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Table of Contents

TRANSAMERICA RETIREMENT INCOME PLUS®

Issued by

TRANSAMERICA LIFE INSURANCE COMPANY

SEPARATE ACCOUNT VA B

Supplement dated May 1, 2017

(for Applications signed on or after May 1, 2017)

to the

Prospectus dated May 1, 2017

This Rate Sheet Prospectus Supplement (this “supplement”) should be read and retained with the prospectus for the Transamerica Retirement Income Plus® variable annuity. If you would like another copy of the current prospectus, please call us at (800) 525-6205.

All Rate Sheet Prospectus Supplements are also available on the Edgar system at www.sec.gov. Please see the SEC file number table below for your applicable product.

We are issuing this supplement to provide the rider fee growth and withdrawal percentages that we are currently offering for the Living Benefit as described in the Living Benefit Fees, Living Benefit – Base Benefit – Withdrawal Percentage and the Living Benefit – Base Benefit –Growth sections of the prospectus. This supplement replaces and supersedes any previously issued Rate Sheet Prospectus Supplement(s), and must be used in conjunction with an effective Transamerica Retirement Income Plus® variable annuity prospectus, as amended.

The amounts listed below apply for applications signed between May 1, 2017 and May 31, 2017. The rider fee growth and withdrawal percentages may be different than those listed below for applications signed after May 31, 2017. The rider fee and withdrawal percentages applicable to your policy will not change for the life of your policy (unless subject to an automatic step-up as described in the Automatic Step-Up section of your prospectus. At the time of an automatic step-up the rider fee percentage may increase by no more than 0.75% from the current rider fee percentage listed below). The Rate Sheet Prospectus Supplement applicable to your policy will be included with your prospectus. Please work with your financial professional or visit www.transamerica.com to confirm the current rates.

RIDER FEE

1.25%

GROWTH PERCENTAGE

5.0%

WITHDRAWAL PERCENTAGE

 

Age at time of

first withdrawal

   

Withdrawal Percentage -

Single Life Option*

   

Withdrawal Percentage -

Joint Life Option*

0-58    0.0%    0.0%
59-64    4.35%    3.85%
65-79    5.35%    4.85%
> 80    6.35%    5.85%

 

*  The withdrawal percentage is determined by the annuitant’s age (or the annuitant’s spouse’s age if younger and the joint life option is elected) at the time of the first withdrawal taken on or after the benefit anniversary immediately following the annuitant’s (or the annuitant’s spouse’s if younger and the joint life option is elected) 59th birthday.

Please note: In order for you to receive the rider fee growth and withdrawal percentages reflected above, your application must be signed within the time period disclosed above. We must also receive your completed application within 7 calendar days from the date that this supplement is no longer effective, and the policy must be funded within 60 calendar days from the date that this supplement is no longer effective. If these conditions are not met, your application will be considered not in good order. If you decide to proceed with the purchase of the policy, additional paperwork may be required to issue the policy with the applicable rates in effect at that time.

 

Transamerica Life Insurance Company

Product Name

    SEC File Number

Transamerica Retirement Income Plus®

    333-186121

Please keep this Rate Sheet Prospectus Supplement for future reference.

Table of Contents
TRANSAMERICA RETIREMENT INCOME PLUS®
Transamerica Life Insurance Company
Separate Account VA B (EST. 1/19/1990)
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
(800)525-6205
www.transamerica.com
 Transamerica Financial Life Insurance Company
Separate Account VA BNY (EST. 9/27/1994)
Administrative Office
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
(800)525-6205
www.transamerica.com
This prospectus describes information you should know before you purchase a Transamerica Retirement Income Plus® variable annuity. The prospectus describes a contract between each owner and joint owner (“you”) and Transamerica Life Insurance Company or Transamerica Financial 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. You can also contact us to get a Statement of Additional Information (SAI) free of charge. The SAI contains more information about this policy. A registration statement, including the SAI, has been filed with the Securities and Exchange Commission (SEC) and the SAI is incorporated herein by reference. The prospectus and SAI can also be obtained from the SEC's website (www.sec.gov). The table of contents of the SAI is included at the end of this prospectus. 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. 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 tax-advantaged retirement plan. This information does not constitute personalized investment advice or financial planning advice.
Prospectus Date: May 1, 2017
Statement of Additional Information Date: May 1, 2017

 

