57% 11.75%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the NASDAQ-100 Index (the “Index”). ProFund VP NASDAQ-100
 
Advised by: ProFund Advisors LLC 		1.68% 24.80% 26.01% 20.70%
Investment Objective: ProFund VP Oil & Gas (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. Oil and GasSM Index (the “Index”). ProFund VP Oil & Gas
 
Advised by: ProFund Advisors LLC 		1.68% 51.93% -3.55% -1.01%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. PharmaceuticalsSM Index (the “Index”). ProFund VP Pharmaceuticals
 
Advised by: ProFund Advisors LLC 		1.67% 11.20% 8.11% 10.07%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones Precious MetalsSM Index (the “Index”). ProFund VP Precious Metals
 
Advised by: ProFund Advisors LLC 		1.68% -8.94% 8.49% -4.44%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Index. ProFund VP Short Emerging Markets
 
Advised by: ProFund Advisors LLC 		1.61% 9.96% -13.59% -9.25%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Index. ProFund VP Short International
 
Advised by: ProFund Advisors LLC 		1.58% -13.40% -11.45% -10.78%
Investment Objective: ProFund VP NASDAQ-100 (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the NASDAQ-100® Index (the “Index”). ProFund VP Short NASDAQ-100
 
Advised by: ProFund Advisors LLC 		1.68% -25.13% -25.87% -22.23%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Index. ProFund VP Short Small-Cap
 
Advised by: ProFund Advisors LLC 		1.69% -19.05% -16.20% -16.62%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Russell 2000® Index (the “Index”). ProFund VP Small-Cap
 
Advised by: ProFund Advisors LLC 		1.70% 12.88% 9.85% 11.22%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the S&P SmallCap 600® Value Index (the “Index”). ProFund VP Small-Cap Value
 
Advised by: ProFund Advisors LLC 		1.69% 28.56% 8.43% 11.60%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. TelecommunicationsSM Index (the “Index”). ProFund VP Telecommunications
 
Advised by: ProFund Advisors LLC 		1.69% 18.41% 3.10% 6.57%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to two time (2x) the daily performance of the Index. ProFund VP UltraSmall-Cap
 
Advised by: ProFund Advisors LLC 		1.72% 23.30% 14.10% 19.59%
62

 

PORTFOLIO COMPANIES AVAILABLE UNDER THE POLICY — (Continued)
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks investment results, before fees and expenses, that correspond to one and on-quarter times (1.25x) the daily price movement of the most recently issued Long Bond. ProFund VP U.S. Government Plus
 
Advised by: ProFund Advisors LLC 		1.39% -7.08% 6.54% 3.70%
Investment Objective: Seeks investment results, before fees and expenses, that correspond to the performance of the Dow Jones U.S. UtilitiesSM Index (the “Index”). ProFund VP Utilities
 
Advised by: ProFund Advisors LLC 		1.69% 15.41% 9.52% 9.26%
Investment Objective: Seeks a high level of current income by investing in high-yield debt securities. Transamerica Aegon High Yield Bond VP - Service Class
 
Sub-Advised by: Aegon USA Investment Management, LLC 		0.87% 6.25% 5.75% 6.50%
Investment Objective: Seeks total return gained from the combination of dividend yield, growth of dividends and capital appreciation. Transamerica Aegon Sustainable Equity Income VP - Service Class
 
Sub-Advised by: Aegon Asset Management UK plc (“AAM”) 		0.94% 22.12% 7.42% 9.84%
Investment Objective: Seeks to provide as high a level of total return as is consistent with prudent investment strategies. Transamerica Aegon U.S. Government Securities VP - Service Class
 
Sub-Advised by: Aegon USA Investment Management, LLC 		0.85% -2.53% 2.89% 2.10%
Investment Objective: Seeks long-term total return from investments primarily in equity securities of real estate companies. Total return consists of realized and unrealized capital gains and losses plus income. Transamerica BlackRock Global Real Estate Securities VP - Service Class
 
Sub-Advised by: BlackRock Investment Management, LLC 		1.04% 25.85% 9.25% 8.57%
Investment Objective: Seeks as high a level of current income as in consistent with preservation of capital and liquidity. Transamerica BlackRock Government Money Market VP - Service Class(2)
 
Sub-Advised by: BlackRock Investment Management, LLC 		0.54% 0.00% 0.54% 0.27%
Investment Objective: Seeks current income and preservation of capital. Transamerica BlackRock iShares Active Asset Allocation - Conservative VP - Service Class
 
Sub-Advised by: BlackRock Investment Management, LLC 		0.89% 5.74% 6.35% 4.91%
Investment Objective: Seeks capital appreciation with current income as secondary objective. Transamerica BlackRock iShares Active Asset Allocation - Moderate Growth VP - Service Class
 
Sub-Advised by: BlackRock Investment Management, LLC 		0.94% 7.62% 5.83% 5.38%
Investment Objective: Seeks capital appreciation and current income. Transamerica BlackRock iShares Edge 40 VP - Service Class
 
Sub-Advised by: BlackRock Investment Management, LLC 		0.69% 9.45% 6.11% 4.96%
Investment Objective: Seeks capital appreciation with current income as secondary objective. Transamerica BlackRock Tactical Allocation VP - Service Class
 
Sub-Advised by: BlackRock Investment Management, LLC. 		1.01% 7.63% 8.77% 7.55%
Investment Objective: Seeks capital growth. Transamerica International Focus VP - Service Class(4)
 
Sub-Advised by: Epoch Investment Partners, Inc. 		1.07% 10.63% 12.11% 9.13%
Investment Objective: Seeks long-term capital growth, consistent with preservation of capital and balanced by current income. Transamerica Janus Balanced VP - Service Class
 
Sub-Advised by: Janus Henderson Investors US LLC(6) 		1.01% 15.44% 13.39% 10.93%
63

 

PORTFOLIO COMPANIES AVAILABLE UNDER THE POLICY — (Continued)
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks long-term capital appreciation. Transamerica Janus Mid-Cap Growth VP - Service Class
 
Sub-Advised by: Janus Henderson Investors US LLC(6) 		1.07% 16.99% 19.20% 12.87%
Investment Objective: Seeks current income and preservation of capital. Transamerica JPMorgan Asset Allocation - Conservative VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.03% 5.63% 7.53% 5.75%
Investment Objective: Seeks long-term capital appreciation. Transamerica JPMorgan Asset Allocation - Growth VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.11% 19.35% 15.71% 12.08%
Investment Objective: Seeks capital appreciation and current income. Transamerica JPMorgan Asset Allocation - Moderate VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.05% 8.93% 9.32% 7.35%
Investment Objective: Seeks capital appreciation with current income as secondary objective. Transamerica JPMorgan Asset Allocation - Moderate Growth VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.09% 13.70% 11.58% 9.20%
Investment Objective: Seeks total return, consisting of current income and capital appreciation. Transamerica JPMorgan Core Bond VP - Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.77% -1.27% 3.43% 2.70%
Investment Objective: Seeks to earn a total return modestly in excess of the total return performance of the S&P 500® (including the reinvestment of dividends) while maintaining a volatility of return similar to the S&P 500®. Transamerica JPMorgan Enhanced Index VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.87% 29.79% 18.16% 16.12%
Investment Objective: Seeks capital appreciation with current income as secondary objective. Transamerica JPMorgan International Moderate Growth VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.15% 9.01% 9.46% 6.94%
Investment Objective: Seeks current income and preservation of capital. Transamerica JPMorgan Tactical Allocation VP - Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. 		1.06% 4.63% 6.64% 5.58%
Investment Objective: Seeks to balance capital appreciation and income. Transamerica Managed Risk - Balanced ETF VP - Service Class
 
Sub-Advised by: Milliman Financial Risk Management LLC 		0.63% 9.35% 7.37% 6.27%
Investment Objective: Seeks capital appreciation as a primary objective and income as a secondary objective. Transamerica Managed Risk - Growth ETF VP - Service Class
 
Sub-Advised by: Milliman Financial Risk Management LLC 		0.65% 14.05% 9.32% 8.06%
Investment Objective: Seeks to maximize long-term growth. Transamerica Morgan Stanley Capital Growth VP – Service Class
 
Sub-Advised by: Morgan Stanley Investment Management Inc. 		0.97% -0.83% 32.33% 23.03%
64

 

PORTFOLIO COMPANIES AVAILABLE UNDER THE POLICY — (Continued)
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks to provide a high total investment return through investments in a broadly diversified portfolio of stocks, bonds and money market instruments. Transamerica Multi-Managed Balanced VP – Service Class
 
Sub-Advised by: J.P. Morgan Investment Management Inc. and Aegon USA Investment Management, LLC 		0.86% 16.79% 12.40% 10.93%
Investment Objective: Seeks a combination of capital appreciation and income. Transamerica PIMCO Tactical - Balanced VP - Service Class
 
Sub-Advised by: Pacific Investment Management Company LLC 		1.11% 6.39% 7.64% 6.10%
Investment Objective:. Seeks a combination of capital appreciation and income. Transamerica PIMCO Tactical - Conservative VP - Service Class
 
Sub-Advised by: Pacific Investment Management Company LLC 		1.12% 4.21% 7.11% 5.63%
Investment Objective: Seeks a combination of capital appreciation and income. Transamerica PIMCO Tactical - Growth VP - Service Class
 
Sub-Advised by: Pacific Investment Management Company LLC 		1.13% 9.21% 8.95% 6.88%
Investment Objective: Seeks maximum total return, consistent with preservation of capital and prudent investment management. Transamerica PIMCO Total Return VP – Service Class
 
Sub-Advised by: Pacific Investment Management Company LLC 		0.92% -1.07% 3.56% 2.94%
Investment Objective: Seeks to maximize total return. Transamerica Small/Mid Cap Value VP – Service Class
 
Sub-Advised by: Systematic Financial Management L.P. & Thompson, Siegel & Walmsley LLC 		1.07% 27.81% 11.03% 12.63%
Investment Objective: Seeks long-term growth of capital by investing primarily in common stocks of small growth companies. Transamerica T. Rowe Price Small Cap VP – Service Class
 
Sub-Advised by: T. Rowe Price Associates, Inc. 		1.06% 11.08% 15.46% 15.15%
Investment Objective: Seeks to maximize long-term growth. Transamerica WMC US Growth VP – Service Class
 
Sub-Advised by: Wellington Management Company, LLP 		0.90% 20.37% 24.29% 18.28%
(1)  Some Subaccounts may be available for certain policies and may not be available for all policies. You should work with your registered representative to decide which Subaccount(s) may be appropriate for you based on a thorough analysis of your particular insurance needs; financial objectives; investment goals; time horizons; and risk tolerance.
(2)  There can be no assurance any money market portfolio offered under this Policy will be able to maintain a stable net asset value per share during extended periods of low interest rates, and partly as a result of Policy charges, the yield on the money market subaccounts may become extremely low and possibly negative.
(3)  Effective on or about November 1, 2021 Transamerica QS Investors Active Asset Allocation - Conservative VP will be renamed Transamerica BlackRock iShares Active Asset Allocation - Conservative VP.
(4)  Effective on or about November 1, 2021 Transamerica QS Investors Active Asset Allocation - Moderate Growth VP will be renamed Transamerica BlackRock iShares Active Asset Allocation - Moderate Growth VP.
(5)  Effective on or about November 1, 2021 Transamerica International Growth VP sub-advised by TDAM USA Inc. will be renamed Transamerica International Focus VP and will be sub-advised by Epoch Investment Partners, Inc.
(6)  Effective on or about January 1, 2022 Janus Capital Management LLC changed its name to Janus Henderson Investors US LLC.
NOTE: All Underlying Fund Portfolios in the Transamerica Series Trust are advised by Transamerica Asset Management. The entities listed are the sub-advisers unless otherwise indicated.
65

 

CLOSED INVESTMENT OPTIONS:
The following Subaccount was closed to new investments on December 12, 2011:
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund’s goal is to achieve a yield which exceeds the composite yield on the securities comprising the S&P 500® Index. Fidelity VIP Equity-Income Portfolio – Service Class 2
Advised by: Fidelity Management & Research Company 		0.76% 24.60% 17.71% 0.66%
The following Subaccounts were closed to new investments on December 12, 2005:
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Growth from capital appreciation. Transamerica JPMorgan Mid Cap Value VP - Initial Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		% 29.19% 10.58% 12.94%
Investment Objective: Growth from capital appreciation. TA JPMorgan Mid Cap Value - Service Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		% 28.84% 10.29% 12.65%
NOTE: All Underlying Fund Portfolios in the Transamerica Series Trust are advised by Transamerica Asset Management. The entities listed are the subadvisors unless otherwise indicated.
66

 

Appendix A
This discussion assumes the rider is included in the Policy.
Illustrations of Guaranteed Minimum Monthly Payments. Under a variable annuity payment option, the amounts shown below are hypothetical guaranteed minimum monthly payment amounts under the rider for a $100,000 Premium Payment when annuity payments do not begin until the rider anniversary indicated in the left-hand column. These figures assume that there were no subsequent Premium Payments, loans or Surrenders, that there were no premium taxes and that the $100,000 premium is Annuitized under the rider. Six different annuity payment options are illustrated: a male Annuitant, a female Annuitant and a joint and survivor annuity, each on a life only and a life with 10-year certain basis. These hypothetical illustrations assume that the Annuitant is (or both Annuitants are) 60 years old when the Policy is issued, that the annual growth rate is 6% (once established, an annual growth rate will not change during the life of the rider), and that there was no upgrade of the minimum Annuitization value. The figures below are based on an assumed investment return of 3%. Subsequent payments will never be less than the amount of the first payment (although subsequent payments will be calculated using a 5% assumed investment return and a 1.10% guaranteed minimum payment fee plus the 1.40% mortality and expense risk and administrative charges, provided no upgrade in minimum Annuitization value has occurred).
Illustrations of guaranteed minimum monthly payments based on other assumptions will be provided upon request.
Rider Anniversary at Exercise Date Male   Female   Joint & Survivor  
  Life Only*   Life 10**   Life Only*   Life 10**   Life Only*   Life 10**  
10 (age 70) $1,112   $1,049   $1,035   $ 999   $ 879   $ 870  
15 $1,787   $1,605   $1,663   $1,545   $1,366   $1,349  
20 (age 80) $2,960   $2,440   $2,777   $2,392   $2,200   $2,116  
* Life only = Life Annuity with No Period Certain
**Life 10 = Life Annuity with 10 Years Certain
These hypothetical illustrations should not be deemed representative of past or future performance of any underlying variable Investment Option.
Surrenders will affect the minimum Annuitization value as follows: Each rider year, Surrenders up to the limit of the minimum Annuitization value on the last rider anniversary multiplied by the annual growth rate reduce the minimum Annuitization value on a dollar-for-dollar basis. Surrenders over this limit will reduce the minimum Annuitization value by an amount equal to the excess Surrenders amount multiplied by the ratio of the minimum Annuitization value immediately prior to the excess Surrender to the Annuity Value immediately prior to the excess Surrender.
The amount of the first payment provided by the rider will be determined by multiplying each $1,000 of minimum Annuitization value by the applicable annuity factor shown on Schedule I of the rider. The applicable annuity factor depends upon the Annuitant’s (and joint Annuitant’s, if any) gender (or without regard to gender if required by law), age, and the rider payment option selected and is based on a guaranteed interest rate of 3% and the “Annuity 2000” mortality table improved to the year 2005 with projection Scale G. Subsequent payments will be calculated as described in the rider using a 5% assumed investment return. Subsequent payments may fluctuate annually in accordance with the investment performance of the Subaccounts. However, subsequent payments are guaranteed to never be less than the initial payment.
The scheduled payment on each subsequent rider anniversary after Annuitization using the rider will equal the greater of the initial payment or the payment supportable by the annuity units in the selected Subaccounts. The supportable payment is equal to the number of variable annuity units in the selected Subaccounts multiplied by the variable Annuity Unit Values in those Subaccounts on the date the payment is made. The variable Annuity Unit Values used to calculate the supportable payment will assume a 5% assumed investment return. If the supportable payment at any payment date during a rider year is greater than the scheduled payment for that Policy year, the excess will be used to purchase additional annuity units. Conversely, if the supportable payment at any payment date during a rider year is less than the scheduled payment for that rider year, then there will be a reduction in the number of annuity units
67

 

Appendix A — (Continued)
credited to the Policy to fund the deficiency. Purchases and reductions of annuity units will be allocated to each Subaccount on a proportionate basis.
We bear the risk that we will need to make payments if all annuity units have been used in an attempt to maintain the scheduled payment at the initial payment level. In such an event, we will make all future payments equal to the initial payment. Once all the annuity units have been used, the amount of Your payment will not increase or decrease and will not depend upon the performance of any Subaccounts. To compensate us for this risk, the guaranteed minimum payment fee, mortality and expense risk and administrative charges will be deducted.
Illustrations of Annuity Payment Values Between the Policy and the Guaranteed Minimum Income Benefit Rider. The following tables have been prepared to show how different rates of return affect Your variable annuity payments over time when You can Annuitize under the Policy or the Guaranteed Minimum Income Benefit Rider. The tables incorporate hypothetical rates of return and we do not guarantee that You will earn these returns for any one year or any sustained period of time. The tables are for illustrative purposes only and do not represent past or future investment returns.
Your variable annuity payment may be more or less than the income shown if the actual returns of the Subaccounts are different from those illustrated. Since it is very likely that Your investment returns will fluctuate over time, You can expect that the amount of Your annuity payment will also fluctuate. The total amount of annuity payments ultimately received will, in addition to the investment performance of the Subaccounts, also depend on how long You live and whether You choose to Annuitize under the rider.
Another factor that determines the amount of Your variable annuity payment is the assumed investment return (“AIR”). Annuity payments will increase from one variable annuity payment calculation date to the next if the performance of the portfolios underlying the Subaccounts, net of all charges, is greater than the AIR and will decrease if the performance of the portfolios underlying the Subaccounts, net of all charges, is less than the AIR. If You Annuitize under the rider, we guarantee that each subsequent payment will be equal to or greater than Your initial payment.
The Hypothetical Illustration based on 10% Gross Rate table below illustrates differences in monthly variable annuity payments assuming a 10% investment return between Annuitizing under the Policy and the rider.
• The table for the Policy assumes an Annuity Value (“AV”) of $150,000; the entire Annuity Value was allocated to variable annuity payments; the AIR is 5%; the payment option is Single Life Annuity with 10 Year Certain; a 70-year-old male, and separate account charges of 1.40%. This results in the receipt of an initial annuity payment in the amount of $1,060.50.
• The table for the rider assumes a Minimum Annuitization Value (“MAV”) of $180,000; the entire MAV was allocated to variable annuity payments; the AIRs are 3% for the initial payment and 5% for all subsequent payments; the payment option is Single Life Annuity with 10 Year Certain; a 70-year-old male, and separate account charges of 2.50%. This results in the receipt of an initial annuity payment in the amount of $1,054.80.
• The table illustrates gross returns of 10.00% (net returns after expenses and AIR deduction are 3.60% for the Policy and 2.50% for the rider).
   
Monthly Payments Assuming 10% Gross Return Net of Portfolio Expenses*
Monthly payment at the
Beginning of Policy year 		Annuitization under Policy
(AV = $150,000) 		Annuitization under Rider
(MAV = $180,000)
1 $1,060.50 $1,054.80
2 $1,098.68 $1,082.32
3 $1,138.23 $1,110.68
4 $1,179.21 $1,139.80
5 $1,221.66 $1,169.72
6 $1,265.64 $1,200.45
7 $1,311.20 $1,232.03
8 $1,358.40 $1,264.48
9 $1,407.31 $1,297.81
10 $1,457.97 $1,332.07
11 $1,510.46 $1,357.27
12 $1,564.83 $1,403.44
13 $1,621.17 $1,440.61
14 $1,679.53 $1,478.80
68

 

Appendix A — (Continued)
Monthly Payments Assuming 10% Gross Return Net of Portfolio Expenses*
Monthly payment at the
Beginning of Policy year 		Annuitization under Policy
(AV = $150,000) 		Annuitization under Rider
(MAV = $180,000)
15 $1,739.99 $1,518.05
16 $1,802.63 $1,558.37
17 $1,867.53 $1,599.81
18 $1,934.76 $1,642.39
19 $2,004.41 $1,686.13
20 $2,076.57 $1,731.07
*The corresponding net returns are 3.60% and 2.50%
Monthly Payments Assuming 0% Gross Return Net of Portfolio Expenses*
Monthly payment at the
Beginning of Policy year 		Annuitization under Policy
(AV = $150,000) 		Annuitization under Rider
(MAV = $180,000)
1 $1,060.50 $1,054.80
2 $ 992.63 $1,054.80
3 $ 929.10 $1,054.80
4 $ 869.64 $1,054.80
5 $ 813.98 $1,054.80
6 $ 761.89 $1,054.80
7 $ 713.13 $1,054.80
8 $ 667.49 $1,054.80
9 $ 624.77 $1,054.80
10 $ 584.78 $1,054.80
11 $ 547.36 $1,054.80
12 $ 512.32 $1,054.80
13 $ 479.54 $1,054.80
14 $ 448.85 $1,054.80
15 $ 420.12 $1,054.80
16 $ 393.23 $1,054.80
17 $ 368.06 $1,054.80
18 $ 344.51 $1,054.80
19 $ 322.46 $1,054.80
20 $ 301.82 $1,054.80
*The corresponding net returns are -6.40% and -7.50%
The Hypothetical Illustration based on 0% Gross Rate table above illustrates differences in monthly variable annuity payments assuming 0% investment return between selecting Annuitization under the Policy and rider. The assumptions are the same as the above except the 0% gross rate. The table illustrates gross returns of 0.00% (net returns after expenses and after the AIR deduction) are -6.4% for the Policy and -7.5% for the rider.
The annuity payment amounts shown reflect the deduction of all fees and expenses. Actual fees and expenses under the Policy and the rider may be higher or lower, will vary from year to year, and will depend on how You allocate among the Subaccouns. The separate account charge is assumed to be at an annual rate of 1.40% of average daily net assets for the Policy, which increases to 2.50% of the average daily net assets if You Annuitize under one of the rider variable payment options.
Upon request, we will furnish You with a customized illustration based on Your individual circumstances and choice of annuity options.
69

 

APPENDIX B
Additional Earnings Rider. The following examples illustrate the additional death benefit payable under the Additional Earnings Rider, as well as the effect of a withdrawal on the Additional Earnings Rider Amount.
Example 1 – Basic Additional Earnings Rider Example, with no additional Premium Payments or Surrenders
Assumed Facts for Example:
Rider Issue Age = 60
Additional Earnings Factor (AEF) = 40%
Rider Earnings Limit (REL) = 250%
At Rider Issue:  
$1,000,000 Maximum Rider Benefit (MRB)
$40,000.00 Rider Base at issue (RBI (equal to the greater of the death benefit proceeds on the Rider Date or the Annuity Value on that date)
    
At Death:  
$75,000.00 Death Benefit Proceeds (DBP)
$35,000.00 Rider Earnings (RE) = DBP – RBI = 75,000 – 40,000
$14,000.00 Additional Earnings Rider Amount = lesser of:
RE * AEF = 35,000 * 40% = 14,000 or
REL * RBI * AEF = 250% * 40,000 *40% = 40,000 or
MRB = 1,000 000
Example 2 –Additional Earnings Rider Example, showing the effect of Surrender
Assumed Facts for Example:
Rider Issue Age = 60
Additional Earnings Factor (AEF) = 40%
Rider Earnings Limit (REL) = 250%
At Rider Issue:  
$1,000,000 Maximum Rider Benefit (MRB)
$40,000.00 Rider Base at issue (RBI (equal to the greater of the death benefit proceeds on the Rider Date or the Annuity Value on that date)
    
At Surrender:  
$50.000.00 Annuity Value before Surrenders (AV)
$15,000.00 Surrender (PW) (including Surrender charges)
$12,000.00 Surrender Adjustment to Base
(WAB) = PW * RBI / AV = 15,000 * 40,000 / 50,000
$28,000.00 Rider Base after Surrender
(RB = RBI – WAB = 40,000 – 12,000
    
At Death:  
$70,000.00 Death Benefit Proceeds (DBP)
$42,000.00 Rider Earnings (RE) = DBP – RB = 70,000 – 28,000
$16,800.00 Additional Earnings Rider Amount = lesser of:
RE * AEF = 42,000 * 40% = 16,800 or
REL * RBI * AEF = 250% * 28,000 *40% = 28,000 or
MRB = 1,000 000
70

 