The subaccounts available under this policy invest in the following underlying fund portfolios:
SUBACCOUNT UNDERLYING FUND PORTFOLIO
TA Aegon Government Money Market - Service Class Transamerica Aegon Government Money Market VP – Service Class
TA Aegon U.S. Government Securities - Service Class Transamerica Aegon U.S. Government Securities VP – Service Class
TA Asset Allocation - Conservative - Service Class Transamerica Asset Allocation - Conservative VP – Service Class
TA PIMCO Total Return - Service Class Transamerica PIMCO Total Return VP – Service Class
TA QS Investors Active Asset Allocation - Conservative - Service Class Transamerica QS Investors Active Asset Allocation - Conservative VP - Service Class
TA QS Investors Active Asset Allocation - Moderate - Service Class Transamerica QS Investors Active Asset Allocation - Moderate VP - Service Class
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GLOSSARY OF TERMS
accumulation unit—An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.
adjusted policy value—The policy value increased or decreased by any excess interest adjustment.
Administrative Office—Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001, (800) 525-6205.
annuitant—The person on whose life any annuity payments involving life contingencies will be based.
annuitize (annuitization)—When you switch from the accumulation phase to the income phase and we begin to make annuity payments to you (or your payee).
annuity commencement date—The date upon which annuity payments are to commence. This date may not be later than the last day of the policy month following the month in which the annuitant attains age 99 (earlier if required by state law).
annuity payment option—A method of receiving a stream of annuity payments selected by the owner.
assumed investment return or AIR— The annual effective rate shown in the contract that is used in the calculation of each variable annuity payment.
cash value—The adjusted policy value less any applicable surrender charge and rider fees (imposed upon surrender).
excess interest adjustment—A positive or negative adjustment to amounts surrendered (both partial or full surrenders) and transfers or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by us since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon full or partial surrenders or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum. The excess interest adjustment does not apply to policies issued in New York by Transamerica Financial Life Insurance Company.
fixed account—One or more investment options under the policy that are part of our general assets and are not in the separate account.
guaranteed period options—The various guaranteed interest rate periods of the fixed account which we may offer and into which premium payments may be paid or amounts transferred or amounts transferred when available.
Living Benefit—A benefit under the policy that provides a guaranteed minimum withdrawal benefit.
market day—A day when the New York Stock Exchange is open for business.
owner (you, your)—The person who may exercise all rights and privileges under the policy.
policy date—The date shown on the policy data page attached to the policy and the date on which the policy becomes effective.
policy value—On or before the annuity commencement date, the policy value is equal to the owner's:
• premium payments; minus
• gross  surrenders (surrenders plus the surrender charge on the portion of the requested partial surrender that is subject to the surrender charge plus or minus any excess interest adjustment plus taxes (on the withdrawal)); plus
• interest credited in the fixed account; plus
• accumulated gains in the separate account; minus
• accumulated losses in the separate account; minus
• service charges, rider fees (including those imposed upon rider termination), premium taxes, transfer fees, and other charges, if any.
policy year—A policy year begins on the policy date and on each anniversary thereafter.
separate account—Separate Account VA B and Separate Account VA BNY, separate accounts established and registered as unit investment trusts 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.
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subaccount—A subdivision within the separate account, the assets of which are invested in a specified underlying fund portfolio.
surrender charge free amount—The amount that can be withdrawn each policy year without incurring any surrender charges and excess interest adjustment (if applicable). Please see “EXPENSES – Surrender Charges” for more explanation.
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 market day.
written notice—Written notice, signed by the owner, that gives us the information we require and is received in good order at the Administrative Office. For some transactions, we may accept an electronic notice or telephone instructions. Such electronic notice must meet the requirements for good order that we establish for such notices.
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INTRODUCTION
How to buy this variable annuity
√ Choose Between Qualified and Non-Qualified(1)
  Qualified Policy(2,3)
Minimum Initial Deposit 		  Non-Qualified (4) Policy
Minimum Initial
Deposit(2) 		  Surrender
Charge Period 		  Mortality & Expense
Risk and
Administrative Charges 		  Living
Benefit
Living Benefit $1,000   $5,000   7 years   1.30%   1.25%
(1)  This table does not show underlying fund portfolio expenses, annual service charge and rider fees. This variable annuity may not be available through your financial intermediary.
(2)  We currently issue new policies to the following plans: Traditional IRAs, Roth IRAs, SIMPLE IRAs, SEP-IRAs, 457(f) plans (in certain circumstances) and Section 401(a) plans (including profit sharing plans, defined benefit pension plans, defined contribution pension plans, 401(k) plans, combination defined benefit/contribution plans).
(3)  Includes anticipated premium at time of application from transfers or rollovers as indicated on your application or electronic order form.
(4)  Includes anticipated premium at time of application from 1035 exchanges as indicated on you application or electronic order form.
√ Choose investment options
• Subaccounts – Invest in underlying funds representing a range of investment strategies, objectives and asset classes.
• Fixed Account - A fixed interest account (if available).
Subject to limitations, you may move your policy value among each of these investment options.
√ Choose Single or Joint
The Living Benefit can be purchased as a single or joint benefit.
√ Complete our application or order form
√ Pay the applicable minimum initial deposit
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FEE TABLE AND EXPENSE EXAMPLES
The following describes the fees and expenses that you will pay when buying, owning, and surrendering the policy. Please be certain to review the notes following the fee table and expense examples for further information about the fees and charges presented. The order of the notes follows the order in which the fees and charges under the policy are presented in the fee tables and the expense examples.
The fee table applies only to the accumulation phase and reflects the maximum charges unless otherwise noted. During the income phase the fees may be different than those described in the Fee Table. See Notes to Fee Table and Expense Examples, No. 5.
The first section describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy, or transfer cash value between investment options. State premium taxes may also be deducted. State premium taxes currently range from 0% - 3.5%. Excess interest adjustments may be made to amounts surrendered (partial and full), transferred or applied to annuity payment options from cash value from the fixed account. (All fees are maximum for purchases made while this prospectus is effective unless otherwise noted.)
Owner Transaction Expenses:  
Front-End Sales Load On Purchase Payments 0%
Contingent Deferred Surrender Charges (as a percentage of premium surrendered)(1)  
Number of Years Since Premium Payment Date  
Year 1 8%
Year 2 8%
Year 3 7%
Year 4 6%
Year 5 5%
Year 6 4%
Year 7 3%
Year 8 (or more) 0%
Transfer Fee(2) $0-$10
Special Service Fee(3) $0-$50*
* $0 - $25 for policies issued prior to May 1, 2015.
The next section describes the fees and expenses that you will pay periodically during the time that you own the policy, not including portfolio fees and expenses. (All fees are maximum for purchases made while this prospectus is effective unless otherwise noted.)
Annual Service Charge(4) $0-$50
Separate Account Annual Expenses (as a percentage, annually, of average separate account value) (5):  
Mortality and Expense Risk Fee 1.15%
Administrative Charge 0.15%
Total Base Separate Account Annual Expenses 1.30%
Living Benefit (annual charge - % of Withdrawal Base)*
Benefit 2.50%
*The Current rider fee will be less than or equal to the stated Maximum. Your rider fee may increase (or decrease) at the time of any automatic step-up. See Automatic Step- Up section. Your current rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchase the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the Edgar system at (File 333-186121 for TLIC and 333-187834 for TFLIC).
The next section shows the lowest and highest total operating expenses charged by the underlying fund portfolios for the year ended December 31, 2016 (before any fee waiver or expense reimbursements). Expenses may be higher or lower in future years. More detail concerning each portfolio's fees and expenses is contained in the prospectus for each portfolio.
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Total Portfolio Annual Operating Expenses (Expenses that are deducted from portfolio assets, including management fees, distribution and/or service 12b-1 fees, and other expenses)(6):  
Lowest Gross 0.58%
Highest Gross 1.03%
The following Example is 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, policy fees, separate account annual expenses, and portfolio fees and expenses.
The Example assumes that you invest $10,000 in the policy for the time periods indicated. The Example also assumes that your policy has a 5% return each year, the highest Total Portfolio Annual Operating Expenses of any of the portfolios for the year ended December 31, 2016. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
Expense Examples(7):
If the policy is surrendered at the end of the applicable time period:
1 Year $1,092
3 Years $1,770
5 Years $2,385
10 Years $4,067
If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy:
1 Year $ 361
3 Years $1,111
5 Years $1,901
10 Years $4,067
Please remember that the Example is an illustration and does not represent past or future expenses. Your actual expenses may be lower or higher than those reflected in the Example. Similarly, your rate of return may be more or less than the 5% assumed in the Example.
For information concerning compensation paid for the sale of the policies, see OTHER INFORMATION - Distributor of the Policies.
Notes to Fee Table and Expense Examples
Policy Owner Transaction Expenses:
1) Surrender Charge: This product does not have a surrender charge.
2) Transfer Fee:  The transfer fee, if any is imposed, applies to each policy, regardless of how policy value is allocated among the investment options. There is no fee for the first 12 transfers per policy year. For additional transfers, we may charge a fee of $10 per transfer. Currently, we do not charge a transfer fee, but reserve the right to do so.
3) Special Service Fees: We may deduct a charge for special services, including overnight delivery; duplicate policies; non-sufficient checks on new business; duplicate Form 1099 and Form 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. We may charge a fee for each service performed. In addition, we may consider as special services customer initiated changes, modifications and transactions which are submitted in such a manner as to require us to incur additional processing costs.
4) Annual Service Charge:
The maximum annual service charge is the lesser of $50 per policy or 2% of the policy value.
Criteria for Potential Waiver   Potential Waiver Amount**
$50,000 thru $249,999.99*   up to $35
$250,000 or more*   up to $50
* Based on Policy Value or sum of all premium payments less all withdrawals.
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** In no event will we waive in the aggregate more than the actual annual service charge for any policy year.
5) Separate Account Annual Expenses:
Mortality and Expense Risk and Administrative Fee: The mortality and expense risk fee shown is for the accumulation phase with the base death benefit. During the income phase, the mortality and expense risk and administrative fee is at an annual rate of 1.25%.
Maximum Living Benefit Fee: This fee total reflects the maximum fee increase resulting from an automatic step-up of the withdrawal base while the benefit is in effect. The withdrawal base is used to calculate the benefit withdrawal amount. On the benefit date the withdrawal base is equal to the policy value.
6) Total Portfolio Annual Operating Expenses:
The fee table information relating to the underlying fund portfolios was provided to us by the underlying fund portfolios, their investment advisers or managers. We have not verified the accuracy of information provided by unaffiliated fund portfolios. Actual future expenses of the portfolios may be greater or less than those shown in the Table. “Gross” expense figures do not reflect any fee waivers or expense reimbursements. Actual expenses may have been lower than those shown in the Table.
7) 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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THE ANNUITY
This prospectus describes information you should know before you purchase the Transamerica Retirement Income Plus®.
An annuity is a contract between you, the owner, and an insurance company (in this case us), 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 annuity commencement date. Until the annuity commencement date, your annuity is in the accumulation phase and the earnings (if any) are generally tax deferred. Tax deferral means you are not taxed until you take money out of your annuity. After you annuitize, your annuity switches to the income phase.
The policy is a “deferred” annuity. You can use the policy to accumulate funds for retirement or other long-term financial planning purposes. Your individual investment and your rights are determined primarily by your own policy.
The policy is a “flexible premium” annuity because after you purchase it, you can generally make additional premium payments of at least $50 (but not more than the stated maximum total premium payment amount) until the annuity commencement 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 phase depends upon the performance of your subaccounts. You could lose the amount you allocate to the separate account. The amount of annuity payments you receive from the separate account also depends upon the investment performance of your subaccounts for the income phase.
The fixed account may, but is not guaranteed to always, be offered. If the fixed account is offered it will offer interest at a rate(s) that we guarantee will not decrease during the selected guaranteed period. There may be different interest rates for each different guaranteed period that we may offer and that you select.
Do not purchase this policy if you plan to use it 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 in good order (See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order) all information needed to issue the policy;
• we receive in good order (at our Administrative Office) a minimum initial premium (including anticipated premiums from 1035 exchanges on nonqualified policies and transfers or rollovers on qualified policies as indicated on your application or electronic order form) payment; and
• the annuitant, owner, and any joint owner are age 85 or younger (the limit may be lower for qualified policies).
• the owner and annuitant have an immediate familial relationship.
Please note, certain riders described herein may require a younger age. Please carefully read the applicable rider sections regarding any age limitations.
We reserve the right to reject any application.
Premium Payments
General. You should make checks for premium payments payable to Transamerica Life Insurance Company or Transamerica Financial Life Insurance Company, as applicable, and send them to the Administrative Office. Your check must be honored in order for us to pay any associated annuity payments and benefits due under the policy.
We do not accept cash. 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 us, 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 (including anticipated premiums from 1035 exchanges as indicated on your application or electronic order form), and at least $1,000 for qualified policies (including anticipated premiums from transfers or rollovers as indicated on your application or electronic order form). You must obtain our prior approval to purchase a policy with an amount in excess of our maximum premium amount.
Your initial premium payment may not be credited to your policy on the day that you leave your premium payment with your financial intermediary. Your financial intermediary may take up to seven market days to assess whether buying this policy is suitable for you. Your financial intermediary may send us your initial premium payment while they complete this assessment. Your financial intermediary must also ensure that we have all the information needed for us to process your policy. We will not begin to process your policy during this period.
We will first begin our review only once we receive both your initial premium payment and your application (or an electronic order form). We will credit your initial premium payment to your policy within two market days after the market day that we receive your initial premium payment, your application (or order form) and once we determine that your policy information is both complete and in good order. This time period is in addition to the time your financial intermediary may take to complete their part of the process. If we are unable to complete our part of the process within five market days after the market day that we receive your initial premium payment and your application (or electronic order form), then we will notify you or your financial intermediary, if applicable, and explain why we can't process your policy. We will also return your initial premium payment at that time unless you consent to us holding the premium up to 30 days. We must receive your consent to hold prior to the market close on the fifth market day after receipt of the premium. If your information is not received in good order within 30 days of our receipt of the premium, then it will be returned. We will credit your initial premium payment within two market days after your information is both complete and in good order.
Neither we nor your financial intermediary are responsible for lost investment opportunities while we each complete our review processes. Any initial premium payments received by us will be held in our general account until credited to your policy. You will not earn interest on your initial premium payment during these review periods.
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 quarters, policy months and policy anniversaries.
Additional Premium Payments. You are not required to make any additional premium payments. However, you can generally make additional premium payments during the accumulation phase. Additional premium payments must be at least $50. After the first policy year, additional premium payments each policy year cannot, in the aggregate, without our prior approval exceed $25,000 for nonqualified policies and the lesser of (1) the IRS maximum contribution limit or (2) $60,000 for qualified policies. We reserve the right to refuse any additional premium payment in excess of these limits, and if you do not obtain prior approval for premiums in excess of the dollar amounts listed above, the business will be deemed not in good order. We will credit additional premium payments to your policy as of the market day we receive your premium and required information in good order at our Administrative Office. Additional premium payments must be received before the close of the New York Stock Exchange (usually 4:00 p.m. Eastern time) to get same-day pricing of the additional premium payment.
Maximum Total Premium Payments. For issue ages 0-80, we reserve the right to require prior approval of any cumulative premium payments over $1,000,000 (this includes subsequent premium payments) for policies with the same owner or same annuitant issued by us or an affiliate. We may approve premium payments over $1,000,000 but restrict access to certain optional benefits. For issue ages over 80, we reserve the right to require prior approval of any cumulative premium payments over $500,000 (this includes subsequent premium payments) for 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. When you purchase a policy, we will allocate your premium payment to the investment choices you select. Your allocation must be in whole percentages and must total 100%. We will allocate additional premium payments the same way, unless you request a different allocation. You could lose the amount you allocate to the subaccounts.
If you allocate premium payments to the Dollar Cost Averaging program (if it is available), 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 sending written instructions to our Administrative Office, or by telephone, or other electronic means acceptable to us, subject to the limitations described in ADDITIONAL FEATURES - Telephone and Electronic Transactions, or any other means acceptable to us. The allocation change will apply to premium payments received on or after the date we receive the change request in good order.
We reserve the right to restrict or refuse any premium payment.
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Policy Value
You should expect your policy value to change from valuation period to valuation period. A valuation period begins at the close of trading on the New York Stock Exchange on each market day and ends at the close of trading on the next succeeding market day. A market day is each day that the New York Stock Exchange is open for business. The New York Stock Exchange usually closes at 4:00 p.m., Eastern time. Holidays are generally not market days.
INVESTMENT OPTIONS
This policy 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 - Underlying Fund Portfolios Associated with the Subaccounts.”
The general public may not purchase shares of any of these underlying fund portfolios. The names and investment objectives and policies may be similar to other portfolios managed by the same investment adviser or manager that are sold directly to the public. You should not expect the investment results of the underlying fund portfolios to be the same as those of other portfolios.
More detailed information, including an explanation of the portfolios' fees and investment objectives, may be found in the current prospectuses for the underlying fund portfolios, which accompany this prospectus. You should read the prospectuses for the underlying fund portfolios carefully before you invest.
Note: If you received a summary prospectus for any of the portfolios listed in “Appendix - Portfolios Associated with the Subaccounts”, 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, volatility, hedgeability, 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, see EXPENSES - Revenue We Receive. We review the portfolios periodically and may remove a portfolio, or limit its availability to new premium payments 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”).
We have developed this variable annuity in cooperation with one or more distributors, and may include certain underlying fund portfolios based on their recommendations. Their selection criteria may differ from our selection criteria.
You are responsible for choosing the subaccounts which invest in the underlying fund portfolios, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Because investment risk is borne by you, decisions regarding investment allocations should be carefully considered. We do not recommend or endorse any particular underlying fund portfolio and we do not provide investment advice.
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 the underlying fund's website 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 guarantee that any of the subaccounts will always be available for premium payments, allocations, or transfers. 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.
We reserve the right to limit the number of subaccounts you are invested in at any one time.
With your rider, you will be subject to investment restrictions. In the future, we may change the investment restrictions.
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Not all subaccounts may be available for all policies, in all states, or through all financial intermediary firms.
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 retain the right, subject to any applicable law, to make certain changes to the separate account and its investment options. We reserve the right to add new portfolios (or portfolio classes) or close existing portfolios (or portfolio classes). We also reserve the right to eliminate the shares of any portfolio held by a subaccount and to substitute shares of another portfolio of the underlying fund portfolios, or of another registered open-end management investment company for the shares of any portfolio, if the shares of the portfolio are no longer available for investment or if, in our judgment, investment in any portfolio would be inappropriate in view of the purposes of the separate account. To the extent required by the 1940 Act, as amended, substitutions of shares attributable to your interest in a subaccount will not be made without prior notice to you and the prior approval of the SEC. Nothing contained herein shall prevent the separate account from purchasing other securities for other series or classes of variable annuity policies, or from affecting an exchange between series or classes of variable annuity policies on the basis of your requests.
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 or liquidate 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 or liquidated, we will notify you and request a reallocation of the amounts invested in the closed or liquidated subaccount. If we do not receive additional instructions, any subsequent premium payments, or transfers (including Dollar Cost Averaging transactions or asset rebalance programs transactions) into a closed subaccount will be re-allocated to the remaining available investment options according to the investment allocation instructions you previously provided. If your previous investment allocation instructions do not include any available investment options, we will require new instructions. If we do not receive new instructions, the requested transaction will be canceled and any premium payment will be returned. Under asset rebalance programs the value remaining in the closed subaccount will be excluded from any future rebalancing. 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 policy, you should also consider whether or not to re-allocate the value remaining in the closed subaccount to another investment option. 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 death benefit adjustments for continued policies, if an investment option is closed to new investment, the amount that would have been allocated thereto will instead be allocated pro-rata to the other current investment options you have value allocated to and which are open to new investment.
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.
The Fixed Account
The fixed account may, but is not guaranteed to always, be available. If available, 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 1940 Act. Accordingly, neither the general account nor any interests therein are generally subject to the provisions of the 1933 or 1940 Acts. Disclosures relating to interests in the general account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy of statements made in a registration statement.
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 when available will not be less than the guaranteed minimum effective annual interest rate shown on your policy (the “guaranteed minimum”). We determine credited rates, which are guaranteed for at least one year, in our sole discretion. You bear the risk that we will not credit interest greater than the guaranteed minimum. At the end of the guaranteed period option you selected, the value in that guaranteed period option will automatically be transferred into the money market subaccount or if a money
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market subaccount is unavailable to a new guaranteed period option of the same length (or the next shorter period if the same period is no longer offered) at the current interest rate for that period. You can transfer to another investment option by giving us notice within 30 days before the end of the expiring guaranteed period.
Surrenders, withdrawals, transfers, and amounts applied to an annuity payment option from a guaranteed period option of the fixed account prior to the end of the guaranteed period are generally subject to an excess interest adjustment. See ACCESS TO YOUR MONEY - Excess Interest Adjustment for more information about when an excess interest adjustment applies. This adjustment will also be made to amounts that you apply to an annuity payment option. This adjustment may increase or decrease the amount of interest credited to your policy. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum.
We also guarantee that upon full surrender your cash value attributable to the fixed account will not be less than the amount required by the applicable nonforfeiture law at the time the policy is issued.
If you select the fixed account, when it is available, your money will be placed with our other general assets. The amount of money you are able to accumulate in the fixed account during the accumulation phase depends upon the total interest credited. The amount of each annuity payment you receive during the income phase from the fixed portion of your policy will remain level for the entire income phase. The interest credited as well as principal invested in the fixed account is based on our claims-paying ability.
We reserve the right to refuse any premium payment or transfer to the fixed account.
Transfers
During the accumulation phase, you may make transfers to or from any investment option within certain limitations. Transfers out of a guaranteed period option of the fixed account are limited to the following:
• Transfers at the end of a guaranteed period.
• Transfers of amounts equal to interest credited. This may affect your overall interest-crediting rate, because unless otherwise directed transfers are deemed to come from the oldest premium payment first.
• Other than at the end of a guaranteed period, transfers of amounts from the guaranteed period option in excess of amounts equal to interest credited, are subject to an excess interest adjustment. If it is a negative adjustment, the maximum amount you can transfer in any one policy year may be limited to 25% of the amount in that guaranteed period option, less any previous transfers during the current policy year. If it is a positive adjustment, we do not limit the amount that you can transfer.  (Note: This restriction may prolong the period of time it takes to transfer the full amount in the guaranteed period option of the fixed account.  You should carefully consider whether investment in the fixed account meets your needs and investment criteria.)
In general, each transfer must be at least $500, or the entire subaccount value. Transfers of interest from a guaranteed period option of the fixed account must be at least $50. If less than $500 remains as a result of the transfer, then we reserve the right to include that amount in the transfer. Transfer requests must be received in good order while the New York Stock Exchange is open to get same-day pricing of the transaction. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
The number of transfers permitted may be limited and a $10 charge for each transfer in excess of 12 in any policy year may apply. Currently, we do not charge a transfer fee. We reserve the right to prohibit transfers to the fixed account.
During the income phase, you may transfer values out of any subaccount; however, you cannot transfer values out of the fixed account. 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 annuity units in the subaccount from which the transfer is being made.
Transfers made by telephone, or other electronic means acceptable to us, are subject to the limitations described in ADDITIONAL FEATURES - Telephone and Electronic Transactions.
Market Timing and Disruptive Trading
Statement of Policy. This variable annuity policy 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)
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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 withdrawals 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.
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.
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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 options 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 options under the variable insurance product. In addition, we may not honor transfer requests if any variable investment option that would be affected by the transfer is unable to purchase or redeem shares of its corresponding underlying fund portfolio.
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.
Investment Restrictions
If you elect certain optional riders, you will be subject to investment restrictions requiring you to invest in certain underlying fund portfolios, known as designated investment options. In the future, we may change the investment restrictions.
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One or more of the underlying fund portfolios that may be designated investment options under an optional rider, in part, may include a volatility control strategy. Volatility control strategies, in periods of high market volatility, could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your policy value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns. Volatility control (and similar terms) can encompass a variety of investment strategies of different types and degrees; therefore, you should read the applicable annuity and underlying fund portfolio prospectuses carefully to understand how these investment strategies may affect your policy value and rider benefits. Our requirement to invest in accordance with certain investment options, which may include volatility control, may reduce our costs and risks associated with this rider. You pay an additional fee for the rider benefits which, in part, pay for protecting the rider benefit base from investment losses. Since the rider benefit base does not decrease as a result of investment losses, volatility control strategies might not provide meaningful additional benefit to you. You should carefully evaluate with your financial advisor whether to invest in underlying fund portfolios with volatility control strategies, taking into consideration the potential positive or negative impact that such strategy may have on your investment objectives, your policy value and the benefits under the riders. If you determine that funds with volatility control strategies are not consistent with your investment objectives, there continues to be other investment options available under the riders that do not invest in funds that utilize volatility control strategies.
For more information about the underlying fund portfolios and the investment strategies they employ, please refer to the underlying fund portfolios' current prospectuses.
EXPENSES
There are charges and expenses associated with your policy that reduce the return on your investment in the policy. In addition to the following charges, there are optional benefits that if selected, assess additional charges. Please see ADDITIONAL FEATURES for more information.
Surrender Charges
During the accumulation phase, you can surrender part or all of the cash value (restrictions may apply to qualified policies). We may apply a surrender charge to compensate us for start-up expenses of the policy relating to sales, including commissions to registered representatives and other promotional expenses.
You can surrender up to 10% of your premium payments each policy year free of surrender charges. This amount is referred to as the surrender charge free amount and is determined at the time of surrender. (This amount is not cumulative, so not surrendering anything in one year does not increase the surrender charge free amount in subsequent years.) If the surrender is in excess of the surrender charge free amount, you might have to pay a surrender charge, which is a contingent deferred sales charge, on the excess amount.
For example, assume your premium is $100,000 and your policy value is $106,000 at the beginning of the second policy year and you surrender $30,000. Since that amount is more than your surrender charge free amount ($10,000), you would pay a surrender charge of $1,600 on the remaining $20,000 [8% of ($30,000 - $10,000)]. Likewise, assume your policy value is $80,000 (premium payments $100,000) at the beginning of the second policy year and you surrender your policy. You would pay a surrender charge of $7,200 [8% of ($100,000 - ($100,000 x 10%))].
You can generally choose to receive the full amount of a requested partial surrender by directing us to deduct any applicable surrender charge (and any applicable excess interest adjustment) from your remaining policy value. You receive your cash value upon full surrender.
Surrender charges and excess interest adjustments are waived if you surrender money under the Nursing Care and Terminal Condition Withdrawal Option or the Unemployment Waiver.
For surrender charge purposes, earnings are considered to be surrendered first, then the oldest premium is considered to be surrendered next. Please note, while there is no surrender charge on the withdrawal of earnings, withdrawn earnings count towards your surrender charge free amount. This means that withdrawing earnings will reduce (possibly to zero) your surrender charge free amount (10% of premium payments) for that policy year.
Keep in mind that surrenders may be taxable and, if made before age 59½, may be subject to a 10% federal penalty tax. For tax purposes, surrenders from nonqualified policies are considered to come from taxable earnings first.
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We may elect to reduce or eliminate the amount of the surrender charge when the policy is sold under circumstances which reduce our sales or other expenses or when required to by regulation or regulatory authority.
Excess Interest Adjustment
Surrenders, withdrawals, transfers, amounts applied when a death benefit is calculated, and amounts applied to an annuity option from the fixed account may be subject to an excess interest adjustment. This adjustment could retroactively reduce the interest credited in the fixed account to the guaranteed minimum or increase the amount credited. This adjustment may also apply to amounts applied to an annuity payment option. (However, please note that a death benefit will not be reduced if the excess interest adjustment results in a decrease in the cash value available to you.) Please see “Appendix - Excess Interest Adjustment Examples” for an example showing the effect of a hypothetical excess interest adjustment calculation. The excess interest adjustment plays a role in calculating the total interest credited to the fixed account.
Mortality and Expense Risk Fees
We charge a fee as compensation for bearing certain mortality and expense risks under the policy. This fee is assessed daily based on the net asset value of each subaccount. Examples of such risks include a guarantee of annuity rates, the death benefit, certain expenses of the policy (including distribution related expenses), and assuming the risk that the current charges will be insufficient in the future to cover costs of selling, distributing and administering the policy.
If this charge does not cover our actual costs, we absorb the loss. Conversely, if the charge more than covers actual costs, the excess is added to our surplus. We expect to profit from this charge. We may use any profit for any proper purpose, including distribution expenses.
Administrative Charges
We deduct a daily administrative charge to cover the costs of supporting and administering the policy (including certain distribution-related expenses). This charge is equal to a percentage of the daily net asset value of each subaccount during both the accumulation phase and the income phase.
Premium Taxes
A deduction is also made for premium taxes, if any, imposed on us by a state, municipality or other government agency. The tax, currently ranging from 0% to 3.50%, is assessed at the time premium payments are made or when annuity payments begin. We pay the premium tax at the time it is imposed. We will, at our discretion, deduct the total amount of premium taxes, if any, from the policy value when such taxes are due to the applicable taxing authority, you begin receiving annuity payments, you surrender the policy or a death benefit is paid.
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.
Special Service Fees
We may deduct a charge for special services, including overnight delivery; duplicate policies; non-sufficient checks on new business; duplicate Form 1099 and Form 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 us to incur additional processing costs.
Transfer Fee
You are generally allowed to make 12 free transfers per policy year before the annuity commencement date. If you make more than 12 transfers per policy year, we reserve the right to charge for each additional transfer. Premium payments, Asset Rebalancing, and Dollar Cost Averaging transfers do not count as one of your free transfers. All transfer requests made at the same time are treated as a single transfer. Currently, we are not charging for transfers.
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Service Charge
We reserve the right to increase the annual service charge up to the maximum. A portion of the service charge may be waived, but is not guaranteed to always be waived. We reserve the right to vary the amount of any waiver and the circumstances in which any waiver or waivers apply.
Underlying Fund Portfolio Fees and Expenses
The value of the assets in each subaccount will reflect the fees and expenses paid by the underlying fund portfolios. The lowest and highest underlying fund portfolio expenses for the previous calendar year are found in FEE TABLE AND EXPENSE EXAMPLES in this prospectus. See the prospectuses for the underlying fund portfolios for more information.
Reduced Fees and Charges
We may, at our discretion, reduce or eliminate certain fees and charges for certain policies (including employer-sponsored savings plans) which may result in decreased costs and expenses.
Revenue We Receive
This prospectus describes generally the payments that we (and/or our affiliates) may directly or indirectly receive from the underlying fund portfolios, their advisers, subadvisers, 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 options 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. These fees range from 0.00% to 0.35% of the average daily assets of the certain underlying fund portfolios attributable to the policies and to certain other variable insurance products that we and our affiliates issue.
• Administrative, Marketing and Support Service Fees (“Support Fees”). As noted above, an investment adviser, subadviser, 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 subadviser 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). 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.
Incoming Payments to Us and/or TCI
Fund   Maximum Fee % of assets
TRANSAMERICA SERIES TRUST   0.25%
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 funds invested 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
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or benefits may take the form of internal credits, recognition, or cash payments. A variety of financial and accounting methods may be used to allocate resources and profits to us. Additionally, if a TST portfolio is subadvised by an entity that is affiliated with us, we may retain more revenue than on those TST portfolios that are subadvised by non-affiliated entities. During 2016 we received $223,234,178.31 for Transamerica Life Insurance Company and $15,423,182.55 for Transamerica Financial Life Insurance Company 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.
Other Payments. TCI also serves as the wholesale distributor for the policies, and in that capacity directly or indirectly receives additional amounts or different percentages of assets under management from certain advisers and subadvisers 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 subadviser 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 subadvisers 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 subadvisers 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 provide our affiliates and/or selling firms with wholesaling services to assist us in the distribution of the policies.
• 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 efforts. The amounts may be significant and these arrangements provide the adviser or subadviser (or other affiliates) with increased access to us and to our affiliates involved in the distribution of the policies.
For the calendar year ended December 31, 2016, TCI and its affiliates received payments that totaled approximately $2,700,000. The firms that paid to participate in TCI sponsored events included but were not limited to the following: Aegon USA Investment Management • Allianzgi Distributors • American Century Investment Management, Inc. • American Century Investment Management, Inc. • American Funds • Barrow, Hanley, Mewhinney & Strauss • Belle Haven Investments • BlackRock Investment Management, LLC • Columbia Threadneedle Investments • Fidelity Management & Research Company • Franklin Templeton Services, LLC • Goldman Sachs• Hartford• Invesco• Janus Capital Management LLC • Jennison Associates LLC • John Hancock• JP Morgan Investment Management Inc. • Kayne Anderson Capital Advisors, LP • Lord Abbett & Co.• Manning & Napier Advisors• MFS Investment Management• Milliman Financial Risk Management LLC • Morgan Stanley Investment Management Inc. • Morningstar Advisers • Natixis Global Asset Management• Neuberger Berman• New York Life/Mainstay Investments• Oppenheimer Funds, Inc. • Pacific Investment Management Company • PineBridge Investments LLC • Pioneer Investment Management, Inc. • Prudential Investments• QS Legg Mason Global Asset Allocation, LLC • Ridgeworth Investments • Rockefeller & Co. • Schroder Investment Management • Systematic Financial Management • TIAA• Thompson Siegel & Walmsley • The Vanguard Group, Inc. • Torray, LLC •  and Wellington Management Company.
Please note some of the aforementioned managers and/or subadvisers 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 subadvisers 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.
ACCESS TO YOUR MONEY
During the accumulation phase, you can have access to the money in your policy in the following ways:
• by making a surrender (either a full or partial surrender); or
• by taking systematic payouts (See ADDITIONAL FEATURES - Systematic Payout Option for more details).
Surrenders
During the accumulation phase, if you take a full surrender you will receive your cash value. If you want to take a partial surrender, in most cases it must be for at least $500. Certain optional benefits have specific requirements regarding the order in which surrenders can be taken from investment options. Unless you tell us otherwise, we will take the surrender from each of the investment options in proportion to the policy value. Surrenders may be referred to as withdrawals on your policy statement and other documents.
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You may elect to take up to the surrender charge free amount each policy year without incurring a surrender charge. Remember that any surrender you take will reduce the policy value, and the amount of the death benefit. See DEATH BENEFIT, for more details. A partial surrender also may have a negative impact on certain other benefits and guarantees of your policy. See ADDITIONAL FEATURES, for more details.
Surrenders in excess of the surrender charge free amount may be subject to a surrender charge. Surrenders from the fixed account may be subject to an excess interest adjustment. Income taxes, federal tax penalties and certain restrictions may apply to any surrenders you make.
Surrenders from qualified policies may be restricted or prohibited.
During the income phase, you will receive annuity payments under the annuity payment option you select; however, you generally may not take any other surrenders, either full or partial.
Delay of Payment and Transfer
Payment of any amount due from the separate account for a surrender, a death benefit, or the death of the 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 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 Exchange is otherwise restricted;
• 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 Aegon 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 (either full or partial), loan, or death benefit from the TA Aegon Government Money Market subaccount until the portfolio is liquidated.
Any payment or transfer request which is not in good order will cause a delay. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
Federal laws designed to counter terrorism and prevent money laundering by criminals might in certain circumstances require us to reject a premium payment and/or “freeze” an owner's account. If these laws apply in a particular situation, we would not be allowed to pay any request for surrenders (either full or partial), or death benefits, make transfers, or continue making annuity payments absent instructions from the appropriate federal regulator. We may also be required to provide information about you and your policy to government agencies or departments.
Pursuant to the requirements of certain state laws, we reserve the right to defer payment of the cash value from the fixed account for up to six months. We may defer payment of any amount until your premium payment check has cleared your bank.
Excess Interest Adjustment
Surrenders, withdrawals, transfers, and amounts applied to an annuity option, from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. If, at the time of such transactions the guaranteed interest rate set by us for the applicable period has risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value (but not below the excess interest adjustment floor described in “Appendix - Excess Interest Adjustment Examples”). However, if the guaranteed interest rate for the applicable period has fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value upon surrender or transfer. Please see “Appendix - Excess Interest Adjustment Examples” to see how the excess interest adjustment is calculated and illustrative examples using hypothetical values.
Any amount surrendered in excess of the cumulative interest credited for that guaranteed period option is generally subject to an excess interest adjustment. An excess interest adjustment may also be made on amounts applied to an annuity payment option.
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The formula that will be used to determine the excess interest adjustment is:
S* (G-C)* (M/12)
S = Is the amount (before surrender charges, premium taxes and the application of any Guaranteed Minimum Death Benefits, if any) being surrendered, withdrawn, transferred, paid upon death, or applied to an income option that is subject to the excess interest adjustment;
G = Is the guaranteed interest rate for the guaranteed period applicable to “S”;
C = Is the current guaranteed interest rate then being offered on new premium payments for the next longer option period than “M”. If this policy form or such an option period is no longer offered, “C” will be the U.S. Treasury rate for the next longer maturity (in whole years) than “M” on the 25th day of the previous calendar month,
M = Number of months remaining in the current option period for “S”, rounded up to the next higher whole number of months; and
* = Multiplication
Please see “Appendix - Excess Interest Adjustment Examples” for more detailed information concerning the excess interest adjustment calculation.
There will be no excess interest adjustment on any of the following:
• withdrawals of cumulative interest credited for that guaranteed period option;
• Nursing Care and Terminal Condition Waiver surrenders;
• Unemployment Waiver surrenders;
• transfers from a Dollar Cost Averaging fixed source;
• withdrawals to satisfy any minimum distribution requirements;
• systematic withdrawals, which do not exceed cumulative interest credited at the time of payment.
Please note that in these circumstances you will not receive a higher cash value if interest rates have fallen nor will you receive a lower cash value if interest rates have risen.
The excess interest adjustment may vary for certain policies and may not be applicable for all policies.
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 surrenders 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 the 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 owner. 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)525-6205.
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.
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ANNUITY PAYMENTS (THE INCOME PHASE)
Upon the annuity commencement date, which is the date your policy is annuitized and annuity payments begin, your annuity switches from the accumulation phase to the income phase. You can generally change the annuity commencement date by giving us 30 days notice with the new date or age. Unless required by state law this date cannot be earlier than the third policy anniversary. The latest annuity commencement date generally cannot be later than the last day of the month following the month in which the annuitant attains age 99 (earlier if required by state law).
Before the annuity commencement date, if the annuitant is alive, you may choose an annuity payment option or change your election. If the annuitant dies before the annuity commencement date, the death benefit is payable in a lump sum or under one of the annuity payment options (unless the surviving spouse is eligible to and elects to continue the policy). If the annuitant dies after the annuity commencement date, no death benefit is payable and the amount payable will depend on the annuity income option.
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.
Unless you specify otherwise, the owner will receive the annuity payments. After the annuitant's death, the beneficiary you designate at annuitization will receive any remaining guaranteed payments.
Annuity Payment Options
The policy provides several annuity payment options (also known as income options) that are described below. You may choose any combination of annuity payment options. We will use your adjusted policy value to provide these annuity payments. If the adjusted policy value on the annuity commencement date is less than $2,000, we reserve the right to pay it in one lump sum in lieu of applying it under an annuity payment option. You can receive annuity payments monthly, quarterly, semi-annually, or annually. (We reserve the right to change the frequency if annuity payments would be less than the amount specified in your policy.) We may require proof of life before making annuity payments.
In deciding on which annuity payment option to elect, you must decide if fixed or variable payments are better for you. If you choose to receive fixed annuity payments, then the amount of each payment will be set on the annuity commencement date and will not change. You may, however, choose to receive variable annuity payments. The dollar amount of the first variable annuity 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 additional variable annuity payments will vary based on the investment performance of the subaccount(s) you select. The dollar amount of each variable annuity payment after the first may increase, decrease, or remain constant. If the actual investment performance (net of fees and expenses) exactly matched the assumed investment return of 3% at all times, the amount of each variable annuity payment would remain constant. If actual investment performance (net of fees and expenses) exceeds the assumed investment return, the amount of the variable annuity payments would increase. Conversely, if actual investment performance (net of fees and expenses) is lower than the assumed investment return, the amount of the variable annuity payments would decrease.
You must also decide if you want your annuity payments to be guaranteed for the annuitant's lifetime, a period certain, or a combination thereof. Generally, annuity payments will be lower if you combine a period certain, guaranteed amount, or liquidity with a lifetime guarantee (e.g., Life Income with 10 years Certain and Life with Guaranteed Return of Policy proceeds). Likewise, annuity payments will also generally be lower the longer the period certain (because you are guaranteed payments for a longer time).
A charge for premium taxes and an excess interest adjustment may be made when annuity payments begin.
The annuity payment options currently available are explained below. Some options are fixed only.
Income for a Specified Period (fixed only). We will make level annuity payments only for a fixed period. No funds will remain at the end of the period. If your policy is a qualified policy, this annuity payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.
Income of a Specified Amount (fixed only). Payments are made for any specified amount until the amount applied to this option, with interest, is exhausted. This will be a series of level annuity payments followed by a smaller final annuity payment. If your policy is a qualified policy, this annuity payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.
Life Income. You may choose between:
• No Period Certain (fixed or variable) - Payments will be made only during the annuitant's lifetime. The last annuity payment will be the payment immediately before the annuitant's death.
• 10 Years Certain (fixed or variable) - Payments will be made for the longer of the annuitant's lifetime or ten years.
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• Guaranteed Return of Policy Proceeds (fixed only) - Payments will be made for the longer of the annuitant's lifetime or until the total dollar amount of annuity payments we made to you equals the annuitized amount (i.e., the adjusted policy value).
Joint and Survivor Annuity. You may choose:
• No Period Certain (fixed or variable) - Payments are made during the joint lifetime of the annuitant and a joint annuitant of your selection. Annuity payments will be made as long as either person is living.
• 10 Year Certain (fixed only) - Payments will be made for the longer of the lifetime of the annuitant and joint annuitant or ten years.
Other annuity payment options may be arranged by agreement with us. Some annuity payment options may not be available for all policies, all ages or we may limit certain annuity payment options to ensure they comply with the applicable tax law provisions.
NOTE CAREFULLY
IF:
• you choose Life Income with No Period Certain or a Joint and Survivor Annuity with No Period Certain; and
• the annuitant dies (or both joint annuitants die) before the due date of the second (third, fourth, etc.) annuity payment;
THEN:
• we may make only one (two, three, etc.) annuity payments.
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.
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 payee's address of record. The person receiving annuity payments is responsible for keeping us informed of his/her current address.
You must annuitize your policy no later than the maximum annuity commencement date specified in your policy (earlier for certain distribution channels) or a later date if agreed to by us. If you do not elect an annuity payment option, the default option will be variable payments under Life with 10 Years Certain. If any portion of the default annuitization is a variable payout option, then annuity units will be purchased proportionally based off your available current investment allocations. Please note, all benefits (including guaranteed minimum death benefits and living benefits) terminate upon annuitization. The only benefits that remain include the guarantees provided under the terms of the annuity option.
DEATH BENEFIT
We will pay a death benefit to your beneficiary, under certain circumstances, if the annuitant dies during the accumulation phase. If there is a surviving owner(s) when the annuitant dies, the surviving owner(s) will receive the death benefit instead of the listed beneficiary. The person receiving the death benefit may choose an annuity payment option (if you pick a variable annuity payment option fees and expenses will apply), or may choose to receive the death benefit as a lump sum withdrawal. The guarantees of these death benefits are based on our claims-paying ability. No death benefit will be payable upon or after the annuity commencement date. Please note that there is a mandatory annuity commencement date.
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.” See OTHER INFORMATION - Abandoned or Unclaimed Property.
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Please Note: Such due proof of death must be received in good order to avoid a delay in processing the death benefit claim. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
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 policy value in the separate account to the money market subaccount 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 (satisfactory evidence may include a certified death certificate).
When We Pay A Death Benefit
We will pay a death benefit IF:
• you are both the annuitant and sole owner of the policy; and
• you die before the annuity commencement date.
We will pay a death benefit to you (owner) IF:
• you are not the annuitant; and
• the annuitant dies before the annuity commencement date.
If the sole beneficiary receiving the death benefit is the surviving spouse of the owner, then he or she may elect, if eligible, to continue the policy as the new annuitant and owner, instead of receiving the death benefit. See DEATH BENEFIT - Spousal Continuation. All currently existing surrender charges will be waived.
When We Do Not Pay A Death Benefit
We will not pay a death benefit IF:
• you are the owner but not the annuitant; and
• you die prior to the annuity commencement date.
Please note: Distribution requirements apply upon the death of any owner. Generally, upon the owner's death (who is not the annuitant) the entire interest must be distributed within five years. See TAX INFORMATION for a more detailed discussion of the distribution requirements under the Code.
Deaths After the Annuity Commencement Date
The amount payable, if any, on or after the annuity commencement date depends on the annuity income option.
IF:
• you are not the annuitant; and
• you die on or after the annuity commencement date; and
• the entire guaranteed amount in the policy has not been paid;
THEN:
• the remaining portion of such guaranteed amount in the policy will continue to be distributed at least as rapidly as under the method of distribution being used as of the date of your death.
IF:
• you are the owner and annuitant; and
• you die after the annuity commencement date; and
• the annuity payment option you selected did not have or no longer has a guaranteed period;
THEN:
• no additional payments will be made.
Succession of Ownership
If an owner (who is not the annuitant) dies during the accumulation phase, the person or entity first listed below who is alive or in existence on the date of that death will become the new owner:
• any surviving owner;
• primary beneficiary;
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• contingent beneficiary; or
• owner's estate.
Spousal Continuation
If the sole primary beneficiary is the spouse, upon the owner's or the annuitant's death, the beneficiary may elect to continue the policy in his or her own name. Upon the annuitant's death if such election is made, the policy value will be adjusted upward (but not downward) to an amount equal to the death benefit amount determined upon such election and receipt of due proof of death of the annuitant. Any excess of the death benefit amount over the policy value will be allocated to each applicable investment option in the ratio that the policy value in the investment option bears to the total policy value. The terms and conditions of the policy that applied prior to the annuitant's death will continue to apply, with certain exceptions described in the policy. For purposes of the death benefit on the continued policy, the death benefit is calculated in the same manner as it was prior to continuation on the date the spouse continues the policy. See TAX INFORMATION - Same Sex Relationships for more information concerning spousal continuation involving same sex spouses.
For these purposes, 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 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.
For these purposes, if the owner is an individual retirement account within the meaning of IRC sections 408 or 408A and if the annuitant's spouse is the sole primary beneficiary of the annuitant's interest in such account, the annuitant's spouse will be treated as the beneficiary of the policy for purposes of applying the spousal continuation provisions of the policy.
Amount of Death Benefit
The death benefit may be paid as a lump sum, as annuity payments or as otherwise permitted by the Company in accordance with applicable law. The amount of the death benefit will generally be the greatest of:
• the policy value on the date we receive the required information in good order at our Administrative Office;
• the cash value on the date we receive in good order the required information at our Administrative Office (this will be more than the policy value if there is a positive excess interest adjustment that exceeds the surrender charge);
• minimum required cash value on the date we receive the required information in good order at our Administrative Office; and
• the guaranteed minimum death benefit plus premium payments, minus gross withdrawals, from the date of death to the date the death benefit is paid. Please see “Appendix - Death Benefit” for illustrative examples regarding death benefit calculations.
Please note: The death benefit terminates upon annuitization and there is a maximum annuity commencement date.
Guaranteed Minimum Death Benefit
If you purchase this policy you will receive the Return of Premium Guaranteed Minimum Death Benefit.
Return of Premium Death Benefit
The Return of Premium Death Benefit is equal to:
• total premium payments; less
• any adjusted partial surrenders (please see “Appendix - Death Benefit”) as of the date of death.
The Guaranteed Minimum Death Benefit 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 a guaranteed minimum death benefit at any time.
Adjusted Partial Withdrawal
When you request a partial withdrawal, your guaranteed minimum death benefit will be reduced by an amount called the adjusted partial withdrawal. Under certain circumstances, the adjusted partial withdrawal may be more than the dollar amount of your withdrawal request. This will generally be the case if the guaranteed minimum death benefit exceeds the policy value at the time of withdrawal. It is also possible that if a death benefit is paid after you have made a partial withdrawal, then the total amount paid could be less than the total premium payments.
The formula used to calculate the adjusted partial withdrawal amount is: adjusted partial withdrawal = (amount of the gross partial withdrawal * value of the current death proceeds immediately prior to the gross partial withdrawal) / policy value immediately prior to the gross withdrawal.
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We have included a detailed explanation of this adjustment with examples in the “Appendix - Death Benefit.” This is referred to as “adjusted partial withdrawal” in your policy. If you have a qualified policy, minimum required distributions rules may require you to request a partial withdrawal.
TAX INFORMATION
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 tax adviser about your own circumstances.
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
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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 contract could be disqualified as an annuity policy under the Code due to the failure of a subaccount to be deemed to be “adequately diversified.”
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 tax advisers 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 a Nonqualified Policy
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.
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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 contract”. 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 tax adviser. 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 tax adviser for more information on how this may impact your policy.
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 tax adviser 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 annuity commencement date used in your policy and the dates will be the same. However, in certain circumstances, your annuity starting date and annuity commencement 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 tax adviser 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 contract if the policy has not been annuitized before that age or have other tax consequences. You should consult with a tax adviser 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 tax adviser 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 Partial 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. Partial 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 partial withdrawals, not annuity payments. In general, loans, pledges, and collateral
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assignments as security for a loan are taxed in the same manner as partial 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.
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 tax adviser.
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 tax adviser for more information regarding the imposition of penalty tax.
Guaranteed Lifetime Withdrawal Benefits
For policies with a guaranteed lifetime withdrawal benefit the application of certain tax rules, particularly those rules relating to distributions from your policy, are not entirely clear. It is possible that the withdrawal base (with respect to the guaranteed lifetime withdrawal benefits) could be taken into account to determine the policy value that is used to calculate the amount of the distribution that would be included in income. In view of this uncertainty, you should consult a tax adviser with any questions.
Aggregation
All nonqualified deferred annuity policies that are issued by us (or our affiliates) to the same owner (policyholder) during any 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 tax adviser 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 contract 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 contract 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 partial withdrawal, surrender, annuity income payment or death benefit).
If you exchange part of an existing contract for the policy, and within 180 days of the exchange you received a payment other than certain annuity payments (e.g., you make a partial withdrawal) from either contract, 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 tax adviser in connection with an exchange of all or part of an annuity contract for the policy, especially if you may make a withdrawal from either contract 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
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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 tax adviser 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 not recognized as marriage under the relevant state law, will not be treated as married or as spouses as defined in this policy. 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 tax adviser 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 partial withdrawals, these amounts are taxed in the same manner as partial surrenders; 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 tax adviser 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 partial withdrawal, which might also be subject to a tax penalty if the partial 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 partial withdrawals, the tax rules associated with these benefits are unclear, and we advise that you consult your tax adviser prior to selecting any optional benefit under the policy.
Federal Estate, Gift and Generation-Skipping Transfer Taxes
Beginning in 2017, the federal estate tax, gift tax and generation-skipping transfer (“GST”) tax exemptions and maximum rate is $5,490,000 indexed for inflation and 40% respectively.
The uncertainty as to how the current law might be modified in the future underscores the importance of seeking guidance from a competent 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
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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.
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 partial 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 70½; (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
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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 tax adviser.
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 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 Partial 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 contract will be treated as zero.
In addition, a penalty tax may be assessed on amounts surrendered 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 tax adviser 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 70½ 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),
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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 70½. The actuarial present value of death and/or living benefit options and riders elected may need to be taken into account in calculating minimum required distributions. Consult a competent tax adviser before purchasing an optional living or death benefit.
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 tax adviser regarding the suitability of the policy.
The Code generally requires that interest in a qualified policy be non-forfeitable.
You should consult your legal counsel or tax adviser 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.
Living Benefits
For policies with a guaranteed lifetime withdrawal 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 this benefit. Additionally, the actions of the qualified plan as contract 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 tax adviser 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 tax adviser 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 tax adviser 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 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 tax adviser 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.
ADDITIONAL FEATURES
Systematic Payout Option
You can select at any time during the accumulation phase to receive regular withdrawals from your policy by using the systematic payout option. Any systematic withdrawal in excess of the cumulative interest credited from the guaranteed period options at the time of the withdrawal may be subject to an excess interest adjustment. Any systematic withdrawal in excess of your remaining surrender charge free amount may be subject to a surrender charge. Any systematic withdrawal in excess of the remaining rider withdrawal amount could affect your rider values. Systematic withdrawals can be made monthly, quarterly, semi-annually, or annually. Each withdrawal must be at least $40. Monthly and quarterly systematic withdrawals must generally be made by electronic funds transfer directly to your checking or savings account. There is no charge for this benefit.
Keep in mind that withdrawals under the systematic payout option may be taxable, and if made before age 59½, may be subject to a 10% federal penalty tax.
Nursing Care and Terminal Condition Waiver
No surrender charges or excess interest adjustments will apply if you make a surrender ($1,000 minimum), under certain circumstances, because you or your spouse has been:
• confined in a hospital or nursing facility for 30 days in a row after the policy issue date; or
• diagnosed with a terminal condition after the policy issue date (usually a life expectancy of 12 months or less).
You may exercise this benefit at any time during the accumulation phase. This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. There is no restriction on the maximum amount you may surrender under this benefit. There is no charge for this benefit.
The Nursing Care and Terminal Condition Waiver may vary for certain policies and may not be available for all policies, in all states or at all times.
Unemployment Waiver
No surrender charges or excess interest adjustments will apply to surrenders after you or your spouse become unemployed due to:
• involuntary termination of employment
• involuntary lay off;
In order to qualify, you (or your spouse, whichever is applicable) must have been:
• employed full time for at least two years prior to becoming unemployed;
• employed full time on the policy date;
• unemployed for at least 60 days in a row at the time of surrender;
• must have a minimum cash value at the time of surrender of $5,000; and
• you (or your spouse) must be receiving unemployment benefits.
You must provide written proof from your State's Department of Labor, which verifies that you qualify for and are receiving unemployment benefits at the time of surrender.
You may use this benefit at any time during the accumulation phase. This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. There is no restriction on the maximum amount you may surrender under this benefit. There is no charge for this benefit.
The Unemployment Waiver may vary for certain policies and may not be available for all policies, in all states or at all times.
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Telephone and Electronic 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. To access information and perform transactions electronically, we require you to create an account with a username and password, and to maintain a valid e-mail address.
We will not be liable for following instructions communicated by telephone or electronically we reasonably believe to be genuine. We will employ reasonable procedures to confirm that instructions we receive are genuine. Our procedures require you to provide information to verify your identity when you call us and we will record conversations with you. We may also require written confirmation of the request. When someone contacts our Administrative Office and follows our procedures, we will assume you are authorizing us to act upon those instructions. For electronic transactions through the internet, you will need to provide your username and password. You are responsible for keeping your password confidential and must notify us of any loss, theft or unauthorized use of your password.
Telephone and other electronic transactions must be received while the New York Stock Exchange is open for regular trading to get same-day pricing of the transaction. Please note that the telephone and/or electronic device transactions may not always be available. Any telephone, fax machine or other electronic device, whether it is yours, your service provider's, or your financial representative's can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request if the volume of transactions is unusually high, we might not have anyone available, or lines available, to take your transaction. Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Administrative Office.
We reserve the right to revoke your telephone and other electronic transaction privileges at any time without revoking all owners' privileges. We may deny telephone and electronic transaction privileges to market timers or disruptive traders.
Dollar Cost Averaging Program
During the accumulation phase, 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 transfers or 4 quarterly transfers, and the maximum is 24 monthly transfers or 8 quarterly transfers. 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 premium 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 market day after we have received in good order all necessary information and the minimum required amount. See OTHER INFORMATION - Sending 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 market 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.
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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 allocated to 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.
Asset Rebalancing
During the accumulation phase you can instruct us to automatically rebalance the amounts in your subaccounts to maintain your desired asset allocation. This feature is called asset rebalancing and can be started and stopped at any time. If a transfer is requested, we will honor the requested transfer and discontinue asset rebalancing. New instructions are required to start asset rebalancing. Asset rebalancing ignores amounts in the fixed account. You can choose to rebalance monthly, quarterly, semi-annually, or annually. Asset rebalancing can be used in conjunction with a guaranteed lifetime withdrawal benefit. There is no charge for this benefit.
Living Benefit
One or more of the investment options available in your product may include a volatility control strategy. Volatility control strategies, in periods of high market volatility, could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your policy value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns. Volatility control (and similar terms) can encompass a variety of investment strategies of different types and degrees; therefore, you should read the applicable annuity and underlying fund portfolio prospectuses carefully to understand how these investment strategies may affect your policy value and Living Benefit. Your investment options, which may include volatility control, may reduce our costs and risks associated with the Living Benefit. The fees you pay for the product include the Living Benefit, which, in part, pay for protecting the Living Benefit bases from investment losses. Since the Living Benefit base does not decrease as a result of investment losses, volatility control strategies might not provide meaningful additional benefit to you. You should carefully evaluate with your financial advisor whether to invest in funds with volatility control strategies, taking into consideration the potential positive or negative impact that such strategy may have on your investment objectives, your policy value and the benefits under the Living Benefit. If you determine that funds with volatility control strategies are not consistent with your investment objectives, there continues to be other investment options available under your policy that do not invest in funds that utilize volatility control strategies.
If you purchase this policy you will receive the Living Benefit which, provides you with: (1) a guaranteed lifetime withdrawal benefit; and (2) an opportunity for increases in the benefit withdrawal amount. This benefit is available during the accumulation phase. The tax rules for qualified policies may limit the value of this benefit. Please Note: This policy may not be issued to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. The guaranteed lifetime withdrawal benefit is based on the claims-paying ability of Transamerica.
Living Benefit – Base Benefit
Under this benefit, you can receive up to the benefit withdrawal amount each benefit year (first as withdrawals from your policy value and, if necessary because your policy value goes to zero by other than an excess withdrawal, as payments from us for life), starting with the benefit year immediately following the annuitant’s (or the annuitant's spouse if younger and the joint life option is elected) birthday after which the withdrawal percentage is no longer zero and lasting until the annuitant’s (or surviving spouse's if the joint life option is elected) death (unless your withdrawal base is reduced to zero because of an “excess withdrawal”; see Withdrawal Base
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Adjustments, below). A benefit year begins on the benefit date and thereafter on each anniversary of that date. The withdrawal percentage and growth percentage that are used to determine your benefit withdrawal amount will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the Edgar system at (File 333-186121 for TLIC and 333-187834 for TFLIC).
Of course, you can always withdraw an amount up to your cash value pursuant to your rights under the policy at your discretion.
See the “Appendix - Living Benefit Adjusted Partial Withdrawals” for examples showing the effect of hypothetical withdrawals in more detail.
Please note:
• You will begin paying the benefit charge as of the date the benefit takes effect, even if you do not begin taking withdrawals for many years, or ever. We will not refund the charges you have paid under the benefit if you never choose to take withdrawals and/or if you never receive any payments under the benefit.
• We have designed this benefit to allow for withdrawals from your policy value each benefit year that are less than or equal to the benefit withdrawal amount. You should not purchase this policy if you plan to take withdrawals in excess of the benefit withdrawal amount, because such excess withdrawals may significantly reduce or eliminate the value of the guarantee provided by the benefit.
• The longer you wait to start making withdrawals under the benefit, the less time you have to benefit from the guarantee because of decreasing life expectancy as you age. On the other hand, the longer you wait to begin making withdrawals, the higher your withdrawal percentage may be, the higher the withdrawal base due to growth may be, and the more opportunities you will have to lock in a higher withdrawal base. You should carefully consider when to begin making withdrawals. There is a risk that you will not begin making withdrawals at the most financially beneficial time for you.
• Because the benefit is accessed through regular withdrawals that do not exceed the benefit withdrawal amount, the policy may not be appropriate for you if you do not foresee a need for liquidity and your primary objective is to take maximum advantage of the tax deferral aspect of the policy.
• Any amount of withdrawals in any benefit year that are in excess of the benefit withdrawal amount are excess withdrawals.
• An excess withdrawal may impact the withdrawal base on a greater than dollar-for-dollar basis and may cause you to lose the guarantees of this benefit.
• Upon the death of the annuitant (or the death of the surviving spouse if the joint option is elected and the surviving spouse was eligible to and did continue the policy), the Living Benefit terminates and all benefits thereunder cease.
Like all withdrawals, withdrawals while this benefit is in effect also:
• reduce your policy value;
• reduce your base policy death benefit and other benefits;
• may be subject to surrender charges or excess interest adjustments if the withdrawal is greater than the surrender charge free amount;
• may be subject to income taxes and federal tax penalties; and
• may be limited or restricted under certain qualified policies.
Benefit Withdrawal Amount. You can withdraw up to the benefit withdrawal amount in any benefit year from your policy value without causing an excess withdrawal. See Withdrawal Base Adjustments below.
The benefit withdrawal amount is zero if the annuitant (or the annuitant's spouse if younger and the joint life option is elected) has not yet attained the age where the withdrawal percentage is no longer zero on the benefit date and remains zero until the first day of the benefit year after the annuitant’s (or the annuitant's spouse's if younger and the joint life option is elected) birthday after which the withdrawal percentage is no longer zero. If the annuitant (or the annuitant's spouse if younger and the joint life option is elected) has at least attained the age where the withdrawal percentage is no longer zero on the benefit date, then the benefit withdrawal amount is equal to the withdrawal base multiplied by the withdrawal percentage (see applicable Rate Sheet Prospectus Supplement or the Appendix in the Statement of Additional Information, depending on when you purchased your policy).
For qualified policies: If the plan participant (generally the annuitant) is at least 70½ years old, the benefit withdrawal amount for that benefit year (and each subsequent benefit year) is equal to the greater of:
• the benefit withdrawal amount described above; or
• an amount equal to any minimum required distribution amount (for the tax year on that benefit anniversary) calculated using only: (1) the living annuitant’s age, (2) the IRS Uniform Lifetime table or, if applicable, the Joint Life and Survivor Expectancy
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  table, (3) the policy value of the base policy, (prior to the first benefit anniversary we use the policy value on the benefit date and thereafter we use the policy value on the date prescribed by the IRS) and (4) amounts from the current calendar year (no carry-over from past years).
Only amounts calculated as set forth above can be used as the benefit withdrawal amount. If the minimum required distribution amount (determined as set forth above) exceeds the benefit withdrawal amount, the excess will not be treated as an excess withdrawal under the benefit. See “Appendix - Living Benefit Adjusted Partial Withdrawals” for an example showing the effect of a minimum required distribution amount.
If your policy value reaches zero:
• due to a non-excess withdrawal, then you cannot make premium payments and all other policy features, benefits, and guarantees (except those provided by this benefit) are terminated. If your policy value reaches zero by other than an excess withdrawal, we will, unless instructed otherwise, disburse any remaining minimum required distribution amount for the current rider year and set up monthly payments beginning in the next rider year according to your guarantees.
• due to an excess withdrawal, then this benefit terminates (as does the policy).
Please note:
• If the policy is purchased prior to the annuitant’s (or annuitant’s spouse if younger and the joint life option is elected) birthday after which the withdrawal percentage is no longer zero, the benefit withdrawal amount will be zero until the beginning of the benefit year after the annuitant’s (or annuitant’s spouse if younger and the joint life option is elected) birthday after which the withdrawal percentage is no longer zero, however, you will still be charged a benefit fee prior to this time.
• The rider year begins on the rider date and thereafter on each rider anniversary. Withdrawals requested for the upcoming rider year must be taken the day after each rider anniversary or later within the rider year. Any withdrawal taken on the rider anniversary date will count towards the previous rider year withdrawals.
• You cannot carry over any portion of your benefit withdrawal amount that is not withdrawn during a benefit year for withdrawal in a future benefit year. This means that if you do not take the entire benefit withdrawal amount during a benefit year, you cannot take more than the benefit withdrawal amount in the next benefit year and maintain the benefit's guarantees.
• Excess withdrawals may cause you to lose the benefit's guarantees.
Rate Sheet Prospectus Supplement
The withdrawal, growth and fee percentages are disclosed in Rate Sheet Prospectus Supplements. We periodically issue new Rate Sheet Prospectus Supplements that may reflect different withdrawal, growth and fee percentages than the previous Rate Sheet Prospectus Supplements. All Rate Sheet Prospectus Supplements are also available on the Edgar system at (File 333-186121 for TLIC and 333-187834 for TFLIC). In order to receive the applicable withdrawal, growth and fee percentages: (1) your application must be signed and received within the stated time period set forth in the applicable Rate Sheet Prospectus Supplement and (2) your application must be received and your policy must be funded within the stated time periods set forth in the applicable Rate Sheet Prospectus Supplement. Withdrawal percentages reflected in a Rate Sheet Prospectus Supplement with an effective period that does not include the date you signed your application will not apply to your policy. You should not purchase this rider without first obtaining the applicable Rate Sheet Prospectus Supplement. You can contact us at to receive a Rate Sheet Prospectus Supplement applicable to you.
Withdrawal Percentage. We use the withdrawal percentage to calculate the benefit withdrawal amount. The withdrawal percentage is determined by the annuitant’s age (or the annuitant's spouse's age if younger and the joint life option is elected) at the time of the first withdrawal taken on or after the benefit anniversary immediately following the annuitant’s (or the annuitant's spouse's if younger and the joint life option is elected) birthday after which the withdrawal percentage is no longer zero.
Please note, once established, the withdrawal percentage will not generally increase even though the annuitant’s age increases except in certain instances involving automatic step-ups. See Living Benefit - Base Benefit - Automatic Step-Up for more information regarding automatic step-ups.
Withdrawal Base. We use the withdrawal base to calculate the benefit withdrawal amount. The withdrawal base on the benefit date is the policy value. During any benefit year, the withdrawal base is equal to the withdrawal base on the benefit date or most recent benefit anniversary, plus subsequent premium payments, less subsequent withdrawal base adjustments due to excess withdrawals.
Please Note: We determine the withdrawal base solely to calculate the benefit withdrawal amount. Your withdrawal base is not a cash value, a surrender value, or a death benefit. It is not available for withdrawal, it is not a minimum return for any subaccount, and it is not a guarantee of policy value.
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On each benefit anniversary, the withdrawal base will equal the greatest of:
• current withdrawal base;
• the withdrawal base immediately before the benefit anniversary, increased by the growth amount, if any (see Growth Percentage below);
• the policy value on any monthiversarySM within the current rider year (the same day of the month as the benefit date, or the next market day if our Administrative Office or the New York Stock Exchange are closed) including the current benefit anniversary (see Automatic Step-Up below).
See “Appendix - Hypothetical Example of the Withdrawal Base Calculation” which illustrates the hypothetical example of the withdrawal base calculation.
Growth Percentage. On each of the first ten benefit anniversaries, we will apply a growth percentage to your withdrawal base if no withdrawal occurred during the preceding benefit year. The amount added to your withdrawal base is equal to the growth percentage multiplied by the withdrawal base immediately before the benefit anniversary.
Please note: Because a withdrawal will eliminate the potential application of the growth percentage for that benefit year, you should consider your need or possible need to take withdrawals within the first 10 benefit years in deciding whether to purchase the policy.
Automatic Step-Up. On each benefit anniversary, we will automatically step-up the withdrawal base to an amount equal to the greater of (1) the highest policy value on any monthiversarySM during the preceding benefit year, if no excess withdrawal occurred, or (2) the policy value on the benefit anniversary. If neither value is greater than the current withdrawal base, or the withdrawal base increased by any growth percentage, no automatic step-up will occur. The withdrawal percentage (as indicated in the Rate Sheet Prospectus Supplement) will also increase if you have crossed into another age band prior to the automatic step-up. Please note, the increase is part of the automatic step-up and if no automatic step-up occurs then there will be no withdrawal percentage increase.
On each benefit anniversary the benefit fee percentage may increase (or decrease) at the time of any automatic step-up. The benefit fee percentage will not exceed 0.75% from the current fee percentage in effect when you purchased the rider.
Automatic Step-Up Opt Out. Each time an automatic step-up results in a benefit fee percentage increase, you have the option to reject the automatic step-up and reinstate the withdrawal base, withdrawal percentage, and benefit fee percentage to their respective amounts immediately before the automatic step-up, provided that you do so within 30 days after the benefit anniversary on which the automatic step-up occurred. We must receive your rejection (each time you elect to opt out), in good order, at our Administrative Office within the same 30 day period after the benefit anniversary on which the automatic step-up occurred. You are not subject to fee increases for any Automatic Step-Up that you have opted out of. Opting out of one step-up does not operate as an opt-out of any future step-ups.
Withdrawal Base Adjustments. Cumulative gross partial withdrawals up to the benefit withdrawal amount in any benefit year will not reduce the withdrawal base. Any amount of gross partial withdrawals in excess of the benefit withdrawal amount in any benefit year (“excess withdrawals”) will reduce the withdrawal base, however, by the greater of the dollar amount of the excess withdrawal (if the policy value is greater than the withdrawal base) or a pro rata amount (in proportion to the reduction in the policy value when the policy value is less than the withdrawal base), possibly to zero. If an excess withdrawal reduces the policy value to zero, this benefit will terminate. Withdrawal base adjustments occur immediately following excess withdrawals. See “Appendix - Living Benefit Adjusted Partial Withdrawals” for examples showing the effect of hypothetical withdrawals in more detail, including an excess withdrawal that reduces the withdrawal base by a pro rata amount. The effect of an excess withdrawal is amplified if the policy value is less than the withdrawal base.
Please Note: You retain all responsibility for monitoring excess withdrawals. If you take regular or scheduled withdrawals please pay particular attention to any excess withdrawal because your otherwise regular or scheduled non-excess withdrawals may thereafter all be excess withdrawals that reduce or eliminate your benefit on an accelerated basis.
Living Benefit – Joint Life Option
You can elect to postpone termination of the benefit until the later of the annuitant or annuitant’s spouse’s death (only if the annuitant’s spouse is eligible to and does continue the policy, see TAX INFORMATION - Tax Status of the Policy - Distribution Requirements). If you elect the Joint Life option, then the withdrawal percentage (used to calculate the benefit withdrawal amount) is lower.
Please note:
• The annuitant's spouse (or in certain instances a non-natural entity acting for the benefit of the annuitant's spouse) must be either a joint owner along with the annuitant or the sole primary beneficiary (and there is no joint owner), if you elect this option. (Please see Spousal Continuation section for more details regarding annuitant's spouse).
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• A former spouse of the annuitant cannot continue to keep the policy in force if no longer married to the annuitant at the time of the annuitant's death. In that event, the benefit will terminate and no additional withdrawals under the benefit will be permitted.
• The annuitant’s spouse for purposes of this benefit cannot be changed to a new spouse.
• The benefit withdrawal percentage is based on the age of the younger of the annuitant and annuitant’s spouse, if you elect this option.
• The withdrawal percentage for each “age at the time of the first withdrawal” is lower if you elect this option.
• This option may not be permitted in the case of certain non-natural owners.
Living Benefit Fees
Living Benefit Fee. The benefit fee is calculated on the benefit date and at the beginning of each benefit quarter. The benefit fee will be adjusted for any premium additions and excess withdrawals. It will be deducted automatically from your policy value at the end of each benefit quarter. Your rider fee may increase (or decrease) at the time of any automatic step-up. See Automatic Step-Up section. Your current benefit fee will not exceed 0.75% from the current benefit fee percentage in effect when you purchased the rider. The current benefit fee will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the Edgar system at (File 333-186121 for TLIC and 333-187834 for TFLIC).
On an annual basis, in general terms, the benefit fee is the benefit fee percentage times the withdrawal base. Specifically, the quarterly fee is calculated by multiplying (A) by (B) multiplied by (C), where:
(A) is the withdrawal base;
(B) is the benefit fee percentage; and
(C) is the number of (remaining) days in the benefit quarter divided by the total number of days in the applicable benefit year.
The following example uses these assumed values: Initial Premium = $100,000; Withdrawal Base = $100,000; Rider Fee percentage = 1.25%; and 91 total days in the rider quarter.
Example 1: Calculation at policy issue for first quarter benefit fee. The benefit fee is:
=100,000*0.0125*(91/365)
=1,250*(91/365)
=$311.64
We will assess a prorated benefit fee upon full surrender of the policy or other termination of the benefit for the period beginning on the first day of the most recent benefit quarter and ending on the date of termination.
On each benefit anniversary the benefit fee percentage may increase (or decrease) at the time of an automatic step-up. The rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement which may be amended from time to time by us. Please contact your financial intermediary or call our Administrative Office to determine whether the Rate Sheet Prospectus Supplement has been amended. Each time an automatic step-up results in a benefit fee percentage increase, you will have the option to reject the automatic step-up and reinstate the withdrawal base and benefit fee percentage to their respective amounts immediately before the automatic step-up (adjusted for any subsequent premium payments or withdrawals), provided that you do so within 30 calendar days after the benefit anniversary on which the automatic step-up occurred. We must receive your rejection in good order, at our Administrative Office within the 30 day period after the benefit anniversary on which the automatic step-up occurred.
Please note regarding the benefit fee:
• Because the benefit fee is a percentage of the withdrawal base, it could be a much higher percentage of your policy value, particularly in the event that your policy value decreases significantly.
• Because the benefit fee is a percentage of the withdrawal base, the amount of the benefit fee we deduct will increase if the withdrawal base increases (although the percentage(s) may remain the same).
Benefit Fee Adjustment for Premium Payments and Excess Withdrawals. A benefit fee adjustment will be calculated for subsequent premium payments and excess withdrawals because these events will change the withdrawal base. The benefit fee adjustment may be positive or negative and will be added to or subtracted from the benefit fee to be collected.
The following example uses these assumed values: All initial values as in Example 1; Subsequent Premium = $10,000; and 30 remaining days in the rider quarter.
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Example 2: Calculation for first quarter benefit fee adjustment for a subsequent premium. The fee adjustment is:
=10,000*0.0125*(30/365)
=125*(30/365)
=$10.27
Total fee assessed at the end of the first benefit quarter (assuming no further benefit fee adjustments):
=311.64 + 10.27
=$321.91
Termination
The Living Benefit will terminate upon the earliest of the following:
• the death of the annuitant (or if the joint life option was elected, the death of the annuitant’s spouse if that spouse was eligible to and elected to continue the policy as the surviving spouse);
• annuitization (however, if you have reached your maximum annuity commencement date you may choose an annuitization option which guarantees you lifetime payments in an amount equal to your benefit withdrawal amount);
• the date a change in ownership or assignment occurs which violates the owner and annuitant requirements for this benefit;
• one year after the death of the owner if the policy is not continued;
• the date an excess withdrawal reduces your policy value to zero; or
• termination of your policy.
Please note: This benefit terminates upon annuitization and there is a maximum annuity commencement date at which time your policy will be annuitized according to its terms. However, if you have reached your maximum annuity commencement date, we will allow you to annuitize your policy and elect to receive lifetime annuity payments which are at least equal to your benefit withdrawal amount. Please contact us for more information concerning your options.
The Living Benefit and additional options may vary for certain policies.
OTHER INFORMATION
State Variations
The following section describes modifications to this prospectus required by one of more state insurance departments as of the date of this prospectus. Unless otherwise noted, variations apply to all forms of policies we issue. References to certain state's variations do not imply that we actually offer policies in each such state. These variations are subject to change without notice and additional variations may be imposed as specific states approve new riders.
Arizona - Owners age 65 and above have a 30 day right to cancel. If cancelled, the amount returned will include any fees and charges.
California – The policy may be canceled by returning the policy. A refund will be paid within 30 days from the date the notice of cancellation was received and refund will include any fees or charges. Owners age 60 or above have the option to elect immediate investment in investment options of their choice, and receive account value if they cancel; or, they may allocate the initial premium to the money market portfolio for 35 calendar days at the end of which the policy value is moved to the investment options of their choice, and they would receive return of premium if they cancel. The Nursing Care and Terminal Condition and Unemployment Waivers are not available. Restrictions on ownership change and assignment are not permitted. The fixed account is not available.
Connecticut - During the right to cancel period, prior to delivery of the policy, the owner will receive return of premium. The Unemployment Waiver is not available. Excess interest adjustment will not be applied upon annuitization. Service charge cannot be assessed at time of surrender. Transfer restrictions apply if more than one transfer is made in a 30 day period.
Florida - Owners have a 21 day right to cancel period and will receive return of premium. The Unemployment Waiver is not available. Excess interest adjustment is not applied upon annuitization or death. The annuity commencement date not is allowed until after the first policy year. The Living Benefit rider and policy will terminate upon ownership change or assignment.
Montana – The Unemployment Waiver is not available. The death benefit must be paid within 60 days and any interest due after 30 days.
New York - Under the right to cancel provision the premium payment allocated to the fixed account, if any, plus the policy value in the separate account, if any, including any fees and charges is returned. If the policy is a replacement, the right to cancel period is extended to 60 days. The Unemployment Waiver and telephone transactions are not available. There is no excess interest adjustment.
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The death benefit payable during the accumulation phase is the greater of policy value or guaranteed minimum death benefit, if any. The policy value is used upon annuitization. The annuity commencement date cannot be earlier than the first policy anniversary. The Living Benefit Rider will not terminate upon assignments. Restrictions on ownership change and assignments are not permitted.
North Dakota - Right to cancel period is 20 days.
Ownership
You, as owner of the policy, exercise all rights under the policy. You can generally change the owner at any time by notifying us in writing at our Administrative Office. 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. The guaranteed living benefit will terminate upon assignment or change in ownership of the policy unless the new assignee or owner meets our company requirements unless prohibited by certain states.
Beneficiary
The beneficiary designation will remain in effect until changed. The owner may change the designated beneficiary by sending us written notice. The beneficiary's consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the owner may then designate a new beneficiary.) We will not be liable for any payment made before the written notice is received in our Administrative and Service Office. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If, upon the death of the annuitant, there is a surviving owner(s), then the surviving owner(s) automatically takes the place of any beneficiary designation.
Right to Cancel Period
You may return your policy for a refund, but only if you return it within a prescribed period, which is generally 10 days after you receive the policy, or whatever longer time may be required by state law. The amount of the refund will generally be the premiums paid plus or minus accumulated gains or losses in the separate account. You bear the risk of any decline in policy value during the right to cancel period. However, if state law requires, we will refund your original premium payment(s), or surrender value, if greater. We will pay the refund within seven days after we receive in good order within the applicable period at our Administrative and Service Office, written notice of cancellation and the returned policy. The policy will then be deemed void.
Assignment
You can also generally assign the policy any time during your lifetime. We will not be bound by the assignment until we receive written notice of the assignment in good order at our Administrative and Service Office and approve it. 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. An assignment may have tax consequences.
Termination for Low Value
If a partial surrender 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.
Sending Forms and Transaction Requests in Good Order
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 Subaccounts affected by the requested transaction; the signatures of all policy 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
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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 any 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 and Service 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.
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.
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. Please see Voting Rights section below for how shares held by the Company would be voted.
Exchanges and/or Reinstatements
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 or full or partial 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,
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your new accumulation units may be worth more or less than the units you previously owned. Generally, unless you return the original company check, your annuity policy is nonqualified and a portion of the prior withdrawal was taxable, we are required to report the taxable amount from the distribution to the IRS even though the funds have been reinstated. The cost basis will be adjusted accordingly. The taxable amount will be reported on Form 1099-R which you will receive in January of the year following the distribution. We recommend that you consult a tax professional to explain the possible tax consequences of reinstatements.
Voting Rights
To the extent required by law, we will vote all shares of the underlying fund portfolios held in the separate account in accordance with instructions we receive from you and/or other individuals that have voting interests in the portfolios. We will send you and/or other individuals requests for instructions on how to vote those shares. When we receive those instructions, we will vote all of the shares in proportion to those instructions. 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. If, however, 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.
Legal Proceedings
We, like other life insurance companies, are subject to regulatory and legal proceedings, including class action lawsuits, 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.
The Company was the subject of inquiries and remains under audits and market conduct examinations with a focus on the handling of unreported claims and abandoned property. The audits and related examination activity may result in additional payments to beneficiaries, escheatment of funds deemed abandoned, and administrative penalties. The Company previously implemented changes in the procedures for the identification of unreported claims and handling of escheatable property to comply with the terms of regulatory agreements and newly adopted laws and regulations. The Company does not believe that any regulators actions or agreements that result from these audits and examinations will have a material adverse impact on our ability to meet our obligations.
Cyber Security
We rely heavily on interconnected computer systems and digital data to conduct our variable product business activities. Because our variable product business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is potentially vulnerable to disruptions from utility outages and other problems, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions) and cyber-attacks. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, interference with or denial of service attacks on websites and other operational disruption and unauthorized release of confidential customer information. Such systems failures and cyber-attacks affecting us, any third party administrator, the underlying funds, intermediaries and other affiliated or third-party service provides may adversely affect us and your policy value. For instance, cyber-attacks may: interfere with our processing of policy transactions, including the processing of orders from our website or with the underlying funds; cause the release and possible destruction of confidential customer or business information; impede order processing; subject us and/or our service providers and intermediaries to regulatory fines and financial losses; and/or cause reputational damage. Cyber security risks may also affect the issuers of securities in which the underlying funds invest, which may cause the underlying funds to lose value. There can be no assurance that we, the underlying funds or our service providers will avoid losses affecting your policy that result from cyber-attacks or information security breaches in the future.
For a complete description regarding Transamerica’s policies for its websites, including the Privacy Policy and Terms of Use for such websites, please visit: https://www.transamerica.com/individual/privacy-policy and https://www.transamerica.com/individual/terms-of-use.
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 except New York and the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. Transamerica Financial Life
42