Policy form number WL18
If You are an existing Policy Owner of Policy Form Number WL18 purchased before April 19, 2007, the following information hereby amends and/or replaces the corresponding information contained in this prospectus.
The following hereby amends, and to the extent inconsistent replaces, the corresponding ANNUITY POLICY FEE TABLE section of the prospectus:
Transaction Expenses
Special Service Fee $25
Annual Contract ExpensesThe next table describes the fees and expenses that You will pay each year during the time that You own the Policy, not including portfolio fees and expenses. This table also includes the charges You would pay if You added optional riders to Your Policy.
Administrative Expenses $30 per Policy yearly
Base Contract Expenses (as a % of average Separate Account value during the accumulation period)(1) 1.40%
With Compounding/Monthly Step-Up Death Benefit Rider Added(1): 1.65%
Optional Benefit Rider Fees  
Additional Earnings Rider Charge (No Longer Available) 0.35%
Guaranteed Minimum Income Benefit Rider(2)(No Longer Available)  
Current 0.45%
Maximum 0.50%
(1)These charges are assessed on Your assets in each Subaccount. They do not apply to the Fixed Account. The mortality and expense risk charge of 1.00% applies when You have selected the standard death benefit. If You select the compounding/monthly step-up death benefit, then the mortality and expense risk charge will increase to 1.25%. These charges apply only during the accumulation period. After the Maturity Date, if You elect a variable annuity payment option, we will deduct a daily Separate Account Annuitization charge from Your Subaccount assets equal to an annual rate of 1.40% in place of the mortality and expense risk and administrative charges.
(2)This rider is no longer available. The annual rider charge is a percentage of the minimum Annuitization value. If You choose to upgrade the rider, the charge for the rider after the upgrade is currently 0.45%, but, we reserve the right to increase the rider charge after upgrade to 0.50%. Once the rider is issued, the rider charge will not change. Keep in mind that the current rider charge (0.45%) may be higher if You upgrade the rider at a later date because we may increase the rider charge after an upgrade up to the maximum (0.50%). We deduct the rider charge from the Fixed Account and from each Subaccount in proportion to the amount of the Annuity Value in each account. If the Annuity Value on any rider anniversary exceeds the rider charge threshold (guaranteed 2.0) times the minimum Annuitization value, we will waive the rider charge otherwise payable on that rider anniversary. If You later choose to Annuitize under a variable annuity payment option of this rider, we will impose a guaranteed minimum payment fee equal to an annual rate of 1.10% of the daily net asset values in the Subaccounts. This charge is assessed in addition to the mortality and expense risk charge of 1.40% annually that is set on the date You Annuitize under the rider. We may change the guaranteed minimum payment fee in the future if You choose to upgrade the minimum Annuitization value, or for future issues of the rider, but it will never be greater than 2.10%. SeeOptional Benefit Riders.
Annual Portfolio Company Expenses
The next section shows the minimum and maximum total operating expenses charged by the Portfolio Companies that You may pay periodically during the time You own the Policy. A complete list of the Portfolios available under the Policy, including their annual expenses may be found under “Appendix - Portfolio Companies Available Under the Policy”.
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Policy form number WL18 — (Continued)
Annual Portfolio Company Expenses Minimum Maximum
Expenses that are deducted from Portfolio Company assets, including management fees, distribution and/or service 12b-1 fees, and other expenses 0.29% 0.90%
Expenses that are deducted from Portfolio Company assets, including management fees, 12b-1 fees, and other expenses, after any waivers or expense reimbursement 0.29% 0.90%
Example(1)
The following Examples are intended to help You compare the cost of investing in the Policy with the cost of investing in other variable annuity policies. These costs include Owner transaction expenses, annual Policy expenses, and annual Portfolio Company operating expenses.
The Examples assume that You invest $100,000 in the Policy for the time periods indicated. The Examples also assume that Your Policy has a 5% return each year and assumes the most expensive combination of annual Portfolio Company expenses and optional benefits available for an additional charge. Although Your actual costs may be higher or lower, based on these assumptions, Your costs would be:
Example of Highest Charges(1)   1 Year   3 Years   5 Years   10 Years
If You Surrender the Policy at the end of the applicable time period.   $10,466   $16,628   $22,107   $38,306
If You Annuitize* or remain invested in the Policy at the end of the applicable time period.   $ 3466   $10,628   $18,107   $38,306
*You cannot Annuitize Your Policy before Your Policy’s fifth anniversary.
(1)Please remember that these Examples are illustrations and do not represent past or future expenses. Your actual expenses may be lower or higher than those reflected in the Examples. Similarly, Your rate of return may be more or less than the 5% assumed in the Examples. Expense Examples: The Example does not reflect premium tax charges, special service fees, or transfer fees. Different fees and expenses not reflected in the Example may be assessed during the income phase of the Policy.
The following hereby amends, and to the extent inconsistent replaces, the corresponding paragraphs/sections of the prospectus:
THE ANNUITY POLICY
The Policy also contains a Fixed Account. Unless otherwise required by state law, we will limit Your allocation or transfers to the Fixed Account if the Fixed Account value following the allocation or transfer would exceed $500,000. The Fixed Account offers an interest rate that is guaranteed by us to equal at least 3% per year.
ANNUITY PAYMENTS (THE INCOME PHASE)
Payment Option B — Life Income: Fixed Payments.
• No Period Certain — We will make level payments only during the Annuitant’s lifetime; or
• 10 or 20 Years Certain — We will make level payments for the longer of the Annuitant’s lifetime or 10 or 20 years; or
• Guaranteed Return of Annuity Proceeds — We will make level payments for the longer of the Annuitant’s lifetime or until the total dollar amount of payments we made to You equals the annuity proceeds.
NOTE CAREFULLY
IF:
• You choose Fixed Installments, Life Income with 10 or 20 Years Certain, Life Income with Guaranteed Return of Annuity Proceeds, or Variable Life Income with 10 Years Certain; and
• the person receiving payments dies prior to the end of the guaranteed period;
THEN:
• the remaining guaranteed payments will be continued to that person’s beneficiary, or their value (determined at the date of death) may be paid in a single sum.
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Policy form number WL18 — (Continued)
PURCHASE
Allocation of Premium Payments
Unless otherwise required by state law, we will limit allocations and transfers to the Fixed Account if the Fixed Account value following the allocation or transfer would exceed $500,000.
INVESTMENT CHOICES
The Fixed Account
We guarantee that the interest credited to the Fixed Account will not be less than 3% per year. We have no formula for determining Fixed Account current interest rates. We establish the interest rate, at our sole discretion, for each premium payment or transfer into the Fixed Account. Rates are guaranteed for at least one year but will never be less than 3% per year.
Unless otherwise required by state law, we will limit allocations and transfers to the Fixed Account if the Fixed Account value following the allocation or transfer would exceed $500,000.
EXPENSES
Mortality and Expense Risk Charge
The mortality and expense risk charge is equal, on an annual basis, to 1.00% of the average daily net assets that You have invested in each Subaccount. If You add the compounding/monthly step-up death benefit, the mortality and expense risk charge increases to 1.25%.
DEATH BENEFIT
Standard Death Benefit
Death benefit provisions may differ from state to state. The death benefit proceeds may be paid as a lump sum; as substantially equal payments while the Policy continues in the accumulation period for a specified number of years; as annuity payments; or as otherwise permitted by the Company in accordance with applicable law.
If an Owner who is the Annuitant dies before the Maturity Date and if the death benefit proceeds are payable, the standard death benefit proceeds will be the greatest of:
• the Annuity Value of Your Policy on the Death Report Day;
• the total premium payments You make to the Policy as of the Death Report Day, reduced by partial Surrenders; or
• the monthly step-up: On each Monthiversary, a new “stepped-up” death benefit is determined. The stepped-up death benefit is equal to the highest Annuity Value on any Monthiversary before the Annuitant’s 81st birthday, increased for any premium payments You have made and decreased by the adjusted partial Surrenders for any partial Surrenders we have paid to You, following the monthiversary on which the highest Annuity Value occurs.
The standard death benefit proceeds are not payable after the Maturity Date.
Compounding/Monthly Step-Up Death Benefit
On the Policy application, You may add the compounding/monthly step-up death benefit to the Policy for an additional charge. This option is not available to Annuitants Age 81 or older on the Policy date. This death benefit option is only payable during the accumulation period and is not payable after the Maturity Date. You may not select this option after the Policy has been issued.
If an Owner who is the Annuitant dies during the accumulation period and if the death benefit proceeds are payable, then the compounding/monthly step-up death benefit proceeds are the greatest of:
• the standard death benefit;
• the compounding death benefit: This benefit equals total premium payments, plus interest at an effective annual rate of 6% (in most states) from the date of the premium payment to the date of death, less any adjusted partial Surrender(s), including interest on any partial Surrender at the 6% rate from the date of partial Surrender to the date of death. Interest is not credited after the Annuitant’s 90th birthday; or
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Policy form number WL18 — (Continued)
• The monthly step-up death benefit: This benefit equals the highest Annuity Value on any monthiversary prior to the Annuitant’s 90th birthday. The highest Annuity Value will be increased for premium payments You have made and decreased for any adjusted partial Surrenders we have paid to You following the monthiversary on which the highest Annuity Value occurs.
If You select this option, then the mortality and expense risk charge will increase to 1.25%.
Effect of Adjusted Partial Surrender on Certain Death Benefits
When You request a partial Surrender, we will reduce certain death benefits under the Policy by an “adjusted partial Surrender.” Adjusted partial Surrenders will reduce the compounding/monthly step-up death benefit, if selected, and the monthly step-up in the standard death benefit.
A partial Surrender will reduce the compounding/monthly step-up death benefit by the amount of the partial Surrender times the ratio of:
• the amount of the compounding and/or monthly step-up death benefit on the same date as, but immediately before the processing of the partial Surrender, to
• the Annuity Value immediately before the partial Surrender.
We have included a more detailed explanation of this adjustment in the SAI.
If the compounding and/or monthly step-up death benefit is greater than the Annuity Value prior to the partial Surrender, the adjusted partial Surrender may be more than the amount of Your request. For this reason, if a death benefit is paid after You have made a partial Surrender, then the total of that partial Surrender and the death benefit could be less than the death benefit immediately before You have made a partial Surrender. If the compounding/monthly step-up death benefit is less than the Annuity Value prior to the partial Surrender, the adjusted partial Surrender will reduce the death benefit dollar for dollar.
Alternate Payment Elections Before the Maturity Date
If the deceased Annuitant was an Owner, and one or more beneficiaries chooses one of the above options instead of a lump sum payment, we will “reset” the Age used in the death benefit provisions under the new option as of the Death Report Day, so that the death benefit is based on the Age of the particular new Annuitant (i.e., the beneficiary). As a result, the phrase “the monthiversary nearest the Annuitant’s 81st birthday” will refer to the Age of the particular beneficiary. If the beneficiary is over Age 81 on the Death Report Day of the first deceased Owner, then we will calculate the death benefit paid on the death of the particular beneficiary by taking the highest Annuity Value (i.e., the Annuity Value as of the Death Report Day) and adding any subsequent premium payments and subtracting the total partial Surrenders following the Death Report Day of the first deceased Owner. This option applies to both spousal and non-spousal beneficiaries.
Additional Earnings Rider
The optional Additional Earnings Rider may pay an Additional Earnings Rider Amount when an Owner who is the Annuitant dies and death benefit proceeds are paid under Your Policy. In order to buy this rider:
• You must purchase it when we issue the Policy;
• You must be both the Owner and Annuitant (except in the case of a trust or employer-sponsored plan); and
• You, a joint Owner and the Annuitant must be Age 75 or younger.
The following hereby amends, and to the extent inconsistent replaces, the corresponding fund and performance information in the Appendix - Portfolio Companies Available Under the Policy:
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks a high level of current income by investing in high-yield debt securities. Transamerica Aegon High Yield Bond VP – Initial Class
Sub-Advised by: Aegon USA Investment Management, LLC 		0.62% 6.35% 6.01% 6.76%
Investment Objective: Seeks to provide as high a level of total return as is consistent with prudent investment strategies. Transamerica Aegon U.S. Government Securities VP – Initial Class
Sub-Advised by: Aegon USA Investment Management, LLC 		0.60% -2.39% 3.14% 2.34%
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Policy form number WL18 — (Continued)
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
1 year 5 years 10 years
Investment Objective: Seeks long-term total return from investments primarily in equity securities of real estate companies. Total return consists of realized and unrealized capital gains and losses plus income. Transamerica BlackRock Global Real Estate Securities VP – Initial Class
Sub-Advised by: BlackRock Investment Management, LLC 		0.79% 26.22% 9.53% 8.83%
Investment Objective: Seeks as high a level of current income as in consistent with preservation of capital and liquidity. Transamerica BlackRock Government Money Market VP - Initial Class(2)
Sub-Advised by: BlackRock Investment Management, LLC 		0.29% 0.00% 0.79% 0.40%
Investment Objective: Seeks capital appreciation and current income. Transamerica BlackRock iShares Edge 40 VP – Initial Class
Sub-Advised by: BlackRock Investment Management, LLC 		0.43% 6.09% 7.13% 5.64%
Investment Objective: Seeks capital growth. Transamerica International Focus VP – Initial Class(3)
Sub-Advised by: Epoch Investment Partners, Inc. 		0.82% 10.82% 12.37% 9.39%
Investment Objective: Seeks long-term capital appreciation. Transamerica Janus Mid-Cap Growth VP – Initial Class
Sub-Advised by: Janus Henderson Investors US LLC 		0.82% 17.30% 19.49% 13.15%
Investment Objective: Seeks total return, consisting of current income and capital appreciation. Transamerica JPMorgan Core Bond VP - Initial Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.52% -1.03% 3.67% 2.96%
Investment Objective: Seeks to earn a total return modestly in excess of the total return performance of the S&P 500® (including the reinvestment of dividends) while maintaining a volatility of return similar to the S&P 500®. Transamerica JPMorgan Enhanced Index VP – Initial Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.62% 30.12% 18.46% 16.41%
Investment Objective: Seeks capital appreciation with current income as secondary objective. Transamerica JPMorgan International Moderate Growth VP - Initial Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.90% 9.25% 9.74% 7.21%
Investment Objective: Seeks current income and preservation of capital. Transamerica JPMorgan Tactical Allocation VP - Initial Class
Sub-Advised by: J.P. Morgan Investment Management Inc. 		0.81% 4.91% 6.90% 5.84%
Investment Objective: Seeks to maximize long-term growth. Transamerica Morgan Stanley Capital Growth VP - Initial Class
Sub-Advised by: Morgan Stanley Investment Management Inc. 		0.72% -0.53% 32.65% 23.34%
Investment Objective: Seeks maximum total return, consistent with preservation of capital and prudent investment management. Transamerica PIMCO Total Return VP – Initial Class
Sub-Advised by: Pacific Investment Management Company LLC 		0.67% -0.87% 3.81% 3.18%
Investment Objective: Seeks long-term growth of capital by investing primarily in common stocks of small growth companies. Transamerica T. Rowe Price Small Cap VP _ Initial Class
Sub-Advised by: T. Rowe Price Associates, Inc. 		0.81% 11.37% 15.75% 15.44%
Investment Objective: Seeks to maximize long-term growth. Transamerica WMC US Growth VP – Initial Class
Sub-Advised by: Wellington Management Company, LLP 		0.64% 20.67% 24.60% 18.58%
(1)  Some Subaccounts may be available for certain policies and may not be available for all policies. You should work with Your registered representative to decide which Subaccount(s) may be appropriate for You based on a thorough analysis of Your particular insurance needs; financial objectives; investment goals; time horizons; and risk tolerance.
(2)  There can be no assurance any money market portfolio offered under this Policy will be able to maintain a stable net asset value per share during extended periods of low interest rates, and partly as a result of Policy charges, the yield on the money market Subaccounts may become extremely low and possibly negative.
(3)  Effective on or about November 1, 2021 Transamerica International Growth VP sub-advised by TDAM USA Inc. will be renamed Transamerica International Focus VP and will be sub-advised by Epoch Investment Partners, Inc.
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Policy form number WL18 — (Continued)
NOTE: All underlying fund portfolios in the Transamerica Series Trust are advised by Transamerica Asset Management. The entities listed are the sub-advisers unless otherwise indicated.
CLOSED INVESTMENT OPTIONS:
For Policy Owners of Policy number WL18:
The following Subaccounts are only available to Owners that held an investment in the Subaccounts on May 1, 2003:
Investment Objective Underlying Fund Portfolio and Adviser/Sub-adviser (1) Current
Expenses 		Average Annual
Total Returns
(as of 12/31/21)
  1 year 5 years 10 years
Investment Objective: Seeks long-term capital appreciation. Fidelity ® VIP Contrafund® Portfolio - Service Class 2
Advised by: Fidelity Management & Research Company 		0.85% -2.78% 7.76% 27.51%
Investment Objective: Provide capital growth. Fidelity VIP Growth Opportunities Portfolio - Service Class 2
Advised by: Fidelity Management & Research Company 		0.88% 11.83% 0.28% 2.48%
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where to find additional information
The Statement of Additional Information (SAI) dated May 1, 2022 contains more information about the Policy and the Separate Account. The SAI has been filed with the SEC and is incorporated by reference into this prospectus. The SAI is posted on our website, http://dfinview.com/Transamerica/TAHD/89358R580?site=VAVUL. For a free paper copy of the SAI, to request other information about the Policies, and to make investor inquiries call us at (800)851-9777 or write us at:
Transamerica Life Insurance Company
6400 C Street SW
Cedar Rapids, IA 52499
Reports and other information about the Separate Account are available on the SEC’s website at sec.gov, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.
EDGAR Contract Identifier No. is #C000223558

Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
WRL FREEDOM PREMIER®
Issued through
WRL SERIES ANNUITY ACCOUNT
Offered by
TRANSAMERICA LIFE INSURANCE COMPANY
This Statement of Additional Information expands upon subjects discussed in the current prospectus for the WRL Freedom Premier, formerly known as WRL Freedom Premier II offered by Transamerica Life Insurance Company. You may obtain a copy of the current prospectus, dated May 1, 2022, by calling (800)851-9777, or write us at: Transamerica Life Insurance Company, Attention: Customer Care Group, 6400 C Street SW, Cedar Rapids, IA 52499. The prospectus sets forth information that a prospective investor should know before investing in a policy. Terms used in the current prospectus for the policy are incorporated in this Statement of Additional Information have the same meaning.
This Statement of Additional Information (SAI) is not a prospectus and should be read only in conjunction with the prospectuses for the policy and the underlying fund portfolios.
Dated: May 1, 2022

 

 

GLOSSARY OF TERMS
Accumulation Period- The period between the Policy Date and the Maturity Date while the Policy is In Force.
Accumulation Unit Value- An accounting unit of measure we use to calculate Subaccount values during the Accumulation Period.
Administrative Office- Transamerica Life Insurance Company, Attention: Customer Care Group, 6400 C Street SW, Cedar Rapids, IA 52499, (800)851-9777.
Age - The issue Age, which is Annuitant’s Age on his/her birthday immediately preceding the Policy date. Attained Age is the issue Age plus the number of completed Policy years. When we use the term “Age” in this document, it has the same meaning as “attained Age” in the Policy.
Annuitant - The person on whose life any annuity payments involving life contingencies will be based.
Annuity Unit Value- An accounting unit of measure we use to calculate annuity payments from the Subaccounts after the Maturity Date.
Beneficiary(ies) - The person(s) who has the right to the death benefit as set forth in the Policy.
Cash Value- The Annuity Value less any applicable  less any premium taxes, any surrender charge, any loans and unpaid accrued interest, the annual policy charge and any rider charges.
Code - The Internal Revenue Code of 1986, as amended.
Death Benefit Proceeds- If an Owner who is the Annuitant dies during the Accumulation Period, the Death Benefit Proceeds are the amount, if any, payable under the death benefit described in Your Policy and in any optional death benefit rider that you purchased.
Death Report Day- The Valuation Date on which we have received due proof of death.
Fixed Account- One or more Investment Options under the Policy that are part of our general assets and are not in the Separate Account.
Fixed Account Value- During the Accumulation Period, your Policy’s value in the Fixed Account.
Fund(s) - Investment companies which are registered with the U.S. Securities and Exchange Commission. The policy allows you to invest in the portfolios of the Funds through our Subaccounts. We reserve the right to add portfolios of other registered investment companies as investment choices under the Policy in the future.
In Force- Condition under which the Policy is active and an Owner is entitled to exercise all rights under the Policy.
Maturity Date- The date on which the Accumulation Period ends and annuity payments begin.
NYSE - New York Stock Exchange.
Owner (You, Your)- The person(s) entitled to exercise all rights and privileges under the Policy. The Annuitant is an Owner unless the application states otherwise, or unless a change of ownership is made at a later time. Joint owners may be named, provided the joint owners are husband and wife. Joint ownership is not available in all states.
Portfolio - A separate investment portfolio of a fund.
Premium Payments- Amounts paid by an Owner or on an Owner’s behalf to Transamerica Life Insurance Company as consideration for the benefits provided by the Policy. When we use the term “Premium Payment” or “premium” in this SAI, it has the same meaning as “net payment” in the Policy, which means the Premium Payment less any applicable premium taxes.
Separate Account- WRL Series Annuity Account, a Separate Account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”), to which Premium Payments under the policies may be allocated.
Subaccount - A subdivision within the Separate Account, the assets of which are invested in a specified underlying fund portfolio.
Surrender - The termination of a Policy at the option of an Owner.
Valuation Date- Each day on which the NYSE is open for trading, except when a Subaccount's corresponding portfolio does not value its shares. Transamerica Life Insurance Company is open for business on each day that the NYSE is open. When we use the term “business day,” it has the same meaning as Valuation Date.
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Valuation Period- The period of time from one determination of Accumulation Unit Values and Annuity Unit Values to the next subsequent determination of those values. Such determination shall be made on each business day.
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Information About Us
We are engaged in the sale of life and health insurance and annuity policies. Transamerica Life Insurance Company was incorporated under the laws of the State of Iowa on April 19, 1961 as NN Investors Life Insurance Company Inc. and is licensed in all states and the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. We are a wholly-owned indirect subsidiary of Transamerica Corporation which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. All of the stock of Transamerica Corporation is indirectly owned by Aegon N.V. of The Netherlands, the securities of which are publicly traded. Aegon N.V., a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business.
All obligations arising under the policies, including the promise to make annuity payments, are general corporate obligations of ours. Accordingly, no financial institution, brokerage firm or insurance agency is responsible for our financial obligations arising under the policies.
The Separate Accounts
WRL Series Annuity Account (the “Separate Account”), 6400 C Street S.W., Cedar Rapids, Iowa, was established by the Company on April 12, 1998, and is a unit investment trust registered with the SEC and operating under Iowa law. The Separate Account has various Subaccounts each of which invests solely in a corresponding Portfolio of the Fund.
The Separate Accounts are registered with the SEC as unit investment trusts under the 1940 Act (the “1940 Act”). However, the SEC does not supervise the management, the investment practices, or the policies of the separate accounts.
Cybersecurity (continued from “Principal Risks” section of the Prospectus)
OPPORTUNITIES and CHALLENGES
The increasing digitalization of the financial services landscape has intensified the financial and reputational risk presented by cybersecurity threats. The COVID-19 pandemic, and the rise in remote working, have further escalated these threats, with the FBI reporting a 300% increase in cybercrimes in the United States since the start of the pandemic.1 As our business becomes more technology driven and our digital reliance increases, we become a greater target for cybercriminals, and more vulnerable to threats such as ransomware attacks.
What Transamerica is doing
We continue to take steps to strengthen our cybersecurity governance, infrastructure, and ability to respond to cyberattacks, for example by further developing our dedicated IT security team, and strengthening controls. The security program aims at analyzing and remediating known vulnerabilities, as well as conducting ongoing exercises to prepare for and respond effectively to cyberattacks. Transamerica’s Risk department also periodically assesses known potential cyber risk factors, together with the first line functions such as the Security Operations Center, with known trends or material incidents reported to Transamerica’s Management and Supervisory Boards as necessary. Transamerica also has dedicated teams, processes, and procedures in place that are intended to mitigate potential cyberattacks.1https://aegon.me/cybercrime-pandemic
OVERVIEW
Information security and privacy regulation
Transamerica’s businesses are regulated with respect to information security, data breach response, privacy, and data use at both the federal and state levels. At the federal level, various Transamerica companies are subject to the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA), among other laws. At the state level, Departments of Insurance and Financial Services typically administer a series of privacy and information security laws and regulations that impact several Transamerica businesses. In addition, in recent years numerous state legislatures have passed or have attempted to pass additional, more broad-based general consumer privacy laws, such as the California Consumer Privacy Act and the California Privacy Rights Act. Those California laws, as amended, will be administered by the newly formed California Privacy Protection Agency. Additional laws and regulations with respect to these topics are also anticipated to be promulgated and to go into effect in the coming years, and they may be administered by new or different state agencies or by the offices of state Attorneys General. The White House, SEC, and other regulators have also increased their focus on companies’ cybersecurity vulnerabilities and risks, including in relation to third-party service providers.
Operational Risks
A computer system failure or security breach of Transamerica’s IT systems or that of critical third parties may disrupt Transamerica’s business, damage Transamerica’s reputation and adversely affect Transamerica’s results of operations, financial condition, and cash flows.
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Transamerica relies heavily on computer and information systems and internet and network connectivity (collectively, “IT systems”) to conduct a large portion of its business operations. This includes the need to securely store, process, transmit and dispose of confidential information, including personal information, through a number of complex systems. In many cases this also includes transmission and processing to or through customers, business partners, (semi-) governmental agencies and third-party service providers. The introduction of new technologies, computer system failures, cyber-crime attacks or security or data privacy breaches may materially disrupt Transamerica’s business operations, damage Transamerica’s reputation, result in regulatory and litigation exposure, investigation and remediation costs, and materially and adversely affect Transamerica’s results of operations, financial condition and cash flows.
The information security risk that Transamerica faces includes the risk of malicious outside forces using public networks and other methods, including social engineering and the exploitation of targeted offline processes, to attack Transamerica’s systems and information and potentially demand ransom. It also includes inside threats, both malicious and accidental. For example, human error, bugs and vulnerabilities that may exist in Transamerica’s systems or software, unauthorized user activity and lack of sufficiently automated processing or sufficient logging and monitoring can result in improper information exposure or failure or delayed detection of such activity in a timely manner. Transamerica also faces risk in this area due to its reliance in many cases on third-party systems, all of which may face cyber and information security risks of their own. Third-party administrators or distribution partners used by Transamerica or its subsidiaries may not adequately secure their own IT systems or may not adequately keep pace with the dynamic changes in this area. Potential bad actors that target Transamerica and applicable third parties may include, but are not limited to, criminal organizations, foreign government bodies, political factions, and others.
In recent years, information security risk has increased sharply due to a number of developments in how information systems are used, not only by companies such as Transamerica, but also by society in general. Threats have increased in frequency and magnitude, and are expected to continue to increase, as criminals and other bad actors become more organized and employ more sophisticated techniques. At the same time companies increasingly make information systems and data available through the internet, mobile devices or other network connections to customers, employees and business partners, thereby expanding the attack surface that bad actors can potentially exploit. As a result of the COVID-19 pandemic, Transamerica also faces increased cybersecurity risks due to the number of Transamerica’s and Transamerica’s service providers’ and partners’ employees who are (and may continue to be) working remotely, which creates additional opportunities for cybercriminals to launch social engineering attacks and exploit vulnerabilities in non-corporate IT environments. The White House, SEC and other regulators have also increased their focus on cybersecurity vulnerabilities and risks.
Large financial institutions such as and including Transamerica have been, and will continue to be, subject to information security attacks for the foreseeable future. The nature of these attacks will also continue to be unpredictable, and in many cases may arise from circumstances that are beyond Transamerica’s control. Attackers are also increasingly using tools and techniques that are specifically designed to circumvent controls, to evade detection and even to remove or obfuscate forensic evidence. As a result, Transamerica may be unable to timely or effectively detect, identify, contain, investigate or remediate IT systems in response to, future cyberattacks or security breaches. Especially if and to the extent Transamerica fails to adequately invest in defensive infrastructure, timely response capabilities, technology, controls and processes or to effectively execute against its information security strategy, it may suffer material adverse consequences.
To date the highest impact information security incidents that Transamerica has experienced are believed to have been the result of e-mail phishing attacks targeted at Transamerica’s business partners and customers. This in turn led to the unauthorized use of valid Transamerica website credentials to engage in fraudulent transactions and improper data exfiltration. Additionally, Transamerica has faced other types of attacks, including, but not limited to, other types of phishing attacks, distributed denial of service (DDoS) attacks, technology implementation and update errors, various human errors, e-mail related errors, paper-based errors, exploitations of vulnerabilities and certain limited cases of unauthorized internal user activity. Like many other companies, Transamerica could also be subject to malware, ransomware and similar types of attacks or intrusions. There is no guarantee that the measures that Transamerica takes will be sufficient to stop all types of attacks or mitigate all types of information security or data privacy risks.
Transamerica maintains cyber liability insurance to help decrease the financial impact of cyber-attacks and information security events, subject to the terms and conditions of the policy; however, such insurance may not be sufficient to cover all applicable losses that Transamerica may suffer.
A breach of data privacy or security obligations may disrupt Transamerica’s business, damage Transamerica’s reputation and adversely affect financial conditions and results of operations.
Pursuant to applicable laws, various government and semi-governmental and other administrative bodies have established numerous rules protecting the privacy and security of personal information and other confidential or sensitive information held by
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Transamerica. Notably, certain of Transamerica’s businesses are subject to laws and regulations enacted by US federal and state governments and/or various regulatory organizations relating to the privacy and/or information security of the information of customers, employees or others.
The New York Department of Finance Services (NYDFS), pursuant to its cybersecurity regulation, requires financial institutions regulated by the NYDFS, including certain Transamerica subsidiaries, to, among other things, satisfy an extensive set of minimum information security requirements, including but not limited to governance, management, reporting, policy, technology and control requirements. Other states have adopted similar cybersecurity laws and regulations.
Numerous other US state and federal laws also impose various information security and privacy related obligations with respect to Transamerica, including but not limited to the Gramm-Leach-Bliley Act and related state laws and implementing regulations (GLBA), the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), and the Health Insurance Portability and Accountability Act (HIPAA), among many others. These laws generally provide for governmental investigative and enforcement authority, and in certain cases provide for private rights of action.
Numerous other legislators and regulators with jurisdiction over Transamerica’s businesses are considering or have already enacted enhanced information security risk management and privacy laws and regulations, with the overall number and scope of such laws and regulations continuing to increase every year. A number of Transamerica companies are also subject to contractual restrictions with respect to the use and handling of the sensitive information of Transamerica’s clients and business partners.
Transamerica, and numerous of its systems, employees, third-party providers and business partners have access to, and routinely process, the personal information of consumers and employees. Transamerica relies on a large number of processes and controls to protect the confidentiality, integrity and availability of personal information and other confidential information that is accessible to, or in the possession of, Transamerica, its systems, employees and business partners. It is possible that a Transamerica or a third party’s employee, contractor, business partner or system could, intentionally or unintentionally, inappropriately disclose or misuse personal or confidential information. Transamerica’s data or data in its possession could also be the subject of an unauthorized information security attack. If Transamerica fails to maintain adequate processes and controls or if Transamerica or its business partners fail to comply with relevant laws and regulations, policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of personal information or other confidential information could occur. Such control inadequacies or non-compliance could cause disrupted operations and misstated or unreliable financial data, materially damage Transamerica’s reputation or lead to increased regulatory scrutiny or civil or criminal penalties or (class action) litigation, which, in turn, could have a material adverse effect on Transamerica’s business, financial condition and results of operations.
In addition, Transamerica analyzes personal information and customer data to better manage its business, subject to applicable laws and regulations and other restrictions. It is possible that additional regulatory or other restrictions regarding the use of such information may be imposed. Additional privacy and information security obligations have been imposed by various governments with jurisdiction over Transamerica or its subsidiaries in recent years, and more similar obligations are likely to be imposed in the near future across Transamerica’s operations. Such restrictions and obligations could have material impacts on Transamerica’s business, financial conditions and results of operations.
In order to supplement the description in the prospectus, the following provides additional information about Transamerica Life Insurance Company (the Company, we, us or our) and the policy, which may be of interest to a prospective purchaser.
THE POLICY—GENERAL PROVISIONS
Owner
The policy shall belong to the owner upon issuance of the policy after completion of an application and delivery of the initial premium payment. While the annuitant is living, the owner may: (1) assign the policy; (2) surrender the policy; (3) amend or modify the policy with our consent; (4) receive annuity payments or name a payee to receive the payments; and (5) exercise, receive and enjoy every other right and benefit contained in the policy. The exercise of these rights may be subject to the consent of any assignee or irrevocable beneficiary; and of your spouse in a community or marital property state.
A joint owner may only be a spouse and may be named in the policy application or in a written notice to our Administrative Office. The surviving joint owner will become the sole owner upon the other joint owner’s death. If the surviving joint owner dies before the annuitant, the surviving joint owner’s estate will become the owner if no beneficiary is named and alive. However, if a beneficiary is named and alive, the beneficiary will receive the cash value.
An owner may change the ownership of the policy in a written notice to our Administrative Office. When this change takes effect, all rights of ownership in the policy will pass to the new owner. A change of ownership may have tax consequences.
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When there is a change of owner, the change will not take effect as of the date we accept the written notice at our Administrative Office. We assume no liability for any payments made, or actions taken before a change is accepted, and shall not be responsible for the validity or effect of any change of ownership. Changing the owner cancels any prior choice of owner, but does not change the designation of the beneficiary or the annuitant.
Entire Policy
The policy and any endorsements or riders thereon and the policy application constitute the entire policy between the Company and the owner. All statements in the application are representations and not warranties. No statement will cause the policy to be void or to be used in defense of a claim unless contained in the application.
Misstatement of Age or Gender
During the Accumulation Period. If the age of any person whose life or age a benefit provided under a guaranteed benefit has been misstated, any such benefit will be that which would have been purchased on the basis of the correct age. If that person would not have been eligible for that guaranteed benefit at the correct age, (i) the benefit will be rescinded; and (ii) any charges that were deducted for the benefit will be refunded and applied to the total account value of the policy.
We reserve the right to terminate the policy at any time if it discovers a misstatement or fraudulent representation of any information provided in connection with the issuance or ongoing administration of the policy.
After the Maturity Date. We may require proof of the annuitant’s or owner’s age and/or gender before any payments associated with any benefits are made. If the age or gender of the annuitant and/or owner has been misstated, we will change the payment associated with any benefits payable to that which the premium payments would have purchased for the correct age or gender. The dollar amount of any underpayment made by us shall be paid in full with the next payment due such person, beneficiary, or payee. The dollar amount of any overpayment made by us due to any misstatement shall be deducted from payments subsequently accruing to such person or beneficiary. Any underpayment or overpayment will include interest as specified in your policy, from the date of the wrong payment to the date of the adjustment. The age of the annuitant or owner may be established at any time by the submission of proof satisfactory to us.
Annuity Payment Options
During the lifetime of the annuitant and prior to the maturity date, the owner may choose an annuity payment option or change the election. If no election is made prior to the maturity date, annuity payments will be made under Payment Option D as Variable Life Income with 10 years of guaranteed payments. The default option may be restricted with respect to qualified policies.
Thirty days prior to the maturity date, we will mail to the owner a notice and a form upon which the owner can select allocation options for the annuity proceeds as of the maturity date. We reserve the right to limit transfers to once per year after the maturity date. If a variable annuity payment option is chosen, the owner must include in the written notice the subaccount allocation of the annuity proceeds as of the maturity date. If we do not receive that form or other written notice acceptable to us prior to the maturity date, the policies existing allocation options will remain in effect. The owner may also, prior to the maturity date, select or change the frequency of annuity payments, which may be monthly, quarterly, semi-annually or annually, provided that the annuity payment option and payment frequency provides for payments of at least $20 per period. If none of these is possible, a lump sum payment will be made.
Determination of the First Variable or Fixed Payment. The amount of the first variable or fixed annuity payment is determined by multiplying the annuity proceeds times the appropriate rate for the annuity option selected. The rates are based on the Society of Actuaries “Annuity 2000” (male, female, and unisex if required by law) Mortality Table with projection Scale G, and variable rates are based on a 5% effective annual assumed investment return. Neither expenses actually incurred, other than taxes on the investment return, nor mortality actually experienced, shall adversely affect the dollar amount of variable annuity payments after such payments have commenced.
The amount of the first annuity payment depends upon the gender (if consideration of gender is allowed under state law) and adjusted age of the annuitant. The adjusted age is the annuitant’s actual age nearest birthday, at the maturity date, adjusted as follows:
Maturity Date Adjusted Age
Before 2010 Actual Age
2010-2019 Actual Age minus 1
2020-2026 Actual Age minus 2
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Maturity Date Adjusted Age
2027-2033 Actual Age minus 3
2034-2040 Actual Age minus 4
After 2040 As determined by the Company
This adjustment assumes an increase in life expectancy, and therefore it results in lower payments than without such an adjustment.
Determination of Additional Variable Payments. The amount of variable annuity payments after the first will increase or decrease according to the annuity unit value which reflects the investment experience of the selected subaccount(s). Each variable annuity payment after the first will be equal to the number of units attributable to the policy in each selected subaccount multiplied by the annuity unit value of that subaccount on the date the payment is processed. The number of such units is determined by dividing the first payment allocated to that subaccount by the annuity unit value of that subaccount on the date the first annuity payment is processed.
Death Benefit
Death of Owner. Federal tax law requires that if any owner (including any successor owner who has become a current owner) dies before the maturity date, then the entire value of the policy must generally be distributed within five years of the date of death of such owner. Special rules apply where (1) the spouse of the deceased owner is the sole beneficiary, (2) an owner is not a natural person and the primary annuitant dies or is changed, or (3) any owner dies after the maturity date. See TAX INFORMATION in the Prospectus for a detailed description of these rules. Other rules may apply to qualified policies.
If an owner (or a surviving joint owner) is not the annuitant and dies before the annuitant:
• if no beneficiary is named and alive on the death report day, the owner’s estate will become the new owner. The cash value must be distributed within five years of the former owner’s death;
• if the sole beneficiary is alive and is the owner’s spouse, the policy will continue with the spouse as the new owner;
• if the beneficiary is alive and is not the owner’s spouse, the beneficiary will become the new owner.
The cash value must be distributed either:
• within five years of the former owner’s death; or
• over the lifetime of the new owner, if a natural person, with payments beginning within one year of the former owner’s death; or
• over a period that does not exceed the life expectancy (as defined by the Code and regulations adopted under the Code) of the new owner, if a natural person, with payments beginning within one year of the former owner’s death.
To determine payments, we may use the “account-based” method under which we recalculate the amount of the payment each year by dividing the remaining unpaid proceeds by the beneficiary’s current life expectancy, with payments beginning within one year of the deceased owner’s death.
Death of Annuitant. Due proof of death of the annuitant is proof that the annuitant died prior to the commencement of annuity payments. Upon receipt of this proof and an election of a method of settlement and return of the policy, the death benefit generally will be paid within seven days, or as soon thereafter as we have sufficient information about the beneficiary(ies) to make the payment. The beneficiary may receive the amount payable in a lump sum cash benefit, or, subject to any limitation under any state or federal law, rule, or regulation, under one of the annuity payment options unless a settlement agreement is effective at an owner’s death preventing such election.
If the annuitant who is not an owner dies during the accumulation period and an owner is a natural person other than the annuitant, then the owner will automatically become the annuitant and this policy will continue. In the event of joint owners, the younger joint owner will automatically become the new annuitant and this policy will continue. If the annuitant dies during the accumulation period and an owner is either (1) the same individual as the annuitant; or (2) other than a natural person, then the death benefit proceeds are payable to the beneficiary in a lump sum distribution.
Assuming no joint owners, if the annuitant who is an owner dies before the maturity date, and the sole beneficiary is not the deceased annuitant’s spouse who elects to continue the policy, (1) the death benefit must be distributed within five years of the date of the annuitant/deceased owner’s death, or (2) payments must begin no later than one year after the annuitant/deceased owner’s death and must be made (i) for the beneficiary’s lifetime or (ii) for a period certain (so long as any certain period does not exceed the beneficiary’s life expectancy). Payments may be made in accordance with the “account-based” method under which we recalculate the
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amount of the payment each year by dividing the remaining unpaid proceeds by the beneficiary’s current life expectancy, with payments beginning within one year of the deceased owner’s death. Death benefit proceeds which are not paid to or for the benefit of a natural person must be distributed within five years of the date of the annuitant/deceased owner’s death. If the sole beneficiary is the annuitant/deceased owner’s surviving spouse, such spouse may elect to continue the policy as the new annuitant and owner instead of receiving the death benefit (See TAX INFORMATION in the Prospectus). We will increase the annuity value as of the death report day to equal the death benefit proceeds as of the death report day, if greater.
If a beneficiary or joint owner elects to receive the death benefit proceeds under alternate payment option (1) or 2(ii) above, then we will: (a) allow surrenders and transfers among the subaccounts and the fixed account; (b) deduct the transfer fee from each transfer after the first 12 transfers during the policy year; (c) deduct the annual policy charge each policy year; and (d) not permit payment of the death benefit proceeds under the annuity provisions of the policy upon complete distribution.
The beneficiary may name a new beneficiary for payment of the death benefit proceeds. If the beneficiary dies during the distribution period, we will pay the remaining value of the policy first to the new beneficiary. If no new beneficiary is named, such payment will be made to the contingent beneficiary if named by the owner. If no new beneficiary or contingent beneficiary is named, such payment will be made to the beneficiary’s estate.
If there are joint owners, the annuitant is not an owner, and the one joint owner dies prior to the maturity date, the surviving joint owner as sole owner may surrender the policy at any time for the policy's cash value.
Beneficiary. The beneficiary designation in the application will remain in effect until changed. An owner may change the designated beneficiary(ies) during the annuitant’s lifetime by sending written notice to us at our Administrative Office. A beneficiary’s consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, an owner may then designate a new beneficiary). The change will take effect as of the date an owner signs the written notice. We will not be liable for any payment made before the written notice is received at our Administrative Office. Unless we receive written notice from an owner to the contrary, no beneficiary may assign any payments under the policy before such payments are due. To the extent permitted by law, no payments under the policy will be subject to the claims of any beneficiary’s creditors.
The discussion and the first set of examples below assume the Additional Earnings Rider is not included in the policy.
Adjusted Partial Surrender. A partial surrender will reduce the amount of your death benefit proceeds by an amount called the adjusted partial surrender. The reduction depends on the relationship between the death benefit proceeds and annuity value. The adjusted partial surrender is the amount of a partial surrender time the ratio of [(a) divided by (b)] where:
(a) is the amount of the death benefit proceeds prior to the partial surrender; and
(b) is the annuity value prior to the partial surrender.
The following examples describe the effect of surrender on the death benefit proceeds, and annuity value.
EXAMPLE 1
(Assumed Facts for Example)
$75,000 current death benefit proceeds before surrender
$50,000 current annuity value before surrender
$75,000 current death benefit (larger of annuity value and death benefit proceeds)
6% current surrender charge percentage
$15,000 requested partial surrender
$10,000 surrender charge free amount
$5,000 excess partial surrender – EPS (amount subject to surrender charge)
$319.15 surrender charge on EPS = 0.06 * (5,319.15)
$5,319.15 reduction in annuity value due to EPS = 5,000 + 319.15
$22,978.73 adjusted partial surrender = $15,319.15 * (75,000/50,000)
$52,021.27 new death benefit proceeds (after partial surrender) = 75,000 – 22,978.73
$34,680.82 New annuity value (after partial surrender) = 50,000 – 15,319.15
Summary:
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Reduction in death benefit proceeds =$22,978.73
Reduction in annuity value =$15,319.15
NOTE: The death benefit proceeds is reduced more than the annuity value since the death benefit proceeds was greater than the annuity value just prior to the partial surrender.
EXAMPLE 2
(Assumed Facts for Example)
$50,000 current death benefit proceeds before surrender
$75,000 current annuity value before surrender
$75,000 current death benefit (larger of annuity value and death benefit proceeds)
6% current surrender charge percentage
$15,000 requested partial surrender
$11,250 surrender charge free amount
$3,750 excess partial surrender – EPS (amount subject to surrender charge)
$293.36 surrender charge on EPS = 0.06 * (3,989.36)
$3,989.36 reduction in annuity value due to EPS = 3,750 + 239.36
$15,239.36 adjusted partial surrender = $15,239.36 * (75,000/50,000)
$34,760.64 new death benefit proceeds (after partial surrender) = 50,000 – 15,239.36
$59,760.64 New annuity value (after partial surrender) = 75,000 – 11,250 – 3,989.36
Summary:
Reduction in death benefit proceeds =$15,239.36
Reduction in annuity value =$15,239.36
NOTE: The death benefit proceeds and annuity value are reduced by the same amount since the annuity value was higher than the death benefit proceeds just prior to the partial surrender.
Additional Earnings Rider. The following examples illustrate the additional death benefit payable under the Additional Earnings Rider, as well as the effect of a withdrawal on the Additional Earnings Rider Amount.
Example 1 – Basic Additional Earnings Rider Example, with no additional Premium Payments or surrenders
Assumed Facts for Example:
Rider Issue Age = 60
Additional Earnings Factor (AEF) = 40%
Rider Earnings Limit (REL) = 250%
At Rider Issue:  
$1,000,000 Maximum Rider Benefit (MRB)
$40,000.00 Rider Base at issue (RBI (equal to the greater of the death benefit proceeds on the Rider Date or the Annuity Value on that date)
    
At Death:  
$75,000.00 Death Benefit Proceeds (DBP)
$35,000.00 Rider Earnings (RE) = DBP – RBI = 75,000 – 40,000
$14,000.00 Additional Earnings Rider Amount = lesser of:
RE * AEF = 35,000 * 40% = 14,000 or
REL * RBI * AEF = 250% * 40,000 *40% = 40,000 or
MRB = 1,000 000
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Example 2 –Additional Earnings Rider Example, showing the effect of surrender
Assumed Facts for Example:
Rider Issue Age = 60
Additional Earnings Factor (AEF) = 40%
Rider Earnings Limit (REL) = 250%
At Rider Issue:  
$1,000,000 Maximum Rider Benefit (MRB)
$40,000.00 Rider Base at issue (RBI (equal to the greater of the death benefit proceeds on the Rider Date or the Annuity Value on that date)
    
At Surrender:  
$50.000.00 Annuity Value before surrenders (AV)
$15,000.00 Surrender (PW) (including surrender charges)
$12,000.00 Surrender Adjustment to Base
(WAB) = PW * RBI / AV = 15,000 * 40,000 / 50,000
$28,000.00 Rider Base after surrender
(RB = RBI – WAB = 40,000 – 12,000
    
At Death:  
$70,000.00 Death Benefit Proceeds (DBP)
$42,000.00 Rider Earnings (RE) = DBP – RB = 70,000 – 28,000
$16,800.00 Additional Earnings Rider Amount = lesser of:
RE * AEF = 42,000 * 40% = 16,800 or
REL * RBI * AEF = 250% * 28,000 *40% = 28,000 or
MRB = 1,000 000
Assignment
During the annuitant’s lifetime and prior to the maturity date (subject to any irrevocable beneficiary’s rights) the owner may assign any rights or benefits provided by a nonqualified policy. The assignment of a policy will be treated as a distribution of the annuity value for federal tax purposes. Any assignment must be made in writing and accepted by us. An assignment will be effective as of the date the request is received at our Administrative Office and is accepted by us. We assume no liability for any payments made or actions taken before a change is accepted and shall not be responsible for the validity or effect of any assignment.
With regard to qualified policies, any assignment may be subject to restrictions, penalties, taxation as a distribution, or even prohibition under the Code, and must be permitted under the terms of the underlying retirement plan.
Proof of Age, Gender and Survival
We may require proper proof of age and gender of any annuitant or joint annuitant prior to making the first annuity payment. Prior to making any payment, we may require proper proof that the annuitant or joint annuitant is alive and legally qualified to receive such payment. If required by law to ignore differences in gender of any payee, annuity payments will be determined using unisex rates.
Non-Participating
The policy will not share in the Company’s surplus earnings; no dividends will be paid.
Employee and Agent Purchases
The policy may be acquired by an employee or registered representative of any broker/dealer authorized to sell the policy or their spouse or minor children, or by an officer, director, trustee or bona-fide full-time employee of ours or our affiliated companies or their spouse or minor children. In such a case, we in our discretion, may credit an amount equal to a percentage of each premium payment to the policy due to lower acquisition costs we experience on those purchases. We may offer, in our discretion, certain employer sponsored savings plans, reduced fees and charges including, but not limited to, the surrender charge and the annual policy charge for
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certain sales under circumstances which may result in savings of certain costs and expenses. In addition, there may be other circumstances of which we are not presently aware which could result in reduced sales or distribution expenses. Credits to the policy or reductions in these fees and charges will not be unfairly discriminatory against any owner.
INVESTMENT EXPERIENCE
Accumulation Units
Allocations of a premium payment directed to a subaccount are credited in the form of accumulation units. Each subaccount has a distinct accumulation unit value. The number of units credited is determined by dividing the premium payment or amount transferred to the subaccount by the accumulation unit value of the subaccount as of the end of the valuation period during which the allocation is made. For each subaccount, the accumulation unit value for a given business day is based on the net asset value of a share of the corresponding portfolio of the underlying fund portfolio less any applicable charges or fees.
Upon allocation to the selected subaccount, premium payments are converted into accumulation units of the subaccount. The number of accumulation units to be credited is determined by dividing the dollar amount allocated to each subaccount by the value of an accumulation unit for that subaccount as next determined after the premium payment is received at the Administrative Office or, in the case of the initial premium payment, when the enrollment form is completed, whichever is later. The value of an accumulation unit for each subaccount was arbitrarily established at $1 at the inception of each subaccount. Thereafter, the value of an accumulation unit is determined as of the close of trading on each day the New York Stock Exchange is open for business.
An index (the “net investment factor”) which measures the investment performance of a subaccount during a valuation period, is used to determine the value of an accumulation unit for the next subsequent valuation period. The net investment factor may be greater or less than or equal to one; therefore, the value of an accumulation unit may increase, decrease, or remain the same from one valuation period to the next. You bear this investment risk. The net investment performance of a subaccount and deduction of certain charges affect the accumulation unit value.
The net investment factor for any subaccount for any valuation period is determined by dividing (A + B - C) by (D) and subtracting (E) from the result, where the net result of:
A  the net asset value per share of the shares held in the subaccount determined at the end of the current valuation period, plus
B  the per share amount of any dividend or capital gain distribution made with respect to the shares held in the subaccount if the ex-dividend date occurs during the current valuation period, plus or minus
C  a per share credit or charge for any taxes determined by us to have resulted during the valuation period from the investment operations of the subaccount;
D  is the net asset value per share of the shares held in the subaccount determined as of the end of the immediately preceding valuation period; and
E  is an amount representing the separate account charge and any optional benefit fees, if applicable.
Illustration of Separate Account Accumulation Unit Value Calculations
Formula and Illustration for Determining the Net Investment Factor
Net Investment Factor = (A + B - C) - E
  D  
    
Where:  
A = The net asset value of an underlying fund portfolio share as of the end of the current valuation period.
  Assume A = $11.57
B = The per share amount of any dividend or capital gains distribution since the end of the immediately preceding valuation period.
  Assume B = 0
C = The per share charge or credit for any taxes reserved for at the end of the current valuation period.
  Assume C = 0
D = The net asset value of an underlying fund portfolio share at the end of the immediately preceding valuation period.
  Assume D = $11.40
E = The daily deduction for the mortality and expense risk fee and the administrative charge, and any optional benefit fees, if applicable. Assume E totals 1.65% on an annual basis; On a daily basis, this equals 0.000044838.
    
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Then, the net investment factor = (11.57 + 0 – 0) - 0.000044838 = Z = 1.014867443
  (11.40)  
Formula for Determining Accumulation Unit Value
Accumulation Unit Value = A * B
Where:  
A = The accumulation unit value for the immediately preceding valuation period.
  Assume A = $X
B = The net investment factor for the current valuation period.
  Assume B = Y
Then, the accumulation unit value = $X * Y = $Z
Annuity Unit Value and Annuity Payment Rates
The amount of variable annuity payments will vary with annuity unit values. Annuity unit values rise if the net investment performance of the subaccount (that is, the portfolio performance minus subaccount fees and charges including the separate account annuitization charge that will equal an annual rate of 1.40%) exceeds the assumed investment return of 5% annually. Conversely, annuity unit values fall if the net investment performance of the subaccount is less than the assumed rate. The value of a variable annuity unit in each subaccount was established at $10 on the date operations began for that subaccount. The value of a variable annuity unit on any subsequent business day is equal to A multiplied by B multiplied by C, where:
A  is the variable annuity unit value for the subaccount on the immediately preceding business day;
B  is the net investment factor for that subaccount for the valuation period; and
C  is the assumed investment return adjustment factor for the valuation period.
The assumed investment return adjustment factor for the valuation period is the product of discount factors of .99986634 per day to recognize the 5% effective annual assumed investment return. The valuation period is the period from the close of the immediately preceding business day to the close of the current business day.
The net investment factor for the policy used to calculate the value of a variable annuity unit in each subaccount for the valuation period is determined by dividing (i) by (ii) and subtracting (iii) from the result, where:
(i)  is the result of:
(1) the net asset value of a fund share held in that subaccount determined at the end of the current valuation period; plus
(2) the per share amount of any dividend or capital gain distributions made by the fund for shares held in that subaccount if the ex-dividend date occurs during the valuation period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we determine to have resulted from the investment operations of the subaccount.
(ii)  is the net asset value of a fund share held in that subaccount determined as of the end of the immediately preceding valuation period.
(iii)  is a factor representing the separate account annuitization charge. This factor is equal, on an annual basis, to 1.40% of the daily net asset value of the portfolio share held in that subaccount.
The dollar amount of subsequent variable annuity payments will depend upon changes in applicable annuity unit values.
The annuity payment rates generally vary according to the annuity option elected and the gender and adjusted age of the annuitant at the maturity date. See ANNUITY PAYMENT OPTIONS – Determination of the First Variable and Fixed Payment, which contains a table for determining the adjusted age of the annuitant.
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Calculations for Annuity Unit
Value and Variable Annuity Payments
Formula for Determining Annuity Unit Value
Annuity Unit Value = A * B * C
Where:  
A = Annuity unit value for the immediately preceding valuation period.
  Assume A = $X
B = Net investment factor for the valuation period for which the annuity unit value is being calculated.
  Assume B = Y
C = A factor to neutralize the annual assumed investment return of 5% built into the Annuity Tables used.
  Assume C = Z
Then, the annuity unit value is: $X * Y * Z = $Q
Formula for Determining Amount of
First Monthly Variable Annuity Payment
First monthly variable annuity payment = A * B
  $1,000
    
Where:  
A = The adjusted policy value as of the maturity date.
  Assume A = $X
B = The annuity purchase rate per $1,000 of adjusted policy value based upon the option selected, the gender and adjusted age of the annuitant according to the tables contained in the policy.
  Assume B = $Y
    
Then, the first monthly variable annuity payment = $X * $Y = $Z
  1,000  
Formula for Determining the Number of Annuity Units
Represented by Each Monthly Variable Annuity Payment
Number of annuity units = A
  B
    
Where:  
A = The dollar amount of the first monthly variable annuity payment.
  Assume A = $X
B = The annuity unit value for the valuation date on which the first monthly payment is due.
  Assume B = $Y
    
Then, the number of annuity units = $X = Z
  $Y  
HISTORICAL PERFORMANCE DATA
Money Market Yields
Yield. The yield quotation set forth in the prospectus for the TA BlackRock Government Money Market subaccount is for the seven days ended on the date of the most recent balance sheet of the separate account included in the registration statement, and is computed by determining the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical pre-existing account having a balance of one unit in the TA BlackRock Government Money Market subaccount at the beginning of the period, subtracting a hypothetical charge reflecting deductions from owner accounts, and dividing the difference by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by (365/7) with the resulting figure carried to at least the nearest hundredth of one percent.
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Effective Yield. - The effective yield quotation for the TA BlackRock Government Money Market subaccount set forth in the prospectus is for the seven days ended on the date of the most recent balance sheet of the separate account included in the registration statement. The effective yield is computed by determining the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical pre-existing subaccount having a balance of one unit in the TA BlackRock Government Money Market subaccount at the beginning of the period. A hypothetical charge, reflecting deductions from owner accounts, is subtracted from the balance. The difference is divided by the value of the subaccount at the beginning of the base period to obtain the base period return, which is then compounded by adding 1. Next, the sum is raised to a power equal to 365 divided by 7, and 1 is subtracted from the result. The following formula describes the computation:
EFFECTIVE YIELD = ({BASE PERIOD RETURN + 1} 365/7) – 1
The effective yield is shown at least to the nearest hundredth of one percent.
Hypothetical Charge. - For purposes of the yield and effective yield computations, the hypothetical charge reflects all fees and charges that are charged to all owner accounts in proportion to the length of the base period, including the annual policy charge. The yield and effective yield quotations do not reflect any deduction for premium taxes or transfer charges that may be applicable to a particular policy, nor do they reflect the surrender charge that may be assessed at the time of surrender in an amount ranging up to 7% of the requested surrender amount. Nor do the yield and effective yield calculations take into account the surrender charges imposed under the policy or the charges for any optional riders. The specific surrender charge percentage applicable to a particular surrender depends on the length of time premium payments have been held under the policy and whether surrenders have been made previously during that policy year. (See EXPENSES - Surrender Charge of the prospectus.) No fees or sales charges are assessed upon annuitization under the policies, except premium taxes. Realized gains and losses from the sale of securities, and unrealized appreciation and depreciation of assets held by the TA BlackRock Government Money Market subaccount and the fund are excluded from the calculation of yield. The calculation of yield (which is based on the performance of the Initial Class of shares for the Transamerica Aegon Government Money Market VP of the Transamerica Series Trust that were held by the subaccount) has been adjusted to reflect the deduction of the 12b-1 fee for the Service Class shares of that portfolio.
The yield on amounts held in the TA BlackRock Government Money Market subaccount normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The TA BlackRock Government Money Market subaccount actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Transamerica BlackRock Government Money Market VP, the types and quality of portfolio securities held by the Transamerica BlackRock Government Money Market VP and its operating expenses. Because of the charges and deductions imposed under a policy, the yield for the TA BlackRock Government Money Market subaccount will be lower than the yield for the corresponding money market portfolio.
Total Returns
The total return quotations set forth in the prospectus for all subaccounts, except the TA BlackRock Government Money Market subaccount, holding assets for the policies during the accumulation period are average annual total return quotations for the one, five, and ten-year periods (or, if a subaccount has been in existence for a period of less than one, five or ten years, for such lesser period) ended on the date of the most recent balance sheet of the separate account, and for the period from the first date any subaccount investing in an underlying portfolio commenced operations until the aforesaid date. The quotations are computed by determining the average annual compounded rates of return over the relevant periods that would equal the initial amount invested to the ending redeemable value, adjusted to reflect current subaccount charges, according to the following formula:
P (1 + T)N = ERV
Where:
T = The average annual total return net of subaccount recurring charges.
ERV = The ending redeemable value of the hypothetical account at the end of the period.
P = A hypothetical initial payment of $1,000.
N = The number of years in the period.
For purposes of the total return quotations for all of the subaccounts, except the TA BlackRock Government Money Market subaccount, the calculations take into account all current fees that are charged under the policy to all owner accounts during the accumulation period except the charge for the optional Additional Earnings Rider. Such fees include the mortality and expense risk charge, the administrative charge, and the annual policy charge. The calculations also assume a complete surrender as of the end of the particular period; therefore, the surrender charge is deducted. The calculations do not reflect any deduction for premium taxes or any transfer or surrender charges that may be applicable to a particular policy.
14

 

Other Performance Data
We may present the total return data stated in the prospectus on a non-standardized basis. This means that the data will not be reduced by the surrender charge under the policy and that the data may be presented for different time periods and for different premium payment amounts. Non-standardized performance data will only be disclosed if standardized performance data for the required periods is also disclosed.
We may also disclose cumulative total returns and average annual compound rates of return (T) for the subaccounts based on the inception date of the subaccounts investing in the underlying portfolios. We calculate cumulative total returns according to the following formula:
(1 + T)n - 1
Where: T and n are the same values as above
In addition, we may present historic performance data for the portfolios since their inception reduced by some or all of the fees and charges under the policy. Such adjusted historic performance includes data that precedes the inception dates of the subaccounts. This data is designed to show the performance that would have resulted if the policy had been in existence during that time.
For instance, we may disclose average annual total returns for the portfolios reduced by some or all fees and charges under the policy, as if the policy had been in existence. Such fees and charges include the mortality and expense risk charge, the administrative charge, and the annual policy charge. Such data may or may not assume a complete surrender of the policy at the end of the period. The charge for the optional Additional Earnings Rider will not be deducted.
Advertising and Sales Literature
From time to time we may refer to the diversifying process of asset allocation based on the Modern Portfolio Theory developed by Nobel Prize winning economist Harry Markowitz. The basic assumptions of Modern Portfolio Theory are: (1) the selection of individual investments has little impact on portfolio performance, (2) market timing strategies seldom work, (3) markets are efficient, and (4) portfolio selection should be made among asset classes. Modern Portfolio Theory allows an investor to determine an efficient portfolio selection that may provide a higher return with the same risk or the same return with lower risk.
When presenting the asset allocation process we may outline the process of personal and investment risk analysis including determining individual risk tolerances and a discussion of the different types of investment risk. We may classify investors into four categories based on their risk tolerance and will quote various industry experts on which types of investments are best suited to each of the four risk categories. The industry experts quoted may include Ibbotson Associates, CDA Investment Technologies, Lipper Analytical Services and any other expert which has been deemed by us to be appropriate. We may also provide an historical overview of the performance of a variety of investment market indices, the performance of these indices over time, and the performance of different asset classes, such as stocks, bonds, cash equivalents, etc. We may also discuss investment volatility including the range of returns for different asset classes and over different time horizons, and the correlation between the returns of different asset classes. We may also discuss the basis of portfolio optimization including the required inputs and the construction of efficient portfolios using sophisticated computer-based techniques. Finally, we may describe various investment strategies and methods of implementation, the periodic rebalancing of diversified portfolios, the use of dollar cost averaging techniques, a comparison of the tax impact of premium payments made on a “before tax” basis through a tax-qualified plan with those made on an “after tax” basis outside of a tax-qualified plan, and a comparison of tax-deferred versus non tax-deferred accumulation of premium payments.
As described in the prospectus, in general, an owner is not taxed on increases in value under a policy until a distribution is made under the policy. As a result, the policy will benefit from tax deferral during the accumulation period, as the annuity value may grow more rapidly than under a comparable investment where certain increases in value are taxed on a current basis. From time to time, we may use narrative, numerical or graphic examples to show hypothetical benefits of tax deferral in advertising and sales literature.
services
We perform administrative services for the policies. These services include issuance of the policies, maintenance of records concerning the policies, and certain valuation services.
RECORDS AND REPORTS
All records and accounts relating to the separate account will be maintained by us. As presently required by the 1940 Act, as amended, and regulations promulgated thereunder, we will mail to all owners at their last known address of record, at least annually, reports containing such information as may be required under that Act or by any other applicable law or regulation. Owners will also
15

 

receive confirmation of each financial transaction and any other reports required by law or regulation. However, for certain routine transactions (for example, regular monthly premiums deducted from your checking account, or regular annuity payments we send to you) you may only receive quarterly confirmations.
DISTRIBUTION OF THE POLICIES
TCI serves as principal underwriter for the policies. TCI's home office is located at 1801 California St. Suite 5200 Denver, Colorado 80202. TCI is an affiliate of Transamerica Life Insurance Company and, like TPLIC is an indirect, wholly owned subsidiary of Aegon USA. TCI is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and is a member of Financial Industry Regulatory Authority (“FINRA”). TCI is not a member of the Securities Investor Protection Corporation.
The policies were offered to the public through sales representatives of broker-dealers (“selling firms”) that have entered into selling agreements with us and with TCI. Sales representatives with these selling firms are appointed as our insurance agents.
During fiscal years 2021, 2020 and 2019, $149,065, $115,509,065 and $5,045,158, respectively, were paid to TCI. TCI passed through commissions it received to selling firms for their sales and did not retain any portion of them. We and our affiliates provide paid-in capital to TCI and pay for TCI’s operating and other expenses, including overhead, legal and accounting fees.
We and/or TCI or another affiliate may pay certain selling firms additional cash amounts for: (1) marketing allowances, which may include marketing services and increased access to their sales representatives; (2) sales promotions relating to the policies; (3) costs associated with sales conferences and educational seminars for their sales representatives; and (4) other sales expenses of the selling firms. We and/or TCI may make bonus payments to certain selling firms based on aggregate sales or persistency standards. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms. Differences in compensation paid to a selling firm or its sales representatives for selling one product over another may create conflicts of interest for such firms or its sales representatives.
CUSTODY OF ASSETS
We hold assets of each of the subaccounts. The assets of each of the subaccounts are segregated and held separate and apart from the assets of the other subaccounts and from our general account assets. We maintain records of all purchases and redemptions of shares of the underlying fund portfolios held by each of the subaccounts. Additional protection for the assets of the separate account is afforded by our fidelity bond, presently in the amount of $5,000,000, covering the acts of our officers and employees.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The statutory-basis financial statements and supplementary information of Transamerica Life Insurance Company have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of each of the subaccounts of WRL Series Annuity Account included in Form N-VPFS dated April 20, 2022 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
FINANCIAL STATEMENTS
All required statutory financial statements are included in Part B of this Registration Statement. Required WRL Series Annuity Account financials statements are incorporated by reference to N-VPFS (811-05672) filed on April 20, 2022.
The values of Your interest in the Separate Account will be affected solely by the investment results of the selected Subaccount(s). The statutory-basis financial statements and schedules of Transamerica Life Insurance Company should be considered only as bearing on our ability to meet our obligations under the policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.
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Table of Contents

 

 

FINANCIAL STATEMENTS – STATUTORY BASIS

AND SUPPLEMENTARY INFORMATION

Transamerica Life Insurance Company

Years Ended December 31, 2021, 2020 and 2019

Table of Contents

Transamerica Life Insurance Company

Financial Statements – Statutory Basis

and Supplementary Information

Years Ended December 31, 2021, 2020 and 2019

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

      10  

3. Accounting Changes and Correction of Error

      25  

4. Fair Values of Financial Instruments

      26  

5. Investments

      35  

6. Premium and Annuity Considerations Deferred and Uncollected

      57  

7. Policy and Contract Attributes

      58  

8. Reinsurance

      75  

9. Income Taxes

      78  

10. Capital and Surplus

      85  

11. Securities Lending

      86  

12. Retirement and Compensation Plans

      88  

13. Related Party Transactions

      89  

14. Managing General Agents and Third-Party Administrators

      96  

15. Commitments and Contingencies

      96  

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

      102  

17. Reconciliation to Statutory Statement

      105  

18. Subsequent Events

      105  

Appendix A – Listing of Affiliated Companies

      107  

Statutory-Basis Financial Statement Schedules

  

Summary of Investments – Other Than Investments in Related Parties

     110  

Supplementary Insurance Information

      111  

Reinsurance

      112  

Table of Contents

LOGO

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 as of December 31, 2021 and 2020, and the related statements of operations, of changes in capital and surplus and of cash flow for each of the three years in the period ended December 31, 2021, including the related notes and schedules of supplementary insurance information and reinsurance for each of the three years in the period ended December 31, 2021 and summary of investments—other than investments in related parties as of December 31, 2021 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, 2021 and 2020 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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, 2021 and 2020, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2021.