 

Insurance Company was incorporated under the laws of the State of New York on October 3, 1947 and is licensed in all states and the District of Columbia. 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.
Financial Condition
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 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.
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 http://www.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/individual/what-we-do/about-us/financial-strength/), and the websites of these nationally recognized statistical ratings organizations – A.M. Best Company (www.ambest.com), Moody’s Investors Service (www.moodys.com), Standard & Poor’s Rating Services (www.standardandpoors.com) and Fitch, Inc. (www.fitchratings.com).
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The Separate Account
Each separate account receives and invests the premium payments that are allocated to it for investment in shares of the underlying fund portfolios. Each 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 us. 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 our other income, gains or losses.
The assets of each separate account are held in our name on behalf of the separate account and belong to us. However, those assets that underlie the policies are not chargeable with liabilities arising out of any other business we may conduct. The separate account may include other subaccounts that are not available under these policies. We do not guarantee the investment results of the Separate Account.
The Underlying Funds
At the time you purchase your policy, you may allocate your premium payment 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 underlying fund portfolios 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 mutual 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 see “Appendix - Underlying Fund Portfolios Associated with the Subaccounts” 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.
Distribution of the Policies
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.
Compensation to Broker-Dealers Selling the Policies. The policies are 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 commissions through TCI to the selling firms for their sales of the policies.
The selling firms are paid commissions for the promotion and sale of the policies according to one or more schedules. The amount and timing of commissions may vary depending on the selling agreement, but the maximum commission is 5.5% of premium payments (additional amounts may be paid as overrides to wholesalers).
To the extent permitted by Financial Industry Regulatory Authority (FINRA) rules, the Company and TCI 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.
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The sales representative who sells you the policy typically receives a portion of the compensation we (and our affiliates) pay to the selling firms, depending on the agreement between the selling firm and its 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 receive in connection with your purchase of a policy. Also inquire about any 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 receive different compensation or incentives for selling one product over another. In some cases, these differences may create an incentive for the selling firm or its sales representatives to recommend or sell the policy to you. You may wish to take such incentives into account when considering and evaluating any recommendation relating to the policies.
Special Compensation Paid to Affiliated Firms. We and/or our affiliates provide paid-in capital to TCI and we or our affiliates may pay all or a portion of the cost of TCI's operating and other expenses, including costs for facilities, legal and accounting services, and other internal administrative functions. 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.
TCI's registered representatives and supervisors may receive non-cash compensation, such as attendance at conferences, seminars and trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items, payments, loans, loan forgiveness or loan guarantees.
Additional Compensation That We, TCI and/or Our Affiliates Pay to Selected Selling Firms. TCI, in connection with the sales of the policies, may pay certain selling firms additional cash amounts in order to receive enhanced marketing services and increased access to their sales representatives. In exchange for providing TCI with access to their distribution network, such selling firms may receive additional compensation or reimbursement for, among other things, the hiring and training of sales personnel, marketing, sponsoring of conferences, meetings, seminars, events, and/or other services they provide to us and our affiliates. To the extent permitted by applicable law, We, TCI and other parties may provide the selling firms with occasional gifts, meals, tickets or other non-cash compensation as an incentive to sell the policies. These special compensation arrangements are not offered to all selling firms and the terms of such arrangements may differ among selling firms.
In addition, TCI paid selling firms other special fees based on new sales and/or assets under management. During 2016, TCI paid such fees to at least 61 broker-dealers and other financial intermediaries. Some of the more significant entities were:
BBVA Securities, Inc. • Bruderman Brothers, LLC • Cambridge Investment Research, Inc. •  CCO Investments •  Centarus Financial, Inc. • Cetera Advisor Networks LLC • Cetera Advisors LLC • Cetera Financial Specialists LLC • Cetera Investment Services LLC •  CFD Investments, Inc • Commonwealth Financial Network • Edward D. Jones & Co., L.P.• Equity Services, Inc. • Fifth Third Securities, Inc. • First Allied Holdings, Inc. • FSC Securities Corporation • Geneos Wealth Management, Inc. • Girard Securities, Inc. • Hantz Financial Services, Inc. • Invest Financial Corporation • Investacorp, Inc. • Investment Centers of America, Inc. • Investors Capital Holding, Inc. • James T. Borello & Co, • Janney Montgomery Scott, LLC • JP Turner & Company • Key Investment Services, Inc. • Legend Equities Corporation • Lincoln Financial Advisors Corporation • Lincoln Financial Securities Corporation • LPL Financial, LLC. • M&T Securities Product Management • Merrill Lynch, Pierce, Fenner & Smith Inc. • MetLife Securities, Inc. • Morgan Stanley Smith Barney, Inc. • Mutual of Omaha Inv. Serv. • National Planning Corporation • NFP Securities Inc. • Park Avenue Securities, LLC • Raymond James & Associates, Inc. • Raymond James Financial Services, Inc. • Royal Alliance Associates, Inc. • SagePoint Financial, Inc. • Santander Securities LLC • Securian Financial Services, Inc. • Securities America, Inc. •  Sigma Financial Corporation • Signator Investors, Inc. • SII Investments, Inc. • Summit Financial Service Group, Inc. • SunTrust Investment Services • The Huntington Investment Company • Transamerica Financial Advisors, Inc. • UBS Financial Services • US Bancorp Investments, Inc. • VOYA Financial Partners, LLC • VSR Financial Services, Inc. • Wells Fargo Advisors Financial Network, LLC • Wells Fargo Advisors, LLC • Wells Fargo Investments LLC • Woodbury Financial
For the calendar year ended December 31, 2016 TCI paid approximately $25,000,000 to various brokers and other financial intermediaries in connection with revenue sharing arrangements.
No specific charge is assessed directly to owners or the separate account to cover commissions, non-cash compensation, 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.
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Glossary of Terms
The Policy - General Provisions
Investment Experience
Performance
Historical Performance Data
Published Ratings
State Regulation of Us
Administration
Records and Reports
Distribution of the Policies
Voting Rights
Other Products
Custody of Assets
Independent Registered Public Accounting Firm
Other Information
Financial Statements
46

 

APPENDIX
UNDERLYING FUND PORTFOLIOS ASSOCIATED WITH THE SUBACCOUNTS
SUBACCOUNT UNDERLYING FUND PORTFOLIO ADVISOR/SUBADVISOR
TRANSAMERICA SERIES TRUST*
TA Aegon Government Money Market - Service Class(1) Transamerica Aegon Government Money Market VP – Service Class(1) Aegon USA Investment Management, LLC
Investment Objective: Invests in high quality, U.S. dollar-denominated short-term money market instruments.
TA Aegon U.S. Government Securities - Service Class Transamerica Aegon U.S. Government Securities VP – Service Class Aegon USA Investment Management, LLC
Investment Objective: High level of total return as is consistent with prudent investment strategies.
TA Asset Allocation - Conservative - Service Class(2) Transamerica Asset Allocation - Conservative VP – Service Class(2) J.P. Morgan Investment Management Inc.
Investment Objective: Current income and preservation of capital.
TA PIMCO Total Return - Service Class Transamerica PIMCO Total Return VP – Service Class Pacific Investment Management Company LLC
Investment Objective: Maximum total return consistent with preservation of capital and prudent investment management.
TA QS Investors Active Asset Allocation - Conservative - Service Class(2) Transamerica QS Investors Active Asset Allocation - Conservative VP - Service Class(2) QS Investors, LLC
Investment Objective: Current income and preservation of capital.
TA QS Investors Active Asset Allocation - Moderate - Service Class(2) Transamerica QS Investors Active Asset Allocation - Moderate VP - Service Class(2) QS Investors, LLC
Investment Objective: Capital appreciation and current income.
(1)  There can be no assurance that the Transamerica Aegon Government Money Market VP - Service Class portfolio 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 TA Aegon Government Money Market - Service Class subaccount may become extremely low and possibly negative.
(2)  This subaccount invests in an underlying fund that utilizes a volatility management strategy as part of its investment objective and/or principal investment strategy. See “Investment Restrictions” earlier in the prospectus for information on how volatility management strategies may impact your policy value in certain optional riders.
* All underlying fund portfolios in the Transamerica Series Trust are advised by Transamerica Asset Management. The entities listed are the subadvisers unless otherwise indicated.
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APPENDIX
CONDENSED FINANCIAL INFORMATION
The following tables list the accumulation unit value information for accumulation units outstanding for policies with the highest total separate account expenses and policies with the lowest total separate account expenses available on December 31, 2016. Should the total separate account expense applicable to your policy fall between the highest and lowest charges, AND you wish to see a copy of the Condensed Financial Information applicable to your policy, such information is contained in the SAI. You can obtain a copy of the SAI FREE OF CHARGE by contacting us at:
Calling: (800) 525-6205
Writing: Transamerica Life Insurance Company
Transamerica Financial Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, IA 52499-0001
    
    Separate Account Expense 1.30%
Subaccount Year Beginning AUV Ending AUV # Units (National) # Units (NY)
TA Aegon Government Money Market - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.660323
$9.786246
$9.913807
$10.000000 		$9.536370
$9.660323
$9.786246
$9.913807 		235,950.497
146,347.518
357,848.635
125,240.009 		0.000
6,643.030
59,784.014
4,267.128
TA Aegon U.S. Government Securities - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.709894
$9.854238
$9.560474
$10.000000 		$9.598228
$9.709894
$9.854238
$9.560474 		108,301.932
93,795.704
179,880.817
31,301.516 		9,753.310
10,732.486
19,495.032
6,872.061
TA Asset Allocation - Conservative - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.194463
$10.554197
$10.487906
$10.000000 		$10.496265
$10.194463
$10.554197
$10.487906 		1,834,895.207
1,842,792.993
1,621,197.223
314,098.876 		26,063.931
27,377.979
28,073.139
3,718.877
TA PIMCO Total Return - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.712694
$9.789141
$9.504820
$10.000000 		$9.824802
$9.712694
$9.789141
$9.504820 		687,874.399
714,709.960
515,149.317
106,925.382 		44,714.850
47,556.006
37,131.611
4,032.091
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.040445
$10.417774
$10.186747
$10.000000 		$10.173525
$10.040445
$10.417774
$10.186747 		1,233,396.897
1,168,731.448
986,378.745
202,785.061 		34,389.685
35,160.687
36,092.352
964.882
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.086856
$10.675473
$10.437709
$10.000000 		$10.174287
$10.086856
$10.675473
$10.437709 		21,916,354.706
22,949,127.279
19,100,117.207
2,931,832.630 		1,433,569.053
1,487,275.254
1,206,865.001
199,565.438
48

 

APPENDIX
Excess Interest Adjustment Examples
Surrenders (full and partial), transfers, death benefits and amounts applied to an annuity option, from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment (“EIA”). If, at the time of such transactions the guaranteed interest rate set by us for the applicable period has risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value. However, if the guaranteed interest rate set by us for the applicable period has fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value.
Excess interest adjustments will not reduce the adjusted policy value for a guaranteed period option below the premium payments and transfers to that guaranteed period option, less any prior partial surrenders and transfers from the guaranteed period option, plus interest at the policy's minimum guaranteed effective annual interest rate. This is referred to as the excess interest adjustment floor.
The formula that will be used to determine the excess interest adjustment is:
S* (G-C)* (M/12)
S = Is the amount (before surrender charges, premium taxes and the application of any Guaranteed Minimum Death Benefits, if any) being surrendered, withdrawn, transferred, paid upon death, or applied to an income option that is subject to the excess interest adjustment.
G = Is the guaranteed interest rate for the guaranteed period applicable to “S”;
C = Is the current guaranteed interest rate then being offered on new premium payments for the next longer option period than “M”. If this policy form or such an option period is no longer offered, “C” will be the U.S. Treasury rate for the next longer maturity (in whole years) than “M” on the 25th day of the previous calendar month; and
M = Number of months remaining in the current option period for “S”, rounded up to the next higher whole number of months.
* = Multiplication
The following examples are for illustrative purposes only and are calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal. In the following examples ^ denotes exponentiation. Please note the exponentiation represents the compounding of the interest rate.
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Excess Interest Adjustment Examples — (Continued)
Example 1 (Full Surrender, rates increase by 3%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Guaranteed minimum interest rate = 1.50%
Surrender in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Amount subject to excess interest adjustment = 54,181.21 – 4,181.21 = 50,000.00
Excess interest adjustment floor = 50,000.00 * (1.015) ^ 1.5 = 51,129.21
Excess interest adjustment S*(G-C)*(M/12) where: G = .055
C = .085
M = 42
= 50,000.00 * (0.055*0.085) * (42/12)
  = -5,250.00, but excess interest adjustment cannot cause the adjusted policy value to fall below the excess interest adjustment floor, so the adjustment is limited to
51,129.21 - 54,181.21 = -3,052.00
Adjusted policy value = policy value + excess interest adjustment = 54,181.21 + (-3,052.00) = 51,129.21
Upon full surrender of the policy, the net surrender value (adjusted policy value less any surrender charge) will never be less than that required by the non-forfeiture laws of your state.
Example 2 (Full Surrender, rates decrease by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Guaranteed minimum interest rate = 1.50%
Surrender in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Amount subject to excess interest adjustment = 54,181.21 – 4,181.21 = 50,000.00
Excess interest adjustment floor = 50,000.00 * (1.015) ^ 1.5 = 51,129.21
Excess interest adjustment S* (G-C)* (M/12) where: G = .055
C = .045
M = 42
= 50,000.00 * (.055-.045) * (42/12) = 1,750.00
Adjusted policy value = 54,181.21 + 1,750.00 = 55,931.21
Upon full surrender of the policy, the net surrender value will never by less than that required by the non-forfeiture laws of your state. For the purpose of these illustrations no surrender charges are assumed.
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Excess Interest Adjustment Examples — (Continued)
On a partial surrender, we will pay the policyholder the full amount of surrender requested (as long as the policy value is sufficient). Amounts surrendered will reduce the policy value by an amount equal to:
R - E + SC
R = the requested partial surrender;
E = the excess interest adjustment; and
SC = the surrender charges on (EPW - E): where
EPW = the excess partial withdrawal amount.
Example 3 (Partial Surrender, rates increase by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Partial Surrender of $20,000 in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Excess interest adjustment S*(G-C)*(M/12) where: S = 20,000 – 4,181.21 = 15,818.79
G = .055
C = .065
M = 42
= 15,818.79 * (.055 - .065) * (42/12) = -553.66
Remaining policy value at middle of policy year 2 = 54,181.21 - (R - E + surrender charge)
= 54,181.21 - (20,000.00 - (-553.66) + 0.00) = 33,627.55
Example 4 (Partial Surrender, rates decrease by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Partial Surrender of $20,000 in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Excess interest adjustment S*(G-C)*(M/12) where: S = 20,000 – 4,181.21 = 15,818.79
G = .055
C = .045
M = 42
= 15,818.79 * (.055 - .045)* (42/12) = 553.66
Remaining policy value at middle of policy year 2 = 54,181.21 - (R - E + surrender charge)
= 54,181.21 - (20,000.00 – 553.66 + 0.00) = 34,734.87
51

 