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, F: (312) 298 2001, www.pwc.com/us

Table of Contents

LOGO

 

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 14, 2022

 

2

Table of Contents

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Millions)

 

    December 31  
    2021     2020  
 

 

 

  

Admitted assets

    

Cash, cash equivalents and short-term investments

    $ 2,126     $ 1,832  

Bonds

     49,942       50,444  

Preferred stocks

     120       105  

Common stocks

     3,527       3,556  

Mortgage loans on real estate

     9,153       9,015  

Real estate

     52       56  

Policy loans

     1,986       2,037  

Securities lending reinvested collateral assets

     2,073       2,115  

Derivatives

     1,760       2,973  

Other invested assets

     3,054       3,222  
 

 

 

  

Total cash and invested assets

     73,793       75,355  

Accrued investment income

     694       697  

Premiums deferred and uncollected

     181       240  

Net deferred income tax asset

     825       812  

Other assets

     1,211       1,344  

Separate account assets

     126,088       121,820  
 

 

 

  

Total admitted assets

    $ 202,792     $ 200,268  
 

 

 

  

Liabilities and capital and surplus

    

Aggregate reserves for policies and contracts

    $ 51,983     $ 50,966  

Policy and contract claim reserves

     1,177       1,257  

Liability for deposit-type contracts

     824       946  

Other policyholders’ funds

     38       32  

Transfers from separate accounts due or accrued

     (658 )      (823 ) 

Funds held under reinsurance treaties

     3,043       3,889  

Asset valuation reserve

     1,250       1,198  

Interest maintenance reserve

     1,382       1,389  

Derivatives

     2,360       3,493  

Payable for collateral under securities loaned and

other transactions

     2,312       2,755  

Borrowed money

     3,870       3,486  

Variable annuity reserve hedge offset deferral

     250       145  

Other liabilities

     1,596       1,605  

Separate account liabilities

     126,088       121,820  
 

 

 

  

Total liabilities

     195,515       192,158  
 

 

 

  

Total capital and surplus

     7,277       8,110  
 

 

 

  

Total liabilities and capital and surplus

    $         202,792     $         200,268  
 

 

 

  

See accompanying notes.

 

3

Table of Contents

Transamerica Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Millions)

 

     Year Ended December 31  
     2021     2020     2019  
  

 

 

  

Revenues

       

Premiums and other considerations

     $     14,482     $     16,723     $     15,708   

Net investment income

      3,191       3,361       2,765   

Commissions and expense allowances on reinsurance ceded

      187       661       470   

Reserve adjustment on reinsurance ceded

      (260 )      (273 )      (128)  

Consideration received on reinsurance recapture and novations

      963       2,958       15   

Fee revenue and other income

      2,259       2,096       2,150   
  

 

 

  

Total revenue

      20,822       25,526       20,980   

Benefits and expenses

       

Death benefits

      2,928       2,863       2,358   

Annuity benefits

      1,798       1,528       1,492   

Accident and health benefits

      945       1,120       1,112   

Surrender benefits

      18,145       15,352       16,301   

Other benefits

      292       234       230   

Net increase (decrease) in reserves

      942       4,985       (1,329)  

Commissions

      1,375       1,435       1,481   

Net transfers to (from) separate accounts

      (8,881 )      (4,850 )      (5,130)  

IMR adjustment due to reinsurance

      (43 )      —       —   

General insurance expenses and other

      1,418       1,780       1,254   
  

 

 

  

Total benefits and expenses

      18,919       24,447       17,769   
  

 

 

  

Gain (loss) from operations before dividends and federal income taxes

      1,903       1,079       3,211   
  

 

 

  

Dividends to policyholders

      10       10       10   
  

 

 

  

Gain (loss) from operations before federal income taxes

      1,893       1,069       3,201   

Federal income tax (benefit) expense

      (185 )      (109 )      (39)  
  

 

 

  

Net gain (loss) from operations

      2,078       1,178       3,240   

Net realized capital gains (losses), after tax and amounts transferred to interest maintenance reserve

      (1,924 )      113       469   
  

 

 

  

Net income (loss)

     $ 154     $ 1,291     $ 3,709   
  

 

 

  

See accompanying notes.

 

4

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Millions)

 

     Common
Stock		      Treasury
Stock		     Surplus
Notes		     Paid-in
Surplus		     Special
Surplus
Funds		     Unassigned
Surplus		     Total Capital
and Surplus		  
  

 

 

  

Balance at January 1, 2019

     $ 7      $ (58 )    $ 310     $ 4,163     $ 232     $ 4,231     $ 8,885   

Net income (loss)

      —        —       —       —       —       3,709       3,709   

Change in net unrealized capital gains/losses, net of taxes

      —        —       —       —       (37 )      (239 )      (276)  

Change in net deferred income tax asset

      —        —       —       —       —       (160 )      (160)  

Change in nonadmitted assets

      —        —       —       —       —       124       124   

Change in reserve on account of change valuation basis

      —        —       —       —       —       (1,218 )      (1,218)  

Change in asset valuation reserve

      —        —       —       —       —       (252 )      (252)  

Change in surplus as a result of reinsurance

      —        —       —       —       —       (143 )      (143)  

Change in surplus notes

      —        —       (250 )      —       —       —       (250)  

Change in treasury stock

      —        58       —       —       —       —       58   

Change in letter of credit

      —        —       —       —       —       (160 )      (160)  

Dividends to stockholders

      —        —       —       —       —       (733 )      (733)  

Return of capital

      —        —       —       (308 )      —       —       (308)  

Other changes - net

      —        —       —       2       2       71       75   
  

 

 

  

Balance at December 31, 2019

     $ 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   
  

 

 

  

Continued on next page.

 

5

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Millions)

 

    
 Common
Stock		  
 		     
 Treasury
Stock		  
 		     
 Surplus
Notes		  
 		     
 Paid-in
Surplus		  
 		     

 Special
Surplus
Funds		  
 
 		    
 Unassigned
Surplus		  
 		    
 Total Capital
and Surplus		  
 
  

 

 

  

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    
  

 

 

  

See accompanying notes.

 

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Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Millions)

 

     Year Ended December 31  
     2021     2020     2019  
  

 

 

  

Operating activities

       

Premiums and annuity considerations

     $     15,975     $ 16,785     $ 15,551   

Net investment income

      3,105       2,758       2,931   

Other income

      2,025       2,311       2,379   

Benefit and loss related payments

      (24,040 )      (20,629 )      (21,328)  

Net transfers from separate accounts

      9,042       4,958       5,282   

Commissions and operating expenses

      (2,799 )      (3,002 )      (2,842)  

Dividends paid to policyholders

      (6 )      (7 )      (7)  

Federal income taxes (paid) received

      148       37       (166)  
  

 

 

  

Net cash provided by (used in) operating activities

      3,450       3,211       1,800   

Investing activities

       

Proceeds from investments sold, matured or repaid

     $ 12,231     $ 12,107     $ 19,902   

Costs of investments acquired

      (14,040 )      (16,438 )      (18,351)  

Net change in policy loans

      51       25       15   
  

 

 

  

Net cash provided by (used in) investing activities

     $ (1,758 )    $ (4,306 )    $ 1,566   

Financing and miscellaneous activities

       

Repayment of surplus notes

     $ —     $ (60 )    $ (250)  

Capital and paid in surplus received (returned)

      2       705       (248)  

Dividends to stockholders

      (761 )      (1,200 )      (725)  

Net deposits (withdrawals) on deposit-type contracts

      (143 )      (34 )      (667)  

Net change in borrowed money

      385       783       (1,621)  

Net change in funds held under reinsurance treaties

      74       (105 )      261   

Net change in payable for collateral under securities lending and other transactions

      (443 )      65       (1,084)  

Other cash (applied) provided

      (512 )      331       162   
  

 

 

  

Net cash provided by (used in) financing and miscellaneous activities

      (1,398 )      485       (4,172)  

Net increase (decrease) in cash, cash equivalents and short-term investments

      294       (610 )      (806)  

Cash, cash equivalents and short-term investments:

       

Beginning of year

      1,832       2,442       3,248   
  

 

 

  

End of year

     $ 2,126     $ 1,832     $ 2,442   
  

 

 

  

See accompanying notes.

 

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Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow (supplemental) – Statutory Basis

(Dollars in Millions)

 

     Year Ended December 31  
Supplemental disclosures of cash flow information          2021                 2020                 2019        
  

 

 

  
Non-cash activities during the year not included in the Statutory Statements of Cash Flows:       

Assets transfer in for amended reinsurance treaty

     $ 47     $ —     $ —  

Distribution of affiliate stock

      (339 )      —       —  
Release of funds withheld related to affiliated reinsurance recaptures      963       500       —  

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 )      —  

Stock cancellations

      —       —       58  

Non-cash dividend received from subsidiary

      —       —       11  

Other

      —       —       (9 ) 

See accompanying notes.

 

8

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

December 31, 2021

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 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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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 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.

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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:

 

     SSAP #    F/S Page    F/S Line    2021      2020      2019  

Net income, State of Iowa basis

    XXX    XXX    XXX    $ 154      $ 1,291      $ 3,709  

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, NAIC SAP

    XXX    XXX    XXX    $ 154      $ 1,291      $ 3,709  
                                        

Statutory surplus, state of Iowa basis

    XXX    XXX    XXX    $ 7,277      $ 8,110      $ 9,351  

State prescribed practices that are an increase(decrease) from NAIC SAP:

                  

None

               —        —        —  

State permitted practices that are an

increase(decrease) from NAIC SAP:

                  

Letter of credit

    4    Balance Sheet    Letter of credit      —        —        (1,870 ) 

Statutory surplus, NAIC SAP

    XXX    XXX    XXX    $   7,277      $   8,110      $   7,481  
                                        

 

The IID issued a no objection letter in the prior year 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.

The Company elected early adoption of SSAP No. 108, Derivatives Hedging Variable Annuities Guarantees effective July 1, 2019. The early adoption allowed for transition from and release of a similar permitted practice in place with the IID since October 1, 2016 (the Permitted Practice). The Company received approval from the IID on September 4, 2019.

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.

 

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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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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.

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

 

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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 an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.

In 2019, the NAIC revised the AVR Factors (basic contribution, reserve objective and maximum reserve) to be consistent with the risk-based capital (RBC) after-tax factors, which were amended in 2018 as a result of federal tax reform. The AVR factor changes are effective for year-end 2019. As of December 31, 2019, the factor changes decreased capital and surplus by $183. The changes were recorded to the Change in Asset Valuation Reserve line of the Statements of Changes in Capital and Surplus.

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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

 

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.

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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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.

Offsetting of Assets and Liabilities

Financial assets and liabilities are offset in the balance sheets when the Company has a legally enforceable right to offset and has the intention to settle the asset and liability on a net basis.

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 general agents pension fund.

Other liabilities consist primarily of amounts withheld by the Company, accrued expenses, reinsurance payable, remittances, unearned investment income 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,

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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

 

21

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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

 

22

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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

 

23

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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.

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).

 

24

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

Surplus Notes

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

Nonadmitted Assets

Certain assets designated 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.

 

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 substantive change, as well as items classified by the NAIC as nonsubstantive 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

Effective January 1, 2021, the NAIC adopted revisions to SSAP No. 32, Preferred Stock, and the corresponding Issue Paper No. 164, Preferred Stock, to update the definitions, measurement and impairment guidance for redeemable vs. perpetual preferred stock and mandatory convertible holdings. With the adoption of SSAP No. 32R, all perpetual preferred stock is to be valued at fair value, not to exceed any currently effective call price. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2021, the NAIC adopted revisions to SSAP No. 106, Affordable Care Act Section 9010 Assessment, which supersede SSAP No. 106 and nullify Interpretation (INT) 18-02: ACA Section 9010 Assessment Moratoriums. The Section 9010 assessment was repealed by the House of Representatives and Senate for calendar years beginning January 1, 2021. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

 

25

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

Change in Valuation Basis

As of December 31, 2019, the Company received IID approval on an approach for adoption of the NAIC 2020 VM-21 and related Risk Based Capital C3P2 changes documented in the VM- 21 2020 NAIC Valuation Manual: Requirements for Principle-Based Reserves for Variable Annuities. The Company elected to early adopt the VM-21 requirements for variable annuities effective December 31, 2019. The approved transition approach did not result in an adjustment to the Company’s historical statutory reporting or existing balances at the time of transition. The Company reported the increase to the VM-21 reserve of $1,218 as of December 31, 2019. As of the date of transition, the Company was fully compliant with the provisions of VM-21 and remains compliant as of December 31, 2021.

Correction of Error

During 2020, management identified an error in the Company’s prior year statutory Actuarial Guideline (AG) 38 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, Accounting Changes and Corrections of Errors with the income correction reflected in Other changes—net in the Statements of Changes in Capital and Surplus.

 

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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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:

 

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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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 were 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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

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.

 

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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, 2021 and 2020, respectively:

 

     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  

 

30

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

    December 31, 2020  
    Aggregate
  Fair Value  		     Admitted
Value		     (Level 1)     (Level 2)       (Level 3)    

Admitted assets

          

Cash equivalents and short-term investments, other than affiliates

   $ 1,522     $ 1,522     $ 1,030     $ 492     $ —   

Short-term notes receivable from affiliates

     149       149       —       149       —   

Bonds

     60,092       50,444       10,161       49,535       396   

Preferred stocks, other than affiliates

     109       105       —       109       —   

Common stocks, other than affiliates

     180       180       20       —       160   

Mortgage loans on real estate

     9,792       9,015       —       —       9,792   

Other invested assets

     555       474       —       534       21   

Derivative assets:

                

Options

     278       278       —       278       —   

Interest rate swaps

     2,544       2,531       —       2,544       —   

Currency swaps

     21       8       —       21       —   

Credit default swaps

     67       49       —       67       —   

Equity swaps

     88       88       —       88       —   

Interest rate futures

     10       10       10       —       —   

Equity futures

     9       9       9       —       —   

Derivative assets total

     3,017       2,973       19       2,998       —   

Policy loans

     2,037       2,037       —       2,037       —   

Securities lending reinvested collateral

     1,893       1,893       —       1,893       —   

Separate account assets

     119,784       119,677       112,719       7,065       —   

Liabilities

                

Investment contract liabilities

     17,556       15,294       —       257       17,299   

Derivative liabilities:

                

Options

     165       165       —       165       —   

Interest rate swaps

     2,853       2,806       —       2,853       —   

Currency swaps

     30       31       —       30       —   

Credit default swaps

     —       14       —       —       —   

Equity swaps

     472       472       —       472       —   

Interest rate futures

     1       1       1       —       —   

Equity futures

     4       4       4       —       —   

Derivative liabilities total

     3,525       3,493       5       3,520       —   

Dollar repurchase agreements

     967       967       —       967       —   

Payable for securities lending

     2,115       2,115       —       2,115       —   

Payable for derivative cash collateral

     640       640       —       640       —   

Separate account liabilities

     109,407       109,407       1       109,354       52   

 

31

Table of Contents

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, 2021 and 2020:

 

    2021  
      Level 1         Level 2         Level 3         Total    

Assets:

        

Bonds

        

Government

    $ —       $ 2       $ —       $ 2   

Industrial and miscellaneous

     —        41        7        48   
 

 

 

    

 

 

    

 

 

    

 

 

  

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

        

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   
 

 

 

    

 

 

    

 

 

    

 

 

  

 

32

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

     2020  
       Level 1          Level 2          Level 3          Total    

Assets:

            

Bonds

            

Industrial and miscellaneous

     $ —        $ 41        $ 7        $ 48   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      —         41         7         48   
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stock

            

Industrial and miscellaneous

      —         6         —         6   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total preferred stock

      —         6         —         6   
  

 

 

     

 

 

     

 

 

     

 

 

  

Common stock

            

Mutual funds

      6         —         —         6   

Industrial and miscellaneous

      14         —         160         174   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      20         —         160         180   
  

 

 

     

 

 

     

 

 

     

 

 

  

Cash equivalents and short-term investments

            

Money market mutual funds

      1,029         —         —         1,029   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash equivalents and short-term investments

      1,029         —         —         1,029   
  

 

 

     

 

 

     

 

 

     

 

 

  

Derivative assets

      18         2,894         —         2,912   

Separate account assets

      112,606         6,393         —         118,999   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

     $   113,673        $       9,334        $         167        $   123,174   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

     $ 5        $ 3,184        $ —        $ 3,189   

Separate account liabilities

      1         —         —         1   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

     $ 6        $ 3,184        $ —        $ 3,190   
  

 

 

     

 

 

     

 

 

     

 

 

  

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.

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.

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

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 2021 and 2020:

 

    

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   
  

 

 

  
     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

   

   

     Beginning
Balance at
  January 1, 2020  		      Transfers in
(Level 3)		      Transfers
out (Level 3)		      Total Gains
(Losses) Included
in Net income (a)		      Total Gains
 (Losses) Included 
in Surplus (b)		  
  

 

 

  

Bonds

               

Other

     $ 7       $ 2      $ —       $ —       $ (2)  

Preferred stock

      3         —         —         (17)        13   

Common stock

      128         —         2         (1)        16   

Separate account assets

      4         —         4         —         —   
  

 

 

  

Total

     $ 142       $ 2       $ 6       $ (18)      $ 27   
  

 

 

  
     Purchases      Issuances      Sales      Settlements      Ending Balance at
 December 31, 2020 		  
  

 

 

  

Bonds

               

Other

     $ —       $ —       $ —       $ —       $ 7   

Preferred stock

      2         —         —         1         —   

Common stock

      21         8         10         —         160   

Separate account assets

      1         —         —         1         —   
  

 

 

  

Total

     $ 24       $ 8       $ 10       $ 2       $ 167   
  

 

 

  

 

(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

 

34

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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, 2021 and 2020, the Company held no properties as held-for-sale, where fair value was less than its carrying value. As of December 31, 2021 and 2020, the Company held four properties as held-for sale, where carrying amount of $7 and $10, 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.

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, 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    
  

 

 

  

 

35

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

     Book Adjusted
  Carrying Value  		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		        Estimated Fair  
Value		  
  

 

 

  

December 31, 2020

            

Bonds:

            

United States Government and agencies

     $ 7,279      $ 2,349      $ 7      $ 9,621    

State, municipal and other government

      2,214        310        8        2,516    

Hybrid securities

      360        83        6        437    

Industrial and miscellaneous

      33,784        6,355        48        40,091    

Mortgage and other asset-backed securities

      6,807        679        59        7,427    
  

 

 

  

Total unaffiliated bonds

      50,444        9,776        128        60,092    

Unaffiliated preferred stocks

      105        11        7        109    
  

 

 

  
    $ 50,549      $ 9,787      $ 135      $ 60,201    
  

 

 

  
     Cost      Gross
  Unrealized  
Gains		      Gross
  Unrealized  
Losses		        Estimated Fair  
Value		  
  

 

 

  

Unaffiliated common stocks

     $ 136      $ 44      $ —      $ 180    
  

 

 

  

The carrying amount and estimated fair value of bonds at December 31, 2021 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.

 

     2021  
  

 

 

  
December 31:         Carrying Value                 Fair Value          
  

 

 

  

Due in one year or less

      $ 727      $ 739    

Due after one year through five years

      7,240        7,950    

Due after five years through ten years

      8,076        9,081    

Due after ten years

      27,681        32,744    
  

 

 

  
     43,724        50,514    

Mortgage and other asset-backed securities

      6,218        6,678    
  

 

 

  
     $ 49,942      $ 57,192    
  

 

 

  

 

36

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2021 and 2020 is as follows:

 

     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    
  

 

 

     

 

 

    

 

 

     

 

 

  
     2020  
  

 

 

  
         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

     $ —        $ —       $ 248        $ 7    

State, municipal and other government

      39         6        89         2    

Hybrid securities

      20         5        10         1    

Industrial and miscellaneous

      160         15        836         33    

Mortgage and other asset-backed securities

      150         18        742         41    
  

 

 

     

 

 

    

 

 

     

 

 

  

Total bonds

      369         44        1,925         84    
  

 

 

     

 

 

    

 

 

     

 

 

  

Preferred stocks-unaffiliated

      22         6        16         1    
  

 

 

     

 

 

    

 

 

     

 

 

  
    $ 391        $ 50       $ 1,941        $ 85    
  

 

 

     

 

 

    

 

 

     

 

 

  

During 2021, 2020 and 2019, respectively, there were $62, $0 and $7, 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 2021, 2020 and 2019, the Company recognized OTTI of $7, $4 and $6, respectively.

 

37

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

The following loan-backed and structured securities were held at December 31, 2021, 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    

  

 

  

02149QAD2        

      $                         13        $                         10        $ 3        $                         10        $                         10        3/31/2021      

026936AA2        

      20        20        —        20        20        3/31/2021      

61915RCJ3        

      8        7        1        7        8        3/31/2021      

02660TJB0        

      2        2        —        2        2        3/31/2021      

41161PPQ0        

      15        14        1        14        14        3/31/2021      

41161PXH1        

      1        1        —        1        1        3/31/2021      

01852FAC7        

      2        2        —        2        2        3/31/2021      

02149QAD2        

      9        2        7        2        7        9/30/2021      
        

 

 

           
           $                         12           
        

 

 

           

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, 2021 and 2020 is as follows:

 

     2021      2020  
  

 

 

     

 

 

  
     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

    $ 14      $ 44      $ 18      $ 61  

The aggregate related fair value of securities with unrealized losses

      299        1,942        150        765  

At December 31, 2021 and 2020, 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 180 and 116 securities with a carrying amount of $1,126 and $441, and an unrealized loss of $78 and $50. Of this portfolio, at December 31, 2021 and 2020, 82.5% and 50.1% were investment grade with associated unrealized losses of $56 and $17, respectively.

At December 31, 2021 and 2020, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 978 and 359 securities with a carrying amount of $7,114 and $2,026 and an unrealized loss of $161 and $85. Of this portfolio, at December 31, 2021 and 2020, 93.9% and 79.6% were investment grade with associated unrealized losses of $144 and $49, respectively.

At December 31, 2021 and 2020, there were no common stocks that have been in a continuous loss position for greater than or equal to twelve months.

 

38

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

At December 31, 2021 and 2020, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 13 and 5 securities with a cost of $3 and $0 and no unrealized losses, 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, 2021

         

Bond, amortized cost

      3       $ 9         $ 9    
  

 

 

     

 

 

     

 

 

  

Total

      3       $ 9         $ 9    
  

 

 

     

 

 

     

 

 

  

December 31, 2020

         

Bond, amortized cost

      2       $ 13         $ 13    

Loan-backed and structured securities, amortized cost

      4        10          6    
  

 

 

     

 

 

     

 

 

  

Total

              6               $             23         $             19    
  

 

 

     

 

 

     

 

 

  

The Company did not have any offsetting assets and liabilities at December 31, 2021. The table below presents the Company’s gross and net receivable for securities and borrowed money financial statement line items that were subject to offsetting at December 31, 2020:

 

December 31, 2020    Gross Amount
Recognized		      Amount Offset      Net Amount
Presented on
Financial
Statements		  
  

 

 

  

Assets:

         

Receivables for securities

    $ 3      $ —      $ 3  

Liabilities:

         

Borrowed money

    $ 967      $ —      $ 967  

During 2021 and 2020, respectively, the Company sold, redeemed or otherwise disposed of 153 and 108 securities as a result of a callable feature which generated investment income of $100 and $25 as a result of a prepayment penalty and/or acceleration fee.

 

39

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

 

     Year Ended December 31  
             2021                     2020                     2019          
  

 

 

  

Proceeds

     $ 10,570     $ 8,747     $ 16,076    
  

 

 

  

Gross realized gains

     $ 437     $ 232     $ 159    

Gross realized losses

      (108 )      (37 )      (56)   
  

 

 

  

Net realized capital gains (losses)

     $ 329     $ 195     $ 103    
  

 

 

  

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, 2021, 2020 and 2019 of $15, $161 and $39, respectively.

At December 31, 2021 and 2020, the Company had no investments in restructured securities.

Mortgage Loans

The credit quality of mortgage loans by type of property for the years ended December 31, 2021 and 2020 were as follows:

 

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   
  

 

 

  
December 31, 2020                     
     Farm      Commercial      Total  
  

 

 

  

AAA - AA

     $             7      $             4,612      $             4,619   

A

      41        3,491        3,532   

BBB

      5        767        772   

BB

      9        82        91   
  

 

 

  
    $ 62      $ 8,952      $ 9,014   
  

 

 

  

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

 

40

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 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%. During 2020, the Company issued mortgage loans with a maximum interest rate of 6.50% and a minimum interest rate of 2.92% 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, 2020 at the time of origination was 79%.

During 2021, the Company issued mortgage loans with a maximum interest rate of 4.45% and a minimum interest rate of 4.45% for agricultural loans. During 2020, the Company issued mortgage loans with a maximum interest rate of 3.80% and a minimum interest rate of 3.80% for agricultural loans.

During 2021 and 2020, 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, 2021 and 2020:

 

            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  

 

41

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

            Residential         Commercial          
          Farm               All Other       All Other             Total          

December 31, 2020

        

Recorded Investment (All)

        

Current

   $ 62     $ —     $ 8,846     $ 8,908  

30-59 Days Past Due

     —       1       —       1  

180+ Days Past Due

     —       —       106       106  

Participant or Co-lender in Mortgage Loan Agreement

        

Recorded Investment

   $ 42     $ —     $ 911     $ 953  

At December 31, 2021, the Company held no mortgage loans that were non-income producing for the previous 180 days. At December 31, 2020, multiple mortgage loans with a carrying value of $106 were non-income producing for the previous 180 days. There was no accrued interest related to these mortgage loans at December 31, 2021 and 2020. 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, 2021 and 2020, there were no taxes, assessments and other amounts advanced and not included in the mortgage loan total.

At December 31, 2021 and 2020, 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, 2021 and 2020, 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. The average recorded investment in impaired loans during 2021 and 2020 was $0 and $3, respectively.

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  
             2021             2020       2019          
  

 

 

  

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, 2021 and 2020, 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

 

42

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

basis. For the years ended December 31, 2021, 2020 and 2019, the Company has recognized no interest income on impaired loans or on a cash basis.

At December 31, 2021 and 2020, the Company held a mortgage loan loss reserve in the AVR of $97 and $116, respectively.

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  
        2021             2020                      2021             2020      

Pacific

     30   %       29   %       

Apartment

     53   %       48   %  

South Atlantic

     21         23         

Office

     17         17    

Middle Atlantic

     13         13         

Retail

     15         16    

E. North Central

     9         9         

Industrial

     13         14    

W. South Central

     8         9         

Medical

     1         1    

Mountain

     8         7         

Agricultural

     1         1    

W. North Central

     6         6         

Other

     —         3    

E. South Central

     3         3             

New England

     2         1             

At December 31, 2021, 2020 and 2019, the Company had mortgage loans with a total net admitted asset value of $14, $14 and $21, 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, 2021, 2020 and 2019 related to such restructurings. At December 31, 2021 and 2020, 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 $9, $1 and $5 were taken on real estate in 2021, 2020 and 2019, 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, 2021.

As of December 31, 2021, there were seven properties classified as held for sale. As of December 31, 2020, there were eight properties classified as held for sale. The Company is working with an external commercial real estate advisor firm to actively market the properties and negotiate with potential buyers. During 2021, one property classified as held for sale was disposed. During 2020, 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.

 

43

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 2021 and 2020 resulting in net realized gains of $0 and $3, respectively. These gains and losses were included in net realized capital gains (losses) within the Statements of Operations.

The carrying value of the Company’s real estate assets at December 31, 2021 and 2020 was as follows:

 

     2021      2020  
  

 

 

  

Home office properties

       $                45        $                41   

Properties held for sale

      7        15   
  

 

 

  
      $                52        $                56   
  

 

 

  

Accumulated depreciation on real estate at December 31, 2021 and 2020, was $29 and $24, respectively.

Other Invested Assets

The Company recorded impairments of $13, $19 and $5 throughout years 2021, 2020 and 2019, 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, 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.

At December 31, 2020, the Company had ownership interests in sixty-four LIHTC investments with a carrying value of $141. The remaining years of unexpired tax credits ranged from one to thirteen, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to seventeen years. The amount of contingent equity commitments expected to be paid during the years 2021 to 2029 is $30. Tax credits recognized in 2020 was $119 and other benefits recognized in 2020 were $9. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

 

44

Table of Contents

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, 2021 and 2020:

 

            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  
     

 

 

  
            December 31, 2020  
Description of State Transferable and Non-transferable Tax Credits    State          Carrying Value      Unused Amount  

Low-Income Housing Tax Credits

      MA           $ 1      $ 5  

Economic Redevelopment and Growth Tax Credits

      NJ            6        37  
     

 

 

  

Total

        $ 7      $ 42  
     

 

 

  

*The unused amount reflects credits that we deem will be realizable in the period 2021-2030.

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, 2021 and 2020 was as follows:

 

     2021     2020  
  

 

 

  

Fair value - positive

      $                2,171       $                976  

Fair value - negative

      (2,988 )      (1,557 ) 

At December 31, 2021, 2020 and 2019, the Company has recorded unrealized gains (losses) of ($173), ($334) and ($266), respectively, for the component of derivative instruments utilized for

 

45

Table of Contents

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. The Company did not recognize any unrealized gains or losses during 2021, 2020 and 2019 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, 2021 and 2020, 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, 2021 and 2020, the Company has accumulated deferred gains in the amount of $0 and $1, respectively, 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 2022.

Summary of realized gains (losses) by derivative type for the years ended December 31, 2021, 2020 and 2019:

 

     2021      2020      2019  
  

 

 

  

Options:

         

Calls

     $                   6       $               (805)      $            (15)  

Puts

      (6)        (299)        —   

Collars

      —         (62)        —   
  

 

 

  

Total options

     $                 —       $            (1,166)      $            (15)  
  

 

 

  

Swaps:

         

Interest rate

     $                 87       $                   —       $              95   

Credit

      —         (6)        (3)  

Total return

      (1,752)        (851)        (621)  
  

 

 

  

Total swaps

     $           (1,665)      $                (857)      $           (529)  
  

 

 

  

Futures - net positions

      110         480         752   
  

 

 

  

Total realized gains (losses)

     $           (1,555)      $             (1,543)      $             208   
  

 

 

  

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, 2021 and 2020:

 

             Asset(1)                     Liability(1)          
  

 

 

    

 

 

  
         2021              2020             2021             2020      
  

 

 

    

 

 

  

Derivative component of RSATs

          

Credit default swaps

    $ 67      $ 34     $ (8 )    $ (6 ) 

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.

 

46

Table of Contents

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, 2021 and 2020:

 

            Asset(1)                     Liability(1)          
 

 

 

    

 

 

  
          2021               2020               2021               2020      
 

 

 

    

 

 

  

Derivative component of RSATs

        

Credit default swaps

    $ 69     $ 67      $ (7)     $ (10)  

Interest rate swaps

     7       6       —        —   
 

 

 

    

 

 

  

Total

    $ 76     $ 73      $ (7)     $ (10)  
 

 

 

    

 

 

  

 

(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, 2021, 2020 and 2019:

 

          2021                 2020                 2019        
 

 

 

  

Derivative component of RSATs

      

Credit default swaps

    $ —     $ (6)     $ (3)  

Interest rate swaps

     —       —        —   
 

 

 

  

Total

    $ —     $ (6)     $ (3)  
 

 

 

  

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.

 

47

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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, 2021 and 2020:

 

          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.

 

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(Dollars in Millions, Except per Share amounts)

 

          2020  
   

 

 

  

            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       $ 779        3.4   

Credit default swaps referencing indices

       —        44        32.6  
   

 

 

    

 

 

    

Subtotal

       15         823        5.0  
   

 

 

    

 

 

    

BBB

     2            

Single name credit default swaps (3)

       36        1,870        3.5  

Credit default swaps referencing indices

       24        1,741        2.9  
   

 

 

    

 

 

    

Subtotal

       60        3,611        3.2  
   

 

 

    

 

 

    

BB

     3            

Single name credit default swaps (3)

       3        113        1.9  
   

 

 

    

 

 

    

Subtotal

       3        113        1.9  
   

 

 

    

 

 

    

B

     4            

Single name credit default swaps (3)

       (1)       50        2.2  
   

 

 

    

 

 

    

Subtotal

       (1)       50        2.2  
   

 

 

    

 

 

    

Total

      $ 77       $ 4,597        3.5  
   

 

 

    

 

 

    

 

(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, 2021, there were not any potential future recoveries available to offset the $4,637 from the table above. At December 31, 2020, there were not any potential future recoveries available to offset the $4,597 from the table above.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

At December 31, 2021 and 2020, 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              
  

 

 

    

 

 

  
     2021     2020     2021      2020  
  

 

 

    

 

 

  

Derivative assets:

          

Credit default swaps

    $ 4,020     $ 3,813     $ 69      $ 67   

Currency swaps

      641       214       34        21  

Equity futures

      —       —       5        9  

Equity swaps

      1,294       969       17        88  

Interest rate futures

      —       —       —        10  

Interest rate swaps

      81       2,543       11        100  

Options

      3,724       9,449       188        278  

Derivative liabilities:

          

Credit default swaps

      1,411       1,218       3        —  

Currency swaps

      664       373       6        30  

Equity futures

      —       —       4        4  

Equity swaps

      6,885       8,158       235        472  

Interest rate futures

      —       —       —        1  

Interest rate swaps

      6,677       8,233       684        480  

Options

      (1,724 )      (4,960 )      114        165  

*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 entails

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

Scheduled amortization for SSAP No. 108 derivatives as of December 31, 2021 is as follows:

 

Amortization Year       Deferred Assets        Deferred Liabilities   

2022

    $ (37 )     $ 10   

2023

     (37 )       10   

2024

     (37 )       10   

2025

     (37 )       10   

2026

     (37 )       10   

2027

     (37 )       10   

2028

     (37 )       10   

2029

     (37 )       10   

2030

     (33 )       9   

2031

     (13 )       3   

Total

    $ (342 )     $ 92   
                

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, 2020

     $ 195   

2. Amortization

      191   

3. Deferred Recognition

      149   
  

 

 

  

4. Balance at December 31, 2020 [1-(2+3)]

     $ (145)  

5. Amortization

      (14)  

6. Deferred Recognition

      119   
  

 

 

  

7. Balance at December 31, 2021 [4-(5+6)]

     $ (250)  
  

 

 

  

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

 

           2021                  2020        
  

 

 

  

Amortized cost

     $ 1       $ 1   

Fair value

      (95)        (2)  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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

 

         
December 31, 2020                            
     Net
    Investment    
Income		        Realized Gain  
(Loss)		      Unrealized
  Gain (Loss)  		      Total*          
  

 

 

  

Derivative performance

    $ —       $ 1,819       $ (80)      $ 1,739   

SSAP No. 108 Adjustments                

            
Portion of the derivative performance attributed to natural offset      37         (1,417)        (170)        (1,550)  

Deferred

      (37)        (402)        250         (189)  

*Totals shown are pre-tax

 

         

 

             Year Ended December 31          
     2021      2020  
  

 

 

  

Prior year fair value of hedged item

     $ (3,778)      $ (1,395)  

Current year fair value of hedged item

      (3,026)        (3,021)  
  

 

 

  

Change in fair value attributable to interest rates

     $ 752       $ (1,626)  
  

 

 

  
Portion of the fair value change attributed to the hedged risk     $ 753       $ (1,626)  
  

 

 

  

 

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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, 2021 and 2020, respectively:

 

     Gross Restricted (Admitted & Nonadmitted)  
     2021  
  

 

 

  
 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

      $ 2,073      $ —      $ —      $ —      $ 2,073   

 Subject to repurchase agreements

      187        —        —        —        187   
 Subject to dollar repurchase agreements      878        —        —        —        878   
 FHLB capital stock      130        —        —        —        130   
 On deposit with states      38        —        —        —        38   
 Pledged as collateral to FHLB (including assets backing funding agreements)      4,226        —        —        —        4,226   
 Pledged as collateral not captured in other categories      1,818        —        —        —        1,818   
 Other restricted assets      1,392        —        —        —        1,392   
  

 

 

  

 Total restricted assets

      $   10,742      $ —      $ —      $ —      $ 10,742   
  

 

 

  

 

     Gross (Admitted & Nonadmitted) Restricted      Percentage  
  

 

 

  
 Restricted Asset Category    Total From
Prior Year
(2020)		      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      $ 2,115      $ (42 )    $ —      $ 2,073        1.02 %      1.02 % 
 Subject to repurchase agreements      200        (13 )      —        187        0.09 %      0.09 % 
 Subject to dollar repurchase agreements      958        (80 )      —        878        0.43 %      0.43 % 
 FHLB capital stock      111        19       —        130        0.06 %      0.06 % 
 On deposit with states      44        (6 )      —        38        0.02 %      0.02 % 

 Pledged as collateral to FHLB (including assets backing funding

 agreements)

      3,818        408       —        4,226        2.08 %      2.08 % 
 Pledged as collateral not captured in other categories      1,399        419       —        1,818        0.89 %      0.90 % 
 Other restricted assets      1,689        (297 )      —        1,392        0.68 %      0.69 % 
  

 

 

  

 Total restricted assets

      $   10,334      $ 408     $ —      $ 10,742        5.27 %      5.29 % 
  

 

 

  

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

 

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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, 2021 and 2020, respectively:

 

     Gross Restricted (Admitted & Nonadmitted)  
     2021  
  

 

 

  
 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

      $ 1,800      $ —      $ —      $ —      $         1,800  

 Secured funding agreements

      17        —        —        —        17  

 AMBAC

      1        —        —        —        1  
  

 

 

  

 Total

      $ 1,818      $ —      $ —      $ —      $ 1,818  
  

 

 

  

 

     Gross (Admitted & Nonadmitted) Restricted      Percentage  
  

 

 

  
 Description of Assets    Total From
Prior Year
(2020)		      Increase/
(Decrease)		     Total
Nonadmitted
Restricted		      Total
Admitted
Restricted		      Gross
(Admitted &
Nonadmitted)
Restricted
to Total
Assets		      Admitted
Restricted to
Total
Admitted
Assets		  

 

  

 Derivatives

      $ 1,376      $ 424     $ —      $ 1,800        0.89%        0.89%  

 Secured funding agreements

      21        (4 )      —        17        0.01%        0.01%  

 AMBAC

      2        (1 )      —        1        0.00%        0.00%  
  

 

 

  

 Total

      $ 1,399      $ 419     $ —      $ 1,818        0.90%        0.90%  
  

 

 

  

 

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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, 2021 and 2020:

 

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%  

 

2020  
Collateral Assets      Carrying Value        Fair Value     

% of CV to
Total Assets
(Admitted

and
Nonadmitted)

     

% of CV to
Total

Admitted
Assets

  

Cash

     $ 1,574      $ 1,574        2.00  %        2.01  %  

Securities lending collateral assets

      2,115        2,115        2.68              2.70        

Other

      33        33        0.04              0.04        
  

 

 

  

Total collateral assets

     $ 3,722      $ 3,722        4.72  %        4.75  %  
  

 

 

  

 

         Amount            % of Liability  
to Total
Liabilities		  
  

 

 

  

Recognized obligation to return collateral asset

     $ 3,724        5.29  %  

 

55

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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  
     2021      2020      2019  

Income:

         

Bonds

    $ 2,151      $ 2,025      $ 1,992    

Preferred stocks

      4        9        8  

Common stocks

      228        57        235  

Mortgage loans on real estate

      483        378        346  

Real estate

      25        40        55  

Policy loans

      112        116        117  

Cash, cash equivalents and short-term investments

      1        24        80  

Derivatives

      89        606        42  

Other invested assets

      155        214        64  
     

Gross investment income

      3,248        3,469        2,939  

Less: investment expenses

      167        210        283  

Net investment income before amortization of IMR

      3,081        3,259        2,656  

Amortization of IMR

      110        102        109  
     

Net investment income

    $           3,191      $           3,361      $           2,765  
                         

 

Realized Capital Gains (Losses)

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

 

     Realized  
     Year Ended December 31  
     2021     2020     2019  

Bonds

    $               311     $             53     $               58    

Preferred stocks

      2       (20 )      2  

Common stocks

      11       (13 )      25  

Mortgage loans on real estate

      —       (1 )      —  

Real estate

      (9 )      257       30  

Cash, cash equivalents and short-term investments

      —       (1 )      —  

Derivatives

      (2,474 )      249       519  

Variable annuity reserve hedge offset

      15       (192 )      (160 ) 

Other invested assets

      488       43       95  

Change in realized capital gains (losses), before taxes

      (1,656 )      375       569  

Federal income tax effect

      (122 )      (128 )      (52 ) 

Transfer from (to) interest maintenance reserve

      (146 )      (134 )      (48 ) 
     

Net realized capital gains (losses) on investments

    $ (1,924 )    $ 113     $ 469  
                       
                       

 

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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  
     2021     2020     2019  

Bonds

    $ 150     $ 53     $ 74   

Preferred stocks

      15       9       (9 ) 

Common stocks

      2       22       5  

Affiliated entities

      (46 )      182       467  

Derivatives

      262       (364 )      (787 ) 

Other invested assets

      139       3       67  

Change in unrealized capital gains (losses), before taxes

      522       (95 )      (183 ) 

Taxes on unrealized capital gains (losses)

      (72 )      (31 )      (93 ) 
     

Change in unrealized capital gains (losses), net of tax

    $               450     $               (126 )    $               (276 ) 
                       

 

6.

Premium and Annuity Considerations Deferred and Uncollected

Deferred and uncollected life premium and annuity considerations, net of reinsurance, at December 31, 2021 and 2020 were as follows:

 

     2021      2020  
             Gross                Net of Loading                Gross                Net of Loading    

Life and annuity:

            

Ordinary first-year business

    $ 1      $ —      $ 1      $ —   

Ordinary renewal business

      154        126        206        172  

Group life direct business

      16        11        23        13  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $             171      $             137      $             230      $             185  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

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(Dollars in Millions, Except per Share amounts)

 

7.

Policy and Contract Attributes

Insurance Liabilities

Policy reserves, deposit-type contracts and policy claims at December 31, 2021 and 2020 were as follows:

 

     Year Ended December 31  
     2021      2020  

Life insurance reserves

    $ 26,749      $ 25,805  

Annuity reserves and supplementary contracts with life contingencies

      18,289        18,328  

Accident and health reserves (including long term care)

      6,945        6,833  
   

Total policy reserves

    $ 51,983      $ 50,966  

Deposit-type contracts

      824        946  

Policy claims

      1,177        1,257  

Total policy reserves, deposit-type contracts and claim liabilities

    $             53,984      $             53,169  
                 

 

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 2.00 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, mean reserves are determined by computing the regular mean reserve for the plan at the true age and holding, in addition, one-half (1/2) 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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

As of December 31, 2021 and 2020, the Company had insurance in force aggregating $48,379 and $52,537, 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 $1,549 and $1,586 to cover these deficiencies as of December 31, 2021 and 2020, 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, 2021 and 2020.

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.

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 1.00 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.

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.

 

59

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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, 2021 and 2020, 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.

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.

 

60

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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, 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   
  

 

 

          

 

 

  
     Unpaid Claims
Liability Beginning
of Year		     

Claims

Incurred

    

Claims

Paid

     

Unpaid Claims
Liability End of

Year

  

Year ended December 31, 2020

           

2020

     $ —       $ 1,105      $ 410       $ 695   

2019 and prior

      2,009        (97 )      612        1,300   
  

 

 

  
     2,009       $             1,008      $             1,022        1,995   
     

 

 

     

Active life reserve

     $ 5,136            $ 5,342   
  

 

 

          

 

 

  

Total accident and health reserves

     $                     7,145            $                     7,337   
  

 

 

          

 

 

  

The change in the Company’s unpaid claims reserve was ($165) and ($97) for the years ended December 31, 2021 and 2020, respectively, for health claims that were incurred prior to those balance sheets dates. The change in 2021 and 2020 was due to significantly better than expected experience primarily due to reduced medical claims and accidental deaths.

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, 2021

           

2021

     $ —      $ 22     $ 9      $ 13  

2020 and prior

      43        (2 )      17        24  
  

 

 

  
    $ 43      $ 20     $ 26      $ 37  
  

 

 

  

Year ended December 31, 2020

           

2020

     $ —      $ 37     $ 22      $ 15  

2019 and prior

      44        (14 )      2        28  
  

 

 

  
    $                 44      $                 23     $                 24      $                 43  
  

 

 

  

The Company increased the claim adjustment expense provision for insured events of prior years during 2021.

 

61

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

Included in the liability for deposit-type contracts at December 31, 2021 and 2020 are approximately $11 and $12, 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.

 

62

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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

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 annuities reserves

      $     9,081      $             7      $         75,066      $    84,154      
  

 

 

     

 

63

Table of Contents

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 annuities reserves

      9,551        20        37,486        47,057         100  %  
              

 

 

  

Less reinsurance ceded

      343        —        —        343      
  

 

 

     

Net group annuities 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      
  

 

 

     

 

64

Table of Contents

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    
  

 

 

  

 

    

December 31

2020

  
  

 

 

  
Individual Annuities:    General
Account		      Separate
Account
with
Guarantees		     

Separate
Account
Non-

Guaranteed

      Total      Percent  
  

 

 

  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

      $ 466      $ 7      $ —      $ 473             1  %  

At book value less surrender charge of 5% or more

      1,411        —        —        1,411         2    

At fair value

      4        —        74,045        74,049         83      
  

 

 

  

Total with adjustment or at fair value

      1,881        7        74,045        75,933         86      

At book value without adjustment (minimal or no charge or adjustment)

      8,050        —        —        8,050         9    

Not subject to discretionary withdrawal provision

      3,943        —        497        4,440         5    
  

 

 

  

Total individual annuity reserves

      13,874        7        74,542        88,423         100  %  
              

 

 

  

Less reinsurance ceded

      3,027        —        —        3,027      
  

 

 

     

Net individual annuity reserves

      $   10,847      $ 7      $ 74,542      $   85,396      
  

 

 

     

 

65

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

     December 31  
     2020  
  

 

 

  
Group Annuities:    General
Account		      Separate
Account
with
Guarantees		     

Separate
Account
Non-

Guaranteed

      Total      Percent  
  

 

 

  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

      $ 1,886      $ 23      $ —      $ 1,909            4  %  

At book value less surrender charge of 5% or more

      21        —        —        21        —        

At fair value

      —        —        34,723        34,723        82        
  

 

 

  

Total with adjustment or at fair value

      1,907        23        34,723        36,653        86        

At book value without adjustment (minimal or no charge or adjustment)

      4,066        —        —        4,066        9        

Not subject to discretionary withdrawal provision

      2,124        —        42        2,166        5        
  

 

 

  

Total group annuity reserves

      8,097        23        34,765        42,885        100  %  
              

 

 

  

Less reinsurance ceded

      358        —        —        358     
  

 

 

  

Net group annuity reserves

      $     7,739      $ 23      $ 34,765      $    42,527     
  

 

 

     
     December 31  
     2020  
  

 

 

  
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)

      2        —        —        2        —        

Not subject to discretionary withdrawal provision

      691        52        18        761        99        
  

 

 

  

Total deposit-type contracts

      698        52        18        768        100  %  
              

 

 

  

Less reinsurance ceded

      10        —        —        10     
  

 

 

  

Net deposit-type contracts

      $ 688      $ 52      $ 18      $ 758     
  

 

 

     

 

66

Table of Contents

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)

      $ 17,423  

Exhibit 5, Supp contracts with life contingencies section, total (net)

      906  

Exhibit 7, Deposit-type contracts, net balance at the end of the current year after reinsurance

      945  
  

 

 

  

Subtotal

      19,274  

Separate Accounts Annual Statement:

   

Exhibit 3, Annuities section, total

      108,841  

Exhibit 3, Supp contracts with life contingencies section, total

      496  

Other contract deposit funds

      70  
  

 

 

  

Subtotal

      109,407  
  

 

 

  

Combined total

      $  128,681  
  

 

 

  

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

 

     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   
  

 

 

  
  

 

 

  

 

67

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

     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   
  

 

 

  
  

 

 

  

 

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   
  

 

 

  

 

68

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

    December 31  
    2020  
 

 

 

  
    General Account  
 

 

 

  
      Account Value     Cash Value     Reserve          
 

 

 

  

Subject to discretionary withdrawal, surrender values, or policy loans:

      

Term policies with cash value

    $ 254     $ 254     $ 389   

Universal life

     9,936       9,515       11,720   

Universal life with secondary guarantees

     5,153       5,043       10,712   

Indexed universal life with secondary guarantees

     4,663       3,067       4,301   

Other permanent cash value life insurance

     4,573       4,573       7,046   

Variable universal life

     661       644       1,529   

Not subject to discretionary withdrawal or no cash values

      

Term policies without cash value

     —       —       8,349   

Accidental death benefits

     —       —       50   

Disability- active lives

     —       —       49   

Disability- disabled lives

     —       —       167   

Miscellaneous reserves

     —       —       1,921   
 

 

 

  

Total (gross)

     25,240       23,096       46,233   

Reinsurance ceded

     4,203       4,203       20,428   
 

 

 

  

Total (net)

    $ 21,037     $ 18,893     $ 25,805   
 

 

 

  

 

    December 31  
    2020  
 

 

 

  
        Separate Account - Guaranteed  
 

 

 

  
        Account Value     Cash Value     Reserve          
 

 

 

  

Subject to discretionary withdrawal, surrender values, or policy loans:

      

Variable universal life

    $ 665     $ 665     $ 665  
 

 

 

  

Total (gross)

     665       665       665  
 

 

 

  

Total (net)

    $ 665     $ 665     $ 665  
 

 

 

  
    December 31  
    2020  
 

 

 

  
        Separate Account - Nonguaranteed  
 

 

 

  
        Account Value     Cash Value     Reserve          
 

 

 

  

Subject to discretionary withdrawal, surrender values, or policy loans:

      

Variable universal life

    $ 8,292     $ 8,274     $ 9,689  
 

 

 

  

Total (gross)

     8,292       8,274       9,689  
 

 

 

  

Total (net)

    $ 8,292     $ 8,274     $ 9,689  
 

 

 

  

 

69

Table of Contents

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)

     $ 24,725   

Exhibit 5, Accidental death benefits section total (net)

      23   

Exhibit 5, Disability - active lives section, total (net)

      23   

Exhibit 5, Disability - disabled lives section, total (net)

      146   

Exhibit 5, Miscellaneous reserves section, total (net)

      888   
  

 

 

  

Subtotal

      25,805   

Separate Accounts Annual Statement:

   

Exhibit 3, Life insurance section, total

      10,354   
  

 

 

  

Subtotal

      10,354   
  

 

 

  

Combined total

    $ 36,159   
  

 

 

  

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.

 

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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, 2021, 2020 and 2019 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, 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   
 

 

 

  

 

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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   
 

 

 

  

 

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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, 2019

     $ —      $ —      $ 12      $ 9,623      $ 9,635   
  

 

 

  

Reserves for separate accounts as of December 31, 2019 with assets at:

               

Fair value

     $ —      $ 65      $ 18      $ 109,833      $ 109,916   

Amortized cost

      —        653        —        —        653   
  

 

 

  

Total as of December 31, 2019

     $ —      $ 718      $ 18      $ 109,833      $ 110,569   
  

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2019:

               

With fair value adjustment

     $ —      $ 35      $ —      $ —      $ 35   

At fair value

      —        —        —        109,384        109,384   

At book value without fair value adjustment and with current surrender charge of less than 5%

      —        653        —        —        653   
  

 

 

  

Subtotal

      —        688        —        109,384        110,072   

Not subject to discretionary withdrawal

      —        30        18        449        497   
  

 

 

  

Total separate account reserve liabilities at December 31, 2019

     $            —      $             718      $               18      $     109,833      $     110,569   
  

 

 

  

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

 

     Year Ended December 31  
     2021     2020     2019  
  

 

 

  

Transfer as reported in the Summary of Operations of the separate accounts statement:

       

Transfers to separate accounts

     $            8,164     $            9,484     $          10,116   

Transfers from separate accounts

      (17,029 )      (14,305 )      (15,216)  
  

 

 

  

Net transfers from separate accounts

      (8,865 )      (4,821 )      (5,100)  

Miscellaneous reconciling adjustments

      (16 )      (29 )      (30)  
  

 

 

  

Net transfers as reported in the Summary of Operations of the life, accident and health annual statement

     $ (8,881 )    $ (4,850 )    $ (5,130)  
  

 

 

  

 

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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, 2021 and 2020, the Company’s separate account statement included legally insulated assets of $126,074 and $121,803, respectively. The assets legally insulated from general account claims at December 31, 2021 and 2020 are attributed to the following products:

 

     2021      2020  
  

 

 

  

Group annuities

     $ 35,216      $ 32,435   

Variable annuities

      78,162        77,850   

Fixed universal life

      700        696   

Variable universal life

      10,366        9,257   

Variable life

      1,526        1,492   

Modified separate accounts

      79        50   

Registered market value annuity product - SPL

      13        12   

WRL asset accumulator

      12        11   
  

 

 

  

Total separate account assets

     $        126,074      $        121,803   
  

 

 

  

At December 31, 2021 and 2020, the Company held separate account assets not legally insulated from the general account in the amount of $14 and $17, respectively, related to variable annuity products.

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 $579, $565, $552, $550 and $538, to the general account in 2021, 2020, 2019, 2018 and 2017, respectively. During the years ended December 31, 2021, 2020, 2019, 2018 and 2017 the general account of the Company had paid $45, $75, $75, $69 and $70 respectively, toward separate account guarantees.

At December 31, 2021 and 2020, the Company reported guaranteed separate account assets at amortized cost in the amount of $674 and $678, respectively, based upon the prescribed practice granted by the State of Iowa as described in Note 2. These assets had a fair value of $748 and $786 at December 31, 2021 and 2020, respectively, which would have resulted in an unrealized gain/(loss) of $74 and $107, respectively, had these assets been reported at fair value.

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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

8.   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  
     2021     2020     2019  
  

 

 

  

Direct premiums

     $ 17,591     $ 19,191     $ 17,922   

Reinsurance assumed - non affiliates

      1,272       1,248       1,279   

Reinsurance assumed - affiliates

      (1 )      2       215   

Reinsurance ceded - non affiliates

      (3,594 )      (2,612 )      (2,540)  

Reinsurance ceded - affiliates

      (786 )      (1,106 )      (1,168)  
  

 

 

  

Net premiums earned

     $          14,482     $          16,723     $          15,708   
  

 

 

  

The Company received reinsurance recoveries in the amount of $3,824, $4,316 and $4,468, during 2021, 2020 and 2019, respectively. At December 31, 2021 and 2020, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $1,053 and $939. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2021 and 2020 of $36,616 and $36,764, respectively, of which $13,078 and $13,916 were ceded to affiliates.

During 2021, 2020 and 2019, amortization of deferred gains associated with previously transacted reinsurance agreements was released into income in the amount of $195 ($127 after tax), $274 ($179 after tax) and $213 ($139 after tax), respectively.

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 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.

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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.

On January 29, 2020, Senior Health Insurance Company of Pennsylvania (SHIP) was placed in rehabilitation by order of the Commonwealth Court of Pennsylvania. The Company worked with the Receiver on a proposal to recapture the business throughout 2020 and a proposal was approved on December 29, 2020. The agreement resulted in the Company recapturing all business previously ceded to SHIP and receiving $310 of assets held in trust while legal proceedings were underway. The assets in excess of the ultimate settlement of the liabilities will be returned to the receiver. The Company will also assume responsibility for administration of the business. No gain or loss was recognized as part of the recapture.

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.

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.

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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 January 1, 2019, the Company recaptured term insurance business of a reinsurance treaty with an affiliate, LIICA Re II, Inc. The universal life with secondary guarantees remained reinsured under the treaty. The Company received cash of $15, recaptured $68 in policyholder reserves, and net due, deferred and advance premiums of $2. The transaction resulted in a pre-tax loss of $51, 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 cession of this business to LIICA Re II in the amount of $14 with a corresponding charge to unassigned surplus.

Effective July 1, 2019, the Company recaptured indexed universal life and variable universal life insurance business from an affiliate, WFG Reinsurance Limited. The Company paid cash of $39, recaptured $2 in policyholder reserves, and policy loans of $1. The transaction resulted in a pre-tax loss of $40 which was partially offset by a commission expense allowance of $6 as unamortized amounts previously deferred to unassigned surplus related to the original inforce reinsurance transactions were released.