APPENDIX
Death Benefit
Adjusted Withdrawals. If you make a partial surrender (withdrawal), then your guaranteed minimum death benefit is reduced by an amount called the adjusted withdrawal. The amount of the reduction depends on the relationship between your death proceeds and policy value. The adjusted withdrawal is equal to the gross withdrawal multiplied by the death proceeds immediately prior to the withdrawal divided by the policy value immediately prior to the withdrawal. The formula is AW = GW x (DP/PV) where:
AW = adjusted withdrawal
GW= gross withdrawal
DP = death proceeds prior to the withdrawal = greatest of (PV, CV, or GMDB)
PV = policy value prior to the withdrawal
GMDB = guaranteed minimum death benefit prior to the withdrawal
CV = cash value prior to the withdrawal
The following examples describe the effect of a surrender on the guaranteed minimum death benefit and policy value.
Example 1: Death Proceeds Greater than Policy Value
Assumptions:
GMDB = $75,000
PV = $50,000
DP = $75,000
GW = $15,494
AW = $15,494 x ($75,000/$50,000) = $23,241
Summary:  
Reduction in guaranteed minimum death benefit =$23,241
Reduction in policy value =$15,494
New guaranteed minimum death benefit amount =$51,759
New policy value (after withdrawal) =$34,506
The guaranteed minimum death benefit is reduced more than the policy value because the guaranteed minimum death benefit was greater than the policy value immediately prior to the withdrawal.
Example 2: Death Proceeds Equal to Policy Value
Assumptions:
GMDB = $50,000
PV = $75,000
DP = $75,000
GW = $15,494
AW = $15,494 x ($75,000/$75,000) = $15,494
Summary:  
Reduction in guaranteed minimum death benefit =$15,494
Reduction in policy value =$15,494
New guaranteed minimum death benefit amount =$34,506
New policy value (after withdrawal) =$59,506
The guaranteed minimum death benefit and policy value are reduced by the same amount because the policy value was greater than the guaranteed minimum death benefit immediately prior to the withdrawal.
These examples are for illustrative purposes only. The purpose of these illustrations is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.
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Death Benefit — (Continued)
Hypothetical Example
In this example, certain death benefit values at various points in time are depicted based on hypothetical assumed rates of performance. This example is for illustrative purposes only and assumes a single $100,000 premium payment by a sole owner and annuitant who is age 50. It further assumes no subsequent premium payments or withdrawals.
End of Year   Net Rate of
Return for Fund* 		  Policy Value
(No GMDB
Elected) 		  Policy Value
(Return of
Premium GMDB
Elected) 		  Return of
Premium
GMDB
Issue   N/A   $100,000   $100,000   $100,000
1   -4%   $ 94,850   $ 94,700   $100,000
2   18%   $110,832   $110,515   $100,000
3   15%   $126,182   $125,655   $100,000
4   -7%   $115,899   $115,226   $100,000
5   2%   $116,884   $116,033   $100,000
6   10%   $127,228   $126,127   $100,000
7   14%   $143,577   $142,146   $100,000
8   -3%   $137,618   $136,033   $100,000
9   17%   $159,431   $157,391   $100,000
10   6%   $167,163   $164,788   $100,000
* The assumed rate does reflect the deduction of a hypothetical fund fee but does not reflect the deduction of any other fees, charges or taxes. The death benefit values do reflect the deduction of hypothetical base policy fees and hypothetical death benefit fees. For purposes of this example we assumed a Mortality and Expense Risk Fee and an Administrative Charge of 1.15% for Policy Value and 1.30% for Return of Premium. Different hypothetical returns and fees would produce different results.
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APPENDIX
Living Benefit - Adjusted Partial Withdrawals
When a withdrawal is taken, three parts of the guaranteed lifetime withdrawal benefit can be affected:
1.  Withdrawal Base (“WB”) (also referred to as Total Withdrawal Base (“TWB”) for some riders);
2.  Benefit Withdrawal Amount (“BWA”)
Withdrawal Base.  Gross partial withdrawals in a benefit year up to the benefit withdrawal amount will not reduce the withdrawal base. Gross partial withdrawals in a benefit year in excess of the benefit withdrawal amount will reduce the withdrawal base by an amount equal to the greater of:
1)  the excess gross partial withdrawal amount; and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the excess gross partial withdrawal (the amount in excess of the benefit withdrawal amount remaining prior to the withdrawal);
B  is the policy value after the benefit withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount; and
C  is the withdrawal base prior to the withdrawal of the excess amount.
The following demonstrates, on a purely hypothetical basis, the effects of partial withdrawals under a guaranteed lifetime withdrawal benefit.
Example 1 (Base):
Assumptions:
WB = $100,000
Withdrawal Percentage = 4.5%
BWA = 4.5% withdrawal would be $4,500 (4.5% of the current $100,000 withdrawal base)
Gross partial withdrawal (“GPWD”) = $4,500
Excess withdrawal (“EWD”) = None
Policy Value (“PV”) = $100,000
Question: Is any portion of the withdrawal greater than the benefit withdrawal amount?
No. There is no excess withdrawal under the guarantee since no more than $4,500 is withdrawn.
Result. In this example, because no portion of the withdrawal was in excess of $4,500, the withdrawal base does not change.
Example 2 (Excess Withdrawal):
Assumptions:
WB = $100,000
Withdrawal Percentage = 4.5%
BWA = 4.5% withdrawal would be $4,500 (4.5% of the current $100,000 withdrawal base)
GPWD = $7,000
EWD = $2,500 ($7,000 - $4,500)
PV = $90,000
NOTE. For the guaranteed lifetime withdrawal benefit, because there was an excess withdrawal amount, the withdrawal base needs to be adjusted and a new lower benefit withdrawal amount calculated. Had the withdrawal for this example not been more than $4,500, the withdrawal base would remain at $100,000 and the benefit withdrawal amount would be $4,500. However, because an excess withdrawal has been taken, the withdrawal base is also reduced (this is the amount the 4.5% is based on).
New withdrawal base:
Step One. The withdrawal base is reduced only by the amount of the excess withdrawal or the pro rata amount, if greater.
Step Two. Calculate how much the withdrawal base is affected by the excess withdrawal.
1.  The formula is (EWD / (PV - 4.5% BWA)) * WB before any adjustments
2.  ($2,500 / ($90,000 - $4,500)) * $100,000 = $2,923.98
Step Three. Which is larger, the actual $2,500 excess withdrawal or the $2,923.98 pro rata amount?
$2,923.98 pro rata amount.
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Living Benefit - Adjusted Partial Withdrawals — (Continued)
Step Four. What is the new withdrawal base upon which the benefit withdrawal amount is based?
$100,000 - $2,923.98 = $97,076.02
Result. The new withdrawal base is $97,076.02
New benefit withdrawal amount:
Because the withdrawal base was adjusted (due to the excess withdrawal) we have to calculate a new benefit withdrawal amount for the 4.5% guarantee that will be available starting on the next calendar anniversary. This calculation assumes no more activity prior to the next calendar anniversary.
Question: What is the new benefit withdrawal amount?
$97,076.02 (the adjusted withdrawal base) * 4.5% = $4,368.42
Result. Going forward, the maximum you can take out in a year is $4,368.42 without causing an excess withdrawal for the guarantee and further reduction of the withdrawal base (assuming there are no future automatic step-ups).
Example 3 (Base demonstrating growth):
Assumptions:
WB = $100,000
Withdrawal Percentage = 4.5%
WB in 10 years (assuming an annual growth rate percentage of 5.0%) = $100,000 * (1 + .05) ^ 10 = $162,889
BWA = 4.5% withdrawal beginning 10 years from the rider date would be $7,330 (4.5% of the then-current $162,889 withdrawal base)
Please Note: Withdrawals under these riders can begin prior to the 10th rider anniversary, but the WB growth will not occur during the benefit years when a withdrawal is taken, and the growth stops on the 10th benefit anniversary.
GPWD = $7,330
EWD = None
PV = $90,000 in 10 years
Question:   Is any portion of the withdrawal greater than the benefit withdrawal amount?
No.  There is no excess withdrawal under the guarantee if no more than $7,330 is withdrawn.
Result.   In this example, because no portion of the withdrawal was in excess of $7,330, the withdrawal base does not change.
The Living Benefit rider and any additional options they offer may vary for certain policies, may not be available for all policies, and may not be available in all states.
This disclosure explains the material features of the Living Benefit rider.
55

 

APPENDIX
Hypothetical Example of the Withdrawal Base Calculation -Living Benefit
The following table demonstrates, on a purely hypothetical basis, the withdrawal base calculation for the Living Benefit using an initial premium payment of $100,000 for a Single Life Option rider at an issue age of 80. All values shown are post transaction values. The assumed withdrawal percentage in the example below is 6.30%
Benefit Year   Hypothetical
Policy
Value 		  Subsequent
Premium
Payment 		  Withdrawal   Excess
WB
Adjustment 		  Growth
Amount 		  High
MonthiversarySM
Value 		  Withdrawal
Base 		  Benefit
Withdrawal
Amount
    $100,000   $   $   $   $   $100,000   $100,000   $ 6,300
1   $102,000   $   $   $   $   $102,000   $100,000   $ 6,300
1   $105,060   $   $   $   $   $105,060   $100,000   $ 6,300
1   $107,161   $   $   $   $   $107,161   $100,000   $ 6,300
1   $110,376   $   $   $   $   $110,376   $100,000   $ 6,300
1   $112,584   $   $   $   $   $112,584   $100,000   $ 6,300
1   $115,961   $   $   $   $   $115,961   $100,000   $ 6,300
1   $118,280   $   $   $   $   $118,280   $100,000   $ 6,300
1   $121,829   $   $   $   $   $121,829   $100,000   $ 6,300
1   $124,265   $   $   $   $   $124,265   $100,000   $ 6,300
1   $120,537   $   $   $   $   $124,265   $100,000   $ 6,300
1   $115,716   $   $   $   $   $124,265   $100,000   $ 6,300
1   $109,930   $   $   $   $105,000   $124,265   $124,265 1   $ 7,829
2   $112,129   $   $   $   $   $112,129   $124,265   $ 7,829
2   $115,492   $   $   $   $   $115,492   $124,265   $ 7,829
2   $117,802   $   $   $   $   $117,802   $124,265   $ 7,829
2   $121,336   $   $   $   $   $121,336   $124,265   $ 7,829
2   $124,976   $   $   $   $   $124,976   $124,265   $ 7,829
2   $177,476   $50,000   $   $   $   $177,476   $174,265   $10,979
2   $175,701   $   $   $   $   $177,476   $174,265   $10,979
2   $172,187   $   $   $   $   $177,476   $174,265   $10,979
2   $167,022   $   $   $   $   $177,476   $174,265   $10,979
2   $163,681   $   $   $   $   $177,476   $174,265   $10,979
2   $166,955   $   $   $   $   $177,476   $174,265   $10,979
2   $170,294   $   $   $   $182,979   $177,476   $182,979 2   $11,528
3   $166,888   $   $   $   $   $166,888   $182,979   $11,528
3   $171,895   $   $   $   $   $171,895   $182,979   $11,528
3   $173,614   $   $   $   $   $173,614   $182,979   $11,528
3   $178,822   $   $   $   $   $178,822   $182,979   $11,528
3   $175,246   $   $   $   $   $178,822   $182,979   $11,528
3   $151,741   $   $20,000   $9,676   $   $   $173,303   $
3   $154,775   $   $   $   $   $   $173,303   $
3   $159,419   $   $   $   $   $   $173,303   $
3   $161,013   $   $   $   $   $   $173,303   $
3   $165,843   $   $   $   $   $   $173,303   $
3   $174,135   $   $   $   $   $   $173,303   $
3   $181,101   $   $   $   $   $   $181,101 1   $11,409
(1)  Automatic Step Up Applied
(2)  Growth Applied
*  Growth Percentage = 5%
56

Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
TRANSAMERICA RETIREMENT INCOME PLUS®
Issued through
Transamerica Life Insurance Company
Separate Account VA B (EST. 1/19/1990)
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
(800)525-6205
www.transamerica.com 		Transamerica Financial Life Insurance Company
Separate Account VA BNY (EST. 9/27/1994)
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
(800)525-6205
www.transamerica.com
This Statement of Additional Information expands upon subjects discussed in the current prospectus for the Transamerica Retirement Income Plus® variable annuity offered by Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company (“us,” “we”, “our” or “Company”). You may obtain a copy of the current prospectus, dated May 1, 2017, by calling (800) 525-6205, or write us at the addresses listed above. 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.
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, 2017

 

TABLE OF CONTENTS
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APPENDIX  
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APPENDIX  
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GLOSSARY OF TERMS
accumulation unit—An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.
adjusted policy value—The policy value increased or decreased by any excess interest adjustment.
Administrative Office—Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001, (800)525-6205.
annuitant—The person on whose life any annuity payments involving life contingencies will be based.
annuity commencement date—The date upon which annuity payments are to commence. This date may not be later than the last day of the policy month following the month in which the annuitant attains age 99 (earlier if required by state law).
annuity payment option—A method of receiving a stream of annuity payments selected by the owner.
annuity unit—An accounting unit of measure used in the calculation of the amount of the second and each subsequent variable annuity payment.
assumed investment return or AIR—The annual effective rate shown in the contract that is used in the calculation of each variable annuity payment.
beneficiary—The person who has the right to the death benefit as set forth in the policy.
cash value—The adjusted policy value less any applicable surrender charge and rider fees (imposed upon surrender).
Code—The Internal Revenue Code of 1986, as amended.
enrollment form—A written application, order form, or any other information received electronically or otherwise upon which the policy is issued and/or is reflected on the data or specifications page.
excess interest adjustment—A positive or negative adjustment to amounts surrendered (both partial or full surrenders) and transfers or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by us since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon full or partial surrenders or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum. The excess interest adjustment does not apply to policies issued in New York by Transamerica Financial Life Insurance Company.
excess partial surrender—The portion of a partial surrender (surrender) that exceeds the free amount.
fixed account—One or more guaranteed period options under the policy that are part of our general assets and are not in the separate account.
free amount—The amount that can be withdrawn each year without incurring any surrender charges or excess interest adjustments.
guaranteed period options—The various guaranteed interest rate periods of the fixed account which we may offer and into which premium payments may be paid or amounts transferred when available.
Living Benefit—A benefit under the policy that provides a guaranteed minimum withdrawal benefit.
market day—A day when the New York Stock Exchange is open for business.
nonqualified policy—A policy other than a qualified policy.
owner (you, your)—The person who may exercise all rights and privileges under the policy.
policy date—The date shown on the policy data page attached to the policy and the date on which the policy becomes effective.
policy value—On or before the annuity commencement date, the policy value is equal to the owner's:
• premium payments; minus
• gross  surrenders (surrenders plus the surrender charge on the portion of the requested partial surrender that is subject to the surrender charge plus or minus any excess interest adjustment plus taxes (on the withdrawal)); plus
• interest credited in the fixed account; plus
• accumulated gains in the separate account; minus
• accumulated losses in the separate account; minus
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• service charges, rider fees, premium taxes, transfer fees, and other charges, if any.
policy year—A policy year begins on the policy date and on each anniversary thereafter.
premium payment—An amount paid to us by the owner or on the owner's behalf as consideration for the benefits provided by the policy.
qualified policy—A policy issued in connection with retirement plans that qualify for special federal income tax treatment under the Code.
separate account—Separate Account VA B and Separate Account VA BNY, separate accounts established and registered as unit investment trusts 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.
service charge—An annual charge on each policy anniversary (and a charge at the time of surrender during any policy year) for policy maintenance and related administrative expenses.
subaccount—A subdivision within the separate account, the assets of which are invested in a specified underlying fund portfolio.
surrender charge—A percentage of each premium payment that depends upon the length of time from the date of each premium payment. The surrender charge is assessed on full or partial surrenders from the policy. A surrender charge may also be referred to as a “contingent deferred sales charge” or a “contingent deferred sales load.”
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 market day.
variable annuity payments—Payments made pursuant to an annuity payment option which fluctuate as to dollar amount or payment term in relation to the investment performance of the specified subaccounts within the separate account.
written notice—Written notice, signed by the owner, that gives us the information we require and is received in good order at the Administrative Office. For some transactions, we may accept an electronic notice or telephone instructions. Such electronic notice must meet the requirements for good order that we establish for such notices.
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In order to supplement the description in the prospectus, the following provides additional information about us 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 enrollment form 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.
Unless we have been notified of a community or marital property interest in the policy, we will rely on our good faith belief that no such interest exists and will assume no responsibility for inquiry.
Note carefully. If the owner predeceases the annuitant and no joint owner, primary beneficiary, or contingent beneficiary is alive or in existence on the date of death, the owner's estate will become the new owner. If no probate estate is opened because the owner has precluded the opening of a probate estate by means of a trust or other instrument, that trust may not exercise ownership rights to the policy. It may be necessary to open a probate estate in order to exercise ownership rights to the policy.
The owner may change the ownership of the policy in a written notice. 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.
When there is a change of owner, the change will not be effective until it is recorded in our records. Once recorded, it will take effect as of the date the owner signs the written notice, subject to any payment we have made or action we have taken before recording the change. Changing the owner does not change the designation of the beneficiary or the annuitant.
Entire Contract
The entire contract consists of the policy and any application, endorsements and riders. If any portion of the policy or rider attached thereto shall be found to be invalid, unenforceable or illegal, the remainder shall not in any way be affected or impaired thereby, but shall have the same force and effect as if the invalid, unenforceable or illegal portion had not been inserted.
Misstatement of Age or Sex
During the Accumulation Phase. 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 contract 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 Annuity Commencement Date. We may require proof of the annuitant’s or owner’s age and/or sex before any payments associated with any benefits are made. If the age or sex 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 sex. 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 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.
Reallocation of Annuity Units After the Annuity Commencement Date
After the annuity commencement date, you may reallocate the value of a designated number of annuity units of a subaccount then credited to a policy into an equal value of annuity units of one or more other subaccounts or the fixed account. The reallocation shall be based on the relative value of the annuity units of the account(s) or subaccount(s) at the end of the market day on the next payment date. The minimum amount which may be reallocated is the lesser of (1) $10 of monthly income or (2) the entire monthly income of the annuity units in the account or subaccount from which the transfer is being made. If the monthly income of the
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annuity units remaining in an account or subaccount after a reallocation is less than $10, we reserve the right to include the value of those annuity units as part of the transfer. The request must be in writing to our Administrative Office. There is no charge assessed in connection with such reallocation. A reallocation of annuity units may be made up to four times in any given policy year.
After the annuity commencement date, no transfers may be made from the fixed account to the separate account.
Annuity Payment Options
During the lifetime of the annuitant and before the annuity commencement date, the owner may choose an annuity payment option or change the election, but notice of any election or change of election must be received by us in good order at least thirty (30) days before the annuity commencement date (elections less than 30 days require prior approval). If no election is made before the annuity commencement date, annuity payments will be made under life income with variable payments for 10 years certain using the existing policy value of the separate account. The default options may be restricted with respect to qualified policies.
The person who elects an annuity payment option can also name one or more beneficiaries to receive any unpaid, guaranteed amount at the death of the annuitant. Naming these beneficiaries cancels any prior choice of a beneficiary.
A payee who did not elect the annuity payment option does not have the right to advance or assign payments, take the payments in one sum, or make any other change. However, the payee may be given the right to do one or more of these things if the person who elects the option tells us in writing and we agree.
Adjusted Age. For the Life Income and Joint and Survivor annuity payment options, the adjusted age is the annuitant's actual age nearest birthday, on the annuity commencement date, adjusted as described in your policy. This adjustment assumes an increase in life expectancy, and therefore it results in lower payments than without such an adjustment.
Variable Payment Options. The dollar amount of the first variable annuity payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the policy. For annuity payments the tables are based on a 3% effective annual AIR and the “Annuity 2000” (male, female and unisex if required by law) mortality table projected for improvement using projection scale G. The rates were projected dynamically using an assumed annuity commencement date of 2020. the “Annuity 2000” mortality rates are adjusted based on improvements in mortality to more appropriately reflect increased longevity. The dollar amount of additional variable annuity payments will vary based on the investment performance of the subaccount(s) of the separate account selected by the annuitant or beneficiary. For certain qualified policies the use of unisex mortality tables may be required.
Determination of the First Variable Payment. The amount of the first variable payment depends upon the sex (if consideration of sex is allowed under state and Federal law) and adjusted age of the annuitant.
Determination of Additional Variable Payments. All variable annuity payments other than the first are calculated using annuity units which are credited to the policy. The number of annuity units to be credited in respect of a particular subaccount is determined by dividing that portion of the first variable annuity payment attributable to that subaccount by the annuity unit value of that subaccount on the annuity commencement date. The number of annuity units of each particular subaccount credited to the policy then remains fixed, assuming no transfers to or from that subaccount occur. The dollar value of variable annuity units in the chosen subaccount will increase or decrease reflecting the investment experience of the chosen subaccount. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant. This amount is equal to the sum of the amounts determined by multiplying the number of annuity units of each particular subaccount credited to the policy by the annuity unit value for the particular subaccount on the date the payment is made.
Death Benefit
Due proof of death of the annuitant is proof that the annuitant died prior to the commencement of annuity payments. A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by the attending physician, or any other proof satisfactory to us will constitute due proof of death. If the annuitant dies after the annuity commencement date, no death benefit is payable and the amount payable will depend on the annuity income option.
Upon receipt in good order of this proof and an election of a method of settlement, 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 death benefit may be paid as a lump sum, as annuity payments or as otherwise permitted by the Company in accordance with applicable law, unless a settlement agreement is effective at the death of the owner preventing such election.
If an owner is not an annuitant, and dies prior to the annuity commencement date, the new owner may surrender the policy at any time for the amount of the cash value. If the new owner is not the deceased owner's spouse, the cash value must be distributed within five years after the date of the deceased owner's death, or be used to provide payments to a designated beneficiary within one year of
4

 

such owner’s death that will be made for life of the beneficiary or for a period not extending beyond the life expectancy of the beneficiary. If the sole new owner is the deceased owner's surviving spouse, such spouse may elect to continue the policy as the new owner instead of receiving the death benefit.
Beneficiary. The beneficiary designation in the enrollment form will remain in effect until changed. The owner may change the designated beneficiary by sending us written notice. The beneficiary's consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. If an irrevocable beneficiary dies, the owner may then designate a new beneficiary. The change will take effect as of the date the owner signs the written notice, whether or not the owner is living when we receive the notice. We will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If upon the death of the annuitant there is a surviving owner(s), the surviving owner(s) automatically takes the place of any beneficiary designation.
Death of Owner
Federal tax law requires that if any owner (including any joint owner who has become a current owner) dies before the annuity commencement date, then the entire value of the policy must generally be distributed within five years of the date of death of such owner. Certain rules apply where (1) the spouse of the deceased owner is the sole beneficiary, (2) the owner is not a natural person and the primary annuitant dies or is changed, or (3) any owner dies after the annuity commencement date. See the TAX INFORMATION section in the prospectus for more information about these rules. Other rules may apply to qualified policies.
Assignment
During the lifetime of the annuitant you may assign any rights or benefits provided by the policy if your policy is a nonqualified policy. An assignment will not be binding on us until a copy has been filed at our Administrative Office. Your rights and benefits and those of the beneficiary are subject to the rights of the assignee. We assume no responsibility for the validity or effect of any assignment. Any claim made under an assignment shall be subject to proof of interest and the extent of the assignment. An assignment may have tax consequences.
Unless you so direct by filing written notice with us, no beneficiary may assign any payments under the policy before they are due. To the extent permitted by law, no payments will be subject to the claims of any beneficiary's creditors.
Ownership under qualified policies is restricted to comply with the Code.
Evidence of Survival
We reserve the right to require satisfactory evidence that a person is alive if a payment is based on that person being alive. No payment will be made until we receive such evidence.
Non-Participating
The policy will not share in our surplus earnings; no dividends will be paid.
Amendments
No change in the policy is valid unless made in writing by us and approved by one of our officers. No registered representative has authority to change or waive any provision of the policy.
We reserve the right to amend the policies to meet the requirements of the Code, regulations or published rulings. You can refuse such a change by giving written notice, but a refusal may result in adverse tax consequences.
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 immediate family, or by an officer, director, trustee or bona-fide full-time employee of ours or our affiliated companies or their immediate family. In such a case, we may, at our sole discretion, 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 certain employer sponsored savings plans, reduced fees and charges including, but not limited to, the annual service charge, the surrender charges, the mortality and expense risk fee and the administrative charge for 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.
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INVESTMENT EXPERIENCE
A “net investment factor” is used to determine the value of accumulation units and annuity units, and to determine annuity payment rates.
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 market day is based on the net asset value of a share of the corresponding portfolio of the underlying fund portfolios less any applicable charges or fees. The investment performance of the portfolio, expenses, and deductions of certain charges affect the value of an accumulation unit.
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 $10 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 at 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 of 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 total 1.50% on an annual basis; On a daily basis, this equals 0.000041096.
    
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Then, the net investment factor = (11.57 + 0 – 0) - 0.000041096 = Z = 1.014871185
  (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 exceeds the assumed investment return of 3% annually. Conversely, annuity unit values fall if the net investment performance of the subaccount is less than the annual assumed investment return. 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 market 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 3% effective annual AIR. The valuation period is the period from the close of the immediately preceding market day to the close of the current market 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 mortality and expense risk fee and administrative charge. This factor is equal, on an annual basis, to 1.25% of the daily net asset value of shares 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 annuity commencement date. The policy 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 value is being calculated.
  Assume B = Y
C = A factor to neutralize the annual assumed investment return of 3% 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 annuity commencement date.
  Assume A = $X
B = The annuity purchase rate per $1,000 of adjusted policy value based upon the option selected, the sex 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  
PERFORMANCE
We periodically advertise performance of the various subaccounts. Performance figures might not reflect charges for options, riders, or endorsements. We may disclose at least three different kinds of non-standard performance. First, we may calculate performance by determining the percentage change in the value of an accumulation unit by dividing the increase (decrease) for that unit by the value of the accumulation unit at the beginning of the period. This performance number reflects the deduction of the mortality and expense risk fees and administrative charges. It does not reflect the deduction of any applicable premium taxes, surrender charges, or fees for any optional riders or endorsements. Any such deduction would reduce the percentage increase or make greater any percentage decrease.
8

 

Second, advertisements may also include total return figures, which reflect the deduction of the mortality and expense risk fees and administrative charges. These figures may also include or exclude surrender charges. These figures may also reflect any applicable premium enhancement.
Third, for certain investment portfolios, performance may be shown for the period commencing from the inception date of the investment portfolio (i.e., before commencement of subaccount operations). These figures should not be interpreted to reflect actual historical performance of the subaccounts.
Not all types of performance data presented reflect all of the fees and charges that may be deducted (such as fees for optional benefits); performance figures would be lower if these charges were included.
HISTORICAL PERFORMANCE DATA
Money Market Yields
We may from time to time disclose the current annualized yield of the money market subaccount, which invests in the corresponding money market portfolio, for a 7-day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the corresponding money market portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the 7-day period in the value of a hypothetical account having a balance of 1 unit of the money market subaccount at the beginning of the 7-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing this quotient on a 365-day basis. The net change in account value reflects (i) net income from the portfolio attributable to the hypothetical account; and (ii) charges and deductions imposed under a policy that are attributable to the hypothetical account. The charges and deductions include the per unit charges for the hypothetical account for (i) the administrative charges and (ii) the mortality and expense risk fee. Current yield will be calculated according to the following formula.
Current Yield = ((NCS * ES)/UV) * (365/7)
Where:    
NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of 1 subaccount unit.
ES = Per unit expenses of the subaccount for the 7-day period.
UV = The unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a policy, the yield for the money market subaccount will be lower than the yield for the corresponding money market portfolio. The yield calculations do not reflect the effect of any premium taxes. The yield calculations also do not reflect surrender charges that may be applicable to a particular policy. Surrender charges range from 8% to 0% of the amount of premium payments surrendered based on the number of years since the premium payment was made. Surrender charges are based on the number of years since the date the premium payment was made, not the policy issue date.
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We may also disclose the effective yield of the money market subaccount for the same 7-day period, determined on a compounded basis. The effective yield is calculated by compounding the base period return according to the following formula.
Effective Yield = (1 + ((NCS - ES)/UV))365/7 - 1
Where:    
NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of one subaccount unit.
ES = Per unit expenses of the subaccount for the 7-day period.
UV = The unit value on the first day of the 7-day period.
The yield on amounts held in the 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 money market subaccount's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the corresponding money market portfolio, the types and quality of portfolio securities held by the corresponding money market portfolio and its operating expenses.
Total Returns
We may from time to time also advertise or disclose total returns for one or more of the subaccounts for various periods of time. One of the periods of time will include the period measured from the date the subaccount commenced operations. When a subaccount has been in operation for 1, 5 and 10 years, respectively, the total return for these periods will be provided. Total returns for other periods of time may from time to time also be disclosed. Total returns represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods. The ending date for each period for which total return quotations are provided will be for the most recent month end practicable, considering the type and media of the communication and will be stated in the communication.
Total returns will be calculated using subaccount unit values which we calculate on each market day based on the performance of the separate account's underlying fund portfolio and the deductions for the mortality and expense risk fee and the administrative charges. Total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. The total return will then be calculated 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.
Other Performance Data
We may from time to time also disclose average annual total returns in a non-standard format in conjunction with the standard format described above.
We may from time to time also disclose cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formulaexcept that the surrender charge percentage will be assumed to be 0%
CTR = (ERV / P)-1
Where:    
CTR = The cumulative total return net of subaccount recurring charges for the period.
ERV = The ending redeemable value of the hypothetical investment at the end of the period.
P = A hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard performance data is also disclosed.
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Adjusted Historical Performance Data
From time to time, sales literature or advertisements may quote average annual total returns for periods prior to the date a particular subaccount commenced operations. Such performance information for the subaccounts will be calculated based on the performance of the various portfolios and the assumption that the subaccounts were in existence for the same periods as those indicated for the portfolios, with the level of policy charges that are currently in effect.
PUBLISHED RATINGS
We may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to us by one or more independent rating organizations such as A.M. Best Company, Standard & Poor's Insurance Ratings Services, Moody's Investors Service and Fitch Financial Ratings. The purpose of the ratings is to reflect our financial strength. The ratings should not be considered as bearing on the investment performance of assets held in the separate account or of the safety or riskiness of an investment in the separate account. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, these ratings may be referred to in advertisements or sales literature or in reports to owners. These ratings are opinions of an operating insurance company's financial capacity to meet the obligations of its insurance policies in accordance with their terms.
STATE REGULATION OF US
We are subject to the laws of jurisdiction governing insurance companies and to regulation by the jurisdiction Department of Insurance. An annual statement in a prescribed form is filed with the Department of Insurance each year covering our operations for the preceding year and our financial condition as of the end of such year. Regulation by the Department of Insurance includes periodic examination to determine our contract liabilities and reserves so that the Department may determine the items are correct. Our books and accounts are subject to review by the Department of Insurance at all times, and a full examination of our operations are conducted periodically by the National Association of Insurance Commissioners. In addition, we are subject to regulation under the insurance laws of other jurisdictions in which it may operate.
ADMINISTRATION
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
We will maintain all records and accounts relating to the separate account. 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 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
We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (“TCI”), for the distribution and sale of the policies. We may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies (e.g., commissions payable to selling firms selling the Policies, as described below).
TCI's home office is located at 1801 California St. Suite 5200 Denver, Colorado 80202. TCI 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.
We currently offer the policies on a continuous basis. We anticipate continuing to offer the policies, but reserve the right to discontinue the offering. The policies are offered to the public through sales representatives of broker-dealers (“selling firms”) that have entered into selling agreements with us and with TCI. TCI compensates these selling firms for their services. Sales representatives with these selling firms are appointed as our insurance agents.
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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 also pay TCI an “override” payment based on the pricing of the product which becomes part of TCI's assets. In addition, we pay commission to TCI for policy sales; these commissions are passed through to the selling firms with TCI not retaining any portion of the commissions. During fiscal year 2016, and 2015 and 2014 the amounts paid to TCI in connection with all policies sold through the Transamerica Life Insurance Company separate account were $737,514, $3,204,208 and $13,377,601. During fiscal year 2016, and 2015 and 2014 the amounts paid to TCI in connection with all policies sold through Transamerica Financial Life Insurance Company separate account were $28,784, $231,863 and $787,182.
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 interests for such firms or its sales representatives.
VOTING RIGHTS
To the extent required by law, we will vote the underlying fund portfolios' shares held by the separate account at regular and special shareholder meetings of the underlying fund portfolios in accordance with instructions received from persons having voting interests in the portfolios, although none of the underlying fund portfolios hold regular annual shareholder meetings. If, however, the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result we will determine that it is permitted to vote the underlying fund portfolios shares in its own right, it may elect to do so.
Before the annuity commencement date, you hold the voting interest in the selected portfolios. The number of votes that you have the right to instruct will be calculated separately for each subaccount. The number of votes that you have the right to instruct for a particular subaccount will be determined by dividing your policy value in the subaccount by the net asset value per share of the corresponding portfolio in which the subaccount invests. Fractional shares will be counted.
After the annuity commencement date, you have the voting interest, and the number of votes decreases as annuity payments are made and as the reserves for the policy decrease. The person's number of votes will be determined by dividing the reserve for the policy allocated to the applicable subaccount by the net asset value per share of the corresponding portfolio. Fractional shares will be counted.
The number of votes that you have the right to instruct will be determined as of the date established by the underlying fund portfolio for determining shareholders eligible to vote at the meeting of the underlying fund portfolio. We will solicit voting instructions by sending you, or other persons entitled to vote, requests for instructions prior to that meeting in accordance with procedures established by the underlying fund portfolio. Portfolio shares as to which no timely instructions are received, and shares held by us in which you, or other persons entitled to vote have no beneficial interest, will be voted in proportion to the voting instructions that are received with respect to all policies participating in the same subaccount.
Each person having a voting interest in a subaccount will receive proxy material, reports, and other materials relating to the appropriate portfolio.
OTHER PRODUCTS
We make other variable annuity policies available that may also be funded through the separate account. These variable annuity policies may have different features, such as different investment choices or charges.
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.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of the Separate Account VA B and Separate Account VA BNY, as of December 31, 2016 and for the years ended December 31, 2016 and 2015, and the statutory-basis financial statements and schedules of Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company as of December 31, 2016 and 2015 and for the three years ended December 31, 2016 included in this Statement of Additional Information, have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given upon the authority of such firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP
One North Wacker Drive
Chicago, IL 60606
OTHER INFORMATION
A registration statement has been filed with the SEC, under the Securities Act of 1933 as amended, with respect to the policies discussed in this SAI. Not all of the information set forth in the registration statement and the amendments and exhibits thereto has been included in the prospectus or this SAI. Statements contained in the prospectus and this SAI concerning the content of the policies and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC.
FINANCIAL STATEMENTS
The values of your interest in the separate account will be affected solely by the investment results of the selected subaccount(s). Our statutory-basis financial statements and schedules, which are included in this SAI, 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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APPENDIX
CONDENSED FINANCIAL INFORMATION
The following tables list the accumulation unit values and the number of accumulation units outstanding for the total separate account expenses listed therein for each subaccount available on December 31, 2016.
    Separate Account Expense 1.30%
Subaccount Year Beginning AUV Ending AUV # Units (National) # Units (NY)
TA Aegon Government Money Market - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.660323
$9.786246
$9.913807
$10.000000 		$9.536370
$9.660323
$9.786246
$9.913807 		235,950.497
146,347.518
357,848.635
125,240.009 		0.000
6,643.030
59,784.014
4,267.128
TA Aegon U.S. Government Securities - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.709894
$9.854238
$9.560474
$10.000000 		$9.598228
$9.709894
$9.854238
$9.560474 		108,301.932
93,795.704
179,880.817
31,301.516 		9,753.310
10,732.486
19,495.032
6,872.061
TA Asset Allocation - Conservative - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.194463
$10.554197
$10.487906
$10.000000 		$10.496265
$10.194463
$10.554197
$10.487906 		1,834,895.207
1,842,792.993
1,621,197.223
314,098.876 		26,063.931
27,377.979
28,073.139
3,718.877
TA PIMCO Total Return - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$9.712694
$9.789141
$9.504820
$10.000000 		$9.824802
$9.712694
$9.789141
$9.504820 		687,874.399
714,709.960
515,149.317
106,925.382 		44,714.850
47,556.006
37,131.611
4,032.091
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.040445
$10.417774
$10.186747
$10.000000 		$10.173525
$10.040445
$10.417774
$10.186747 		1,233,396.897
1,168,731.448
986,378.745
202,785.061 		34,389.685
35,160.687
36,092.352
964.882
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount inception date May 1, 2013 		2016
2015
2014
2013 		$10.086856
$10.675473
$10.437709
$10.000000 		$10.174287
$10.086856
$10.675473
$10.437709 		21,916,354.706
22,949,127.279
19,100,117.207
2,931,832.630 		1,433,569.053
1,487,275.254
1,206,865.001
199,565.438
14