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, 2021 financial statements. The impact was a $109 charge reported in the Statements of Operations.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

9.   Income Taxes

The net deferred income tax asset at December 31, 2021 and 2020 and the change from the prior year are comprised of the following components:

 

     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   
  

 

 

  
     December 31, 2020  
     Ordinary     Capital     Total  
  

 

 

  

Gross Deferred Tax Assets

     $ 1,923     $ 243     $ 2,166   

Statutory Valuation Allowance Adjustment

      —       —       —   
  

 

 

  

Adjusted Gross Deferred Tax Assets

      1,923       243       2,166   

Deferred Tax Assets Nonadmitted

      226       —       226   
  

 

 

  

Subtotal (Net Deferred Tax Assets)

      1,697       243       1,940   

Deferred Tax Liabilities

      698       430       1,128   
  

 

 

  

Net Admitted Deferred Tax Assets (Liabilities)

     $ 999     $ (187 )    $ 812   
  

 

 

  
           Change        
     Ordinary     Capital     Total  
  

 

 

  

Gross Deferred Tax Assets

     $ (8 )    $ (62 )    $ (70)  

Statutory Valuation Allowance Adjustment

      11       —       11   
  

 

 

  

Adjusted Gross Deferred Tax Assets

      (19 )      (62 )      (81)  

Deferred Tax Assets Nonadmitted

      38       —       38   
  

 

 

  

Subtotal (Net Deferred Tax Assets)

      (57 )      (62 )      (119)  

Deferred Tax Liabilities

      3       (135 )      (132)  
  

 

 

  

Net Admitted Deferred Tax Assets (Liabilities)

     $ (60 )    $ 73     $ 13   
  

 

 

  

 

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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         
             2021                      2020                      Change          
  

 

 

  

Deferred Tax Assets:

         

Ordinary

         

Policyholder reserves

     $ 745      $ 824      $ (79)  

Investments

      208        227        (19)  

Deferred acquisition costs

      574        534        40   

Policyholder dividends accrual

      4        3        1   

Compensation and benefits accrual

      40        34        6   

Receivables - nonadmitted

      37        32        5   

Net operating loss carry-forward

      50        —        50   

Tax credit carry-forward

      166        144        22   

Contingent experience rate refunds

      22        32        (10)  

Bad debt allowance

      23        17        6   

Litigation reserve

      19        36        (17)  

Other (including items <5% of total ordinary tax assets)

      27        40        (13)  
  

 

 

  

Subtotal

      1,915        1,923        (8)  

Statutory valuation allowance adjustment

      11        —        11   

Nonadmitted

      264        226        38   
  

 

 

  

Admitted ordinary deferred tax assets

      1,640        1,697        (57)  

Capital

         

Investments

      181        243        (62)  
  

 

 

  

Subtotal

      181        243        (62)  

Statutory valuation allowance adjustment

      —        —        —   

Nonadmitted

      —        —        —   
  

 

 

  

Admitted capital deferred tax assets

      181        243        (62)  
  

 

 

  

Admitted deferred tax assets

     $ 1,821      $ 1,940      $ (119)  
  

 

 

  
     Year Ended December 31         
             2021                     2020                     Change          
  

 

 

  

Deferred Tax Liabilities:

         

Ordinary

         

Investments

     $ 521      $ 467      $ 54   

Policyholder reserves

      168        223        (55)  

Other (including items <5% of total ordinary tax liabilities)

      12        8        4   
  

 

 

  

Subtotal

      701        698        3   

Capital

         

Investments

      295        430        (135)  
  

 

 

  

Subtotal

      295        430        (135)  
  

 

 

  

Deferred tax liabilities

      996        1,128        (132)  
  

 

 

  

Net admitted deferred tax assets (liabilities)

     $ 825      $ 812      $ 13   
  

 

 

  

 

79

Table of Contents

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 taxable 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, 2021, the Company recorded a tax valuation allowance of $11 for deferred tax assets related to its foreign tax credit carryover. No valuation allowance was recorded in 2020. The ultimate realization of this deferred tax asset depends on generation of sufficient future foreign source taxable income before the foreign tax credit carryover expires in 2031. After considering projected foreign source taxable income, credit expirations and tax planning strategies, the Company does not expect to generate sufficient foreign source income in future years to realize all of its foreign tax credit carryover.

As discussed in Note 2, for the years ended December 31, 2021 and 2020, 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, 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   
    

 

 

  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

         December 31, 2020  
             Ordinary         Capital         Total      
    

 

 

  

Admission Calculation Components SSAP No. 101

       

2(a)

   Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks     $ —     $ 1     $ 1    

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)      754       57       811    
 

1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date

      754       57       811    
 

2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

      XXX               XXX       1,095    

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      943       185       1,128    
    

 

 

  

2(d)

   Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))     $ 1,697     $ 243     $           1,940    
    

 

 

  
               Change        
             Ordinary         Capital         Total      
    

 

 

  

Admission Calculation Components SSAP No. 101

       

2(a)

   Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks     $ —     $ 2     $ 2    

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)      23       (13 )      10    
 

1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date

      23       (13 )      10    
 

2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

      XXX       XXX       (127)   

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      (81 )      (51 )      (132)   
    

 

 

  

2(d)

   Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))     $ (58 )    $ (62 )    $ (120)   
    

 

 

  

 

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     December 31        
               2021                         2020                         Change            
  

 

 

  

Ratio Percentage Used To Determine Recovery

       
  

 

 

  

Period and Threshold Limitation Amount

      709 %      735 %                     -26%  
  

 

 

  
Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold       
  

 

 

  

Limitation in 2(b)2 Above

      $            6,452     $            7,298     $ (846)   
  

 

 

  

The impact of tax planning strategies at December 31, 2021 and 2020 was as follows:

 

     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%  
  

 

 

  

 

     December 31, 2020  
         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)

      7 %      0 %      7%  
  

 

 

  

The Company’s tax planning strategies do not include the use of reinsurance-related tax planning strategies.

Current income taxes incurred consist of the following major components:

 

     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)  
  

 

 

  

 

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     Year Ended December 31        
               2020                         2019                         Change            
  

 

 

  

Current Income Tax

                                                                                                          

Federal

     $ (109 )    $ (39 )    $ (70)  
  

 

 

  

  Subtotal

      (109 )      (39 )      (70)  

Federal income tax on net capital gains

      128       52       76   
  

 

 

  

Federal and foreign income taxes incurred

     $ 19     $ 13     $ 6   
  

 

 

  

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  
             2021                     2020                     2019          
  

 

 

  

Current income taxes incurred

     $ (63 )    $ 19     $ 13     

Change in deferred income taxes

      (123 )      126       160     

(without tax on unrealized gains and losses)

       
  

 

 

  

    Total income tax reported

     $ (186 )    $ 145     $ 173     
  

 

 

  

Income before taxes

     $ 194     $ 1,444     $ 3,770     

Federal statutory tax rate

            21.00 %            21.00 %            21.00%  
  

 

 

  

Expected income tax expense (benefit) at statutory rate

     $ 41     $ 303     $ 792     

Increase (decrease) in actual tax reported resulting from:

       

Pre-tax income of disregarded subsidiaries

     $ 15     $ 17     $ 21     

Dividends received deduction

      (94 )      (59 )      (90)    

Tax-exempt income

      (74 )      (3 )      (11)    

Nondeductible expenses

      5       6       5     

Pre-tax items reported net of tax

      (77 )      (35 )      (53)    

Tax credits

      (38 )      (40 )      (43)    

Prior period tax return adjustment

      3       (11 )      15     

Change in statutory valuation allowance

      11       (14 )      14     

Change in uncertain tax positions

      (3 )      —       —     

Deferred tax change on other items in surplus

      24       (20 )      (478)    

Other

      1       1       1     
  

 

 

  

    Total income tax reported

     $ (186 )    $ 145     $ 173     
  

 

 

  

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

 

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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 2021.

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

     $ 238       12/31/2021    N/A
  

 

 

        

Operating Loss Total

     $ 238         
  

 

 

        

Foreign Tax Credit

     $ 11       12/31/2021    12/31/2031
  

 

 

        

Foreign Tax Credit Total

     $ 11         
  

 

 

        

General Business Credit

     $ 1       12/31/2012    12/31/2032

General Business Credit

      15       12/31/2013    12/31/2033

General Business Credit

      20       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

      18       12/31/2021    12/31/2041
  

 

 

        

General Business Credit Total

     $        156         
  

 

 

        

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

 

               Total            

2019

     $ —   

2020

     $ 40   

2021

     $ —   

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

 

         Unrecognized    
Tax Benefits		  

Balance at January 1, 2020

     $ 21    

Tax positions taken during prior period

      —    
  

 

 

  

Balance at December 31, 2020

     $ 21    

Tax positions taken during prior period

      (3)   
  

 

 

  

Balance at December 31, 2021

     $ 18    
  

 

 

  

 

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Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

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, 2019

     $ 3     $ —      $ 3   

Interest expense (benefit)

      6       —        6   

Cash received (paid)

      —       —        —   
  

 

 

  

Balance at December 31, 2019

     $ 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   
  

 

 

  

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 2016 amended tax returns. Federal income tax returns filed in 2018 through 2020 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.

10. 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, 2021 and 2020.

The Company has 42,500 Series A preferred shares authorized, of which 0 shares were issued and outstanding at December 31, 2021 and 2020. 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, 2021 and 2020.

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 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 unassigned surplus at the time of such dividend, the maximum payment which may be made in 2022, without the prior approval of insurance regulatory authorities, is $2,078.

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

 

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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.

On December 20, 2019, the Company paid extraordinary common stock dividends of $725 to CGC.

On June 21, 2019, the Company paid a return of capital of $250 to CGC.

On February 1, 2019, the Company paid an ordinary common stock dividend of $8 to CGC.

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, 2021 and 2020, 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. On December 20, 2019, the Company repaid in full its $57 surplus note with TA Corp and made a partial repayment of $43 on its surplus note with CGC. On June 21, 2019, the Company repaid $150 on its surplus note with TA Corp. The Company received approval from IID for each of these transactions as well as prior to making quarterly interest payments.

11.   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

 

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(Dollars in Millions, Except per Share amounts)

 

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, 2021 and 2020, respectively, securities with a fair value of $1,919 and $2,000 were on loan under securities lending agreements. At December 31, 2021 and 2020, 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 $2,073 and $2,115 at December 31, 2021 and 2020, respectively.

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

 

     Fair Value  
     2021      2020  
  

 

 

  

Open

     $ 2,073       $ 2,115  

Securities received

      —        —   
  

 

 

  

Total collateral received

     $        2,073      $        2,115   
  

 

 

  

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.

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

 

     2021      2020  
         Amortized    
Cost		     

Fair

      Value      

          Amortized    
Cost		     

Fair

      Value      

  
  

 

 

     

 

 

  

Open

     $ 123      $ 123        $ 215      $ 215   

30 days or less

      675        675         656        656   

31 to 60 days

      511        511         429        429   

61 to 90 days

      208        208         219        219   

91 to 120 days

      100        100         393        393   

121 to 180 days

      356        356         203        203   

181 to 365 days

      100        100         —        —   
  

 

 

     

 

 

  

Total

      2,073        2,073         2,115        2,115   

Securities received

      —        —         —        —   
  

 

 

     

 

 

  

Total collateral reinvested

     $ 2,073      $ 2,073        $ 2,115      $ 2,115   
  

 

 

     

 

 

  

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 $2,074 (fair value of $2,073) that are currently tradable securities that could be sold and used to pay for the $2,073 in collateral calls that could come due under a worst-case scenario.

 

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12. 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 match an amount up to three percent of the participant’s eligible earnings. 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, as amended (ERISA). Benefits expense of $13, $14 and $14 was allocated to the Company for the years ended December 31, 2021, 2020 and 2019, 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 years of service and the employee’s eligible compensation. The plan provides benefits based on a traditional final average formula or a cash balance formula. The plan is subject to the reporting and disclosure requirements of ERISA.

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 and benefits are based on years of service and the employee’s eligible compensation. The plan provides benefits based on a traditional final average formula or 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 $28, $27 and $28 for the years ended December 31, 2021, 2020 and 2019, 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 $5, $5 and $6 for the years ended December 31, 2021, 2020 and 2019, respectively.

 

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(Dollars in Millions, Except per Share amounts)

 

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, 2021, 2020 and 2019 was insignificant.

13. 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 $690, $703 and $486 during 2021, 2020 and 2019, respectively. The amount paid as a result of being a party to these agreements was $679, $698 and $352 during 2021, 2020 and 2019, 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 advisor for the Company’s mortgage loan operations. The Company paid $29, $20 and $5 for these services during 2021, 2020 and 2019, 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 $97 for these services during 2021, 2020 and 2019, 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 $168, $149 and $151 for these services during 2021, 2020 and 2019, respectively.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $9, $43 and $51 for the years ended December 31, 2021, 2020 and 2019, respectively.

Receivables from (payables to) affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. During 2021, 2020 and 2019, the Company received (paid) net interest of $0, $0 and ($2) from (to) affiliates, respectively. At December 31, 2021 and 2020, respectively, the Company reported net receivables (payables) from (to) affiliates of $118 and

 

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$191. 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.

At December 31, 2021, the Company had no short-term intercompany notes receivable. At December 31, 2020, the Company had short-term intercompany notes receivable of $149. In accordance with SSAP No. 25, these notes are reported as short-term investments.

 

Receivable from   Amount   Due By   Interest Rate

  TA Corp

   $                5         August 3, 2021           0.10%

  TA Corp

   128         October 1, 2021           0.07%

  TA Corp

   10         November 24, 2021           0.09%

  TA Corp

   6         December 15, 2021           0.08%

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.

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

     $ 20   

Real Estate Alternatives Portfolio 3, LLC

      15   

Real Estate Alternatives Portfolio 4 HR, LLC

      61   

Real Estate Alternatives Portfolio 4 MR, LLC

      6   

Aegon Workforce Housing Fund 2, L.P.

      155   

Aegon Workforce Housing Fund 3, L.P.

      17   

Natural Resources Alternatives Portfolio I, LLC

      212   

Natural Resources Alternatives Portfolio II, LLC

      42   

Natural Resources Alternatives Portfolio 3, LLC

      167   

TA Private Equity Assets LLC

      386   

Zero Beta Fund, LLC

      34   

TA-APOP I, LLC

      34   

TA-APOP II, LLC

      109   

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.

 

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The following tables show the disclosures for all SCA investments, except 8bi entities, Balance Sheet value (admitted and nonadmitted) and the NAIC responses for the SCA filings as of December 31, 2021 and 2020:

 

                                                                                               
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     $ —    
 

 

 

  

 

91

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

December 31, 2020  
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         6       6       —    

Transamerica Asset Management, Inc.

     77         97       97       —    

Transamerica Fund Services, Inc.

     44         —       —       —    
 

 

 

  

Total SSAP No. 97 8b(iii) Entities

     XXX       $ 103     $ 103     $ —    
 

 

 

  

 SSAP No. 97 8b(iv) Entities

        

Transamerica Life (Bermuda) Ltd.

     94   %    $ 1,462     $ 1,462     $ —    
 

 

 

  

Total SSAP No. 97 8b(iv) Entities

     XXX       $ 1,462     $ 1,462     $ —    
 

 

 

  

 Total SSAP No. 97 8b Entities (except 8bi entities)

     XXX       $ 1,565     $ 1,565     $ —    
 

 

 

  

 Aggregate Total

     XXX       $ 1,565     $ 1,565     $ —    
 

 

 

  

 

92

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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, 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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

December 31, 2020

 

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.

      S2        12/21/2020        —        Y        N        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           21        —        —        I  

Transamerica Asset Management, Inc.

      S2        12/17/2020        91        Y        N        I  

Transamerica Fund Services, Inc.

      NA           —        —        —        I  
        

 

 

           

Total SSAP No. 97 8b(iii) Entities

      —        —       $ 112        —        —        —  
        

 

 

           

SSAP No. 97 8b(iv) Entities

                  

Transamerica Life (Bermuda) Ltd.

      S2        2/18/2021       $ 941        Y        N        I  
        

 

 

           

Total SSAP No. 97 8b(iv) Entities

      —        —       $ 941        —        —        —  
        

 

 

           

Total SSAP No. 97 8b Entities (except 8bi entities)

      —        —       $ 1,053        —        —        —  
        

 

 

           

Aggregate Total

      —        —       $ 1,053        —        —        —  
        

 

 

           

    *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. (TPRe)                             Excess of loss reinsurance asset

 

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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. (TORI)      Credit linked note

TLIC Watertree Reinsurance, Inc. (TWRI)     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**

    $ —      $ (2,131 )    $ —      $ —   

  Transamerica Pacific Reinsurance, Inc.**

      —        (1,213 )      —        —   

  TLIC Oakbrook Reinsurance, Inc.

      —        (3,432 )      1,311        —   

  TLIC Watertree Reinsurance, Inc.

      —        (1,044 )      539        —   

*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 8. Reinsurance.

Information regarding the Company’s affiliated guarantees is available in Note 15. Commitments and Contingencies.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

14. Managing General Agents and Third-Party Administrators

The Company utilizes managing general agents and third-party administrators in its operation. Information regarding these entities for the years ended December 31, 2021, 2020 and 2019, respectively, is:

 

                        

Total Direct
Premiums Written /

Produced By

  
              

 

 

  

      Name and Address of

  Managing General Agent or

    Third-Party Administrator

    FEIN    Exclusive
Contract		    Types of
Business
Written		    Types of
Authority
Granted		    December 31,  
   2021      2020      2019  
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355    23-1945930    No    Deferred
and income
annuities		    C, B, P, U      $  —        $  247        $  631   
              

 

 

  

Total

                  $  —        $  247        $  631   
              

 

 

  

C - Claims Payment

B - Binding Authority

P - Premium Collection

U - Underwriting

There were no premiums written in 2021 as the contract with Vanguard was terminated in December of 2020. During 2020, the premiums written declined due to the underlying business being closed to new sales in December 2019.

15. Commitments and Contingencies

At December 31, 2021 and 2020, the Company has mortgage loan commitments of $284 and $289, respectively.

The Company has contingent commitments of $832 and $893, as of December 31, 2021 and 2020, respectively, to provide additional funding for joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $21 and $30, respectively.

The Company leases office buildings and equipment under various non-cancelable operating lease agreements. Rental expense for the years 2021 and 2020 was $22 and $20, respectively.

Private placement commitments outstanding as of December 31, 2021 and 2020 were $174 and $115, respectively.

The Company sold ($26) and $0 of “to-be-announced” (TBA) securities as of December 31, 2021 and 2020, 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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

by the counterparty. The amount of cash collateral pledged by the Company as of December 31, 2021 and 2020, respectively, was $217 and $295.

At December 31, 2021 and 2020, securities in the amount of $76 and $61, 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, 2021 and 2020. The current assessment of risk of making payments under these guarantees is remote.

As of January 20, 2020, the Company has been discharged of its guarantee to the Monetary Authority of Singapore (MAS) to provide adequate funds to make up for any liquidity shortfall in its wholly-owned foreign life insurance subsidiary, TLB (Singapore Branch), and ensure that TLB was able to continue to meet, pay and settle all present and future obligations. The Company was not required to provide funds prior to the discharge of the guarantee on January 20, 2020 because TLB maintained adequate liquidity to settle its obligations.

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 the required margin of solvency as stipulated under the Insurance Companies (Margin of Solvency) Regulation. As of December 31, 2021 and 2020, 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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

then current rating or AA, whichever is lower. As of December 31, 2021 and 2020, 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, 2021 and 2020, TLB holds related statutory-basis policy and claim reserves of $2,328 and $2,315, 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, 2021 and 2020, 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, 2021 and 2020, TLB policies covered by this guarantee would have resulted in US statutory policy and claim reserves of $3,504 and $3,533, 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, 2021 and 2020, 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 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 2021 and 2020, 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

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

future payments for those contracts. The direct statutory reserve established at December 31, 2021 and 2020 for the total payout block is $4,990 and $5,124, 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 2021 or 2020 under this agreement. As of December 31, 2021 and 2020, there is no amount committed to these purchases.

The following table provides an aggregate compilation of guarantee obligations as of December 31, 2021 and 2020:

 

    December 31  
            2021                     2020          
 

 

 

  

Aggregate maximum potential of future payments of all guarantees (undiscounted)

    $ 5,832     $ 5,848   
 

 

 

  

Current liability recognized in financial statements:

    

Noncontingent liabilities

     —       —   
 

 

 

  

Contingent liabilities

     —       —   
 

 

 

  

Ultimate financial statement impact if action required:

    

Incurred claims

     5,832       5,848   

Other

     —       —   
 

 

 

  

Total impact if action required

    $ 5,832     $ 5,848   
 

 

 

  

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 $5,674 and $5,793 at December 31, 2021 and 2020, respectively. The Company calculated this amount in accordance with the terms and conditions of agreement with FHLB of Des Moines.

At December 31, 2021 and 2020, the Company purchased/owned the following FHLB stock as part of the agreement:

 

    Year Ended December 31  
        2021     2020      
 

 

 

  

Membership Stock:

    

Class A

    $ —     $ —   

Class B

     10       10   

Activity Stock

     120       101   

Excess Stock

     —       —   
 

 

 

  

Total

    $ 130     $ 111   
 

 

 

  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

At December 31, 2021 and 2020, 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, 2021

            

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, 2020

            

Membership Stock

            

Class A

     $ —      $ —      $ —      $ —   

Class B

      —        —        —        10   
  

 

 

  

Total

     $ —      $ —      $ —      $ 10   
  

 

 

  

At December 31, 2021 and 2020, the amount of collateral pledged and the maximum amount pledged to the FHLB was as follows:

 

           Fair Value                  Carry Value        
  

 

 

  

December 31, 2021

      

Total Collateral Pledged

    $ 4,575      $ 4,226  

Maximum Collateral Pledged

      4,893        4,486  
           Fair Value                  Carry Value        
  

 

 

  

December 31, 2020

      

Total Collateral Pledged

    $ 4,215      $ 3,818  

Maximum Collateral Pledged

      4,258        3,860  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

At December 31, 2021 and 2020, the borrowings from the FHLB were as follows:

 

    December 31, 2021     December 31, 2020  
 

 

 

    

 

 

  
    General
Account		     Funding
Agreements
Reserves
Established		     General
Account		     Funding
Agreements
Reserves
Established		  
 

 

 

    

 

 

  

Debt 1

    $     2,995     $ —       $   2,515      $ —   

Funding agreements 2

     —       —        —        —   

Other

     —       —        —        —   
 

 

 

    

 

 

  

Total

    $ 2,995     $ —       $ 2,515      $ —   
 

 

 

    

 

 

  

 

1

The maximum amount of borrowing during 2021 was $2,995

2

The maximum amount of borrowing during 2021 was $0

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. As of December 31, 2020, the weighted average interest rate on FHLB advances was 0.443% with a weighted average term of 2.3 years.

At December 31, 2021 and 2020, the borrowings from the FHLB were not subject to prepayment penalties.

The Company has issued synthetic GIC contracts to benefit plan sponsors totaling $53,440 and $56,004 as of December 31, 2021 and 2020, 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, no reserves were recorded at December 31, 2021 and 2020.

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

 

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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 to be 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 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. The Company held provisions totaling $69 and $170 for these lawsuits as of December 31, 2021 and December 31, 2020, 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 $9 and an offsetting premium tax benefit $6 and $7 at December 31, 2021 and 2020, 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, 2021, 2020 and 2019.

16. 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.

 

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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 2021 and 2020:

 

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   

 

December 31, 2020                        
    First
      Quarter      		     Second
      Quarter      		     Third
      Quarter      		     Fourth
      Quarter      		  
 

 

 

  

Maximum Amount

        

BACV

     XXX       XXX       XXX     $ 200   

Fair Value

   $ 167     $ 211     $ 232     $ 232   

Ending Balance

        

BACV

     XXX       XXX       XXX     $ 200   

Fair Value

   $ 167     $ 211     $ 232     $ 232   

 

                                                                                                                                   
    2021     2020  
 

 

 

    

 

 

  
            NAIC 1                     NAIC 2                     Total                     NAIC 1                     NAIC 2                     Total          
 

 

 

    

 

 

  

Bonds - BACV

   $     140     $     47     $     187     $     160     $     40     $     200   

Bonds - FV

     159       49       208       190       42       232   

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 2021 and 2020:

 

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.

 

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Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

December 31, 2020                        
    First
      Quarter      		     Second
Quarter		     Third
Quarter		     Fourth
      Quarter      		  
 

 

 

  

Maximum Amount

        

Cash

   $ 131     $ 164     $ 182     $ 101   

Ending Balance (1)

        

Cash

   $ 131     $ 162     $ 79     $ 100   

 

(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, 2021 and 2020, the Company had dollar repurchase agreements outstanding in the amount of $873 and $969, respectively, which is included in borrowed money on the Balance Sheets. Those amounts include accrued interest of $2 and $2, at December 31, 2021 and 2020, respectively. At December 31, 2021, securities with a book value of $878 and a fair value of $872 were subject to dollar repurchase agreements. These securities have maturity dates that range from November 1, 2022 to December 1, 2051. At December 31, 2020, securities with a book value of $958 and a fair value of $972 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  
  

 

 

  
     2021      2020  
  

 

 

  

Open

    $             872      $             967   

Securities received

      —        —   
  

 

 

  

Total collateral received

    $ 872      $ 967   
  

 

 

  

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 2021 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 5

      1      $ —      $ —      $ —  

Common stocks

      11      $ 109      $ 109      $ —  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

17. 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 2021.

 

     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 the prior year is driven by elimination of affiliated activity for the merged entities in 2020.

18. Subsequent Events

The financial statements are adjusted to reflect events that occurred between the Balance Sheet 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 I subsequent events for the year ended December 31, 2021 through April 14, 2022.

Events that are indicative of conditions that arose after the Balance Sheets date are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). The Company has identified Type II subsequent events for the year ended December 31, 2021. On March 29, 2022, the Company received a $100 capital contribution from its parent, CGC, which further increased surplus already above company action level.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Millions, Except per Share amounts)

 

On February 24, 2022, Russia invaded Ukraine, which caused a humanitarian crisis and is also impacting global financial markets and causing economic turbulence. At the date of this report the depth and length of this invasion is unknown, and the situation is changing rapidly from day to day. While the Company has no direct investment exposure to Ukraine or Russia, the indirect impacts to global markets need to be closely monitored. The Company is closely monitoring the financial markets and economic turbulence that has arisen as a consequence of the situation and the related international sanctions, and its potential impact on the Company. The most significant risks the Company faces are related to financial markets, particularly from volatility in credit, equity, and interest rates. The Company is actively managing its risks and capital position to maintain a robust balance sheet, as the Company navigates through the uncertainty created by the current geopolitical situation. While it is too early to provide long-term impacts, if any, management has determined that the Company remains strongly capitalized with RBC remaining within target limits set by the capital management policy.

 

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies

 

Transamerica Corporation

     

EIN: 42-1484983

     

AFFILIATIONS SCHEDULE

     

YEAR ENDED DECEMBER 31, 2021

   

  

    

  

                                                             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  

   

Intersecurities Ins Agency

   

42-1517005  

   

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  

   

Short Hills Management

   

42-1338496  

   

Stonebridge Benefit Services Inc

   

75-2548428  

   

TLIC Oakbrook Reinsurance Inc.

   

47-1026613  

   

TLIC Watertree Reinsurance, Inc.

   

81-3715574  

   

Transamerica Affinity Services Inc

   

42-1523438  

   

Transamerica Affordable Housing Inc

   

94-3252196  

Transamerica Asset Management

   

59-3403585  

 

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies

 

 

Transamerica Corporation

     

EIN: 42-1484983

     

AFFILIATIONS SCHEDULE

     

YEAR ENDED DECEMBER 31, 2021

     
      

                                                             Entity Name

    FEIN
      

Transamerica Capital Inc

   

95-3141953  

   

Transamerica Casualty Insurance Company

   

31-4423946  

   

Transamerica Corporation (OREGON)

   

98-6021219  

   

Transamerica Finance Corporation

   

95-1077235  

   

Transamerica Financial Advisors

   

59-2476008  

   

Transamerica Financial Life Insurance Company

   

36-6071399  

   

Transamerica Fund Services Inc

   

59-3403587  

   

Transamerica Home Loan

   

95-4390993  

   

Transamerica International Re (Bermuda) Ltd

   

98-0199561  

   

Transamerica Investors Securities Corp

   

13-3696753  

   

Transamerica Life Insurance Company

   

39-0989781  

   

Transamerica Pacific Insurance Co Ltd

   

94-3304740  

   

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  

   

World Financial Group Insurance Agency

   

95-3809372  

   

Zahorik Company Inc

   

95-2775959  

   

Zero Beta Fund LLC

   

26-1298094  

 

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Statutory-Basis Financial

Statement Schedules

 

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Transamerica Life Insurance Company

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Millions)

December 31, 2021

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

     $             6,723       $             9,151       $ 7,160   

States, municipalities and political subdivisions

      2,921         3,129        2,921   

Foreign governments

      543         562        541   

Hybrid securities

      325         393        325   

All other corporate bonds

      39,017         43,957        38,995   

Preferred stocks

      109         120        120   
  

 

 

  

Total fixed maturities

      49,638         57,312        50,062   

Equity securities

         

Common stocks:

         

Industrial, miscellaneous and all other

      151         198        198   
  

 

 

  

Total equity securities

      151         198        198   

Mortgage loans on real estate

      9,153            9,153   

Real estate

      52            52   

Policy loans

      1,986            1,986   

Other long-term investments

      1,504            1,504   

Receivable for securities

      32            32   

Receivable for derivative cash collateral posted to counterparty

      217            217   

Securities lending

      2,073            2,073   

Cash, cash equivalents and short-term investments

      2,126            2,126   
  

 

 

        

 

 

  

Total investments

     $ 66,932           $ 67,403   
  

 

 

        

 

 

  
(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.

 

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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, 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)  
  

 

 

  

Year ended December 31, 2019

                     

Individual life

     $ 22,141      $ —      $ 472      $ 2,884      $ 1,267      $ 2,658      $ 1,255   

Individual health

      5,567        185        299        750        357        1,034        262   

Group life and health

      2,463        31        138        866        155        471        305   

Annuity

      15,478        —        34        11,208        986        16,001        (4,217)  
  

 

 

  
    $ 45,649      $ 216      $ 943      $ 15,708      $ 2,765      $ 20,164      $ (2,395)  
  

 

 

  

*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.

 

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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, 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%
  

 

 

Year ended December 31, 2019

               

Life insurance in force

     $ 726,805      $ 809,789      $ 421,752      $ 338,768      124%
  

 

 

Premiums:

               

Individual life

     $ 4,575      $ 2,988      $ 1,297      $ 2,884      45%

Individual health

      797        66        19        750      3%

Group life and health

      968        137        35        866      4%

Annuity

      11,582        517        143        11,208      1%
  

 

 

      $    17,922      $        3,708      $        1,494      $        15,708      10%
  

 

 

 

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PART C

OTHER INFORMATION

 

Item 27.             Exhibits
                Exhibit No:    Description
   (a)    Board of Directors Resolution
   (a)(1)    Resolution of the Board of Directors establishing the WRL Series Annuity Account. Note 1
   (a)(2)    Resolution of Board of Directors of Transamerica Premier Life Insurance Company re-domesticating WRL Series Annuity Account. Note 17
   (a)(3)    Resolution of Board of Directors of Transamerica Premier Life Insurance Company Approving Plan of Merger with Western Reserve Life Assurance Co. of Ohio. Note 17
   (a) (4)    Resolution of Board of Directors of Western Reserve Life Assurance Co. of Ohio Approving Plan of Merger with Transamerica Premier Life Insurance Company. Note 17
   (a)(5)    Resolution of Board of Directors of Transamerica Premier Life Insurance Company Approving Plan of Merger with Transamerica Life Insurance Company. Note 26
   (b)    Custodian Agreements. Not Applicable
   (c)    Underwriting Contracts
   (c)(1)    Amended and Restated Principal Underwriting Agreement - Monumental Life Insurance Company and Transamerica Capital, Inc. Note 2
   (c)(2)    Amendment to Amended and Restated Principal Underwriting Agreement. Note 17
   (c)(3)    Broker/Dealer Life Insurance Company Product Sales Agreement by and between TCI Securities Corporation and the Broker/Dealer. Note 3
   (d)    Contracts
   (d)(1)    Specimen Flexible Payment Variable Accumulation Deferred Annuity contract (WL18). Note 4
   (d)(2)    Specimen Flexible Payment Variable Accumulation Deferred Annuity contract (VA30). Note 5
   (d)(3)    Death Benefit Rider (Annual Step-Up Death Benefit - GDB10). Note 5
   (d)(4)    Death Benefit Rider (Compounding Minimum Death Benefit - GDB11). Note 5
   (d)(5)    Guaranteed Minimum Income Benefit Rider (GIB01). Note 4
   (d)(6)    Guaranteed Minimum Income Benefit Rider (GIB02). Note 6
   (d)(7)    Terminal Illness Rider (EA132). Note 4
   (d)(8)    Nursing Care Facility Waiver Endorsement (EA133). Note 4
   (d)(9)    Tax Sheltered Annuity Endorsement (EA125). Note 7

Table of Contents
   (d)(10)    Contract Loan Provisions Endorsement (EA 126). Note 7
   (d)(11)    Dollar Cost Averaging Endorsement (EA134). Note 7
   (d)(12)    Asset Rebalancing Program Endorsement (EA135). Note 7
   (d)(13)    Additional Earnings Rider (AER01). Note 6
   (d)(14)    Additional Earnings Rider (AER02). Note 8
   (d)(15)    Split Contract Endorsement (EA141). Note 8
   (d)(16)    Guaranteed Minimum Death Benefit Endorsement (EA138A, EA139A, EA139B EA140). Note 6
   (d)(17)    Guaranteed Minimum Death Benefit Endorsement (EA142, EA145). Note 8
   (e)    Applications
   (e)(1)    Application for Flexible Payment Variable Accumulation Deferred Annuity Contract. Note 9
   (f)    Depositor’s Certificate of Incorporation and By-laws
   (f)(1)    Articles of Incorporation of Transamerica Life Insurance Company. Note 27
   (f)(2)    Bylaws Transamerica Life Insurance Company. Note 27
   (g)    Reinsurance Contracts
   (g)(1)    Reinsurance Agreement (TIRe). Note 10
   (g)(2)    Assignment, Transfer, And Novation. Note 21
   (g)(3)    First Amended and Restated Reinsurance Agreement. Note 21
   (h)    Participation Agreements
   (h)(1)    Participation Agreement (Access One and ProFunds). Note 11
   (h)(1)(i)    Amendment No. 1 to Participation Agreement (Access One and ProFunds). Note 17
   (h)(1)(ii)    Amendment No. 2 to Participation Agreement (Access One and ProFunds). Note 12
   (h)(1)(iii)    Amendment to Agreements (Confidential Information Access One and ProFunds). Note 13
   (h)(1)(iv)    Amendment No. 6 to Participation Agreement (Access One and ProFunds). Note 14
   (h)(2)    Participation Agreement (Fidelity). Note 15
   (h)(2)(i)    Amendment No. 4 to Participation Agreement (Fidelity). Note 18
   (h)(2)(ii)    Amendment No. 5 to Participation Agreement (Fidelity). Note 2
   (h)(2)(iii)    Amendment No. 6 to Participation Agreement (Fidelity). Note 19
   (h)(2)(iv)    Amendment No. 7 to Participation Agreement (Fidelity). Note 20

Table of Contents
   (h)(3)    Participation Agreement (TST). Note 16
   (h)(3)(i)    Amendment No. 1 to Participation Agreement (TST). Note 14
   (h)(3)(ii)    Amended Schedule A 07-01-14 to Participation Agreement (TST). Note 17
   (h)(3)(iii)    Amendment No. 2 to Participation Agreement (TST). Note 20
   (h)(3)(iv)    Schedule A Revision 5-1-2015 (TST). Note 20
   (h)(3)(v)    Schedule A Revision 7-1-2015 (TST). Note 21
   (h)(3)(vi)    Schedule A Revision 12-18-2015 (TST). Note 21
   (h)(3)(vii)    Schedule A Revisions 3-21-2016 (TST). Note 21
   (h)(3)(viii)    Schedule A Revision 5-1-2016 (TST). Note 21
   (h)(3)(ix)    Schedule A Revision 12-1-2016 (TST). Note 22
   (h)(3)(x)    Schedule A Revision 5-1-2017 (TST). Note 23
   (h)(3)(xi)    Schedule A Revision 9-29-2017 (TST). Note 24
   (h)(3)(xii)    Schedule A Revision 5-1-2018 (TST). Note 25
   (h)(3)(xiii)    Schedule A Revision 11-1-2018 (TST). Note 25
   (h)(3)(xiv)    Schedule A Revision 11-1-2019 (TST). Note 26.
   (i)    Administrative Contracts. Not applicable.
   (j)    Other Material Contracts. Not applicable.
   (k)    Legal Opinion. Opinion and Consent of Counsel. Filed herewith.
   (l)    Other Opinions. Consent of Independent Registered Public Accounting Firm. Filed herewith.
   (m)    Omitted Financial Statements. Not applicable
   (n)    Initial Capital Agreements. Not applicable
   (o)    Initial Summary Prospectuses. Not applicable.
   (p)    Powers of Attorney. Filed herewith.

 

Note 1.    Incorporated herein by reference to Post-Effective Amendment No. 11 to Form N-4 Registration Statement (File No. 033-49556) filed on April 20, 1998.
Note 2.    Incorporated herein by reference to Post-Effective Amendment No. 9 to Form N-4 Registration Statement (File No. 333-146323) filed on April 25, 2013.
Note 3.    Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-185574) filed on December 20, 2012.

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Note 4.    Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-82705) filed on July 12, 1999.
Note 5.    Incorporated herein by reference to Post-Effective Amendment No. 7 to Form N-4 Registration Statement (File No. 333-82705) filed on February 19, 2003.
Note 6.    Incorporated herein by reference to Post-Effective Amendment No. 3 to Form N-4 Registration Statement (File No. 333-82705) filed on April 19, 2002.
Note 7.    Incorporated herein by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-93169) filed on April 10, 2000.
Note 8.    Incorporated herein by reference to Post-Effective Amendment No. 5 to Form N-4 Registration Statement (File No. 333-93169) filed on April 14, 2003.
Note 9.    Incorporated herein by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-82705) filed on September 24, 1999.
Note 10.    Incorporated herein by reference to Post-Effective Amendment No. 27 to Form N-4 Registration Statement (File No. 33-24856) filed on April 27, 2009.
Note 11.    Incorporated herein by reference to Post-Effective Amendment No. 8 to Form N-4 Registration Statement (File No. 333-108525) filed on February 13, 2007.
Note 12.    Incorporated herein by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-145461) filed on October 23, 2007.
Note 13.    Incorporated herein by reference to Post-Effective Amendment No. 23 to Form N-4 Registration Statement (File No. 333-108525) filed on April 22, 2013.
Note 14.    Incorporated herein by reference to Post-Effective Amendment No. 24 to Form N-4 Registration Statement (File No. 333-108525) filed on August 16, 2013.
Note 15.    Incorporated herein by reference to Post-Effective Amendment No. 24 to Form N-4 Registration Statement (Filed No. 033-80958) filed on April 27, 2005.
Note 16.    Incorporated herein by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-185573) filed on April 10, 2013.
Note 17.    Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-199071) filed on October 1, 2014.
Note 18.    Incorporated herein by reference to Post-Effective Amendment No. 4 to Form N-4 Registration Statement (File No. 333-146323) filed on April 29, 2008.
Note 19.    Incorporated herein by reference to Post-Effective Amendment No. 10 to Form N-4 Registration Statement (File No. 333-146323) filed on April 30, 2014.
Note 20.    Incorporated herein by reference to Post-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-199071) filed on April 28, 2015.
Note 21.    Incorporated herein by reference to Post-Effective Amendment No. 2 to Form N-4 Registration Statement (File No. 333-199071) filed on April 26, 2016.

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Note 22.    Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-215598) filed on January 18, 2017.
Note 23.    Incorporated herein by reference to Post-Effective Amendment No.3 to Form N-4 Registration Statement (File No. 333-199071) filed on April 27, 2017.
Note 24.    Incorporated herein by reference to Post-Effective Amendment No. 4 to Form N-4 Registration Statement (File No. 333-199071) filed on April 26, 2018.p
Note 25.    Incorporated herein by reference to Post-Effective Amendment No. 7 to Form N-4 Registration Statement (File No. 333-199071) filed on December 7, 2018.
Note 26    Incorporated herein by reference to Post-Effective Amendment No. 7 to Form N-4 Registration Statement (File No. 333-199071) filed on April 24, 2020.
Note 27    Incorporated by reference to the Initial Filing of Form N-4 Registration Statement (File No.333-169445) filed on September 17, 2010
Note 28    Incorporated herein by reference to Pre-Effective Amendment No. 15 to Form N-4 Registration Statement (File No.033-49556) filed on April 23, 2002.

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Item 28. Directors and Officers of the Depositor (Transamerica Life Insurance Company)

 

Name and Principal Business Address    Positions and Offices with Depositor

Blake S. Bostwick

1801 California St. Suite 5200

Denver, CO 80202

    Director, Chief Executive Officer, Individual Solutions Division and President

Fred Gingerich

6400 C Street SW

Cedar Rapids, Iowa 52404

    Director, Chairman of the Board, Controller, Assistant Treasurer and Vice President

Karyn Polak

100 Light Street

Baltimore, MD 21202

    Director, General Counsel, Secretary and Senior Vice President

Matthew McCorry

100 Light Street

Baltimore, MD 21202

    Director, Chief Operating Officer, Individual Solutions Division

Christopher Ashe

100 Light Street

Baltimore, MD 21202

    Chief Financial Officer, Executive Vice President and Treasurer

Zachary Harris

6400 C Street SW

Cedar Rapids, Iowa 52404

    Director

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Item 29. Persons Controlled by or under Common Control with the Depositor or Registrant.

 

As of December 31, 2021, the following pages shows all corporations directly or indirectly controlled or under common control, with the Depositor, showing the state or other sovereign power under the laws of which each is organized and the percentage ownership of voting securities giving rise to the control relationship.

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
25 East 38th Street, LLC   Delaware  

Sole Member: Yarra Rapids, LLC

 

   Real estate investments

239 West 20th Street, LLC

   Delaware  

Sole Member: Yarra Rapids, LLC

 

   Real estate investments
313 East 95th Street, LLC   Delaware  

Sole Member: Yarra Rapids, LLC

 

   Real estate investments
319 East 95th Street, LLC   Delaware  

Sole Member: Yarra Rapids, LLC

 

   Real estate investments
AEGON Affordable Housing Debt Fund I, LLC   Delaware  

Members: AHDF Manager I, LLC (0.01%), Managing Member; Transamerica Life Insurance Company (5%); non-AEGON affiliates: Dominium Taxable Fund I, LLC (94.99%)

 

   Affordable housing loans
AEGON AM Funds, LLC   Delaware  

AEGON USA Investment Management, LLC is the Manager; equity will be owned by clients/Investors of AEGON USA Investment Management, LLC

 

   To serve as a fund for a client and offer flexilbility to accommodate other similarly situated clients.
AEGON AM Private Equity Partners I, LLC   Delaware  

Sole Member: AEGON USA Investment Management, LLC

 

   Investments
AEGON Asset Management Services, Inc.   Delaware  

100% AUSA Holding, LLC

 

   Registered investment advisor
Aegon Community Investments 50, LLC   Delaware  

Members: Aegon Community Investments 50, LLC (0.10%); Transamerica Financial Life Insurance Company (25.49750%); Transamerica Life Insurance Company (25.49750%); non-AEGON affiliate, Citibank, N.A. (48.9950%)

 

   Investments
Aegon Community Investments 51, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 52, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 53, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 54, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 55, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 56, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 57, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 58, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments

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ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Aegon Community Investments 59, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 60, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 61, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 62, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 63, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 64, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 65, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 66, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 67, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
AEGON Direct Marketing Services, Inc.   Maryland  

Transamerica Life Insurance Company owns 73.548%; Commonwealth General Corporation owns 26.452%

 

   Marketing company
AEGON Direct Marketing Services International, LLC   Maryland   100% AUSA Holding, LLC  

Marketing arm for sale of mass marketed insurance coverage

 

AEGON Direct Marketing Services Mexico,

S.A. de C.V.

   Mexico   100% AEGON DMS Holding B.V.  

Provide management advisory and technical consultancy services.

 

AEGON Direct Marketing Services Mexico Servicios, S.A. de C.V.   Mexico   100% AEGON DMS Holding B.V.  

Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies.

 

AEGON Energy Management, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
AEGON Financial Services Group, Inc.   Minnesota  

100% Transamerica Life Insurance Company

 

   Marketing
AEGON Funding Company, LLC.   Delaware  

Sole Member: Transamerica Corporation

 

   Issue debt securities-net proceeds used to make loans to affiliates
Aegon Global Services, LLC   Iowa  

Sole Member: Commonwealth General Corporation

 

   Holding company
AEGON Institutional Markets, Inc.   Delaware   100% Commonwealth General Corporation  

Provider of investment, marketing and administrative services to insurance companies

 

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ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Aegon LIHTC Fund 50, LLC   Delaware  

Members: Members: Managing Member - Aegon Community Investments 50, LLC (0%); Aegon LIHTC Fund 63, LLC (51.0049%); non- affiliate of AEGON, Citibank, N.A. (48.9951%)

 

   Investments
Aegon LIHTC Fund 51, LLC   Delaware  

Members: Aegon Community Investments 51, LLC (.01%) as Managing Member; non-affiliate of AEGON, Citibank, N.A. (99.99%)

 

   Investments
Aegon LIHTC Fund 52, LLC   Delaware  

Members: Transamerica Financial Life Insurance Company (10.18%); Transamerica Life Insurance Company (1%); Managing Member - Aegon Community Investments 52, LLC (0.01%); non-affiliates of AEGON, Citibank, N.A. (49%); California Bank & Trust (5.21%); Pacific West Bank (7.58%); Ally Bank (11.35%); US Bank (7.58%); Bank of the West (7.46%)

 

   Investments
Aegon LIHTC Fund 54, LLC   Delaware  

Non-Member Manager Aegon Community Investments 54, LLC (0%); Members: non-affiliate of Aegon, FNBC Leasing Corporation (100%)

 

   Investments
Aegon LIHTC Fund 55, LLC   Delaware  

Members: Managing Member - Aegon Community Investments 55, LLC (.01%); Transamerica Life Insurance Company (2.82%); non-affiliates of AEGON, Bank of Hope (14.26%); CMFG Life Insurance Company (9.72%); Citibank, N.A. (21.69%); ZB National Association (1.81%); Ally Bank (8.21%); U.S. Bancorp Community Development Corporation (22.10%); Lake City Bank (1.47%); The Guardian Life Insurance Company of America (10.45%); Minnesota Life Insurance Company (7.46%)

 

   Investments
Aegon LIHTC Fund 57, LLC   Delaware  

Members: Managing Member - Aegon Community Investments 57, LLC (.01%); non-affiliate of AEGON, Bank of America, N.A. as Investor Member (99.99%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Aegon LIHTC Fund 58, LLC   Delaware  

Members: Managing Member - Aegon Community Investments 58, LLC (0.01%); Transamerica Life Insurance Company (12%); non-affiliates of AEGON, Allstate Insurance Company (24%); Ally Bank (17%); CMFG Life Insurance Company (8.05%); Santander Bank, N.A. (22.25%); U.S. Bancorp Community Development Corporation (19.47%); Zions Bancorporation, N.A. (6.35%)

 

   Investments
Aegon LIHTC Fund 60, LLC   Delaware  

Non-Member Manager Aegon Community Investments 60, LLC (0%); Member: non-affiliate of Aegon, FNBC Leasing Corporation (100%)

 

   Investments
Aegon LIHTC Fund 61, LLC   Delaware  

Non-Member Manager Aegon Community Investments 61, LLC (0%); Members: non-affiliate of Aegon, HSBC Bank, N.A. (100%)\

 

   Investments
Aegon LIHTC Fund 62, LLC   Delaware  

Non-Member Manager: Aegon Community Investments 62, LLC (.01%); non-affiliates of AEGON, Ally Bank (10.11%); Allstate (20.48%); Bank of the West (6.57%); Farm Bureau Property & Casualty (6.74%); Minnesota Life Insurance Company (6.74%); Santander Bank, N.A. (5.39%); State Street Bank and Trust Company (34.22%); U.S. Bancorp Community Development Corporation (6.57%); Zions Bancorporation, N.A. (3.17%)

 

   Investments
Aegon LIHTC Fund 63, LLC   Delaware  

Non-Member Manager: Aegon Community Investments 63, LLC (0%); non-affiliate of AEGON, FNBC Leasing Corporation (100%)

 

   Investments
Aegon LIHTC Fund 64, LLC   Delaware  

Sole Member: Aegon Community

Investments 64, LLC

   Investments
Aegon LIHTC Fund 65, LLC   Delaware  

Non-Member Manager: Aegon Community Investments 62, LLC (.01%); non-affiliates of AEGON, Ally Bank (10.11%); Allstate (20.48%); Bank of the West (6.57%); Farm Bureau Property & Casualty (6.74%); Minnesota Life Insurance Company (6.74%); Santander Bank, N.A. (5.39%); State Street Bank and Trust Company (34.22%); U.S. Bancorp Community Development Corporation (6.57%); Zions Bancorporation, N.A. (3.17%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Aegon LIHTC Fund 66, LLC   Delaware  

Members: Aegon Community Investments 66, LLC (.01%); non- affiliates of AEGON, Bank of the West (49.995%) and Cedar Rapids Bank & Trust (49.995%)

 

   Investments
Aegon LIHTC Fund 67, LLC   Delaware  

Member Manager: Aegon Community Investments 67, LLC

 

   Investments
Aegon Loan Opportunitities Partners, LLC   Delaware  

Sole Member: AEGON USA Investment Management, LLC

 

   Investments
Aegon Loan Opportunitities Fund I, LP   Delaware  

Sole Member: AEGON USA Investment Management, LLC

 

   Investments
AEGON Managed Enhanced Cash, LLC   Delaware  

Sole Member: Tramsamerica Life Insurance Company

 

   Investment vehicle for securities lending cash collateral
AEGON Management Company   Indiana  

100% Transamerica Corporation

 

   Holding company
Aegon Multi-Family Equity Fund, LLC   Delaware  

Members: Transamerica Life Insurance Company (20%); Transamerica Financial Life Insurance Company (5%); non-affiliate of AEGON: Landmark Real Estate Partners VIII, L.P. (72.1591%).

 

   Investments
Aegon Opportunity Zone Fund Joint Venture 1, LLC   Delaware  

Sole Member: Aegon OZF Investments 1, LLC

 

   Investments
Aegon OZF Investments 1, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
Aegon Private Opportunities Partners I, LLC   Delaware  

Sole member: Transamerica Life Insurance Company

 

   Investments (private equity)
Aegon Upstream Energy Fund, LLC   Delaware  

Sole Member: AEGON Energy Management, LLC

 

   Investments

AEGON USA Asset Management Holding, LLC

 

   Iowa   Sole Member: AUSA Holding, LLC   Holding company
AEGON USA Investment Management, LLC   Iowa  

Sole Member: AEGON USA Asset Management Holding, LLC

 

   Investment advisor
AEGON USA Real Estate Services, Inc.   Delaware  

100% AEGON USA Realty Advisors, Inc.

 

   Real estate and mortgage holding company
AEGON USA Realty Advisors, LLC   Iowa  

Sole Member: AEGON USA Asset Management Holding, LLC

 

   Administrative and investment services
AEGON USA Realty Advisors of California, Inc.   Iowa  

100% AEGON USA Realty Advisors, Inc.

 

   Investments
Aegon Workforce Housing Boynton Place REIT, LLC   Delaware  

Sole Member: Aegon Worforce Housing Separate Account 1, LLC

 

   Multifamily private equity structure with third- party Investor
Aegon Workforce Housing Fund 2 Holding Company, LLC   Delaware  

Sole Member: Aegon Workforce Housing Fund 2, LP

 

   Holding company

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Aegon Workforce Housing Fund 2 Holding Company B, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Holding company
Aegon Workforce Housing Fund 2, LP   Delaware  

General Partner is AWHF2 General Partner, LLC. Fund Partners: Transamerica Life Insurance Company (80%) and Transamerica Financial Life Insurance Company (20%)

 

   Investments
Aegon Workforce Housing Fund 3 Holding Company, LLC   Delaware  

Sole Member: Aegon Workforce Housing Fund 3, LP

 

   Holding company
Aegon Workforce Housing Fund 3,LP   Delaware  

General Partner is AWHF3 General Partner, LLC. Fund Partners: Transamerica Life Insurance Company (90%) and Transamerica Financial Life Insurance Company (10%)

 

   Investments
Aegon Workforce Housing JV 4A, LLC   Delaware  

Members: Aegon Workforce Housing Fund 2 Holding Company, LLC (44.5%); non-affiliates of AEGON: Strategic Partners Real Estate VII Investments, L.P. (27.75%), Landmark Real Estate Partners VIII, L.P. (26.6988578%), NCL Investments II, L.P. (1.05111422%)

 

   Investments
Aegon Workforce Housing JV 4B, LLC   Delaware  

Members: Aegon Workforce Housing Fund 2 Holding Company, LLC (25%); non-affiliates of AEGON: Strategic Partners Real Estate VII Investments, L.P. (37.5%), Landmark Real Estate Partners VIII, L.P. (36.0795375%), NCL Investments II, L.P. (1.4204625%)

 

   Investments
Aegon Workforce Housing JV 4C, LLC   Delaware  

Members: Aegon Workforce Housing Fund 2 Holding Company, LLC (10%); non-affiliates of AEGON: Strategic Partners Real Estate VII Investments, L.P. (45%), Landmark Real Estate Partners VIII, L.P. (43.295445%), NCL Investments II, L.P. (1.704555%)

 

   Investments
Aegon Workforce Housing Park at Via Rosa REIT, LLC   Delaware  

Sole Member: Aegon Worforce Housing Separate Account 1, LLC

 

   Multifamily private equity structure with third- party Investor
Aegon Workforce Housing Separate Account 1, LLC   Delaware  

Members: Transamerica Life Insurance Company (20.08%); Transamerica Financial Life Insurance Company (4.170%); non-affiliates of AEGON: Lake Tahoe IV, L.P. (23.860%); Townsend RE Global Special Solutions, L.P. (10.230%); Townsend Real Estate Alpha Fund III, L.P. (40.910%). Member Manager: AWHSA Manager 1, LLC.

 

   Multifamily private equity structure with third- party Investor

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
AHDF Manager I, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
ALH Properties Eight LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Eleven LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Four LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Nine LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Seven LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Seventeen LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Sixteen LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Ten LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Twelve LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Two LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
AMFETF Manager, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
AMTAX HOLDINGS 308, LLC   Ohio  

TAHP Fund II, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 388, LLC   Ohio  

TAHP Fund II, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 483, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 559, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 561, LLC   Ohio  

TAHP Fund VII, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 588, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 613, LLC   Ohio  

Garnet LIHTC Fund VII, LLC - 99% Member; Cupples State LIHTC Investors, LLC - 1% Member; TAH Pentagon Funds, LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 639, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
AMTAX HOLDINGS 649, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 672, LLC   Ohio  

TAHP Fund I, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
AMTAX HOLDINGS 713, LLC   Ohio  

TAHP Fund II, LLC - 100% Member; TAH Pentagon Funds LLC - non-owner Manager

 

   Affordable housing
Apollo Housing Capital Arrowhead Gardens, LLC   Delaware  

Sole Member: Garnet LIHTC Fund XXXV, LLC

 

   Affordable housing
AUIM Credit Opportunities Fund, LLC   Delaware  

Members: AEGON USA Invesmtent Management, LLC (98.36%); non- affiliate of AEGON (1.64%)

 

   Investment vehicle
AUSA Holding, LLC   Maryland  

Sole Member: 100% Transamerica Corporation

 

   Holding company
AUSA Properties, Inc.   Iowa  

100% AEGON USA Realty Advisors, LLC

 

   Own, operate and manage real estate
AWHF2 General Partner, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
AWHF3 General Partner, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
AWHJV4 Manager, LLC   Delaware  

Member: AEGON USA Realty Advisors, LLC

 

   Investments
AWHSA Manager 1, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Multifamily private equity structure with third- party Investor
Barfield Ranch Associates, LLC   Florida  

Members: Mitigation Manager, LLC (50%); non-affiliate of AEGON, OBPFL- Barfield, LLC (50%)

 

   Investments
Bay State Community Investments II, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments in low income housing tax credit properties
Carle Place Leasehold SPE, LLC   Delaware  

Sole Member: Transamerica Financial Life Insurance Company

 

   Lease holder
Commonwealth General Corporation   Delaware  

100% Transamerica Corporation

 

   Holding company
Creditor Resources, Inc.   Michigan  

100% AUSA Holding, LLC

 

   Credit insurance
CRI Solutions Inc.   Maryland  

100% Creditor Resources, Inc.

 

   Sales of reinsurance and credit insurance
Cupples State LIHTC Investors, LLC   Delaware  

Sole Member: Garnet LIHTC Fund VIII, LLC

 

   Investments
Equitable AgriFinance, LLC   Delaware  

Members: AEGON USA Realty Advisors, LLC (50%); AXA Equitable Life Insurance Company, a non-affiliate of AEGON (50%)

 

   Agriculturally-based real estate advisory services

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
FD TLIC, Limited Liability Company   New York  

100% Transamerica Life Insurance Company

 

   Broadway production
FGH Realty Credit LLC   Delaware  

Sole Member: FGH USA, LLC

 

   Real estate
FGH USA LLC   Delaware  

Sole Member: RCC North America LLC

 

   Real estate
Fifth FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Financial Planning Services, Inc.   District of Columbia  

100% Commonwealth General Corporation

 

   Management services
First FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Fourth FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
FSBA AAM Strategic Fund I, LP   Delaware  

Sole Member: Aegon AM Private Equity Parnters I, LLC

 

   Investments
Garnet Assurance Corporation   Kentucky  

100% Transamerica Life Insurance Company

 

   Investments
Garnet Assurance Corporation II   Iowa  

100% Commonwealth General Corporation

 

   Business investments
Garnet Assurance Corporation III   Iowa  

100% Transamerica Life Insurance Company

 

   Business investments
Garnet Community Investments, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments IV, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments V, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments VI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments VII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments VIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments IX, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments X, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XVIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet Community Investments XX, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXIV, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXV, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investment XXVI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXVII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investment XXVIII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXIX, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXX, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXI, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXIII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXIV, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXV, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXVI, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXVII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXVIII, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XXXIX, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XL, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet Community Investments XLIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLIV, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLVI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLVII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLVIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLIX, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet ITC Fund XLIII, LLC   Delaware  

Members: Garnet Community Investments XLIII, LLC (0%) asset Manager: non-affiliate of AEGON, Solar TC Corp. (100%) Investor Member

 

   Investments
Garnet LIHTC Fund IV, LLC   Delaware  

Members: Garnet Community Investments IV, LLC (99.99%); Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund V, LLC   Delaware  

Members: Garnet Community Investments V, LLC (99.99%); Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund VI, LLC   Delaware  

Members: Garnet Community Investments VI, LLC (99.99%); Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund VII, LLC   Delaware  

Members: Garnet Community Investments VII, LLC (99.99%); Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund VIII, LLC   Delaware  

Members: Garnet Community Investments VIII, LLC (99.99%); Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund IX, LLC   Delaware  

Members: Garnet Community Investments IX, LLC (99.99%); Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund X, LLC   Delaware  

Members: Garnet Community Investments X, LLC (0.01%); Goldenrod Asset Management, a non- AEGON affiliate (99.99%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XI, LLC   Delaware  

Members: Garnet Community Investments XI, LLC (99.99%) and Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund XII, LLC   Delaware  

Members: Managing Member, Garnet Community Investments XII (.01%), Garnet LIHTC Fund XII-A, LLC (79.9%); Garnet LIHTC Fund XII-B (13.30%), Garnet LIHTC Fund XII-C (13.30%)

 

   Investments
Garnet LIHTC Fund XII-A, LLC   Delaware  

Members: Garnet Community Investments XII, LLC (99.99%); Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund XII-B, LLC   Delaware  

Members: Garnet Community Investments XII, LLC (99.99%) and Transamerica Life Insurance Company (.01%).