 

APPENDIX
Prior Withdrawal/Growth Percentages and rider fees
The table below identifies the prior percentages for the Living Benefit Rider.
Withdrawal Percentages
Date   Age at time of first withdrawal   Singe Life Percentage   Joint Life Percentage
May 1, 2013 to March 16, 2014   0-58
59-64
65-79
≥80 		  0.00%
4.50%
5.50%
6.50% 		  0.00%
4.00%
5.00%
6.00%
March 17, 2014 to December 31, 2014   0-58
59-64
65-79
≥80 		  0.00%
5.00%
6.00%
7.00% 		  0.00%
4.50%
5.50%
6.50%
January 1, 2015 to March 31, 2014   0-58
59-64
65-79
≥80 		  0.00%
4.50%
5.50%
6.50% 		  0.00%
4.00%
5.00%
6.00%
April 1, 2015 to April 30, 2017   0-58
59-64
65-79
≥80 		  0.00%
4.35%
5.35%
6.35% 		  0.00%
3.85%
4.85%
5.85%
New York Withdrawal Percentages
Date   Age at time of first withdrawal   Singe Life Percentage   Joint Life Percentage
May 1, 2013 to March 16, 2014   0-58
59-64
65-79
≥80 		  0.00%
4.50%
5.50%
6.50% 		  0.00%
4.00%
5.00%
6.00%
March 17, 2014 to December 31, 2014   0-64
65-69
70-79
≥80 		  0.00%
5.80%
6.00%
7.00% 		  0.00%
5.30%
5.50%
6.50%
January 1, 2015 to March 31, 2014   0-64
65-69
70-79
≥80 		  0.00%
5.50%
5.50%
6.50% 		  0.00%
5.00%
5.00%
6.00%
April 1, 2015 to April 30, 2017   0-64
65-69
70-79
≥80 		  0.00%
5.35%
5.35%
6.35% 		  0.00%
4.85%
4.85%
5.85%
Growth Percentages
Date   Percentage
May 1, 2013 to June 30, 2016   5.00%
15

Table of Contents

FINANCIAL STATEMENTS – STATUTORY BASIS

AND SUPPLEMENTARY INFORMATION

Transamerica Life Insurance Company

Years Ended December 31, 2016, 2015 and 2014

Table of Contents

Transamerica Life Insurance Company

Financial Statements – Statutory Basis

and Supplementary Information

Years Ended December 31, 2016, 2015 and 2014

Contents

 

Report of Independent Auditors

      1  

Audited Financial Statements

   

Balance Sheets – Statutory Basis

      3  

Statements of Operations – Statutory Basis

      5  

Statements of Changes in Capital and Surplus – Statutory Basis

      7  

Statements of Cash Flow – Statutory Basis

      9  

Notes to Financial Statements – Statutory Basis

      11  

Appendix A – Listing of Affiliated Companies

      112  

Statutory-Basis Financial Statement Schedules

   

Summary of Investments – Other Than Investments in Related Parties

     116  

Supplementary Insurance Information

      117  

Reinsurance

      118  

Table of Contents

LOGO

Report of Independent Auditors

To the Board of Directors of

Transamerica Life Insurance Company

We have audited the accompanying statutory financial statements of Transamerica Life Insurance Company (the “Company”), which comprise the statutory balance sheet as of December 31, 2016 and 2015, and the related statutory statements of operations, of changes in capital and surplus, and of cash flow for the years ended December 31, 2016, 2015, and 2014.

Management’s Responsibility 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements 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, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 1 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 1 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

Table of Contents

LOGO

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” paragraph, the financial statements referred to above 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, 2016 and 2015 or the results of its operations or its cash flows for the years ended December 31, 2016, 2015, and 2014.

Opinion on Statutory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2016 and 2015 and the results of its operations and its cash flows for the years ended December 31, 2016, 2015 and 2014, in accordance with the accounting practices prescribed or permitted by the Iowa Insurance Division described in Note 1.

Emphasis of Matter

As discussed in Note 1 to the financial statements, the financial statements give retroactive effect to the merger of Global Preferred Re Limited into the Company on January 1, 2016 in a transaction accounted for as a statutory merger. Our opinion is not modified with respect to this matter.

As discussed in Note 2 to the financial statements, the Company changed the manner in which it accounts for its investment in Transamerica Life (Bermuda), Ltd. (TLB), a wholly-owned Bermuda domiciled life subsidiary in 2016. Our opinion is not modified with respect to this matter

Other Matter

Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Summary of Investments-Other Than Investments in Related Parties as of December 31, 2016 and the Supplementary Insurance Information and Reinsurance as of December 31, 2016 and 2015 and for the years then ended are presented for purposes of additional analysis and are not a required part of the financial statements. The Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The effects on the Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. As a consequence, the Summary of Investments-Other Than Investments in Related Parties as of December 31, 2016 and the Supplementary Insurance Information and Reinsurance as of December 31, 2016 and 2015 and for the years then ended do not present fairly, in conformity with accounting principles generally accepted in the United States of America. The Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the of Summary Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance are fairly stated, in all material respects, in relation to the financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

April 24, 2017

PricewaterhouseCoopers LLP, One North Wacker, Chicago, IL 60606

T: 312-298-2000, F: 312-298-2001, www.pwc.com

Table of Contents

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

 

     December 31  
     2016      2015  

Admitted assets

      

Cash and invested assets:

      

Cash, cash equivalents and short-term investments

    $ 1,470,814      $ 2,280,106  

Bonds:

      

Affiliated entities

      4,982        63,750  

Unaffiliated entities

      38,627,052        34,109,703  

Preferred stocks

      

Affiliated entities

      7,162        7,162  

Unaffiliated entities

      95,547        99,102  

Common stocks:

      

Affiliated entities (cost: 2016 - $1,563,014; 2015 - $1,328,112)

      2,352,862        1,961,018  

Unaffiliated entities (cost: 2016 - $179,505; 2015 - $111,416)

      194,833        126,649  

Mortgage loans on real estate

      5,641,558        5,363,099  

Real estate, at cost less accumulated depreciation (2016 - $65,765; 2015 - $43,305):

      

Home office properties

      84,670        94,268  

Investment properties

      8,112        8,132  

Properties held for sale

      29,115        29,115  

Policy loans

      607,746        649,738  

Receivables for securities

      120,312        17,469  

Securities lending reinvested collateral assets

      2,303,603        2,760,922  

Derivatives

      866,950        1,157,993  

Receivable for derivative cash collateral posted to counterparty

      10,715        18,789  

Other invested assets

      1,927,635        2,653,261  
  

 

 

     

 

 

  

Total cash and invested assets

      54,353,668        51,400,275  

Accrued investment income

      510,947        474,961  

Cash surrender value of life insurance policies

      347,214        338,835  

Premiums deferred and uncollected

      149,211        139,516  

Current federal income tax recoverable

      524,017        237,608  

Net deferred income tax asset

      863,844        783,107  

Reinsurance receivables

      158,288        90,803  

Receivable from parent, subsidiaries and affiliates

      111,305        59,963  

Accounts receivable

      137,488        206,315  

General agents pension fund

      47,650        48,200  

Reinsurance deposit receivables

      199,500        203,429  

Variable annuity reserve hedge offset deferral

      575,869        —    

Other assets

      36,739        37,699  

Separate account assets

      73,774,288        72,128,772  
  

 

 

     

 

 

  

Total admitted assets

    $ 131,790,028      $ 126,149,483  
  

 

 

     

 

 

  

 

3

Table of Contents

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

 

     December 31  
     2016     2015  

Liabilities and capital and surplus

     

Liabilities:

     

Aggregate reserves for policies and contracts:

     

Life

    $ 15,074,311     $ 15,303,716  

Annuity

      17,190,070       15,701,229  

Accident and health

      5,110,678       4,824,046  

Policy and contract claim reserves:

     

Life

      283,287       342,120  

Accident and health

      265,766       259,538  

Liability for deposit-type contracts

      3,370,720       2,739,298  

Other policyholders’ funds

      18,126       18,987  

Transfers from separate accounts due or accrued including $(1,472,484) and $(1,605,754) accrued for expense allowances recognized in reserves, net of reinsurance allowances at December 31, 2016 and 2015, repectively)

      (1,515,226 )      (1,633,610 ) 

Funds held under reinsurance treaties

      3,603,948       3,381,363  

Amounts withheld or retained

      167,500       175,637  

General expenses due or accrued

      176,650       149,338  

Remittances and items not allocated

      263,232       246,306  

Asset valuation reserve

      813,683       740,321  

Interest maintenance reserve

      894,015       967,414  

Derivatives

      1,314,458       795,914  

Municipal reverse repurchase agreements

      91,808       90,299  

Payable for derivative cash collateral

      714,431       1,057,984  

Payable for securities lending

      2,303,603       2,760,922  

Borrowed money

      2,267,594       496,528  

Payable to parent, subsidiaries and affiliates

      115,256       18,965  

Other liabilities

      376,308       251,903  

Separate account liabilities

      73,655,055       72,012,055  
  

 

 

    

 

 

  

Total liabilities

    $ 126,555,273     $ 120,700,273  

Capital and surplus:

     

Common stock, $10 per share par value, 1,000,000 shares authorized, 676,190 issued and outstanding at December 31,

     

Class B common stock, $750 par value, 10,000 shares authorized, 3,697.27 issued and outstanding

      6,762       6,762  

Preferred stock, Series A, $10 per share par value, 42,500 shares authorized and issued (total liquidation value - $58,000) at December 31, 2016 and 2015; Series B, $10 per share par value, 250,000 shares authorized, 85,717 and 117,154 shares issued and outstanding total liquidation value - $857,170 and $1,171,540) at December 31, 2016 and 2015

      1,282       1,597  

Treasury stock, Series A Preferred, $10 per share par value, 42,500 shares as of December 31, 2016 and 2015

      (58,000 )      (58,000 ) 

Surplus notes

      150,000       150,000  

Paid-in surplus

      2,789,513       3,120,362  

Special surplus funds

      577,936       2,292  

Unassigned surplus

      1,767,262       2,226,197  
  

 

 

    

 

 

  

Total capital and surplus

      5,234,755       5,449,210  
  

 

 

    

 

 

  

Total liabilities and capital and surplus

    $ 131,790,028     $ 126,149,483  
  

 

 

    

 

 

  

See accompanying notes.

 

4

Table of Contents

Transamerica Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Revenues:

       

Premiums and other considerations, net of reinsurance:

       

Life

    $ 1,194,339     $ 1,113,373     $ 2,393,662  

Annuity

      12,204,065       12,919,985       16,656,875  

Accident and health

      624,248       771,929       (2,795,472 ) 

Net investment income

      2,453,818       2,326,992       2,359,512  

Amortization of interest maintenance reserve

      79,380       93,679       43,809  

Commissions and expense allowances on reinsurance ceded

      451,545       581,823       88,656  

Income from fees associated with investment management, administration and contract guarantees for separate accounts

      1,247,856       1,187,712       978,879  

Reserve adjustment on reinsurance ceded

      13,653       (191,378 )      3,773,911  

Consideration received on reinsurance recapture and novations

      7,326       49,723       195,620  

Income from administrative service agreement with affiliate

      136,494       133,831       124,653  

Other income

      146,486       141,506       116,319  
  

 

 

    

 

 

    

 

 

  
     18,559,209       19,129,175       23,936,424  

Benefits and expenses:

       

Benefits paid or provided for:

       

Life benefits

      1,543,390       1,376,035       1,305,025  

Accident and health benefits

      327,969       427,224       750,045  

Annuity benefits

      1,157,200       1,201,449       1,135,988  

Surrender benefits

      9,770,320       9,855,357       8,258,924  

Other benefits

      154,153       120,151       133,925  

Increase (decrease) in aggregate reserves for policies and contracts:

       

Life

      (229,405 )      124,129       (212,366 ) 

Annuity

      1,488,841       (1,787,418 )      933,763  

Accident and health

      286,632       304,113       143,401  
  

 

 

    

 

 

    

 

 

  
     14,499,100       11,621,040       12,448,705  

Insurance expenses:

       

Commissions

      1,029,935       1,324,189       1,486,330  

General insurance expenses

      891,388       913,754       951,122  

Taxes, licenses and fees

      125,864       127,072       131,974  

Net transfers to (from) separate accounts

      1,365,071       5,151,619       8,510,290  

Funds withheld ceded investment income

      (18,134 )      63,878       247,693  

Reinsurance transaction - modco reserve adjustment on reinsurance assumed

      (188,295 )      (228,984 )      (243,577 ) 

Consideration paid on reinsurance recapture transactions

      41,012       861       67,769  

IMR adjustment due to reinsurance

      81,293       —         —    

Other expenses

      47,650       (1,242 )      4,660  
  

 

 

    

 

 

    

 

 

  
     3,375,784       7,351,147       11,156,261  
  

 

 

    

 

 

    

 

 

  

Total benefits and expenses

      17,874,884       18,972,187       23,604,966  
  

 

 

    

 

 

    

 

 

  

Gain (loss) from operations before dividends to policyholders, federal income tax (benefit) expense and net realized capital gains (losses) on investments

    $ 684,327     $ 156,988     $ 331,458  

 

5

Table of Contents

Transamerica Life Insurance Company

Statements of Operations – Statutory Basis (continued)

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Dividends to policyholders

    $ 5,969     $ 5,894     $ 8,045  
  

 

 

    

 

 

    

 

 

  

Gain (loss) from operations before federal income tax (benefit) expense and net realized capital gains (losses) on investments

      678,358       151,094       323,413  

Federal income tax (benefit) expense

      (101,441 )      (9,618 )      258,554  
  

 

 

    

 

 

    

 

 

  

Gain (loss) from operations before net realized capital gains (losses) on investments

      779,799       160,712       64,859  

Net realized capital gains (losses) on investments (net of related federal income taxes and amounts transferred to/from interest maintenance reserve)

      (308,708 )      (343,731 )      288,762  
  

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 471,091     $ (183,019 )    $ 353,621  
  

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

6

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Thousands)

 

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

Balance at January 1, 2014

                

As originally presented

   $ 6,762     $ 1,597     $ (58,000 )    $ 150,000     $ 3,410,534     $ —       $ 1,271,902     $ 4,782,795  

Merger of Global Preferred Reinsurance (GPRe)

     250       —         —         —         17,411       —         (39,382 )      (21,721 ) 

Merger adjustment - retire GPRe stock

     (250 )      —         —         —         250       —         —         —    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at January 1, 2014

     6,762       1,597       (58,000 )      150,000       3,428,195       —         1,232,520       4,761,074  

Net income (loss)

     —         —         —         —         —         —         353,621       353,621  

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

     —         —         —         —         —         —         902,174       902,174  

Change in net deferred income tax asset

     —         —         —         —         —         —         (263,473 )      (263,473 ) 

Change in nonadmitted assets

     —         —         —         —         —         —         418,748       418,748  

Change in asset valuation reserve

     —         —         —         —         —         —         127,971       127,971  

Change in surplus as a result of reinsurance

     —         —         —         —         —         —         224,000       224,000  

Dividends to stockholders

     —         —         —         —         —         —         (500,000 )      (500,000 ) 

Other changes - net

     —         —           —         5,552       667       (30,776 )      (24,557 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2014

   $ 6,762     $ 1,597     $ (58,000 )    $ 150,000     $ 3,433,747     $ 667     $ 2,464,785     $ 5,999,558  

Net income (loss)

     —         —         —         —         —         —         (183,019 )      (183,019 ) 

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

     —         —         —         —         —         —         95,872       95,872  

Change in net deferred income tax asset

     —         —         —         —         —         —         300,765       300,765  

Change in nonadmitted assets

     —         —         —         —         —         —         (318,398 )      (318,398 ) 

Change in surplus as a result of reinsurance

     —         —         —         —         —         —         (108,266 )      (108,266 ) 

Dividends to stockholders

     —         —         —         —         —         —         (50,000 )      (50,000 ) 

Return of Capital

     —         —         —         —         (300,000 )      —         —         (300,000 ) 

Other changes - net

     —         —         —         —         (13,385 )      1,625       24,458       12,698  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2015

   $ 6,762     $ 1,597     $ (58,000 )    $ 150,000     $ 3,120,362     $ 2,292     $ 2,226,197     $ 5,449,210  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

7

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis (continued)

(Dollars in Thousands)

 

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

Balance at December 31, 2015

   $ 6,762     $ 1,597     $ (58,000 )    $ 150,000     $ 3,120,362     $ 2,292     $ 2,226,197     $ 5,449,210  

Net income (loss)

     —         —         —         —         —         —         471,091       471,091  

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

     —         —         —         —         —         575,869       (688,997 )      (113,128 ) 

Change in net deferred income tax asset

     —         —         —         —         —         —         183,306       183,306  

Change in non admitted assets

     —         —         —         —         —         —         114,741       114,741  

Change in asset valuation reserve

     —         —         —         —         —         —         60,538       60,538  

Cumulative effect of change in accounting principles

     —         —         —         —         —         —         (276,042 )      (276,042 ) 

Return of capital

     —         —         —         —         (314,056 )      —         —         (314,056 ) 

Dividends to stockholders

     —         —         —         —         —         —         (385,630 )      (385,630 ) 

Other changes - net

     —         (315 )      —         —         (16,794 )      (225 )      62,057       44,724  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2016

   $ 6,762     $ 1,282     $ (58,000 )$      150,000     $ 2,789,513     $ 577,936     $ 1,767,262     $ 5,234,755  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

8

Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Operating activities

       

Premiums collected, net of reinsurance

      12,158,028       14,868,206       16,205,618  

Net investment income

      2,356,181       2,306,617       2,356,404  

Miscellaneous income

      2,011,519       1,759,927       5,298,353  

Benefit and loss related payments

      (13,002,709 )      (12,846,598 )      (11,520,995 ) 

Net transfers from separate accounts

      (1,237,126 )      (5,214,145 )      (8,823,241 ) 

Commissions, expenses paid and other deductions

      (1,897,305 )      (2,202,781 )      (1,467,343 ) 

Dividends paid to policyholders

      (6,935 )      (7,743 )      (8,250 ) 

Federal income taxes (paid) received

      (203,264 )      (279,806 )      (288,721 ) 
  

 

 

    

 

 

    

 

 

  

Net cash provided by operating activities

      178,389       (1,616,322 )      1,751,826  

Investing activities

       

Proceeds from investments sold, matured or repaid:

       

Bonds

      10,795,896       13,740,477       8,362,600  

Stocks

      26,673       53,649       108,717  

Mortgage loans

      705,232       881,722       1,040,891  

Real estate and properties held for sale

      14,667       —         28,084  

Other invested assets

      921,210       614,621       635,395  

Securities lending reinvested collateral assets

      457,319       145,338       347,507  

Derivatives

      —         —         255,580  

Miscellaneous proceeds

      16,389       17,797       117,780  
  

 

 

    

 

 

    

 

 

  

Total investment proceeds

      12,937,386       15,453,602       10,896,555  

Costs of investments acquired:

       

Bonds

      (12,682,216 )      (12,145,728 )      (6,214,330 ) 

Stocks

      (210,597 )      (24,188 )      (307,013 ) 

Mortgage loans

      (740,949 )      (733,005 )      (853,948 ) 

Real estate and properties held for sale

      (2,809 )      (10,202 )      (13,410 ) 

Other invested assets

      (404,878 )      (1,516,458 )      (239,060 ) 

Payable for securities

      (102,843 )      (15,477 )      (18,033 ) 

Derivatives

      (185,514 )      (455,642 )      —    

Miscellaneous applications

      (151,001 )      (229,914 )      (49,870 ) 
  

 

 

    

 

 

    

 

 

  

Total cost of investments acquired

      (14,480,806 )      (15,130,616 )      (7,695,664 ) 

Net increase (decrease) in policy loans

      41,992       39,965       32,811  
  

 

 

    

 

 

    

 

 

  

Net cost of investments acquired

      (14,438,815 )      (15,090,650 )      (7,662,853 ) 
  

 

 

    

 

 

    

 

 

  

Net cash provided by (used in) investing activities

      (1,501,428 )      362,952       3,233,701  

 

9

Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Financing and miscellaneous activities

       

Change in:

       

Net deposits on deposit-type contracts an other insurance liabilities

      (217,744 )      (328,515 )      (624,703 ) 

Borrowed funds

      1,769,852       30,508       202,000  

Funds held under reinsurance treaties with unauthorized reinsurers

      (108,899 )      688,121       (2,527,186 ) 

Receivable from parent, subsidiaries and affiliates

      (51,647 )      111,599       (140,456 ) 

Payable to parent, subsidiaries and affiliates

      96,291       9,145       (17,220 ) 

Payable for securities lending

      (457,319 )      (145,338 )      (347,507 ) 

Other cash (applied) provided

      201,917       353,324       145,202  

Dividends to stockholders

      (385,630 )      (50,000 )      (500,000 ) 

Capital contribution provided

      (333,074 )      (327,213 )      (14,681 ) 
  

 

 

    

 

 

    

 

 

  

Net cash used in financing and miscellaneous activities

      513,747       341,632       (3,824,550 ) 
  

 

 

    

 

 

    

 

 

  

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

      (809,292 )      (911,738 )      1,160,977  

Cash, cash equivalents and short-term investments:

       

Beginning of year

      2,280,106       3,191,844       2,030,868  
  

 

 

    

 

 

    

 

 

  

End of year

      1,470,814       2,280,106       3,191,844  
  

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

10

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share amounts)

December 31, 2016

1. Organization and Summary of Significant Accounting Policies

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.

Prior to September 30, 2015, all outstanding common shares of the Company were owned by Transamerica International Holdings, Inc. (TIHI). Prior to September 29, 2015, the Series B preferred shares of the Company were owned by Transamerica Corporation (TA Corp) and AEGON USA, LLC (AEGON). On September 29, 2015, TA Corp and AEGON contributed their respective share of the Company’s Series B preferred share to TIHI. Effective September 30, 2015, TIHI merged into CGC. As a result of this merger, the Company is now wholly-owned by CGC.

On December 31, 2015, AEGON merged into TA Corp, a Delaware-domiciled non-insurance affiliate.

On January 1, 2016, the Company completed a merger with Global Preferred Re Limited (GPRe), a Bermuda-domiciled affiliate. The merger was accounted for in accordance with Statement of Statutory Accounting Principles (SAP) No. 68, Business Combinations and Goodwill, as a statutory merger. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of GPRe were carried forward to the merged company. As a result of the merger, GPRe’s common stock was deemed cancelled by operation of law. Each share of the Company’s capital stock issued and outstanding immediately before the merger shall continue to represent one share of the capital stock.

Summarized financial information for the Company and GPRe presented separately for periods prior to the merger is as follows:

 

     Year Ended
December 31
2015		      Year Ended
December 31
2014		  

Revenues:

      

Company

    $ 19,078,332      $ 23,904,030  

GPRe

      50,842        32,394  
  

 

 

     

 

 

  
   $ 19,129,174      $ 23,936,424  
  

 

 

     

 

 

  

Net income (loss):

      

Company

    $ (250,873 )     $ 335,423  

GPRe

      67,853        18,198  
  

 

 

     

 

 

  
   $ (183,020 )     $ 353,621  
  

 

 

     

 

 

  

 

11

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31
2015		      December 31
2014		  

Assets:

      

Company

    $ 126,035,999      $ 126,211,096  

GPRe

      88,529        105,579  

Change in deferred tax admissibility due to merger

      24,955        53,208  
  

 

 

     

 

 

  
   $ 126,149,483      $ 126,369,883  
  

 

 

     

 

 

  

Liabilities:

      

Company

    $ 120,577,357      $ 120,211,966  

GPRe

      122,916        158,359  
  

 

 

     

 

 

  
   $ 120,700,273      $ 120,370,325  
  

 

 

     

 

 

  

Capital and surplus:

      

Company

    $ 5,458,642      $ 5,999,130  

GPRe

      (37,685 )       (51,780 ) 

Change in deferred tax admissibility due to merger

      28,253        52,208  
  

 

 

     

 

 

  
   $ 5,449,210      $ 5,999,558  
  

 

 

     

 

 

  

On October 1, 2015, the Company completed a merger with Stonebridge Life Insurance Company (SLIC). The merger was accounted for in accordance with Statement of Statutory Accounting Principles (SSAP) No. 68, Business Combinations and Goodwill, as a statutory merger. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of SLIC were carried forward to the merged company. As a result of the merger, SLIC’s common stock was deemed cancelled by operation of law. Each share of the Company’s capital stock issued and outstanding immediately before the merger shall continue to represent one share of the capital stock.

Nature of Business

The Company sells individual non-participating whole life, endowment and term contracts, structured settlements, pension products and reinsurance, as well as a broad line of single fixed and flexible premium annuity products, guaranteed interest contracts and funding agreements. In addition, the Company offers group life, universal life, credit life, and individual and specialty health coverages. 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 agents, brokers and financial institutions.

Basis of Presentation

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.

 

12

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Iowa Insurance Division, which practices differ from accounting principles generally accepted in the United States (GAAP). The more significant variances from GAAP are as follows:

Investments: Investments in bonds and mandatory redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (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. Fair value for GAAP is based on indices, third-party pricing services, brokers, external fund managers and internal models. For statutory reporting, the NAIC allows insurance companies to report the fair value determined by the Securities Valuation Office of the NAIC (SVO) or determine the fair value by using a permitted valuation method.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If the fair value of the mortgage-backed/asset-backed security is less than amortized cost, an entity shall assess whether the impairment is other-than-temporary. An other-than-temporary impairment (OTTI) is considered to have occurred if the fair value of the mortgage-backed/asset-backed 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.

If it is determined an OTTI has occurred as a result of the cash flow analysis, the security is written down to the discounted estimated future cash flows. If an OTTI has occurred due to intent to sell or lack of intent and ability to hold, the security is written down to fair value.

For GAAP, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), 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. 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 and it is not more likely than not that the entity will 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.

 

13

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. 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 US 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.

Derivative instruments are also used in replication (synthetic asset) transactions. In these transactions, the derivative is valued in a manner consistent with the cash instrument and replicated asset. For US GAAP, the derivative is reported at fair value, with the changes in fair value reported in income.

Investments in real estate are reported net of related obligations rather than on a gross basis as for GAAP. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses for statutory reporting include rent for the Company’s occupancy of those properties. Changes between depreciated cost and admitted amounts are credited or charged directly to unassigned surplus rather than to income as would be required under GAAP.

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.

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 over the remaining period to maturity of the bond or mortgage loan based on groupings of individual securities sold in five year bands. That 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 statement 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.

Subsidiaries: 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.

 

14

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 would be 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 Accounting Practices and Procedures Manual (NAIC SAP).

Subsidiaries: Investments in subsidiaries, controlled and affiliated companies (SCA) companies are state 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, A Replacement of SSAP No. 88. 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).

Separate Accounts with Guarantees: Some of the Company’s separate accounts provide policyholders with a guaranteed return. 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. These separate accounts are included in the general account for GAAP due to the nature of the guaranteed return.

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 sheet to the extent that they are not impaired.

Universal Life and Annuity Policies: Revenues for universal 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. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk and guaranteed interest in group annuity contracts are recorded directly to a policy reserve account using deposit accounting, without recognizing premium

 

15

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

income or benefits expense. Interest on these policies is reflected in other benefits. Under GAAP, for universal life policies, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies without significant mortality risk, premiums received and benefits paid would be recorded directly to the reserve liability using deposit accounting.

Benefit Reserves: Certain policy reserves are calculated based on statutorily required interest and mortality assumptions rather than on estimated expected experience or actual account balances as would be required under GAAP.

Reinsurance: 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 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, A Replacement of SSAP No. 10R and SSAP No. 10. Under SSAP No. 101, admitted adjusted deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of adjusted gross deferred income 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 adjusted gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities after considering the character (i.e., ordinary versus capital) and reversal patterns of the deferred tax assets and liabilities. The remaining adjusted deferred income tax assets are nonadmitted. Deferred state income taxes are not recorded under SSAP No. 101, whereas under GAAP state income taxes are included in the computation of deferred income taxes.

 

16

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Goodwill: Goodwill is measured as the difference between the cost of acquiring the entity and the reporting entity’s share of the book value of the acquired entity. Goodwill is admitted subject to an aggregate limitation of ten percent of the capital and surplus in the most recently filed annual statement excluding electronic data processing equipment, operating system software, net deferred income tax assets and net positive goodwill. Excess goodwill is nonadmitted. Goodwill is amortized over ten years. Under GAAP, goodwill is measured as the excess of the consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date as compared to the fair values of the identifiable net assets acquired. Goodwill is not amortized but is assessed for impairment on an annual basis, or more frequently if circumstances indicate that a possible impairment has occurred.

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

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

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. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less.

Securities Lending Assets and Liabilities: For securities lending programs, cash collateral received which may be sold or repledged by the Company is reflected as a one-line entry on the balance sheet (securities lending reinvested collateral assets) and a corresponding liability is established to record the obligation to return the cash collateral. Collateral received which may not be sold or repledged is not recorded on the Company’s balance sheet. Under GAAP, the reinvested collateral is included within invested assets (i.e. it is not one-line reported).

The effects of the foregoing variances from GAAP on the accompanying statutory-basis financial statements have not been determined by the Company, but are presumed to be material.

Other significant accounting policies are as follows:

Investments

Investments in bonds, except those to which the SVO has ascribed an NAIC designation of 6, are reported at amortized cost using the interest method.

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. 26, Bonds, excluding Loan-backed and Structured Securities and therefore, are reported at amortized cost or fair value based upon their NAIC rating.

 

17

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. 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.

The Company closely monitors below investment grade holdings and investment grade issuers, where the Company has concerns, to determine if an OTTI has occurred. The Company also regularly monitors industry sectors. The Company considers relevant facts and circumstances in evaluating whether the impairment is other-than-temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; (2) the Company’s decision to 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. 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. For structured securities, cash flow trends and underlying levels of collateral are monitored. The Company will record a charge to the statement of operations to the extent that these securities are determined to be other-than-temporarily impaired.

Investments in both affiliated and unaffiliated preferred stocks in good standing are reported at cost or amortized cost. Investments in preferred stocks are stated at amortized cost, except those with NAIC designations RP4 to RP6 and P4 to P6, which are reported at lower of amortized cost or fair value, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

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 unassigned surplus along with any adjustment for federal income taxes.

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 statement 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.

Common stocks of affiliated insurance subsidiaries are reported based on underlying statutory equity plus the admitted portion of goodwill. Common stocks of affiliated noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in the change in net unrealized capital gains or losses, reported in unassigned surplus along with any adjustment for federal income taxes.

 

18

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized 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 that the impairment is other-than-temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

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 that 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.

Policy loans are reported at unpaid principal balances.

The Company has minority ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying audited 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 statement 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.

Other “admitted assets” are valued principally at cost, as required or permitted by Iowa Insurance Laws.

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.

 

19

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. In addition, accrued interest is excluded from investment income when payment exceeds 90 days past due. At December 31, 2016 and 2015, the Company excluded investment income due and accrued of $924 and $3,563 respectively, with respect to such practices.

For dollar repurchase agreements, 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. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company.

Derivative Instruments

Overview: The Company may use various derivative instruments (options, caps, floors, swaps, foreign currency 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. (B) Replications, (C) income generation and (D) held for other investment/risk management activities do not qualify for hedge accounting under SSAP No. 86, Accounting for Derivative Instruments and Hedging Activities.

Derivative instruments used in hedging relationships are accounted for on a basis that is consistent with the hedged item (amortized cost or fair value). Derivative instruments used in replication relationships are accounted for on a basis that is consistent with the cash instrument and the replicated asset (amortized cost or fair value). 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). 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.

 

20

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 ‘A’ 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 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 unassigned surplus.

Interest rate basis swaps are used in the overall asset/liability management process to modify the interest rate characteristics of the underlying liability to mitigate the basis risk of assets and liabilities resetting on different indices. These interest rate swaps generally provide for the exchange of the difference between a floating rate on one index to a floating rate of another index, based upon an underlying notional amount. Typically, no cash is exchanged at the outset of the swap contract and a single net payment is exchanged at each due date. Swaps meeting 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 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 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 USD denominated security. These cross currency swap agreements involve the exchange of two principal amounts in two different currencies at the prevailing currency rate at contract inception. During the life of the swap, the counterparties exchange fixed or floating rate interest payments in the swapped currencies. At maturity, the principal amounts are again swapped at a pre-determined rate of exchange. Each asset or liability is hedged individually where the terms of the swap must meet the terms of the hedged instrument. For swaps qualifying for hedge accounting, the premium or discount is amortized into income over the life of the contract and the foreign currency translation adjustment is recorded as unrealized gain/loss in capital and surplus. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus. If a swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the hedged instrument receives that treatment.

 

21

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Total return swaps are used in the asset/liability management process to mitigate the delta risk created when the Company has issued 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 S&P or other global market financial index) and floating leg (tied to 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, on 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. The 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 unassigned surplus.

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

The Company issues products providing the customer a return based on the various global equity market indices. The Company uses options to hedge the liability option risk associated with these products. Options are marked to fair value in the balance sheet and fair value adjustments are recorded as capital and surplus in the financial statements.

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.

 

22

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 sheet 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 invests in domestic corporate debt securities denominated in U.S. dollars. If the issuers of these debt obligations fail to make timely payments, the value of the investment declines materially. The Company manages credit default risk through the purchase of credit default swaps. As the buyer of credit default protection, the Company will pay a premium to an approved counterparty in exchange for a contingent payment should a defined credit event occur with respect to the underlying reference entity or asset. Typically, the periodic premium or fee is expressed in basis points per notional. Generally, the premium payment for default protection is made periodically, although it may be paid as an up-front fee for short dated transactions. Should a credit event occur, the Company may be required to deliver the reference asset to the counterparty for par. Alternatively, settlement may be in cash. These credit default swaps are carried on the balance sheet at amortized cost. Premium payments made by the Company are recognized as investment expense. If the Company is unable to prove hedge effectiveness, the credit default swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus. Gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment.

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

 

23

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company replicates hybrid fixed to floating treasuries by combining a U.S. Treasury cash component with a forward starting swap which, in effect, converts a fixed U.S. Treasury into a hybrid fixed to floating treasury. The purpose of these replications is to aid duration matching between the treasuries and the supported liabilities. Generally these swaps are carried at amortized cost with periodic interest payments beginning at a future date. Any early terminations are recognized as capital gains or losses. The Company complies with the specific rules established in AVR for replication transactions.

The Company holds some warrants linked to an Argentina Government Gross Domestic Product (GDP) as part of an authorized workout from the Argentina Brady Bonds. The Company was put into these warrants and did not voluntarily convert into these types of instruments. The Company does not have any downside risk to the warrants, and only receives a payment if the GDP is above a specific threshold. These warrants are marked to fair value in the balance sheet and the fair value adjustment is recorded in capital and surplus. At December 31, 2015, all warrants had matured for the Company. The Company had realized gains totaling $4,225 for the year ended December 31, 2015 related to these warrants.

Separate Accounts

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

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

Assets held in trust for purchases of variable universal life and 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. The Company received variable contract premiums of $8,767,590, $12,203,423 and $13,127,468 in 2016, 2015 and 2014, respectively. In addition, the Company received $1,247,856, $1,187,712 and $978,879 in 2016, 2015 and 2014, respectively, related to fees associated with investment management, administration and contractual guarantees for 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.

 

24

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are developed 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.

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.

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioner’s Standard Ordinary Mortality and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 2.00 to 6.00 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.

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. 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.

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 2.00 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.

Annuity reserves also include guaranteed investment contracts (GICs) and funding agreements classified as life-type contracts as defined in SSAP No. 50, Classifications and Definitions of Insurance or Managed Care Contracts In Force. 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.

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.

Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula. Tabular interest on funds not involving life contingencies has also been determined primarily by formula.

 

25

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 sheet 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.

Liability for Deposit-Type Contracts

Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include 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 statement of operations.

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.

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 on the contract.

These municipal repurchase agreements require a minimum of 95% of the fair value of the securities transferred to be maintained as collateral.

Premiums and Annuity Considerations

Revenues for policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and are recognized over the premium paying periods of the related policies. Consideration received and benefits paid for annuity policies without mortality or morbidity risk are recorded using deposit accounting and recorded directly to an appropriate policy reserve account, without recognizing premium revenue.

Claims and Claim Adjustment Expense

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.

 

26

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016

            

2016

    $ —        $ 726,808      $ 212,321      $ 514,487  

2015 and prior

      1,372,958        (358,737 )       103,318        910,903  
  

 

 

     

 

 

     

 

 

     

 

 

  
     1,372,958      $ 368,071      $ 315,639        1,425,390  
     

 

 

     

 

 

     

Active life reserve

      3,710,626              3,951,054  
  

 

 

           

 

 

  

Total accident and health reserves

    $ 5,083,584            $ 5,376,444  
  

 

 

           

 

 

  
     Unpaid Claims
Liability
Beginning
of Year		      Claims
Incurred		      Claims
Paid		      Unpaid Claims
Liability End
of Year		  

Year ended December 31, 2015

            

2015

    $ —        $ 781,155      $ 285,156      $ 495,999  

2014 and prior

      1,203,942        (206,782 )       120,201        876,959  
  

 

 

     

 

 

     

 

 

     

 

 

  
     1,203,942      $ 574,373      $ 405,357        1,372,958  
     

 

 

     

 

 

     

Active life reserve

      3,575,596              3,710,626  
  

 

 

           

 

 

  

Total accident and health reserves

    $ 4,779,538            $ 5,083,584  
  

 

 

           

 

 

  

The Company’s unpaid claims reserve was decreased by $(358,737) and $(206,782) for the years ended December 31, 2016 and 2015, respectively, for health claims that were incurred prior to those balance sheet dates. The change in 2016 resulted primarily from variances in the estimated frequency of claims and claims severity.

The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2016 and 2015 was $36,586 and $35,337, respectively. The Company incurred $19,398 and paid $18,036 of claim adjustment expenses during 2016, of which $2,466 of the paid amount was attributable to insured or covered events of prior years. The Company incurred $24,766 and paid $20,388 of claim adjustment expenses during 2015, of which $13,485 of the paid amount was attributable to insured or covered events of prior years. The Company did not increase or decrease the claim adjustment expense provision for insured events of prior years during 2016 or 2015.

 

27

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

Consistency of Presentation

Differences in tabular totals and references between notes are caused by rounding differences not considered to be significant to the financial statement presentation. Prior year amounts have been reclassified to conform to current period presentation.

Recent Accounting Pronouncements

Effective January 1, 2017, the Company adopted revisions to SSAP No. 35R, Guaranty Fund and Other Assessments, which allows 1) expected renewals of short-term health contracts to be considered in determining the assets recognized from accrued guaranty fund liability assessments and 2) requires reporting entities to discount guaranty fund liabilities, and related assets, resulting from the insolvencies of insurers that wrote long-term care contracts 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, 2017, the Company adopted SSAP No. 41R, Surplus Notes. Surplus notes held by investors that are rated an equivalent NAIC 1 or 2 designation by an approved NAIC credit rating provider will be reported at amortized cost, while non-rated surplus notes or those with an equivalent designation of 3 through 6 will be reported at the lower of amortized cost or fair value adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2017, the Company adopted revisions to SSAP No. 51R, Life Contracts, which includes updates for new principle-based reserving (PBR) requirements, with references to Valuation Manual changes. The Valuation Manual allows companies to continue using current reserve methodologies for a three-year period, beginning with the Valuation Manual operative date. For policies issued after the operative date, formulaic calculations for some policies will be supplemented with more advanced deterministic and stochastic reserve methodologies. The Company adopted the new requirements for certain of its term products. 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, 2017, the Company adopted revisions to SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which incorporates explicit accounting guidance on short sales and secured borrowing transactions when the insurer is the transferee. The adoption of this guidance did not impact the financial position or results of operations of the Company.

 

28

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Effective December 31, 2017, the Company will adopt revisions to SSAP No. 2R, Cash, Drafts and Short-term Investments, which reclassify money market mutual funds from short-term investments to cash equivalents and clarify that money market mutual funds shall be valued at fair value, allowing net asset value as a practical expedient. The adoption of this guidance will not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2015, the Company adopted guidance that moves wholly-owned, single member/single asset LLCs where the underlying asset is real estate, into the scope of SSAP No. 40, Real Estate Investments, when specific conditions are met, and clarifies in SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies, that these types of investments are within the scope of SSAP No. 40. The adoption of this guidance had no material impact to the financial position or results of operations of the Company.

Going Concern

Management has evaluated the ability of the Company to continue as a going concern and has determined that no substantial doubt exists with regard to the Company’s ability to meet its obligations as they become due within one year after the issuance of the financial statements.

2. Prescribed and Permitted Statutory Accounting Practices

The Iowa Insurance Division 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 Company, with the permission of the Iowa Commissioner of Insurance, is allowed special accounting treatment for certain hedges of interest rate exposures on variable annuity products that would not otherwise conform to current accounting guidance under SSAP No. 86. The Company recognizes a reserve hedge offset deferral for the difference between the hedge results associated with a highly effective clearly defined hedge strategy related to variable annuity interest rate risks and the corresponding interest-rate related impact to variable annuity results. This deferral was effective October 1, 2016, and will be amortized through the capital and surplus account change in net unrealized capital gains (losses) on a straight line basis over a period of 10 years beginning in the period of deferral.

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.

 

29

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company previously valued its investments in limited purpose subsidiary (LPS) US insurance SCAs based on the underlying audited statutory equity under a prescribed practice adopted by the State of Iowa. Effective October 1, 2016, the Company received approval from Iowa for the respective LPS to be valued in accordance with SSAP No. 97, paragraph 8.b.i.1 in amounts equal to the respective entity’s underlying audited statutory equity including statutory accounting practices prescribed or permitted by the State of Iowa, which is consistent with Iowa Administrative Code 191-99.11(5). As a result, the Company will no longer disclose its valuation method for these LPS as a prescribed practice. The Company will continue to provide the disclosures required by SSAP No.97, paragraph 36 about underlying LPS accounting practices that depart from the NAIC accounting practices and procedures. This change in SCA valuation method did not result in a change in the Company’s valuation of its LPS but rather aligned the NAIC valuation with that required by the Iowa Administrative Code.

The Company has three 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 Riverwood Reinsurance Inc. (TRRI)    Parental guarantee
TLIC Oakbrook Reinsurance Inc. (TORI)    Credit linked note
TLIC Watertree Reinsurance Inc. (TWRI)    Excess of loss reinsurance asset

For each respective LPS, the table below discloses the amount of the investment in the insurance SCA per recorded statutory equity and the amount of the investment if the insurance SCA had completed statutory financial statements in accordance with the NAIC SAP. Each LPS provides the Company audited financial statements annually.

 

     Amount of Investment  

SCA Entity

(Investments in Insurance SCA Entities)

    Per
Reported
Statutory
Equity		      If the Insurance
SCA Had
Completed
Statutory
Financial
Statements*		  

TLIC Riverwood Reinsurance Inc

    $ 965,083      $ —    

TLIC Oakbrook Reinsurance Inc

      133,416        —    

TLIC Watertree Reinsurance Inc

      188,313        —    

 

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

 

30

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

A reconciliation of the Company’s net income 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		    2016     2015     2014  

Net (loss) income, State of Iowa basis

             $ 471,092     $ (182,480 )    $ 353,790  

State prescribed practice that increases(decreases) NAIC SAP:

                

Limited purpose subsidiary valuation - TRRI

      97      Balance Sheet    Common Stock      —         —         —    

Limited purpose subsidiary valuation - TORI

      97      Balance Sheet    Common Stock      —         —         —    

Separate account asset valuation

      56      NA    NA      —         —         —    

State permitted practice that increases(decreases) NAIC SAP:

                

Hedge reserve offset

      86      Balance Sheet;
Statement of
Changes in
Capital and
Surplus		    Hedge reserve
offset Change
in net
unrealized
capital gains/
losses		      —         —         —    

TLB

      97      Balance Sheet    Common Stock      —         —         —    

Net (loss) income, NAIC SAP

             $ 471,092     $ (182,480 )    $ 353,790  
           

 

 

    

 

 

    

 

 

  

Statutory surplus, State of Iowa basis

             $ 5,234,756     $ 5,449,210     $ 5,999,558  
           

 

 

    

 

 

    

 

 

  

State prescribed practice that increases(decreases) NAIC SAP:

                

Limited purpose subsidiary valuation - TRRI

      97      Balance Sheet    Common Stock      —         (869,844 )      (817,285 ) 

Limited purpose subsidiary valuation - TORI

      97      Balance Sheet    Common Stock      —         (132,955 )      (113,677 ) 

Separate account asset valuation

      56      NA    NA       

State permitted practice that increases(decreases) NAIC SAP:

                

Hedge reserve offset

      86      Balance Sheet;
Statement of
Changes in
Capital and
Surplus		    Hedge reserve
offset Change
in net
unrealized
capital gains/
losses		      (575,869 )      —         —    

TLB

      97      Balance Sheet    Common Stock      —         74,225       62,284  
           

 

 

    

 

 

    

 

 

  

Statutory surplus, NAIC SAP

             $ 4,658,887     $ 4,520,636     $ 5,130,880  
           

 

 

    

 

 

    

 

 

  

 

31

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company previously disclosed a state permitted practice to record the value of its wholly-owned Bermuda domiciled life subsidiary, Transamerica Life (Bermuda), Ltd. (TLB), based upon audited statutory equity rather than audited U.S. GAAP or foreign statutory basis financial statements equity adjusted to a statutory basis of accounting, utilizing adjustments as outlined in SSAP No.97, paragraph 9. Changes in the Bermuda Insurance Act 1978 require TLB to file audited GAAP or IFRS financials with the Bermuda Monetary Authority in 2016 rather than statutory basis financials. As a result of the change in the Bermuda regulation, the Company began recording the value of TLB in accordance with SSAP No. 97 in first quarter of 2016, therefore eliminating the need for a permitted practice.

3. Accounting Changes and Correction of Errors

As disclosed in Note 2, the Company began recording the value of its foreign insurance subsidiary in accordance with SSAP No. 97 in 2016, therefore eliminating the need for a permitted practice. This change in accounting impacted the carrying value of the subsidiary and the AVR reported on the Company’s balance sheet. The cumulative effect of implementing the change in accounting effective January 1, 2016, was a $276,042 decrease in capital and surplus. The cumulative effect consisted of two components, a $142,142 change in unrealized loss on the subsidiary and a $133,900 increase in AVR.

During the first quarter of 2016, management determined that the Company’s accretion policy was not correctly adjusting accretion yields for asset specific changes in future cash flow expectations which resulted in an understatement of investment income of $31,151, net of tax, relating to prior years. This was corrected in 2016 and is reflected as other changes, net, in the capital and surplus accounts of the Statements of Changes in Capital and Surplus.

During 2015, the Company discovered errors in the calculation of ceded reserves on certain substandard and disabled life policies which caused an overstatement of these reserves since 2011. The cumulative pre-tax effect of these errors was a decrease to equity of $13,866 and was reflected as other changes, net, in the 2015 capital and surplus accounts of the Statements of Changes in Capital and Surplus.

As a result of the Company’s model validation initiative performed in 2015, the Company determined that its aggregate life reserves were overstated by $16,713 relating to prior years. This was corrected in 2015 and was reflected as other changes, net, in the capital and surplus accounts of the Statements of Changes in Capital and Surplus.

During 2015, it was discovered that a 2014 intercompany transfer of taxes payable was booked incorrectly, resulting in an incorrect equity distribution to a non-insurance affiliate of $8,833. This was corrected in 2015 and was reflected as other changes, net, in the capital and surplus accounts of the Statements of Changes in Capital and Surplus.

During 2015, the Company made a change in valuation bases relating to its long-term care business. A change was made to use a morbidity table that is consistent with leading industry practice where claims are determined using a first-site, first principles approach. This change resulted in an increase in A&H reserves of $5,946 which has been reported on Exhibit 5A – Changes in Bases of Valuation During the Year.

 

32

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company had consistently reported reserves for all states using the Missouri Department of Insurance required modified 2001 CSO table in the valuation of certain limited underwriting policies. During 2015, Missouri rescinded this rule. The Company made a change in valuation bases relating to these policies to use the unmodified 2001 CSO table. This resulted in a decrease to reserves of $12,464 which has been reported on Exhibit 5A – Change in Bases of Valuation During the Year. Related to this change were corresponding decreases in the deferred premium asset of $5,114 and the uncollected premium asset of $104. These amounts were charged to surplus and are reported as a cumulative effect of changes in accounting principle in the capital and surplus accounts of the Statements of Changes in Capital and Surplus.

During 2015, the Company identified simplifications and implemented mapping updates in some of the valuation mortality tables used for the calculation of reinsurance reserve credits on some universal life policies. The change in valuation process resulted in a decrease to reserves of $14,481 which has been reported on Exhibit 5A – Change in Bases of Valuation During the Year.

During 2014, the Company discovered errors with certain components of the quarterly settlement statements related to the modified coinsurance treaty assumed from an affiliate, Western Reserve Life Assurance Co. of Ohio (WRL), resulting in incorrect cession amounts received by the Company since inception of the treaty effective December 31, 2010. The cumulative impact of the errors as of December 31, 2013 was an overstatement of capital and surplus of $53,792 after tax. This was reflected as other changes, net, in the 2014 capital and surplus accounts of the Statements of Changes in Capital and Surplus.

Prior to its merger in 2015 with the Company, during 2014, SLIC discovered that the accounting entries had not been recorded to the ledger when a block of escheated policies were entered into the claims administration system in 2013. The impact of not recording these entries to the ledger was an understatement of the claims liability of $2,900, an understatement of current federal income taxes recoverable of $1,015, an overstatement of net deferred income taxes of $1,298, and an overstatement of capital and surplus of $3,183 as of December 31, 2013. This was corrected in 2014 and is reflected as other changes, net, in the capital and surplus accounts of 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.

 

33

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 that the Company can corroborate detailed information such as assumptions, inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

Each month, the Company performs an analysis of the information obtained from indices, third-party services, and brokers to ensure that 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. 100, Fair Value Measurements. 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

 

34

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

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

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

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

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

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

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

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.

 

35

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Derivative Financial Instruments: The estimated fair values of equity and interest rate options (calls, puts, caps) are based upon the latest quoted market price at the balance sheet 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 fair value of policy loans is considered to approximate the book value of the loan, which is stated at unpaid principal balance.

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

Receivable From/Payable to Parents, Subsidiaries and Affiliates: The carrying amount of receivable from/payable to affiliates approximates their fair value.

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.

Surplus Notes: Fair values for surplus notes are estimated using a discounted cash flow analysis based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

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.

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.

 

36

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016 and 2015, respectively:

 

     December 31, 2016  
     Estimated
Fair Value		      Admitted
Assets/
Liabilities		      (Level 1)      (Level 2)     (Level 3)  

Admitted assets

              

Cash equivalents and short-term investments, other than affiliates

    $ 1,435,906      $ 1,435,906      $ —        $ 1,435,906     $ —    

Bonds

      41,750,057        38,632,034        8,543,520        32,331,681       874,856  

Preferred stocks, other than affiliates

      94,325        95,547        —          91,172       3,153  

Common stocks, other than affiliates

      194,833        194,833        1,905        —         192,928  

Mortgage loans on real estate

      5,801,102        5,641,558        —          —         5,801,102  

Other invested assets

      168,197        149,019        —          160,516       7,681  

Options

      182,667        182,667        —          182,667       —    

Interest rate swaps

      678,868        587,537        —          674,938       3,930  

Currency swaps

      21,819        21,408        —          21,819       —    

Credit default swaps

      36,173        26,828        —          36,173       —    

Equity swaps

      48,509        48,509        —          48,509       —    

Policy loans

      607,746        607,746        —          607,746       —    

Securities lending reinvested collateral

      2,303,603        2,303,603        —          2,303,603       —    

Receivable from parent, subsidiaries and affiliates

      111,305        111,305        —          111,305       —    

Separate account assets

      72,675,382        72,638,065        69,229,744        3,399,333       46,305  

Liabilities

              

Investment contract liabilities

      17,237,938        15,077,116        —          265,681       16,972,257  

Options

      82,070        82,070        —          82,070       —    

Interest rate swaps

      183,689        806,424        —          (179,214 )      362,903  

Currency swaps

      1,666        76        —          1,666       —    

Credit default swaps

      13,478        44,647        —          13,478       —    

Equity swaps

      381,242        381,242        —          381,242       —    

Payable to parent, subsidiaries and affiliates

      115,256        115,256        —          115,256       —    

Separate account annuity liabilities

      66,986,814        66,987,131        1,996        66,926,286       58,532  

Surplus note

      165,351        150,000        —          165,351       —    

 

37

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements —   Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31, 2015  
     Estimated
Fair Value		     Admitted
Assets/
Liabilities		      (Level 1)      (Level 2)     (Level 3)  

Admitted assets

             

Cash equivalents and short-term investments, other than affiliates

    $ 2,012,842     $ 2,012,842      $ —        $ 2,012,842     $ —    

Short-term notes receivable from affiliates

      278,771       278,771        —          278,771       —    

Bonds

      36,576,232       34,173,453        6,841,379        28,830,442       904,411  

Preferred stocks, other than affiliates

      97,770       99,103        —          97,770       —    

Common stocks, other than affiliates

      126,649       126,649        8,239        71       118,339  

Mortgage loans on real estate

      5,657,436       5,657,436        —          —         5,657,436  

Other invested assets

      152,140       133,087        —          142,831       9,309  

Options

      399,911       399,911        —          399,911       —    

Interest rate swaps

      668,643       543,001        —          646,960       21,683  

Currency swaps

      28,988       26,378        —          28,988       —    

Credit default swaps

      37,808       32,968        —          37,808       —    

Equity swaps

      155,735       155,735        —          155,735       —    

Policy loans

      649,738       649,738        —          649,738       —    

Securities lending reinvested collateral

      2,760,922       2,760,922        —          2,760,922       —    

Receivable from parent, subsidiaries and affiliates

      59,963       59,963        —          59,963       —    

Separate account assets

      72,154,755       72,127,543        68,354,452        3,762,211       38,092  

Liabilities

             

Investment contract liabilities

      12,911,523       11,852,454        —          276,950       12,634,573  

Short-term notes payable to affiliates

      —         —          —          —         —    

Options

      178,638       178,638        —          178,638       —    

Interest rate swaps

      (484,994 )      429,751        —          (520,103 )      35,109  

Currency swaps

      38,722       46,656        —          38,722       —    

Credit default swaps

      13,862       27,180        —          13,862       —    

Equity swaps

      113,689       113,689        —          113,689       —    

Payable to parent, subsidiaries and affiliates

      18,965       18,965        —          18,965       —    

Separate account annuity liabilities

      63,493,519       63,507,470        983        63,428,222       64,314  

Surplus notes

      164,418       150,000        —          164,418       —    

 

38

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016 and 2015:

 

     2016  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Government

    $ —        $ 1,124      $ —        $ 1,124  

Industrial and miscellaneous

      —          20,216        18,746        38,962  

Hybrid securities

      —          2,573        —          2,573  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      —          23,913        18,746        42,659  
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stock

            

Industrial and miscellaneous

      —          —          3,153        3,153  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total preferred stock

      —          —          3,153        3,153  
  

 

 

     

 

 

     

 

 

     

 

 

  

Common stock

            

Mutual funds

      761        —          —          761  

Industrial and miscellaneous

      1,144        —          192,928        194,072  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      1,905        —          192,928        194,833  
  

 

 

     

 

 

     

 

 

     

 

 

  

Short-term investments

            

Government

      —          598,723        —          598,723  

Industrial and miscellaneous

      —          820,579        —          820,579  

Sweep accounts

      —          16,604        —          16,604  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total short-term investments

      —          1,435,906        —          1,435,906  
  

 

 

     

 

 

     

 

 

     

 

 

  

Securities lending reinvested collateral

      —          2,303,603        —          2,303,603  

Derivative assets

      —          813,180        3,930        817,110  

Separate account assets

      69,213,345        2,706,809        45,420        71,965,574  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 69,215,250      $ 7,283,411      $ 264,177      $ 76,762,838  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

    $ —        $ 878,117      $ 362,903      $ 1,241,020  

Separate account liabilities

      1,996        871        —          2,867  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ 1,996      $ 878,988      $ 362,903      $ 1,243,887  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

39

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     2015  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Government

    $ —        $ 1,094      $ —        $ 1,094  

Industrial and miscellaneous

      —          10,588        22,878        33,466  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      —          11,682        22,878        34,560  
  

 

 

     

 

 

     

 

 

     

 

 

  

Common stock

            

Mutual funds

      5,823        69        —          5,892  

Industrial and miscellaneous

      2,416        2        118,339        120,757  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      8,239        71        118,339        126,649  
  

 

 

     

 

 

     

 

 

     

 

 

  

Short-term investments

            

Government

      —          94,915        —          94,915  

Industrial and miscellaneous

      —          1,349,518        —          1,349,518  

Mutual funds

      —          526,117        —          526,117  

Intercompany notes receivable

      —          278,771        —          278,771  

Sweep accounts

      —          42,292        —          42,292  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total short-term investments

      —          2,291,613        —          2,291,613  
  

 

 

     

 

 

     

 

 

     

 

 

  

Securities lending reinvested collateral

      —          2,760,922        —          2,760,922  

Derivative assets

      —          1,078,404        21,683        1,100,087  

Separate account assets

      68,338,600        2,670,280        32,569        71,041,449  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 68,346,839      $ 8,812,972      $ 195,469      $ 77,355,280  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

    $ —        $ 670,145      $ 35,109      $ 705,254  

Separate account liabilities

      983        965        —          1,948  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ 983      $ 671,110      $ 35,109      $ 707,202  
  

 

 

     

 

 

     

 

 

     

 

 

  

Bonds classified in Level 2 are valued using inputs from third party pricing services or broker quotes. Bonds classified in 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 in Level 3 is internally valued using significant unobservable inputs.

Common stocks classified in Level 3 are comprised primarily of shares in the Federal Home Loan Bank (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.

Short-term investments are classified as Level 2 and carried at amortized cost or fair value. Because of the highly liquid nature of these assets, carrying amounts are used to approximate fair value when amortized cost is used.

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

 

40

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. Derivatives classified as Level 3 represent interest rate swaps calculated by simulation using a series of market-consistent inputs to model the dynamics of the swap. The inputs are taken from market instruments to the extent that they exist.

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

Transfers from Level 1 to Level 2 for separate account bonds were attributable to securities being valued using an index at December 31, 2015, subsequently changing to being valued using a different index during 2016.

Transfers from Level 1 to Level 2 for separate account common stock were attributable to securities being valued using third party vendor inputs at December 31, 2015, subsequently changing to being valued using external money manager statements during 2016.

Transfers from Level 2 to Level 1 for separate account common stock were attributable to securities being valued using external money managers at December 31, 2015, subsequently changing to being valued using third party vendor inputs during 2016.

 

41

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables summarize the changes in assets and liabilities classified in Level 3 for 2016 and 2015:

 

     Beginning
Balance at
January 1,
2016		     Transfers
in
(Level 3)		      Transfers
out
(Level 3)		     Total Gains
and (Losses)
Included in
Net income (a)		     Total Gains
and (Losses)
Included in
Surplus (b)		  

Bonds

            

Government

    $ —       $ —        $ —       $ (9 )    $ 9  

RMBS

      1,439       —          1,428       (122 )      116  

Other

      21,439       885        184       (2,852 )      5,003  

Preferred stock

      —         —          —         512       (101 ) 

Common stock

      118,338       —          —         —         101  

Derivatives

      (13,426 )      —          —         (189,403 )      (348,382 ) 

Separate account assets

      32,569       5,578        9,142       15,896       81  
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

Total

    $ 160,359     $ 6,463      $ 10,754     $ (175,978 )    $ (343,173 ) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  
     Purchases     Issuances      Sales     Settlements     Ending Balance at
December 31, 2016		  

Bonds

            

Government

    $ —       $ —        $ —       $ —       $ —    

RMBS

      —         —          —         5       —    

Other

      1,663       —          —         7,208       18,746  

Preferred stock

      3,254       —          —         512       3,153  

Common stock

      73,000       1,689        200       —         192,928  

Derivatives

      2,834       —          (80,527 )      (108,876 )      (358,974 ) 

Separate account assets

      1,520       —          —         1,082       45,420  
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

Total

    $ 82,271     $ 1,689      $ (80,327 )    $ (100,069 )    $ (98,727 ) 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

 

42

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Beginning
Balance at
January 1,
2015		     Transfers
in
(Level 3)		      Transfers
out
(Level 3)		      Total Gains
and (Losses)
Included in
Net income (a)		     Total Gains
and (Losses)
Included in
Surplus (b)		  

Bonds

             

Government

    $ —       $ —        $ —        $ (11 )    $ 11  

RMBS

      1,498       —          —          (371 )      317  

Other

      21,156       14,483        3,846        (6,374 )      (1,848 ) 

Preferred stock

      164       —          —          —         —    

Common stock

      118,061       —          —          (24 )      281  

Derivatives

      90,924       —          —          —         (26,551 ) 

Separate account assets

      7,905       1,398        1,500        21,539       (220 ) 
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 239,708     $ 15,881      $ 5,346      $ 14,759     $ (28,010 ) 
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  
     Purchases     Issuances      Sales      Settlements     Ending Balance at
December 31, 2015		  

Bonds

             

Government

    $ —       $ —        $ —        $ —       $ —    

RMBS

      —         —          —          5       1,439  

Other

      —         —          —          2,132       21,439  

Preferred stock

      —         —          —          164       —    

Common stock

      4,020       —          4,000        —         118,338  

Derivatives

      (63,114 )      —          —          14,685       (13,426 ) 

Separate account assets

      4,245       —          —          798       32,569  
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ (54,849 )    $ —        $ 4,000      $ 17,784     $ 160,359  
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

 

(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

The Company’s policy is to recognize transfers in and out of Level 3 as of the beginning of the reporting period.

Transfers in for bonds were the result of a security being carried at amortized cost at December 31, 2015 and 2014, subsequently changing to being carried at fair value during 2016 and 2015. In addition, transfers in for bonds were attributable to a security being valued using third-party vendor input at December 31, 2014, subsequently changing to being valued using a stale price during 2015.

Transfers out for bonds were the result of a security being carried at fair value at December 31, 2015 and 2014, subsequently changing to being carried at amortized cost during 2016 and 2015.

Transfers in for separate account assets were attributable to securities being valued using third party vendor inputs at December 31, 2015 and 2014, subsequently changing to being valued using broker quotes during 2016 and 2015.

 

43

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Transfers out for separate account assets were attributable to securities being valued using a stale price at December 31, 2015 and 2014, subsequently changing to being valued using third party vendor inputs during 2016 and 2015. In addition, transfers out for separate account assets were attributable to securities being valued using broker quotes at December 31, 2015, subsequently changing to being valued using third party vendor inputs during 2016.

Non-recurring fair value measurements

As indicated in Note 1, real estate held for sale is measured at the lower of carrying amount or fair value less cost to sell. As of December 31, 2016, the Company has several parcels of land that are held for sale. Therefore, these properties are carried at fair value less cost to sell, which amounts to $8,570. Two parcels of land have a carrying amount less than its fair value and therefore is not carried at fair value as of December 31, 2016.

The Company also had parcels of land that were held for sale as of December 31, 2015. Fair value less cost to sell of these properties was $8,570. Two parcels of land had a carrying amount less than its fair value and therefore is not carried at fair value as of December 31, 2015.