 

   Investments
Garnet LIHTC Fund XII-C, LLC   Delaware  

Members: Garnet Community Investments XII, LLC (99.99%) and Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund XIII, LLC   Delaware  

Members: Managing Member, Garnet Community Investments .01%; Garnet LIHTC Fund XIII-A (68.10%); Garnet LIHTC Fund XIII-B (31.89%)

 

   Investments
Garnet LIHTC Fund XIII-A, LLC   Delaware  

Members: Managing Member, Garnet Community Investments XIII, LLC (99.99%) and Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund XIII-B, LLC   Delaware  

Members: Managing Member, Garnet Community Investments XIII, LLC (99.99%) and Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund XIV, LLC   Delaware  

Members: 0.01% Garnet Community Investments, LLC (0.01%); Wells Fargo Bank, N.A. (49.995%); and Goldenrod Asset Management, Inc.(49.995%), both non-AEGON affiliates

 

   Investments
Garnet LIHTC Fund XV, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XVI, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); FNBC Leasing Corporation, a non-AEGON entity (99.99%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XVII, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); Special Situations Investing Group II, LLC, a non-affiliate of AEGON (99.99%)

 

   Investments
Garnet LIHTC Fund XVIII, LLC   Delaware  

Members: Garnet Community Investments XVIII, LLC (99.99%); Transamerica Life Insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund XIX, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XX, LLC   Delaware  

Sole Member - Garnet Community Investments XX, LLC

 

   Investments
Garnet LIHTC Fund XXII, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XXIII, LLC   Delaware  

Members: Garnet Community Investments, LLC (99.99%); Transamerica Life insurance Company (.01%)

 

   Investments
Garnet LIHTC Fund XXIV, LLC   Delaware  

Members: Garnet Community Investments XXIV, LLC (0.01% as Managing Member); Transamerica Life Insurance Company (21.26%); non- affiliates of AEGON: New York Life Insurance Company (25.51%), New York Life Insurance and Annuity Corporation (21.73%) and Principal Life Insurance Company (31.49%)

 

   Investments
Garnet LIHTC Fund XXV, LLC   Delaware  

Members: Garnet Community Investment XXV, LLC (0.01%); Garnet LIHTC Fund XXVIII LLC (1%); non-

affiliates of AEGON: Mt. Hamilton Fund, LLC (97.99%); Google Affordable housing I LLC (1%)

 

   Investments
Garnet LIHTC Fund XXVI, LLC   Delaware  

Members: Garnet Community Investments XXVI, LLC (0.01%); American Income Life Insurance Company, a non-affiliate of AEGON (99.99%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XXVII, LLC   Delaware  

Members: Garnet Community Investments XXVII, LLC (0.01%); Transamerica Life Insurance Company (16.7045%); non-affiliates of AEGON: Aetna Life Insurance Company (30.2856%); New York Life Insurance Company (22.7142%); ProAssurance

Casualty Company (3.6343%); ProAssurance Indemnity Company (8.4800%); State Street Bank and Trust Company (18.1714%)

 

   Investments
Garnet LIHTC Fund XXVIII, LLC   Delaware  

Members: Garnet Community Investments XXVIII LLC (0.01%); non- affiliates of AEGON: USAA Casualty Insurance Company (17.998%); USAA General Indemnity Company (19.998%); USAA Life Insurance Company (3.999%); United Services Automobile Association (57.994%)

 

   Investments
Garnet LIHTC Fund XXIX, LLC   Delaware  

Members: Garnet Community Investments XXIX, LLC (.01%); non- affiliate of AEGON: Bank of America, N.A. (99.99%)

 

   Investments
Garnet LIHTC Fund XXX, LLC   Delaware  

Members: Garnet Community Investments XXX, LLC (0.01%); non- affiliate of AEGON, New York Life Insurance Company (99.99%)

 

   Investments
Garnet LIHTC Fund XXXI, LLC   Delaware  

Members: Garnet Community Investments XXXI, LLC (0.1%); non- affiliates of AEGON: Thunderbolt Peak Fund, LLC (98.99%); Google Affordable Housing I, LLC (1%)

 

   Investments
Garnet LIHTC Fund XXXII, LLC   Delaware  

Sole Member: Garnet Community Investments XXXVII, LLC.

 

   Investments
Garnet LIHTC Fund XXXIII, LLC   Delaware  

Members: Garnet Community Investment XXXIII, LLC (0.01%); non-affiliate of AEGON, NorLease, Inc. (99.99%)

 

   Investments
Garnet LIHTC Fund XXXIV, LLC   Delaware  

Members: Garnet Community Investments XXXIV, LLC (99.99%) and Transamerica Life Insurance Company (0.01%)

 

   Investments
Garnet LIHTC Fund XXXV, LLC   Delaware  

Members: Garnet Community Investment XXXV, LLC (0.01%); non- affiliate of AEGON, Microsoft Corporation (99.99%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XXXVI, LLC   Delaware  

Members: Garnet Community Investments XXXVI, LLC (1%) as Managing Member; JPM Capital Corporation, a non-AEGON affiliate (99%) as Investor Member

 

   Investments
Garnet LIHTC Fund XXXVII, LLC   Delaware  

Members: Garnet Community Investments XXXVII, LLC (.01%); LIH Realty Corporation, a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XXXVIII, LLC   Delaware  

Members: Garnet Community Investments XXXVIII, LLC, non- Member Manager; non-affiliate of AEGON, Norlease, Inc. (100%)

 

   Investments
Garnet LIHTC Fund XXXIX, LLC   Delaware  

Members: Garnet Community Investments XXXIX, LLC a Managing Member (1%); non-AEGON affiliate, FNBC Leasing Corporation as Investor Member (99%)

 

   Investments
Garnet LIHTC Fund XL, LLC   Delaware  

Members: Garnet Community Investments XL, LLC (.01%); non- AEGON affiliate, Partner Reinsurance Company of the U.S. (99.99%)

 

   Investments
Garnet LIHTC Fund XLI, LLC   Delaware  

Members: Transamerica Life Insurance Company (9.990%) and Garnet Community Investments XLI, LLC (.01% Managing Member); non- AEGON affiliates : BBCN Bank (1.2499%), East West Bank (12.4988%), Opus Bank (12.4988%), Standard Insurance Company (24.9975%), Mutual of Omaha (12.4988%), Pacific Western Bank (7.4993%) and Principal Life Insurance Company (18.7481%).

 

   Investments
Ganet LIHTC Fund XLII, LLC   Delaware  

Members: Garnet Community Investments XLII, LLC (.01%) Managing Member; non-affiliates of AEGON: Community Trust Bank (83.33%) Investor Member; Metropolitan Bank (16.66%) Investor Member.

 

   Investments
Garnet LIHTC Fund XLIV-A, LLC   Delaware  

Sole Member: ING Capital, LLC; Asset Manager: Garnet Community Investments XLIV, LLC (0% interest)

 

   Investments
Garnet LIHTC Fund XLIV-B, LLC   Delaware  

Sole Member: Lion Capital Delaware, Inc.; Asset Manager: Garnet Community Investments XLIV, LLC (0% interest)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XLVI, LLC   Delaware  

Members: Garnet Community Investments XLVI, LLC (0.01%) Managing Member; non-affiliate of AEGON, Standard Life Insurance Company (99.99%) Investor Member

 

   Investments
Garnet LIHTC Fund XLVII, LLC   Delaware  

Members: Garnet Community Investments XLVII, LLC (1%) Managing Member; Transamerica Life Insurance Company (14%) Investor Member; non- affiliate of AEGON: Citibank, N.A. (49%) Investor Member; New York Life Insurance Company (20.5%) Investor Member and New York Life Insurance and Annuity Corporation (15.5%) Investor Member

 

   Investments
Garnet LIHTC Fund XLVIII, LLC   Delaware  

Members: Transamerica Financial Life Insurance Company (75.18%) and Garnet Community Investments XXXLVIII, LLC (.01%); non-affiliates of AEGON: U.S. Bancorp Community Development Corporation (21.04%), American Republic Insurance Company (2.84%), Bank of Hope (.93%)

 

   Investments
Horizons Acquisition 5, LLC   Florida  

Sole Member - PSL Acquisitions Operating, LLC

 

   Development company
Horizons St. Lucie Development, LLC   Florida  

Sole Member - PSL Acquisitions Operating, LLC

 

   Development company
Imani Fe, LP   California  

Partners: Garnet Community Investments, LLC (99.99%); Transamerica Life Insurance Company (.01%)

 

   Affordable housing
Investors Warranty of America, LLC   Iowa  

Sole Member: RCC North America LLC

 

   Leases business equipment
Ironwood Re Corp.   Hawaii  

100% Commonwealth General Corporation

 

   Captive insurance company
LCS Associates, LLC   Delaware  

Sole Member: RCC North America LLC

 

   Investments
Life Investors Alliance LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Purchase, own, and hold the equity interest of other entities
LIHTC Fund 53, LLC   Delaware  

Non-Member Manager, AEGON Community Investments 53, LLC (0%); non-affiliates of AEGON: Bank of America, National Association (98%); MUFG Union Bank, N.A. (2%)

 

   Investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
LIHTC Fund 56, LLC   Delaware  

Members: Managing Member - Aegon Community Investments 56, LLC (0%); non-affiliates of AEGON, Bank of America, National Association (90%) and MUFG Union Bank, N.A. (10%)

 

   Investments
LIHTC Fund 59, LLC   Delaware  

Members: Non-Member Manager Aegon Community Investments 59, LLC (0%); non-affiliates of AEGON, Bank of America, National Association (99.99%); Dominium Taxable Fund II, LLC (0.01%)

 

   Investments
LIHTC Fund XLV, LLC   Delaware  

Non-Member Manager: Garnet Community Investments XLV, LLC (0%)

 

   Investments
LIHTC Fund XLIX, LLC   Delaware  

Sole Member: Garnet Community Investments XLIX, LLC

 

   Investments
LIICA Re II, Inc.   Vermont  

100% Transamerica Life Insurance Company

 

   Captive insurance company
Massachusetts Fidelity Trust Company   Iowa  

100% AUSA Holding, LLC

 

   Trust company
Mitigation Manager, LLC   Delaware  

Sole Member: RCC North America LLC

 

   Investments
Money Services, Inc.   Delaware   100% AUSA Holding, LLC  

Provides certain financial services for affiliates including, but not limited to, certain intellectual property, computer and computer- related software and hardware services, including procurement and contract services to some or all of the Members of the AEGON Group in the United States and Canada.

 

Monumental Financial Services, Inc.   Maryland  

100% Transamerica Corporation

 

   DBA in the State of West Virginia for United Financial Services, Inc.
Monumental General Administrators, Inc.   Maryland  

100% AUSA Holding, LLC

 

   Provides management services to unaffiliated third party administrator
Natural Resources Alternatives Portfolio I, LLC   Delaware  

Members: Transamerica Life Insurance Company (96%); Transamerica Financial Life Insurance Company (4%); Managing Member: AEGON USA Realty Advisors, LLC

 

   Investment vehicle - to invest in Natural Resources
Natural Resources Alternatives Portfolio II, LLC   Delaware  

Members: Transamerica Life Insurance Company (95%); Transamerica Financial Life Insurance Company (5%)

 

   Investment vehicle
Natural Resources Alternatives Portfolio 3, LLC   Delaware  

Members: Transamerica Life Insurance Company (90%); Transamerica Financial Life Insurance Company (10%)

 

   Investment vehicle

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Nomagon Title Grandparent, LLC   Delaware  

Sole member is AEGON USA Asset Management Holding, LLC; AEGON USA Realty Advisors, LLC is the non- member manager of this entity

 

   Investment vehicle
Nomagon Title Holding 1, LLC   Delaware  

Sole member is Nomagon Title Parent, LLC; AEGON USA Realty Advisors, LLC is the non-member manager of this entity

 

   Investment vehicle
Nomagon Title Parent, LLC   Delaware  

Sole member is Nomagon Title Grandparent, LLC; AEGON USA Realty Advisors, LLC is the non-member manager of this entity

 

   Investment vehicle
Osceola Mitigation Partners, LLC   Florida  

Members: Mitigation Manager, LLC (50%); non-affiliate of AEGON, OBPFL- MITBK, LLC (50%)

 

   Investmetns
Pearl Holdings, Inc. I   Delaware  

100% AEGON USA Asset

Management Holding, LLC

 

   Holding company
Pearl Holdings, Inc. II   Delaware  

100% AEGON USA Asset

Management Holding, LLC

 

   Holding company
Peoples Benefit Services, LLC   Pennsylvania  

Sole Member - Transamerica Life Insurance Company

 

   Marketing non-insurance products
Placer 400 Investors, LLC   California  

Members: RCC North Amerivca LLC (50%); non-affiliate of AEGON, AKT Placer 400 Investors, LLC (50%)

 

   Investments
Primus Guaranty, Ltd.   Bermuda  

Members: Transamerica Life Insurance Company (20% 13.1%) and non-affiliates of AEGON and the public holders own the remainder.

 

   Provides protection from default risk of investment grade corporate and sovereign issues of financial obligations.
PSL Acquisitions Operating, LLC   Iowa  

Sole Member: RCC North America LLC

 

   Owner of Core subsidiary entities
RCC North America LLC   Delaware  

Sole Member: Transamerica Corporation

 

   Real estate
Real Estate Alternatives Portfolio 2 LLC   Delaware  

Members are: Transamerica Life Insurance Company (92.%); Transamerica Financial Life Insurance Company (7.5%). Manager: AEGON USA Realty Advisors, Inc.

 

   Real estate alternatives investment
Real Estate Alternatives Portfolio 3 LLC   Delaware  

Member: Transamerica Life Insurance Company. Manager: AEGON USA Realty Advisors, Inc.

 

   Real estate alternatives investment
Real Estate Alternatives Portfolio 3A, Inc.   Delaware  

Members: Transamerica Financial Life Insurance Company (9.4%); Transamerica Life Insurance Company (90.6%).

 

   Real estate alternatives investment

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Real Estate Alternatives Portfolio 4 HR, LLC   Delaware  

Members: Transamerica Life Insurance Company (96%); Transamerica Financial Life Insurance Company (4%). Manager: AEGON USA Realty Advisors, Inc.

 

   Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
Real Estate Alternatives Portfolio 4 MR, LLC   Delaware  

Members: Transamerica Life Insurance Company (96%); Transamerica Financial Life Insurance Company (4%). Manager: AEGON USA Realty Advisors, Inc.

 

   Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
River Ridge Insurance Company   Vermont  

100% AEGON Management Company

 

   Captive insurance company
SB Frazer Owner, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Second FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Seventh FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
St. Lucie West Development Company, LLC   Florida  

Sole Member - PSL Acquisitions Operating, LLC

 

   Development company
Stonebridge Benefit Services, Inc.   Delaware  

100% Commonwealth General Corporation

 

   Health discount plan
TA Private Equity Assets, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments (private equity)
TA-APOP I, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Private equity vehicle
TA-APOP II, LLC   Delaware  

Members: Transamerica Life Insurance Company (56%); Transamerica Financial Life Insurance Company (44%)

 

   Private equity vehicle
TABR Realty Services, LLC   Delaware  

Sole Member: AUSA Holding, LLC

 

   Real estate investments
TAH-MCD IV, LLC   Iowa  

Sole Member - Transamerica Affordable Housing, Inc.

 

   Serve as the general partner for McDonald Corporate Tax Credit Fund IV Limited Partnership.
TAH Pentagon Funds, LLC   Iowa  

Sole Member - Transamerica Affordable Housing, Inc.

 

   Serve as a general partner in a lower-tier tax credit entity
TAHP Fund 1, LLC   Delaware  

Sole Member - Garnet LIHTC Fund IX, LLC

 

   Real estate investments
TAHP Fund 2, LLC   Delaware  

Sole Member - Garnet LIHTC Fund VIII, LLC

 

   Low incoming housing tax credit
TAHP Fund VII, LLC   Delaware  

Investor Member: Garnet LIHTC Fund XIX, LLC

 

   Real estate investments

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
THH Acquisitions, LLC   Iowa  

Sole Member - Transamerica Life Insurance Company

 

   Acquirer of Core South Carolina mortgage loans from Investors Warranty of America, LLC and holder of foreclosed real estate.
TLIC Oakbrook Reinsurance, Inc.   Iowa  

100% Transamerica Life Insurance Company

 

   Limited purpose subsidiary life insurance company
TLIC Watertree Reinsurance Inc.   Iowa  

100% Transamerica Life Insurance Company

 

   Limited purpose subsidiary life insurance company
Tradition Development Company, LLC   Florida  

Sole Member - PSL Acquisitions Operating, LLC

 

   Development company
Tradition Irrigation Company, LLC   Florida  

Sole Member - PSL Acquisitions Operating, LLC

 

   Irrigation company
Tradition Land Company, LLC   Iowa  

Sole Member: RCC North America LLC

 

   Acquirer of Core Florida mortgage loans from Investors Warranty and holder of foreclosed real estate.
Transamerica Affordable Housing, Inc.   California  

100% Transamerica Realty Services, LLC

 

   General partner LHTC Partnership
Transamerica Agency Network, Inc.   Iowa  

100% AUSA Holding, LLC

 

   Special purpose subsidiary
Transamerica Asset Management, Inc.   Florida  

Transamerica Life Insurance Company owns 77%; AUSA Holding, LLC owns 23%.

 

   Fund advisor
Transamerica Capital, Inc.   California  

100% AUSA Holding, LLC

 

   Broker/Dealer

Transamerica Casualty Insurance Company

 

   Iowa  

100% Transamerica Corporation

 

   Insurance company
Transamerica Corporation   Delaware  

100% AEGON International B.V.

 

   Major interest in insurance and finance
Transamerica Corporation   Oregon  

100% Transamerica Corporation

 

   Holding company
Transamerica Finance Corporation   Delaware  

100% Transamerica Corporation

 

   Commercial & Consumer Lending & equipment leasing
Transamerica Financial Advisors, Inc.   Delaware  

1,000 shares owned by AUSA Holding, LLC; 209 shares owned by Commonwealth General Corporation; 729 shares owned by AEGON Asset Management Services, Inc.

 

   Broker/Dealer
Transamerica Financial Life Insurance Company   New York  

88% Transamerica Corporation; 12% Transamerica Life Insurance Company

 

   Insurance
Transamerica Fund Services, Inc.   Florida  

Transamerica Life Insurance Company owns 44%; AUSA Holding, LLC owns 56%

 

   Mutual fund
Transamerica International Direct Marketing Consultants, LLC   Maryland  

Members: 51% Beth Lewellyn; 49% AEGON Direct Marketing Services, Inc.

 

   Provide consulting services ancillary to the marketing of insurance products overseas.

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ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
Transamerica International RE (Bermuda) Ltd.   Bermuda  

100% Transamerica Corporation

 

   Reinsurance
Transamerica Investors Securities Corporation   Delaware  

100% Transamerica Retirement Solutions, LLC

 

   Broker/Dealer
Transamerica Leasing Holdings Inc.   Delaware  

100% Transamerica Finance Corporation

 

   Holding company
Transamerica Life Insurance Company   Iowa  

100% - Commonwealth General Corporation

 

   Insurance
Transamerica Life (Bermuda) Ltd.   Bermuda  

100% Transamerica Life Insurance Company

 

   Long-term life insurer in Bermuda - - will primarily write fixed universal life and term insurance
Transamerica Pacific Re, Inc.   Vermont  

100% Transamerica Life Insurance Company

 

   Captive insurance company
Transamerica Pyramid Properties LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Realty limited liability company
Transamerica Realty Investment Properties LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Realty limited liability company
Transamerica Resources, Inc.   Maryland  

100% Monumental General Administrators, Inc.

 

   Provides education and information regarding retirement and economic issues.
Transamerica Retirement Advisors, LLC   Delaware  

Sole Member: Transamerica Retirement Solutions, LLC

 

   Investment advisor
Transamerica Retirement Insurance Agency, LLC   Delaware  

Sole Member: Transamerica

Retirement Solutions, LLC

 

   Conduct business as an insurance agency.
Transamerica Retirement Solutions, LLC   Delaware  

Sole Member: AUSA Holding, LLC

 

   Retirement plan services.
Transamerica Stable Value Solutions Inc.   Delaware  

100% Commonwealth General Corporation

 

   Principle Business: Provides management services to the stable value division of AEGON insurers who issue synthetic GIC contracts.
Transamerica Travel and Conference Services, LLC   Iowa  

Sole Member: Money Services, Inc.

 

   Travel and conference services
Transamerica Ventures Fund II, LLC   Delaware  

Sole Member: AUSA Holding, LLC

 

   Investments
ULI Funding, LLC   Iowa  

Sole Member: AUSA Holding, LLC

 

   Holding Company
United Financial Services, Inc.   Maryland  

100% Transamerica Corporation

 

   General agency
Universal Benefits, LLC   Iowa  

Sole Member: AUSA Holding, LLC

 

   Third party administrator
US PENG, INC.   Delaware  

Sole Member: AEGON Levensverzekering N.V.

 

   Energy investment strategy
WFG Insurance Agency of Puerto Rico, Inc.   Puerto Rico  

100% World Financial Group Insurance Agency, Inc.

 

   Insurance agency
WFG Properties Holdings, LLC   Georgia  

Sole Member: World Financial Group, Inc.

 

   Marketing

Table of Contents

ITEM 29 LISTING

 

Name  

Jurisdiction of

Incorporation

  

Percent of Voting

Securities Owned

   Business
WFG Securities Inc.   Canada  

100% World Financial Group Holding Company of Canada, Inc.

 

   Mutual fund dealer
World Financial Group Canada Inc.   Canada  

100% World Financial Group Holding Company of Canada Inc.

 

   Marketing
World Financial Group Holding Company of Canada Inc.   Canada  

100% Commonwealth General Corporation

 

   Holding company
World Financial Group, Inc.   Delaware  

100% AEGON Asset Management Services, Inc.

 

   Marketing
World Financial Group Insurance Agency of Canada Inc.   Ontario  

50% World Financial Group Holding Co. of Canada Inc.; 50% World Financial Group Subholding Co. of Canada Inc.

 

   Insurance agency
World Financial Group Insurance Agency of Hawaii, Inc.   Hawaii  

100% World Financial Group Insurance Agency, Inc.

 

   Insurance agency
World Financial Group Insurance Agency of Massachusetts, Inc.   Massachusetts  

100% World Financial Group Insurance Agency, Inc.

 

   Insurance agency
World Financial Group Insurance Agency of Wyoming, Inc.   Wyoming  

100% World Financial Group Insurance Agency, Inc.

 

   Insurance agency

World Financial Group Insurance Agency, LLC

 

   Iowa  

Sole Member: AUSA Holding, LLC

 

   Insurance agency
World Financial Group Subholding Company of Canada Inc.   Canada  

100% World Financial Group Holding Company of Canada, Inc.

 

   Holding company
Yarra Rapids, LLC   Delaware  

Members are: Real Estate Alternatives Portfolio 4MR, LLC (49%) and non- AEGON affiliate (51%)

 

   Real estate investments
Zahorik Company, Inc.   California  

100% AUSA Holding, LLC

 

   Inactive
Zero Beta Fund, LLC   Delaware  

Members are: Transamerica Life Insurance Company (69.15%); Transamerica Financial Life Insurance Company (16.58%); Transamerica Pacific Insurance Company, Ltd. (14.27%). Manager: AEGON USA

Investment Management LLC

 

   Aggregating vehicle formed to hold various fund investments.

Table of Contents

Item 30. Indemnification

The Iowa Code (Sections 490.850 et. seq.) provides for permissive indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The Code also specifies producers for determining when indemnification payments can be made.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in connection with the securities being registered), the Depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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Item 31.

Principal Underwriters

 

(a)

Transamerica Capital, Inc. serves as the principal underwriter for:

Transamerica Capital, Inc. serves as the principal underwriter for the Retirement Builder Variable Annuity Account, Separate Account VA B, Separate Account VA Q, Separate Account VA FF, Separate Account VA HH, Separate Account VA-1, Separate Account VA-2L, Separate Account VA-5, Separate Account VA-6, Separate Account VA-7, Separate Account VA-8, Separate Account Fund B, Separate Account Fund C, Transamerica Corporate Separate Account Sixteen, Transamerica Separate Account R3, Separate Account VL, Separate Account VUL-1; Separate Account VUL-2, Separate Account VUL-3, Separate Account VUL-4, Separate Account VUL-5, Separate Account VUL-6, Separate Account VUL-A, and Variable Life Account A, Merrill Lynch Life Variable Annuity Separate Account, Merrill Lynch Life Variable Annuity Separate Account A, Merrill Lynch Life Variable Annuity Separate Account B, Merrill Lynch Life Variable Annuity Separate Account C, Merrill Lynch Life Variable Annuity Separate Account D, Merrill Lynch Variable Life Separate Account, and Merrill Lynch Life Variable Life Separate Account II, Separate Account VA BB, Separate Account VA CC, Separate Account VA U, Separate Account VA V, Separate Account VA AA, WRL Series Annuity Account, WRL Series Annuity Account B, WRL Series Life Account, WRL Series Life Account G, WRL Series Life Corporate Account and Separate Account VL E. These accounts are separate accounts of Transamerica Life Insurance Company.

Transamerica Capital, Inc. serves as principal underwriter for Separate Account VA BNY, Separate Account VA QNY, TFLIC Separate Account VNY, Separate Account VA-2LNY, TFLIC Separate Account C, Separate Account VA-5NLNY, Separate Account VA-6NY, TFLIC Series Annuity Account, TFLIC Series Life Account, TFLIC Pooled Account No. 44, Transamerica Variable Funds, ML of New York Variable Annuity Separate Account A, ML of New York Variable Annuity Separate Account B, ML of New York Variable Annuity Separate Account C, ML of New York Variable Annuity Separate Account D and ML of New York Variable Life Separate Account II. These accounts are separate accounts of Transamerica Financial Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for Transamerica Series Trust, Transamerica Funds, and Transamerica Asset Allocation Variable Funds.

Table of Contents
(b)

Directors and Officers of Transamerica Capital, Inc.:

 

Name   

Principal

Business Address

    Position and Offices with Underwriter

Brian Beitzel

 

   

(2)

 

   

Director, Treasurer and Chief Financial Officer

 

David Curry

    (3)   

Director, Chairman of the Board, Chief Executive Officer and President

 

Doug Hellerman

    (3)   

Director, Chief Compliance Officer and Vice President

 

Timothy Ackerman

    (3)    Director and Vice President

Mark Halloran

    (3)    Director and Vice President

Jennifer Pearce

    (3)    Director and Vice President

Gregory E. Miller-Breetz

    (1)    Secretary

 

  (1)

100 Light Street, Floor B1, Baltimore, MD 21202

  (2)

4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001

  (3)

1801 California Street, Suite 5200, Denver, CO 80202

Table of Contents
(c)

Compensation to Principal Underwriter:

 

Name of Principal Underwriter

 

  

  Net Underwriting
  Discounts and
  Commissions(1)

 

  

  Compensation
  on Redemption

 

  

  Brokerage
  Commissions

 

  

  Compensation    

 

Transamerica Capital, Inc.

     $149,065     $0     $0     $0

  (1) Fiscal Year 2021

Item 32. Location of Accounts and Records

The records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by Manager Regulatory Filing Unit, Transamerica Life Insurance Company at 6400 C Street SW., Cedar Rapids, Iowa 52499.

Item 33. Management Services.

All management service policies, if any, are discussed in Part A or Part B.

Item 34. Undertakings

The Depositor hereby represents that the fees and charges deducted under the contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Depositor.

SECTION 403(B) REPRESENTATIONS

Transamerica Life Insurance Company represents that it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88), regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in connection with redeemability restrictions on Section 403(b) Policies, and that paragraphs numbered (1) through (4) of that letter will be complied with.

TEXAS ORP REPRESENTATION

The Registrant intends to offer policies to participants in the Texas Option Retirement Program. In connection with that offering, the Registrant is relying on Rule 6c-7 under the Investment Company Act of 1940 and is complying with, or shall comply with, paragraphs (a) – (d) of that Rule.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Denver and State of Colorado, on April 28, 2022.

 

  WRL SERIES ANNUITY ACCOUNT               
  Registrant  
  TRANSAMERICA LIFE INSURANCE COMPANY  
  Depositor  
 

 

  
 

Jamie Ohl*

President

  

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 28, 2022.

 

Signatures    Title
   Director and President (principal executive officer)

                                                                          *

Jamie Ohl

 

   
   Director, Chairman of the Board, Controller, Vice President and Assistant Treasurer (principal accounting officer)

                                                                          *

Fred Gingerich

 

   Director, Chief Operating Officer, Individual Solutions Division

                                                                          *

Matthew McCorry

 

   Director, General Counsel, Secretary and Senior Vice President

                                                                          *

Karyn Polak

 

   Chief Financial Officer, Executive Vice President and Treasurer (principal financial officer)

                                                                          *

Christopher Ashe

                                                                          *

Zachary Harris

    Director

                                                                          *

Chris Giovanni

    Director

/s/Brian Stallworth                                           

Brian Stallworth

    Assistant Secretary

*By: Brian Stallworth – Attorney-in-Fact pursuant to Powers of Attorney filed previously and/or herewith.