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

5. Investments

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

 

     Carrying
Amount		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses 12
Months or
More		      Gross
Unrealized
Losses less
Than 12
Months		      Estimated
Fair
Value		  

December 31, 2016

               

Unaffiliated bonds:

               

United States Government and agencies

    $ 7,909,126      $ 480,225      $ —        $ 276,098      $ 8,113,253  

State, municipal and other government

      846,024        38,500        9,136        11,920        863,468  

Hybrid securities

      463,953        21,551        26,842        2,308        456,354  

Industrial and miscellaneous

      22,672,674        2,963,306        81,739        140,208        25,414,034  

Mortgage and other asset-backed securities

      6,735,275        298,695        74,418        63,243        6,896,309  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     38,627,052        3,802,277        192,135        493,777        41,743,418  

Unaffiliated preferred stocks

      95,547        3,771        4,802        190        94,325  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 38,722,599      $ 3,806,048      $ 196,937      $ 493,967      $ 41,837,743  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

44

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Carrying
Amount		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses 12
Months or
More		      Gross
Unrealized
Losses less
Than 12
Months		      Estimated
Fair
Value		  

December 31, 2015

               

Unaffiliated bonds:

               

United States Government and agencies

    $ 5,987,562      $ 499,532      $ 53      $ 106,422      $ 6,380,619  

State, municipal and other government

      848,372        44,220        4,395        18,989        869,208  

Hybrid securities

      363,526        20,787        21,966        6,216        356,131  

Industrial and miscellaneous

      20,933,595        2,289,579        171,562        320,604        22,731,008  

Mortgage and other asset-backed securities

      5,976,648        356,869        134,130        23,871        6,175,516  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     34,109,703        3,210,987        332,106        476,102        36,512,482  

Unaffiliated preferred stocks

      99,103        4,880        5,351        862        97,770  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 34,208,806      $ 3,215,867      $ 337,457      $ 476,964      $ 36,610,252  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

At December 31, 2016 and 2015, 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 326 and 364 securities with a carrying amount of $1,905,967 and $2,234,787, and an unrealized loss of $196,937 and $337,457 with an average price of 89.7 and 84.9 (fair value/amortized cost). Of this portfolio, 66.2% and 71.8% were investment grade with associated unrealized losses of $105,393 and $191,342, respectively.

At December 31, 2016 and 2015, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 1,128 and 1,081 securities with a carrying amount of $10,886,803 and $9,043,827 and an unrealized loss of $493,967 and $476,964 with an average price of 95.5 and 94.7 (fair value/amortized cost). Of this portfolio, 96.4% and 91.8% were investment grade with associated unrealized losses of $471,156 and $394,702, respectively.

At December 31, 2016 and 2015, respectively, for common stocks that have been in a continuous loss position for greater than or equal to twelve months, the Company held 0 and 2 securities with a cost of $0 and $1 and an unrealized loss of $0 and $1 with an average price of 0.0% and 4.8% (fair value/cost).

At December 31, 2016 and 2015, respectively, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 4 and 3 securities with a cost of $2,020 and $476 and an unrealized loss of $294 and $20 with an average price of 85.5 and 95.7 (fair value/cost).

 

45

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2016 and 2015 is as follows:

 

     Losses 12
Months or
More		      Losses Less
Than 12
Months		      Total  

December 31, 2016

         

Unaffiliated bonds:

         

United States Government and agencies

    $ —        $ 3,765,738      $ 3,765,738  

State, municipal and other government

      49,698        290,257        339,955  

Hybrid securities

      107,667        65,108        172,775  

Industrial and miscellaneous

      856,096        3,754,485        4,610,581  

Mortgage and other asset-backed securities

      673,363        2,512,512        3,185,875  
  

 

 

     

 

 

     

 

 

  
     1,686,824        10,388,100        12,074,924  

Unaffiliated preferred stocks

      22,207        4,736        26,943  

Unaffiliated common stocks

      —          1,726        1,726  
  

 

 

     

 

 

     

 

 

  
   $ 1,709,031      $ 10,394,562      $ 12,103,593  
  

 

 

     

 

 

     

 

 

  
     Losses 12
Months or
More		      Losses Less
Than 12
Months		      Total  

December 31, 2015

         

Unaffiliated bonds:

         

United States Government and agencies

    $ 3,105      $ 2,247,989      $ 2,251,094  

State, municipal and other government

      40,402        323,866        364,268  

Hybrid securities

      96,946        41,249        138,195  

Industrial and miscellaneous

      825,390        4,376,512        5,201,902  

Mortgage and other asset-backed securities

      910,509        1,562,131        2,472,640  
  

 

 

     

 

 

     

 

 

  
     1,876,352        8,551,747        10,428,099  

Unaffiliated preferred stocks

      20,978        15,115        36,093  

Unaffiliated common stocks

      —          456        456  
  

 

 

     

 

 

     

 

 

  
   $ 1,897,330      $ 8,567,318      $ 10,464,648  
  

 

 

     

 

 

     

 

 

  

 

46

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The carrying amount and estimated fair value of bonds at December 31, 2016, 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.

 

     Carrying
Amount		      Estimated
Fair
Value		  

Due in one year or less

    $ 1,325,277      $ 1,348,424  

Due after one year through five years

      6,849,253        7,221,046  

Due after five years through ten years

      5,069,295        5,472,967  

Due after ten years

      18,647,952        20,804,672  
  

 

 

     

 

 

  
     31,891,777        34,847,109  

Mortgage and other asset-backed securities

      6,735,275        6,896,309  
  

 

 

     

 

 

  
   $ 38,627,052      $ 41,743,418  
  

 

 

     

 

 

  

For impairment policies related to non-structured and structured securities, refer to Note 1 under Investments.

As of December 31, 2016, the Company’s portfolio had Treasury investments in an unrealized loss position which had a fair value of $3,759,864, with a carrying value of $4,035,873, resulting in a gross unrealized loss of $276,009. All of the issuers in the sector continue to make payments in accordance with the original bond agreements. Fair value changes are driven by interest rate movements.

The following structured notes were held at December 31, 2016:

 

CUSIP

Identification

    Actual Cost      Fair Value      Book / Adjusted
Carrying Value		      Mortgage-
Referenced
Security
(YES/NO)		  

44965TAA5

    $ 11,561      $ 11,074      $ 11,566        NO  

G52836AB2

      10,050        10,310        10,050        NO  

912810QV3

      14,974        14,392        15,722        NO  

912810RA8

      772,522        873,726        809,956        NO  

912810RL4

      1,195,281        1,225,476        1,222,583        NO  
  

 

 

     

 

 

     

 

 

     

Total

    $ 2,004,388      $ 2,134,978      $ 2,069,877     
  

 

 

     

 

 

     

 

 

     

 

47

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Number of
5* Securities		      Book / Adjusted
Carrying Value		      Fair Value  

December 31, 2016

         

Bonds, amortized cost

      2      $ 14,644      $ 14,473  

Loan-backed and structured securities, amortized cost

      1        432        430  

Preferred stock, amortized cost

      0        —          —    

Preferred stock, fair value

      0        —          —    
  

 

 

     

 

 

     

 

 

  

Total

      3      $ 15,076      $ 14,903  

December 31, 2015

         

Bonds, amortized cost

      2      $ 8,868      $ 8,564  

Loan-backed and structured securities, amortized cost

      0        —          —    

Preferred stock, amortized cost

      0        —          —    

Preferred stock, fair value

      2        —          —    
  

 

 

     

 

 

     

 

 

  

Total

      4      $ 8,868      $ 8,564  

 

48

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table provides the aggregate totals for loan-backed 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 during the years ended December 31, 2016 and December 31, 2015 respectively. During 2016 there was $27,182 of loan-backed securities with a recognized OTTI due to intent to sell or lack of intent and ability to hold, and none during 2015.

 

     Amortized Cost      OTTI Recognized in Loss         
     Basis Before OTTI      Interest      Non-interest      Fair Value  

Year Ended December 31, 2016

            

OTTI recognized 1st quarter:

            

Intent to sell

    $ —        $ —        $ —        $ —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 1st quarter OTTI on loan-backed securities

      —          —          —          —    

OTTI recognized 2nd quarter:

            

Intent to sell

      —          —          —          —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 2nd quarter OTTI on loan-backed securities

      —          —          —          —    

OTTI recognized 3rd quarter:

            

Intent to sell

      —          —          —          —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      27,182        —          2,892        24,290  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 3rd quarter OTTI on loan-backed securities

      27,182        —          2,892        24,290  

OTTI recognized 4th quarter:

            

Intent to sell

      —          —          —          —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 4th quarter OTTI on loan-backed securities

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 27,182      $ —        $ 2,892      $ 24,290  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

49

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Amortized Cost      OTTI Recognized in Loss         
     Basis Before OTTI      Interest      Non-interest      Fair Value  

Year Ended December 31, 2014

            

OTTI recognized 1st quarter:

            

Intent to sell

    $ —        $ —        $ —        $ —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 1st quarter OTTI on loan-backed securities

      —          —          —          —    

OTTI recognized 2nd quarter:

            

Intent to sell

      —          —          —          —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 2nd quarter OTTI on loan-backed securities

      —          —          —          —    

OTTI recognized 3rd quarter:

            

Intent to sell

      —          —          —          —    

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 3rd quarter OTTI on loan-backed securities

      —          —          —          —    

OTTI recognized 4th quarter:

            

Intent to sell

      17,618        1,513        —          16,105  

Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total 4th quarter OTTI on loan-backed securities

      17,618        1,513        —          16,105  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 17,618      $ 1,513      $ —        $ 16,105  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

50

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables provide the aggregate totals for loan-backed 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.

 

     Amortized Cost
Before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year ended December 31, 2016

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 90,669      $ 7,850      $ 82,819      $ 75,187  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      7,387        2,482        4,905        4,587  

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      57,816        6,951        50,865        47,445  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      3,481        38        3,443        3,454  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 159,353      $ 17,321      $ 142,032      $ 130,673  
  

 

 

     

 

 

     

 

 

     

 

 

  
     Amortized Cost
Before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year ended December 31, 2015

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 118,794      $ 2,778      $ 116,016      $ 101,780  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      90,459        4,180        86,279        75,094  

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      50,862        2,928        47,934        40,960  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      17,193        542        16,651        9,769  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 277,308      $ 10,428      $ 266,880      $ 227,603  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

51

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Amortized Cost
Before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year ended December 31, 2014

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 91,982      $ 3,445      $ 88,537      $ 55,150  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      268,462        4,854        263,608        212,608  

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      459,548        46,113        413,435        325,095  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      95,282        4,776        90,506        83,684  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 915,274      $ 59,188      $ 856,086      $ 676,537  
  

 

 

     

 

 

     

 

 

     

 

 

  

The following loan-backed and structured securities were held at December 31, 2016, 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		      Quarter in
which
Impairment
Occurred		  

07402PAJ2

    $ 17,443      $ 17,230      $ 213      $ 17,230      $ 16,972        1Q 2016  

24763LDE7

      535        461        74        461        465        1Q 2016  

35729PPC8

      347        210        137        210        178        1Q 2016  

70557RAB6

      13,595        12,123        1,472        12,123        6,989        1Q 2016  

759676AJ8

      3,749        3,651        98        3,651        3,391        1Q 2016  

75970JAJ5

      2,821        2,693        128        2,693        2,485        1Q 2016  

75970QAH3

      3,712        3,550        161        3,551        3,306        1Q 2016  

75971EAF3

      3,612        3,446        167        3,445        3,006        1Q 2016  

759950GY8

      4,619        4,530        89        4,530        4,129        1Q 2016  

83611MMM7

      2,113        2,031        82        2,031        1,675        1Q 2016  

75970QAD2

      3,423        3,399        24        3,399        3,096        1Q 2016  

150324AC5

      34,700        29,495        5,205        29,495        29,495        1Q 2016  

61751NAM4

      2,713        611        2,101        612        600        2Q 2016  

36298JAA1

      4,674        4,293        381        4,293        3,987        2Q 2016  

14984WAA8

      2,325        2,153        172        2,153        1,872        3Q 2016  

70557RAB6

      9,322        7,795        1,527        7,795        5,222        3Q 2016  

759950GA0

      3,646        3,618        28        3,618        3,596        3Q 2016  

126380AB0

      12,381        12,212        169        12,212        12,333        3Q 2016  

150324AC5

      27,182        24,290        2,892        24,290        24,290        3Q 2016  

52108HYQ1

      2,960        798        2,163        797        132        3Q 2016  

759676AJ8

      3,481        3,443        38        3,443        3,454        4Q 2016  
        

 

 

           
         $ 17,321           
        

 

 

           

 

52

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The unrealized losses of loan-backed and structured securities where fair value is less than cost or amortized cost for which an OTTI has not been recognized in earnings as of December 31, 2016 and 2015 is as follows:

 

     Losses 12
Months or
More		      Losses Less
Than 12
Months		  

Year ended December 31, 2016

      

The aggregate amount of unrealized losses

    $ 74,418      $ 86,409  

The aggregate related fair value of securities with unrealized losses

      673,363        2,548,835  
     Losses 12
Months or
More		      Losses Less
Than 12
Months		  

Year ended December 31, 2015

      

The aggregate amount of unrealized losses

    $ 158,836      $ 24,176  

The aggregate related fair value of securities with unrealized losses

      939,458        1,566,481  

Detail of net investment income is presented below:

 

     Year Ended December 31  
     2016      2015      2014  

Income:

         

Bonds

    $ 1,790,692      $ 1,727,340      $ 1,791,926  

Preferred stocks

      6,141        6,639        8,542  

Common stocks

      13,474        3,836        29,486  

Mortgage loans on real estate

      284,532        314,903        350,497  

Real estate

      22,698        20,264        18,039  

Policy loans

      41,872        44,072        46,233  

Cash, cash equivalents and short-term investments

      15,064        6,597        3,115  

Derivatives

      221,031        256,287        183,316  

Other invested assets

      171,225        47,823        26,216  

Other

      26,591        33,364        17,290  
  

 

 

     

 

 

     

 

 

  

Gross investment income

      2,593,320        2,461,125        2,474,660  

Less investment expenses

      139,501        134,003        115,006  
  

 

 

     

 

 

     

 

 

  

Net investment income

    $ 2,453,819      $ 2,327,122      $ 2,359,654  
  

 

 

     

 

 

     

 

 

  

 

53

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Proceeds from sales and other disposals (excluding maturities) of bonds and preferred stock and related gross realized capital gains and losses were as follows:

 

     Year Ended December 31  
     2016      2015      2014  

Proceeds

    $ 10,076,310      $ 12,197,993      $ 7,606,211  
  

 

 

     

 

 

     

 

 

  

Gross realized gains

    $ 155,810      $ 180,050      $ 403,590  

Gross realized losses

      (117,345 )       (158,916 )       (83,674 ) 
  

 

 

     

 

 

     

 

 

  

Net realized capital gains

    $ 38,465      $ 21,134      $ 319,916  
  

 

 

     

 

 

     

 

 

  

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, 2016, 2015 and 2014 of $40,319, $13,947 and $80,230, respectively.

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

 

    

Realized

Year Ended December 31

  
     2016      2015      2014  

Bonds

    $ (48,223 )     $ (6,233 )     $ 241,065  

Preferred stocks

      933        10,119        (801 ) 

Common stocks

      885        (1,640 )       302  

Mortgage loans on real estate

      145        (16,141 )       (5,749 ) 

Real estate

      (3,377 )       (3,356 )       12,395  

Cash, cash equivalents and short-term investments

      133        2        6  

Derivatives

      (185,514 )       (455,642 )       255,580  

Other invested assets

      (148,597 )       140,574        234,758  

Other

      4,829        —          8  
  

 

 

     

 

 

     

 

 

  
     (378,786 )       (332,317 )       737,564  

Federal income tax effect

      (5,234 )       (51,585 )       (120,545 ) 

Transfer from (to) interest maintenance reserve

      75,312        39,581        (327,736 ) 
  

 

 

     

 

 

     

 

 

  

Net realized capital (losses) gains on investments

    $ (308,708 )     $ (344,321 )     $ 289,283  
  

 

 

     

 

 

     

 

 

  

At December 31, 2016 and 2015, the Company had no investments in restructured securities.

 

54

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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  
     2016      2015      2014  

Bonds

    $ 87,348      $ (34,438 )     $ 37,229  

Preferred stocks

      (102 )       15        (15 ) 

Common stocks

      95        (1,898 )       (33,879 ) 

Affiliated entities

      412,879        141,897        139,410  

Mortgage loans on real estate

      149        6,123        (6,676 ) 

Cash, cash equivalents and short-term investments

      (131 )       —          —    

Derivatives

      (858,670 )       41,311        785,644  

Other invested assets

      475,672        (82,489 )       (10,680 ) 
  

 

 

     

 

 

     

 

 

  

Change in unrealized capital gains/losses, before taxes

      117,240        70,521        911,033  

Taxes on unrealized capital gains/losses

      (202,078 )       10,105        (19,971 ) 
  

 

 

     

 

 

     

 

 

  

Change in unrealized capital gains/losses, net of tax

    $ (84,838 )     $ 80,626      $ 891,062  
  

 

 

     

 

 

     

 

 

  

The credit qualities of mortgage loans by type of property for the year ended December 31, 2016 were as follows:

 

     Farm      Commercial      Mezzanine      Total  

AAA - AA

    $ —        $ 3,418,276      $ —        $ 3,418,276  

A

      68,833        1,832,506        —          1,901,339  

BBB

      —          255,494        —          255,494  

BB

      —          58,846        —          58,846  

B

      9,024        —          —          9,024  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 77,857      $ 5,565,122      $ —        $ 5,642,979  
  

 

 

     

 

 

     

 

 

     

 

 

  

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

During 2016, the Company issued mortgage loans with a maximum interest rate of 8.71% and a minimum interest rate of 3.00% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2016 at the time of origination was 91%. During 2015, the Company issued mortgage loans with a maximum interest rate of 4.59% and a minimum interest rate of 3.50% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2015 at the time of origination was 75%. During 2014, the Company issued mortgage loans with a maximum interest rate of 7.00% and a minimum interest rate of 3.55% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2014 at the time of origination was 79%.

 

55

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

During 2016, the Company did not reduce the interest rate on any outstanding mortgage loans. During 2015, the Company reduced the interest rate by 1.6% on two outstanding mortgage loan with statement value of $24,214. During 2014, the Company reduced the interest rate by 2.0% on one outstanding mortgage loan with statement value of $2,163.

The following tables provide the age analysis of mortgage loans aggregated by type:

 

            Residential      Commercial                
     Farm      Insured      All Other      Insured      All Other      Mezzanine      Total  

December 31, 2016

                     

Recorded Investment (All)

                     

(a) Current

    $ 77,857      $ —        $ —        $ —        $ 5,565,122      $ —        $ 5,642,979  

(b) 30-59 Days Past Due

      —          —          —          —          —          —          —    

(c) 60-89 Days Past Due

      —          —          —          —          —          —          —    

(d) 90-179 Days Past Due

      —          —          —          —          —          —          —    

(e) 180+ Days Past Due

      —          —          —          —          —          —          —    
            Residential      Commercial                
     Farm      Insured      All Other      Insured      All Other      Mezzanine      Total  

December 31, 2015

                     

Recorded Investment (All)

                     

(a) Current

    $ 64,068      $ —        $ —        $ —        $ 5,220,578      $ 73,729      $ 5,358,375  

(b) 30-59 Days Past Due

      —          —          —          —          —          —          —    

(c) 60-89 Days Past Due

      —          —          —          —          —          —          —    

(d) 90-179 Days Past Due

      —          —          —          —          —          —          —    

(e) 180+ Days Past Due

      —          —          —          —          6,293        —          6,293  

At December 31, 2016, no mortgage loans were non-income producing, and at December 31, 2015, two mortgage loans with a carrying value of $6,293 were non-income producing for the previous 180 days. There was no accrued interest related to these mortgage loans at December 31, 2016 or 2015. 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, 2016 and 2015 there were no taxes, assessments and other amounts advanced and not included in the mortgage loan total.

At December 31, 2016 and 2015, respectively, the Company held $6,077 and $6,347 in impaired loans with related allowance for credit losses of $1,421 and $1,570. There were no impaired mortgage loans held without an allowance for credit losses as of December 31, 2016 and 2015, respectively. The average recorded investment in impaired loans during 2016 and 2015 was $9,820 and $30,884, respectively.

 

56

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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  
     2016      2015      2014  

Balance at beginning of period

    $ 1,569      $ 7,693      $ 1,017  

Additions, net charged to operations

      174        7,225        11,962  

Recoveries in amounts previously charged off

      (322 )       (13,349 )       (5,286 ) 
  

 

 

     

 

 

     

 

 

  

Balance at end of period

    $ 1,421      $ 1,569      $ 7,693  
  

 

 

     

 

 

     

 

 

  

The following table provides the aggregate amount of mortgage loans derecognized as a result of foreclosure and the collateral recognized:

 

     Year Ended December 31  
     2016      2015  

Aggregate amount of mortgage loans derecognized

    $ 10,522      $ 25,693  

Real estate collateral recognized

      10,543        25,693  

Other collateral recognized

      —          —    

Receivables recognized from a government guarantee of the foreclosed mortgage loan

      —          —    

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. For the years ended December 31, 2016, 2015 and 2014, respectively, the Company recognized $677, $92 and $1,924 of interest income on impaired loans. Interest income of $786, $289 and $1,759, respectively, was recognized on a cash basis for the years ended December 31, 2016, 2015 and 2014.

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 $7,500, $3,356 and $112 were taken on real estate in 2016, 2015 and 2014, respectively, to write the book value down to the current fair value and were reflected as realized losses in the statements of operations. The Company disposed of one property during 2016, none in 2015, and multiple properties during 2014 resulting in a realized gains of $4,123, $0, and $2,446, respectively.

At December 31, 2016 and 2015, the Company held a mortgage loan loss reserve in the AVR of $53,388 and $54,414, respectively.

 

57

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

Geographic Distribution

 

     December 31  
     2016     2015  

Pacific

      25 %      27 % 

South Atlantic

      21       20  

Middle Atlantic

      18       17  

Mountain

      9       11  

W. North Central

      8       7  

E. North Central

      7       7  

W. South Central

      7       7  

E. South Central

      4       3  

New England

      1       1  

Property Type Distribution

 

     December 31  
     2016     2015  

Apartment

      38 %      33 % 

Retail

      24       26  

Office

      21       22  

Industrial

      11       12  

Other

      3       4  

Medical

      2       2  

Agricultural

      1       1  
 

 

At December 31, 2016, 2015 and 2014, the Company had mortgage loans with a total net admitted asset value of $81,895, $86,311 and $88,002, 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, 2016, 2015 and 2014 related to such restructurings. At December 31, 2016 and 2015 there was one commitment for $3,000 to lend additional funds to debtors owing receivables

During 2016, the Company recorded impairments of $4,971 for its investment in Prudential Capital Partners II, L.P.; $4,537 for its investment in Falcon Mezzanine Partners II, L.P.; $2,298 for its investment in VSS Communications Partners IV, L.P.; $7,560 for its investment in WLR Recovery Fund III, L.P.; $2,819 for its investment in Carlyle Partners IV, L.P.; $10,478 for its investment in Apollo Investment Fund VI, L.P.; $4,216 for its investment in Vintage III L.P.; $3,003 for its investment in Metalmark Capital Partners L.P.; $2,411 for its investment in PineBridge PEP IV Co-Investment, L.P; $12,610 for its investment in Invenergy Wind LLC. 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 statement of operations.

During 2015, the Company recorded impairments of $6,269 for its investment in PineBridge Global Emerging Markets Partners, LLC. The impairments were taken because the decline in fair value of the funds was deemed to be other-than-temporary and a recovery in value from the remaining underlying investments in the funds was not anticipated. These write-downs are included in net realized capital gains (losses) within the statement of operations.

During 2014, the Company did not recognize any impairment write down for its investments in joint ventures, partnerships and limited liability companies.

 

58

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016, the Company had ownership interests in fifty-two LIHTC investments. The remaining years of unexpired tax credits ranged from one to twelve, 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 2017 to 2029 is $48,742. LIHTC tax credits recognized during 2016 was $6,423. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

At December 31, 2015, the Company had ownership interests in forty-six LIHTC investments. The remaining years of unexpired tax credits ranged from one to eleven, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to sixteen years. The amount of contingent equity commitments expected to be paid during the years 2016 to 2029 is $8,611. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

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, 2016 and 2015:

 

            December 31, 2016  

Description of State Transferable and Non-transferable Tax Credits

    State      Carrying
Value		      Unused
Amount*		  

Low-Income Housing Tax Credits

      MA      $ 1,332      $ 9,000  

Economic Redevelopment and Growth Tax Credits

      NJ        4,669        15,497  
     

 

 

     

 

 

  

Total

       $ 6,001      $ 24,497  
     

 

 

     

 

 

  
            December 31, 2015  

Description of State Transferable and Non-transferable Tax Credits

    State      Carrying
Value		      Unused
Amount		  

Low-Income Housing Tax Credits

      MA      $ 1,332      $ 9,000  

Economic Redevelopment and Growth Tax Credits

      NJ        936        16,847  
     

 

 

     

 

 

  

Total

       $ 2,268      $ 25,847  
     

 

 

     

 

 

  

 

* The unused amount reflects credits that the Company deems will be realizable in the period from 2017 to 2025.

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.

 

59

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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, was as follows:

 

     2016      2015  

Fair value—positive

    $ 1,803,598      $ 2,329,060  

Fair value—negative

      (1,497,706 )       (897,891 ) 

At December 31, 2016 and 2015, the Company has recorded $(591,186) and $272,952, respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting, which is recorded directly to unassigned surplus as an unrealized gain (loss). The Company did not recognize any unrealized gains or losses during 2016, 2015 and 2014 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 27 years for forecasted hedge transactions. At December 31, 2016 and 2015, 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, 2016 and 2015, the Company has accumulated deferred gains in the amount of $30,231 and $48,182, 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 2026.

Summary of realized gain/(losses) by derivative type for year-end December 31, is as follows:

 

     2016      2015      2014  

Options:

         

Calls

    $ 1,524      $ 7,014      $ —    

Puts

      10,700        25,396        —    
  

 

 

     

 

 

     

 

 

  

Total options

    $ 12,224      $ 32,410      $ —    
  

 

 

     

 

 

     

 

 

  

Swaps:

         

Interest rate

    $ 642,433      $ (187,530 )     $ 377,414  

Credit

      3,046        (278 )       (472 ) 

Foreign exchange

      (2,959 )       —          —    

Total return

      (510,883 )       (324,480 )       (363,166 ) 
  

 

 

     

 

 

     

 

 

  

Total swaps

    $ 131,637      $ (512,288 )     $ 13,776  
  

 

 

     

 

 

     

 

 

  

Futures—net positions

      (337,977 )       20,012        241,804  

Argentina warrants

      —          4,225        —    

Lehman settlements

      1,241        1,590        —    
  

 

 

     

 

 

     

 

 

  

Total realized gains/(losses)

    $ (192,875 )     $ (454,051 )     $ 255,580  
  

 

 

     

 

 

     

 

 

  

 

60

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Fair value of replicated assets and credit default swaps (as underlying), as of December 31, is as follows:

 

     Year Ended December 31  
     2016      2015      2014  

Replicated assets

    $ 4,576,931      $ 4,726,248      $ 4,158,940  

Credit default

      (32,317 )       (95,069 )       (85,230 ) 

Capital gain/(losses) related to credit swap transactions (which are primarily replication transactions), as of December 31, is as follows:

 

     Year Ended December 31
     2016      2015      2014

Capital gains/(losses)

    $ 3,046      $ (278 )     $(472)

As stated in Note 1, the Company replicates investment grade corporate bonds 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, the Company has recourse provisions from the proceeds of the bankruptcy settlement of the underlying entity or by the sale of the underlying bond.

 

61

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

As of December 31, 2016, credit default swaps, used in replicating corporate bonds are as follows:

 

Deal, Receive (Pay), Underlying

    Maturity Date      Maximum
Future Payout
(Estimate)		      Current
Fair Value		  

43289,SWAP, USD 1 / (USD 0), :US731011AN26

      3/20/2017      $ 10,000        16  

43290,SWAP, USD 1 / (USD 0), :US46513E5Y48

      3/20/2017        10,000        18  

43291,SWAP, USD 1 / (USD 0), :US731011AN26

      3/20/2017        10,000        16  

43292,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        15,000        23  

43293,SWAP, USD 1 / (USD 0), :XS0113419690

      3/20/2017        10,000        19  

43294,SWAP, USD 1 / (USD 0), :US50064FAD69

      3/20/2017        10,000        19  

43295,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        10,000        15  

43296,SWAP, USD 1 / (USD 0), :USY6826RAA06

      3/20/2017        10,000        14  

43297,SWAP, USD 1 / (USD 0), :US168863AS74

      3/20/2017        15,000        24  

43298,SWAP, USD 1 / (USD 0), :US731011AN26

      3/20/2017        15,000        23  

43300,SWAP, USD 1 / (USD 0), :XS0113419690

      3/20/2017        15,000        28  

43309,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        15,000        23  

51402,SWAP, USD 1 / (USD 0), :US168863AS74

      3/20/2017        10,000        16  

43313,SWAP, USD 1 / (USD 0), :JP1200551248

      3/20/2017        15,000        31  

43314,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        10,000        15  

43315,SWAP, USD 1 / (USD 0), :XS0113419690

      3/20/2017        15,000        28  

43317,SWAP, USD 1 / (USD 0), :US50064FAD69

      3/20/2017        10,000        19  

51282,SWAP, USD 1 / (USD 0), :US168863AS74

      3/20/2017        10,000        16  

43320,SWAP, USD 1 / (USD 0), :USY6826RAA06

      3/20/2017        5,000        7  

43325,SWAP, USD 1 / (USD 0), :US50064FAD69

      3/20/2017        10,000        19  

43326,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        10,000        15  

43333,SWAP, USD 1 / (USD 0), :USY6826RAA06

      3/20/2017        10,000        14  

51283,SWAP, USD 1 / (USD 0), :US475070AD04

      6/20/2017        25,000        100  

51403,SWAP, USD 1 / (USD 0), :US026874AZ07

      6/20/2017        25,000        104  

51404,SWAP, USD 1 / (USD 0), :US026874AZ07

      6/20/2017        25,000        104  

47290,SWAP, USD 1 / (USD 0), :US141781AC86

      6/20/2017        10,000        42  

47291,SWAP, USD 1 / (USD 0), :US141781AC86

      6/20/2017        5,000        21  

47292,SWAP, USD 1 / (USD 0), :US42217KAL08

      6/20/2017        10,000        39  

43366,SWAP, USD 1 / (USD 0), :CDX-NAIGS18V1-5Y

      6/20/2017        20,000        87  

43368,SWAP, USD 1 / (USD 0), :CDX-NAIGS18V1-5Y

      6/20/2017        20,000        87  

57600,SWAP, USD 1 / (USD 0), :CDX-NAIGS18V1-5Y

      6/20/2017        26,000        113  

51284,SWAP, USD 1 / (USD 0), :CDX-NAIGS18V1-5Y

      6/20/2017        20,000        87  

47293,SWAP, USD 1 / (USD 0), :CDX-NAIGS18V1-5Y

      6/20/2017        25,000        109  

43383,SWAP, USD 1 / (USD 0), :XS0203685788

      6/20/2017        10,000        34  

43384,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2017        10,000        34  

43387,SWAP, USD 1 / (USD 0), :US731011AN26

      6/20/2017        8,000        28  

43602,SWAP, USD 1 / (USD 0), :US836205AJ33

      9/20/2017        10,600        57  

43604,SWAP, USD 1 / (USD 0), :US88322LAA70

      9/20/2017        5,100        30  

51211,SWAP, USD 1 / (USD 0), :US715638AP79

      9/20/2017        9,000        47  

43626,SWAP, USD 1 / (USD 0), :US455780AQ93

      9/20/2017        9,500        39  

45879,SWAP, USD 1 / (USD 0), :US731011AN26

      12/20/2017        15,000        103  

 

62

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

46819,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2017        5,000        27  

58913,SWAP, USD 1 / (USD 0), :US715638AP79

      12/20/2017        10,000        67  

46831,SWAP, USD 1 / (USD 0), :US88322LAA70

      12/20/2017        10,000        77  

46845,SWAP, USD 1 / (USD 0), :US46513E5Y48

      12/20/2017        10,000        79  

46951,SWAP, USD 1 / (USD 0), :US534187AX79

      12/20/2017        10,000        82  

46958,SWAP, USD 1 / (USD 0), :US416515AV66

      12/20/2017        10,000        84  

47855,SWAP, USD 1 / (USD 0), :US084664BN03

      12/20/2017        10,000        77  

47856,SWAP, USD 1 / (USD 0), :US416515AV66

      12/20/2017        20,000        167  

47859,SWAP, USD 1 / (USD 0), :US101137AG20

      12/20/2017        20,000        179  

47866,SWAP, USD 5 / (USD 0), :US345370BX76

      12/20/2017        20,000        924  

47867,SWAP, USD 1 / (USD 0), :US94973VAM90

      12/20/2017        20,000        171  

48247,SWAP, USD 1 / (USD 0), :US59156RAX61

      12/20/2017        20,000        159  

51440,SWAP, USD 1 / (USD 0), :CDX-NAIGS19V1-5Y

      12/20/2017        20,000        173  

51405,SWAP, USD 1 / (USD 0), :CDX-NAIGS19V1-5Y

      12/20/2017        25,000        216  

48458,SWAP, USD 5 / (USD 0), :US345370BX76

      12/20/2017        25,000        1,155  

48774,SWAP, USD 1 / (USD 0), :CDX-NAIGS19V1-5Y

      12/20/2017        12,500        108  

51287,SWAP, USD 1 / (USD 0), :US101137AG20

      12/20/2017        25,000        224  

51406,SWAP, USD 1 / (USD 0), :US94973VAM90

      12/20/2017        25,000        214  

51407,SWAP, USD 1 / (USD 0), :US084664BN03

      12/20/2017        20,000        153  

51288,SWAP, USD 5 / (USD 0), :US345370BX76

      12/20/2017        10,000        462  

50040,SWAP, USD 1 / (USD 0), :US29250RAC07

      12/20/2017        10,000        35  

53125,SWAP, USD 1 / (USD 0), :US29250RAC07

      3/20/2018        10,000        35  

52960,SWAP, USD 1 / (USD 0), :US96950HAD26

      3/20/2018        10,000        64  

53667,SWAP, USD 1 / (USD 0), :US59156RAX61

      3/20/2018        20,000        195  

53716,SWAP, USD 1 / (USD 0), :US55616XAA54

      3/20/2018        20,000        185  

53805,SWAP, USD 1 / (USD 0), :US55616XAA54

      3/20/2018        10,000        93  

54724,SWAP, USD 1 / (USD 0), :US836205AJ33

      3/20/2018        10,000        78  

55126,SWAP, USD 1 / (USD 0), :XS0292653994

      3/20/2018        7,100        77  

55142,SWAP, USD 1 / (USD 0), :US46513E5Y48

      3/20/2018        3,000        29  

55297,SWAP, USD 1 / (USD 0), :US836205AJ33

      3/20/2018        10,000        78  

57866,SWAP, USD 1 / (USD 0), :US74432QAY17

      6/20/2018        10,000        118  

60222,SWAP, USD 1 / (USD 0), :US026874AZ07

      6/20/2018        10,000        118  

64235,SWAP, USD 1 / (USD 0), :US925524AU41

      9/20/2020        10,000        214  

64236,SWAP, USD 1 / (USD 0), :US984121BW26

      9/20/2020        20,000        68  

64238,SWAP, USD 1 / (USD 0), :US55616XAA54

      9/20/2020        10,000        (32 ) 

64593,SWAP, USD 1 / (USD 0), :US416515AV66

      9/20/2020        20,000        376  

65753,SWAP, USD 1 / (USD 0), :US984121BW26

      9/20/2020        20,000        68  

65755,SWAP, USD 1 / (USD 0), :US428236AM52

      9/20/2020        15,000        183  

94986,SWAP, USD 5 / (USD 0), :US629377BG69

      12/20/2017        4,000        174  

94987,SWAP, USD 5 / (USD 0), :US85375CAW10

      12/20/2017        4,000        183  

94988,SWAP, USD 5 / (USD 0), :US459745GF62

      12/20/2017        4,000        181  

94990,SWAP, USD 5 / (USD 0), :US428040CD99

      12/20/2017        4,000        159  

94992,SWAP, USD 5 / (USD 0), :US911365AX24

      12/20/2017        3,500        163  

93528,SWAP, USD 1 / (USD 0), :US260543BJ10

      12/20/2020        9,500        153  

76131,SWAP, USD 1 / (USD 0), :US455780AU06

      3/20/2019        5,000        33  

76147,SWAP, USD 1 / (USD 0), :US718286AP29

      3/20/2019        5,000        59  

76203,SWAP, USD 1 / (USD 0), :US455780AU06

      3/20/2019        5,000        33  

76204,SWAP, USD 1 / (USD 0), :US718286AP29

      3/20/2019        5,000        59  

76205,SWAP, USD 1 / (USD 0), :USY6826RAA06

      3/20/2019        5,000        43  

 

63

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

76206,SWAP, USD 1 / (USD 0), :US836205AN45

      3/20/2019        5,000        22  

76207,SWAP, USD 1 / (USD 0), :XS0292653994

      3/20/2019        5,000        81  

78319,SWAP, USD 5 / (USD 0), :US459745GF62

      6/20/2019        10,000        1,038  

78318,SWAP, USD 5 / (USD 0), :US125581GL68

      6/20/2019        10,000        1,043  

78182,SWAP, USD 5 / (USD 0), :US125581GL68

      6/20/2019        5,000        521  

78184,SWAP, USD 5 / (USD 0), :US125581GL68

      6/20/2019        10,000        1,043  

78303,SWAP, USD 5 / (USD 0), :DE000A0TKUU3

      6/20/2019        10,000        1,130  

78347,SWAP, USD 1 / (USD 0), :US23331ABF57

      6/20/2019        22,000        292  

80205,SWAP, USD 5 / (USD 0), :XS0356705219

      6/20/2019        20,000        1,694  

93896,SWAP, USD 1 / (USD 0), :US105756AL40

      12/20/2019        10,000        (149 ) 

102612,SWAP, USD 1 / (USD 0), :US00163MAB00

      3/20/2020        15,000        179  

109652,SWAP, USD 1 / (USD 0), :US40414LAA70

      3/20/2020        15,000        (8 ) 

102633,SWAP, USD 1 / (USD 0), :US635405AQ61

      3/20/2020        10,000        214  

120684,SWAP, USD 1 / (USD 0), :US91086QAW87

      3/20/2020        10,000        0  

102864,SWAP, USD 1 / (USD 0), :US465410AH18

      3/20/2020        15,000        (127 ) 

102758,SWAP, USD 1 / (USD 0), :US042735AL41

      3/20/2020        15,000        321  

103144,SWAP, USD 1 / (USD 0), :US68268NAF06

      3/20/2020        7,000        (24 ) 

103050,SWAP, USD 5 / (USD 0), :US37045VAC46

      3/20/2020        20,000        2,522  

103278,SWAP, USD 1 / (USD 0), :ES0413900384

      3/20/2020        50,000        217  

103292,SWAP, USD 1 / (USD 0), :US902494AT07

      3/20/2020        30,000        589  

103592,SWAP, USD 1 / (USD 0), :US055450AG50

      3/20/2020        10,000        107  

103617,SWAP, USD 1 / (USD 0), :US055450AG50

      3/20/2020        20,000        215  

109186,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        4,000        (133 ) 

109189,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        6,500        (217 ) 

109217,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        4,000        (14 ) 

109218,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,500        (12 ) 

109220,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        4,000        (14 ) 

109221,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,500        (12 ) 

109224,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        4,000        (14 ) 

109225,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,500        (12 ) 

109356,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        4,000        43  

109358,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        3,500        37  

109542,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        4,200        17  

109543,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        3,400        14  

109551,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        2,100        9  

109552,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        1,700        7  

109548,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        2,000        21  

109549,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        1,750        19  

109644,SWAP, USD 1 / (USD 0), :US465410AH18

      6/20/2020        3,670        (40 ) 

109646,SWAP, USD 1 / (USD 0), :US465410AH18

      6/20/2020        3,670        (40 ) 

109686,SWAP, USD 1 / (USD 0), :US465410AH18

      6/20/2020        3,660        (40 ) 

 

64

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

110508,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        2,100        9  

110509,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        1,700        7  

110618,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        2,000        21  

110619,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        1,750        19  

111119,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        2,000        21  

111120,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        1,750        19  

111123,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        2,100        9  

111124,SWAP, USD 1 / (USD 0), :US698299AD63

      6/20/2020        1,700        7  

110852,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        2,000        21  

110853,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        1,750        19  

111717,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        6,000        (200 ) 

111727,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,000        (10 ) 

111730,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        3,000        (100 ) 

111733,SWAP, USD 1 / (USD 0), :US836205AN45

      6/20/2020        3,000        (45 ) 

111736,SWAP, USD 1 / (USD 0), :US105756BV13

      6/20/2020        3,000        (79 ) 

111742,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,000        (10 ) 

111828,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        3,000        32  

111840,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2020        3,000        (8 ) 

111843,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        3,000        (10 ) 

111896,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        3,000        (100 ) 

112136,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        6,000        13  

112139,SWAP, USD 1 / (USD 0), :US105756BV13

      6/20/2020        3,000        (79 ) 

112151,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        3,000        (100 ) 

112226,SWAP, USD 1 / (USD 0), :USY6826RAA06

      9/20/2020        6,000        (5 ) 

112229,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        4,400        9  

112250,SWAP, USD 5 / (USD 0), :US345370BX76

      9/20/2020        12,500        1,775  

112251,SWAP, USD 5 / (USD 0), :US345370BX76

      9/20/2020        12,500        1,775  

112252,SWAP, USD 5 / (USD 0), :US37045VAD29

      9/20/2020        12,500        1,715  

112255,SWAP, USD 5 / (USD 0), :US37045VAD29

      9/20/2020        12,500        1,715  

112257,SWAP, USD 1 / (USD 0), :US42217KAT34

      9/20/2020        7,500        38  

112258,SWAP, USD 1 / (USD 0), :US42217KAT34

      9/20/2020        7,500        38  

112259,SWAP, USD 1 / (USD 0), :US00163MAB00

      9/20/2020        7,500        65  

112260,SWAP, USD 1 / (USD 0), :US00163MAB00

      9/20/2020        7,500        65  

112302,SWAP, USD 1 / (USD 0), :US455780AU06

      9/20/2020        3,000        (16 ) 

112326,SWAP, USD 1 / (USD 0), :US91086QAW87

      9/20/2020        3,000        (16 ) 

112358,SWAP, USD 1 / (USD 0), :US465410AH18

      6/20/2020        3,000        (33 ) 

112429,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        3,000        6  

113045,SWAP, USD 1 / (USD 0), :XS0254035768

      9/20/2020        20,000        3  

113265,SWAP, USD 1 / (USD 0), :DE000DB5DCW6

      9/20/2020        25,000        (1,840 ) 

113396,SWAP, USD 1 / (USD 0), :US88322KAC53

      9/20/2020        3,000        47  

113435,SWAP, USD 1 / (USD 0), :US455780AU06

      9/20/2020        3,000        (16 ) 

115815,SWAP, USD 1 / (USD 0), :US260543BJ10

      9/20/2020        15,000        254  

115827,SWAP, USD 1 / (USD 0), :US42217KAT34

      9/20/2020        5,000        26  

116038,SWAP, USD 1 / (USD 0), :ES0413900384

      9/20/2020        13,335        14  

116754,SWAP, USD 1 / (USD 0), :US195325BB02

      9/20/2020        10,000        (65 ) 

116755,SWAP, USD 1 / (USD 0), :US715638AP79

      9/20/2020        10,000        94  

116933,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        5,700        12  

 

65

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

119228,SWAP, USD 1 / (USD 0), :US712219AG90

      9/20/2020        15,000        68  

119231,SWAP, USD 1 / (USD 0), :US168863AV04

      9/20/2020        10,000        136  

119422,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        10,000        21  

119572,SWAP, USD 1 / (USD 0), :US168863AV04

      9/20/2020        5,000        68  

119599,SWAP, USD 1 / (USD 0), :US91086QAW87

      9/20/2020        5,000        (26 ) 

119956,SWAP, USD 1 / (USD 0), :US712219AG90

      9/20/2020        5,000        23  

120467,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        5,000        (2 ) 

120468,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        10,000        (4 ) 

120565,SWAP, USD 1 / (USD 0), :US718286AP29

      12/20/2020        10,000        74  

120745,SWAP, USD 1 / (USD 0), :US718286AP29

      12/20/2020        5,000        37  

120673,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        5,000        (2 ) 

120951,SWAP, USD 1 / (USD 0), :CDX-NAIGS25V1-5Y

      12/20/2020        50,000        809  

120962,SWAP, USD 1 / (USD 0), :US534187AX79

      12/20/2020        20,000        163  

121009,SWAP, USD 1 / (USD 0), :US59156RAX61

      12/20/2020        30,000        377  

121131,SWAP, USD 1 / (USD 0), :CDX-NAIGS25V1-5Y

      12/20/2020        50,000        809  

127386,SWAP, USD 1 / (USD 0), :US149123BZ39

      12/20/2020        5,000        109  

127387,SWAP, USD 1 / (USD 0), :US149123BZ39

      12/20/2020        5,000        109  

127388,SWAP, USD 1 / (USD 0), :US149123BZ39

      12/20/2020        10,000        218  

127390,SWAP, USD 1 / (USD 0), :US460146CE11

      12/20/2020        5,000        109  

127391,SWAP, USD 1 / (USD 0), :US460146CE11

      12/20/2020        5,000        109  

127392,SWAP, USD 1 / (USD 0), :US460146CE11

      12/20/2020        10,000        218  

127394,SWAP, USD 1 / (USD 0), :US244199BC83

      12/20/2020        5,000        126  

127395,SWAP, USD 1 / (USD 0), :US244199BC83

      12/20/2020        5,000        126  

127396,SWAP, USD 1 / (USD 0), :US244199BC83

      12/20/2020        10,000        251  

127428,SWAP, USD 5 / (USD 0), :US37045VAD29

      12/20/2020        12,500        1,782  

127470,SWAP, USD 1 / (USD 0), :US037411AN57

      12/20/2020        5,000        46  

127472,SWAP, USD 1 / (USD 0), :US037411AN57

      12/20/2020        10,000        92  

127473,SWAP, USD 1 / (USD 0), :US29379VAS25

      12/20/2020        15,000        (25 ) 

127474,SWAP, USD 1 / (USD 0), :US29379VAS25

      12/20/2020        5,000        (8 ) 

127475,SWAP, USD 1 / (USD 0), :US29379VAS25

      12/20/2020        5,000        (8 ) 

127594,SWAP, USD 1 / (USD 0), :US670346AG05

      12/20/2020        10,000        156  

127595,SWAP, USD 1 / (USD 0), :US670346AG05

      12/20/2020        5,000        78  

127654,SWAP, USD 1 / (USD 0), :US29379VAS25

      12/20/2020        10,000        (17 ) 

127656,SWAP, USD 1 / (USD 0), :US29379VAS25

      12/20/2020        5,000        (8 ) 

128212,SWAP, USD 1 / (USD 0), :US037411AN57

      12/20/2020        10,000        92  

128213,SWAP, USD 1 / (USD 0), :US037411AN57

      12/20/2020        10,000        92  

128214,SWAP, USD 1 / (USD 0), :US037411AN57

      12/20/2020        5,000        46  

128216,SWAP, USD 1 / (USD 0), :US032511BF31

      12/20/2020        10,000        (12 ) 

128217,SWAP, USD 1 / (USD 0), :US032511BF31

      12/20/2020        10,000        (12 ) 

128218,SWAP, USD 1 / (USD 0), :US032511BF31

      12/20/2020        5,000        (6 ) 

128220,SWAP, USD 1 / (USD 0), :US670346AG05

      12/20/2020        12,500        194  

103570,SWAP, USD 1 / (USD 0), :US50064FAD69

      3/20/2017        5,000        10  

103571,SWAP, USD 1 / (USD 0), :US731011AN26

      3/20/2017        10,000        16  

103572,SWAP, USD 1 / (USD 0), :US731011AN26

      3/20/2017        10,000        16  

103573,SWAP, USD 1 / (USD 0), :JP1200551248

      3/20/2017        20,000        41  

103566,SWAP, USD 1 / (USD 0), :US59156RAN89

      6/20/2017        25,000        100  

 

66

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

103567,SWAP, USD 5 / (USD 0), :US345370BX76

      6/20/2017        25,000        564  

101771,SWAP, USD 1 / (USD 0), :US836205AJ33

      9/20/2017        8,000        43  

109653,SWAP, USD 1 / (USD 0), :US219350AE55

      12/20/2017        12,500        79  

101775,SWAP, USD 1 / (USD 0), :US29273RAB50

      12/20/2017        20,000        135  

103568,SWAP, USD 1 / (USD 0), :CDX-NAIGS19V1-5Y

      12/20/2017        50,000        433  

103569,SWAP, USD 1 / (USD 0), :US94973VAM90

      12/20/2017        20,000        171  

115332,SWAP, USD 5 / (USD 0), :US911365AX24

      12/20/2017        500        23  

101778,SWAP, USD 5 / (USD 0), :US37247DAK28

      6/20/2018        27,000        664  

107260,SWAP, USD 1 / (USD 0), :US026874AZ07

      6/20/2018        15,000        177  

101779,SWAP, USD 1 / (USD 0), :CDX-NAIGS20V1-5Y

      6/20/2018        50,000        595  

109654,SWAP, USD 1 / (USD 0), :US172967ES69

      9/20/2023        20,000        53  

109655,SWAP, USD 1 / (USD 0), :US06051GDX43

      9/20/2023        20,000        14  

109656,SWAP, USD 1 / (USD 0), :US55616XAA54

      9/20/2020        10,000        (32 ) 

101780,SWAP, USD 1 / (USD 0), :US084670BD98

      9/20/2023        30,000        (231 ) 

101781,SWAP, USD 1 / (USD 0), :US73755LAF40

      9/20/2020        20,000        130  

101782,SWAP, USD 1 / (USD 0), :US172967ES69

      9/20/2023        20,000        53  

109657,SWAP, USD 1 / (USD 0), :US925524AU41

      9/20/2020        10,000        214  

101783,SWAP, USD 1 / (USD 0), :US416515AV66

      9/20/2020        25,000        471  

101784,SWAP, USD 1 / (USD 0), :US74432QAY17

      9/20/2020        37,000        554  

109659,SWAP, USD 1 / (USD 0), :US260543BJ10

      12/20/2020        15,500        250  

109665,SWAP, USD 1 / (USD 0), :FR0010871376

      12/20/2020        10,000        227  

115333,SWAP, USD 1 / (USD 0), :FR0010871376

      12/20/2020        10,000        227  

109666,SWAP, USD 5 / (USD 0), :US852061AF78

      12/20/2019        5,000        409  

109667,SWAP, USD 5 / (USD 0), :US552953BB60

      12/20/2019        5,000        594  

109668,SWAP, USD 5 / (USD 0), :US126304AK02

      12/20/2019        2,000        168  

109669,SWAP, USD 5 / (USD 0), :US12543DAL47

      12/20/2019        5,000        (927 ) 

109670,SWAP, USD 5 / (USD 0), :US131347CF14

      12/20/2019        5,000        493  

119316,SWAP, USD 1 / (USD 0), :XS0292653994

      12/20/2019        10,000        137  

119323,SWAP, USD 1 / (USD 0), :US105756AL40

      12/20/2019        10,000        (149 ) 

119318,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2019        10,000        25  

119321,SWAP, USD 1 / (USD 0), :US836205AN45

      12/20/2019        10,000        (64 ) 

119320,SWAP, USD 1 / (USD 0), :US900123AL40

      12/20/2019        20,000        (451 ) 

101785,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2019        10,000        25  

133643,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        6,300        (49 ) 

133644,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        6,200        (48 ) 

133653,SWAP, USD 1 / (USD 0), :US195325BB02

      12/20/2020        6,200        (59 ) 

133656,SWAP, USD 1 / (USD 0), :US715638AP79

      12/20/2020        6,200        50  

133897,SWAP, USD 1 / (USD 0), :JP576400C859

      12/20/2020        5,000        75  

133896,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2020        5,000        (41 ) 

133743,SWAP, USD 1 / (USD 0), :US712219AG90

      12/20/2020        5,000        14  

133876,SWAP, USD 1 / (USD 0), :US712219AG90

      12/20/2020        5,000        14  

133877,SWAP, USD 1 / (USD 0), :US712219AG90

      12/20/2020        5,000        14  

133880,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        8,000        (62 ) 

133881,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        2,000        (16 ) 

133902,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        10,000        (78 ) 

134315,SWAP, USD 1 / (USD 0), :US168863AV04

      12/20/2020        5,000        65  

134316,SWAP, USD 1 / (USD 0), :US168863AV04

      12/20/2020        5,000        65  

 

67

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Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

134319,SWAP, USD 1 / (USD 0), :US465410AH18

      12/20/2020        10,000        (156 ) 

134643,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        6,000        (2 ) 

134618,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        5,000        (2 ) 

134620,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        5,000        (39 ) 

134622,SWAP, USD 1 / (USD 0), :US715638AP79

      12/20/2020        10,000        81  

134821,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2020        7,000        (58 ) 

134804,SWAP, USD 1 / (USD 0), :US718286AP29

      12/20/2020        10,000        74  

134805,SWAP, USD 1 / (USD 0), :US698299AD63

      12/20/2020        5,900        1  

134806,SWAP, USD 1 / (USD 0), :US698299AD63

      12/20/2020        2,000        0  

134808,SWAP, USD 1 / (USD 0), :US195325BB02

      12/20/2020        4,000        (38 ) 

134809,SWAP, USD 1 / (USD 0), :US195325BB02

      12/20/2020        6,000        (57 ) 

135158,SWAP, USD 1 / (USD 0), :US168863AV04

      12/20/2020        5,000        65  

138038,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2020        10,000        (83 ) 

141522,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        5,000        (39 ) 

141625,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        5,000        (39 ) 

141747,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2020        10,000        (83 ) 

141748,SWAP, USD 1 / (USD 0), :US195325BB02

      12/20/2020        5,000        (47 ) 

152086,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2021        15,000        (222 ) 

153789,SWAP, USD 1 / (USD 0), :CDX-NAIGS22V1-5Y

      6/20/2019        37,000        567  

157739,SWAP, USD 1 / (USD 0), :CDX-NAIGS24V1-5Y

      6/20/2020        50,000        830  

157740,SWAP, USD 1 / (USD 0), :CDX-NAIGS24V1-5Y

      6/20/2020        50,000        830  

157741,SWAP, USD 1 / (USD 0), :CDX-NAIGS24V1-5Y

      6/20/2020        50,000        830  

157735,SWAP, USD 1 / (USD 0), :CDX-NAIGS26V1-5Y

      6/20/2021        20,000        328  

157736,SWAP, USD 1 / (USD 0), :CDX-NAIGS26V1-5Y

      6/20/2021        20,000        328  

157742,SWAP, USD 1 / (USD 0), :CDX-NAIGS24V1-5Y

      6/20/2020        22,000        365  

158024,SWAP, USD 1 / (USD 0), :CDX-NAIGS26V1-5Y

      6/20/2021        40,000        656  

160768,SWAP, USD 1 / (USD 0), :XS0114288789

      6/20/2021        3,500        (81 ) 

160770,SWAP, USD 1 / (USD 0), :XS0114288789

      6/20/2021        5,000        (115 ) 

173565,SWAP, USD 5 / (USD 0), :US37045VAD29

      12/20/2021        10,000        1,593  

186522,SWAP, USD 1 / (USD 0), :XS0114288789

      12/20/2021        1,800        (62 ) 

186526,SWAP, USD 5 / (USD 0), :USP04808AE45

      12/20/2021        1,200        (7 ) 

184294,SWAP, USD 1 / (USD 0), :XS0114288789

      12/20/2021        9,000        (310 ) 

186529,SWAP, USD 5 / (USD 0), :USP04808AE45

      12/20/2021        6,000        (37 ) 

186530,SWAP, USD 5 / (USD 0), :USP04808AE45

      12/20/2021        4,000        (25 ) 

186669,SWAP, USD 1 / (USD 0), :XS0114288789

      12/20/2021        6,000        (207 ) 

187621,SWAP, USD 0 / (USD 0), :US23331ABF57

      12/20/2021        19,000        (211 ) 
     

 

 

     

 

 

  
      $ 3,429,535      $ 41,602  
     

 

 

     

 

 

  

 

68

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the Company’s outstanding financial instruments with on and off balance sheet risks, shown in notional amounts, are summarized as follows:

 

     Notional Amount  
     2016      2015  

Interest rate and currency swaps:

      

Receive fixed—pay fixed

    $ 85,262      $ 3,561,505  

Receive fixed—pay floating

      77,500        169,665  

Receive floating—pay floating

      —          120,950  

Swaptions:

      

Receive fixed—pay floating

      6,000,000        6,000,000  

Receive floating—pay fixed

      6,000,000        6,000,000  

Interest rate swaps:

      

Receive fixed—pay fixed

      11,825,181        6,022,893  

Receive fixed—pay floating

      15,695,014        17,733,996  

Receive floating—pay fixed

      18,811,000        14,818,781  

Receive floating—pay floating

      11,491,769        8,710,507  

Caps

      2,250,000        2,250,000  

Options Calls / Puts

      250,375        1,372,064  

 

69

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables show the pledged or restricted assets as of December 31, 2016 and 2015, respectively:

 

     Gross Restricted (Admitted & Nonadmitted)  
     2016  

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  

Subject to contractual obligation for which liability is not shown

    $ —        $  —        $ —        $ —        $ —    

Collateral held under security lending agreements

      2,303,289        —          —          —          2,303,289  

Subject to repurchase agreements

      147,444        —          —          —          147,444  

Subject to reverse repurchase agreements

      —          —          —          —          —    

Subject to dollar repurchase agreements

      453,474        —          —          —          453,474  

Subject to dollar reverse repurchase agreements

      —          —          —          —          —    

Placed under option contracts

      —          —          —          —          —    

Letter stock or securities restricted as to sale - excluding FHLB capital stock

      6,408        —          —          —          6,408  

FHLB capital stock

      176,800        —          —          —          176,800  

On deposit with states

      47,548        —          —          —          47,548  

On deposit with other regulatory bodies

      —          —          —          —          —    

Pledged as collateral to FHLB (including assets backing funding agreements)

      5,155,703        —          —          —          5,155,703  

Pledged as collateral not captured in other categories

      1,039,105        —          —          —          1,039,105  

Other restricted assets

      482,544        —          —          —          482,544  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Restricted Assets

    $ 9,812,315      $ —        $ —        $ —        $ 9,812,315  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

70

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Gross (Admitted & Nonadmitted) Restricted      Percentage  

Restricted Asset Category

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

Subject to contractual obligation for which liability is not shown

    $ —        $ —       $ —        $ —          0.00 %      0.00 % 

Collateral held under security lending agreements

      2,760,891        (457,602 )      —          2,303,289        1.75 %      1.75 % 

Subject to repurchase agreements

      109,793        37,651       —          147,444        0.11 %      0.11 % 

Subject to reverse repurchase agreements

      —          —         —          —          0.00 %      0.00 % 

Subject to dollar repurchase agreements

      705,253        (251,779 )      —          453,474        0.34 %      0.34 % 

Subject to dollar reverse repurchase agreements

      —          —         —          —          0.00 %      0.00 % 

Placed under option contracts

      —          —         —          —          0.00 %      0.00 % 

Letter stock or securities restricted as to sale - excluding FHLB capital stock

      25,339        (18,931 )      —          6,408        0.00 %      0.00 % 

FHLB capital stock

      104,000        72,800       —          176,800        0.13 %      0.13 % 

On deposit with states

      49,010        (1,462 )      —          47,548        0.04 %      0.04 % 

On deposit with other regulatory bodies

      —          —         —          —          0.00 %      0.00 % 

Pledged as collateral to

                

FHLB (including assets backing funding agreements)

      3,299,057        1,856,646       —          5,155,703        3.91 %      3.91 % 

Pledged as collateral not captured in other categories

      371,577        667,528       —          1,039,105        0.79 %      0.79 % 

Other restricted assets

      476,119        6,425       —          482,544        0.37 %      0.37 % 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Total Restricted Assets

    $ 7,901,039      $ 1,911,276     $ —        $ 9,812,315        7.45 %      7.45 % 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

 

71

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables show the pledged or restricted assets in other categories as of December 31, 2016 and 2015, respectively:

 

     Gross (Admitted & Nonadmitted) Restricted  
     2016  

Description of Assets

    Total
General
Account (G/A)		      G/A Supporting
S/A Activity (a)		     Total Separate
Account (S/A)
Restricted
Assets		      S/A Assets
Supporting
G/A Activity		     Total  

Derivatives

    $ 989,453      $ —       $ —        $ —       $ 989,453  

Secured Funding Agreements

      42,588        —         —          —         42,588  

AMBAC

      7,064        —         —          —         7,064  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total

    $ 1,039,105      $ —       $ —        $ —       $ 1,039,105  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
     Gross (Admitted &
Nonadmitted) Restricted		            Percentage  

Description of Assets

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

Derivatives

    $ 314,892      $ 674,561     $ 989,453        0.75 %      0.75 % 

Secured Funding Agreements

      45,928        (3,340 )      42,588        0.03       0.03  

AMBAC

      10,757        (3,693 )      7,064        0.01       0.01  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total

    $ 371,577      $ 667,528     $ 1,039,105        0.78 %      0.78 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

The follow table shows the collateral received and reflected as assets within the financial statements as of December 31, 2016.

 

Collateral Assets

    Book Adjusted
Carrying Value
(BACV)		      Fair Value      % of BACV to
Total Assets
(Admitted and
Nonadmitted)		     % of BACV to
Total Admited
Assets		  

Cash

    $ 1,079,335      $ 1,079,335        1.84 %      1.86 % 

Securities lending collateral assets

      2,303,603        2,303,603        3.92       3.97  

Other

      79,536        79,531        0.14       0.14  
  

 

 

     

 

 

     

 

 

    

 

 

  

Total Collateral Assets

    $ 3,462,473      $ 3,462,469        5.90 %      5.97 % 
  

 

 

     

 

 

     

 

 

    

 

 

  

 

     Amount      % of Liability to
Total Liabilities		  

Recognized obligation to return collateral asset

    $ 3,463,690        6.55 % 

 

72

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company has no receivables as of December 31, 2016 associated with “to-be-announced” (TBA) covered short sales. The Company has receivables as of December 31, 2015 associated with TBA covered short sales. These receivables have been offset on the Balance Sheet with dollar repurchase agreement liabilities as the transactions are with the same counterparty. See the following table:

 

     Gross Amount
Recognized		      Amount Offset      Net Amount
Presented on
Financial
Statements		  

December 31, 2016

         

Assets:

         

Receivables for securities

    $ —        $ —        $ —    

Liabilities:

         

Borrowed money

    $ —        $ —        $ —    

December 31, 2015

         

Assets:

         

Receivables for securities

    $ 226,645      $ 209,176      $ 17,469  

Liabilities:

         

Borrowed money

    $ 705,704      $ 209,176      $ 496,528  

6. 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 earned reflect the following reinsurance amounts:

 

     Year Ended December 31  
     2016      2015      2014  

Direct premiums

    $ 14,081,227      $ 17,621,969      $ 18,862,934  

Reinsurance assumed - non affiliates

      1,412,887        1,376,827        1,451,900  

Reinsurance assumed - affiliates

      98,501        110,700        128,976  

Reinsurance ceded - non affiliates

      (2,018,612 )       (2,650,533 )       (2,078,651 ) 

Reinsurance ceded - affiliates

      448,649        (1,649,085 )       (2,129,876 ) 
  

 

 

     

 

 

     

 

 

  

Net premiums earned

    $ 14,022,652      $ 14,809,878      $ 16,235,283  
  

 

 

     

 

 

     

 

 

  

Effective October 1, 2016, the Company recaptured fixed annuity and funding agreement business previously ceded to Transamerica Premier Life Insurance Company (TPLIC), an affiliate, on a coinsurance basis. The Company received cash and invested assets of $3,017,999 and recaptured policy and claim reserves of $3,030,564. A reinsurance receivable from TPLIC

 

73

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

was established for the remaining $12,565 of assets to be transferred in support of the transferred policy and claim reserves. In addition, TPLIC transferred $82,218 of transfer date IMR to the Company. The Company paid net consideration to TPLIC resulting in a pre-tax loss of $40,086, which has been included in the Summary of Operations.

Effective October 1, 2016, TPLIC recaptured medium-term note funding agreements previously ceded to the Company on a coinsurance basis. The Company transferred cash and invested assets of $114,175 and released deposit-type reserves of $112,238 and a hedge novation of $2,228. A payable to TPLIC of $292 was established for remaining assets to be transferred in support of the hedge novation. The Company received consideration from TPLIC resulting in a pre-tax gain of $2,936 which has been included in the Summary of Operations.

Effective September 30, 2016, the Company ceded term life business to TWRI, an affiliate, on a coinsurance funds withheld basis. The Company paid an initial reinsurance premium of $41,565, transferred other net assets of $2,042, and released life and claim reserves of $296,656 and $21,926, respectively, resulting in a pre-tax gain of $274,974 ($178,733 net of tax) which has been credited directly to unassigned surplus.

The Company received reinsurance recoveries in the amount of $3,349,716, $3,370,420 and $3,157,884, during 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $753,202 and $731,784. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2016 and 2015 of $30,090,704 and $33,315,357.

On October 1, 2015, the Company, Union Hamilton Reinsurance, Ltd. (UH), and Commonwealth Annuity and Life Insurance Company (CALIC) entered into a Novation Agreement, pursuant to which UH assigned and delegated to CALIC its rights and obligations under the Original Agreement. Subsequently, the Company and CALIC amended and restated the fixed annuity reinsurance agreement from a modified coinsurance to coinsurance basis. As a result of the amendment, the Company transferred assets with a market value of $735,156, released coinsurance reserve liabilities of $721,190, and released an after-tax IMR liability associated with the block of business in the amount of $9,477 resulting in a net of tax gain on the transaction in the amount of $399 (IMR after-tax gain of $9,477 less gross loss on reinsurance of $13,966 taxed at 35%) which has been included in the Statement of Operations.

Effective July 1, 2015, the Company entered into an assumption reinsurance agreement with TPLIC, an affiliate, under which the Company novated its Medicare Supplement business to TPLIC. The Company transferred policy reserves of $6,987, claims reserves of $20,893, other liabilities of $920 along with assets of $28,801 to TPLIC during the last two quarters of the year. This represents the portion of the Medicare supplement business for which regulatory approval of the assumption agreement was received by July 1. No consideration was paid or received related to the novation. No gain or loss was recognized in the financial statements.

Effective April 14, 2015, the reinsurance agreement dated December 31, 2008 reinsuring variable annuity reinsurance between the Company and Transamerica International Re (Bermuda) Ltd (TIRe) was novated, to Firebird Re Corp. (FReC). General account reserves, and claim reserves ceded on a coinsurance basis at the time of novation were $514,898 and $5,070, respectively.

 

74

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Separate account modified coinsurance reserves and general account modified coinsurance reserves at the time of the novation were $7,052,587 and $140,034 respectively. No consideration was paid or received related to the novation. No gain or loss was recognized.

Subsequent to the novation, the Companies entered into an amended and restated reinsurance agreement related to the business. The modified coinsurance reinsurance reserves were converted to coinsure reserves and a general account funds withheld was established. The general account paid FReC $140,034 for the modified coinsurance reserves and ceded coinsurance reserves of $156,478, resulting in a pre-tax gain of $16,444 which has been credited directly to unassigned surplus. FReC placed assets of $676,446, equal to the ceded general account reserves, in a funds withheld account, and the Company established a corresponding funds withheld liability of $676,446.    

Effective December 31, 2014, the Company ceded certain stand-alone long-term care policies to TPLIC, an affiliate, for which the Company paid an initial ceding commission and premiums of $350,000 and $3,914,521, respectively and ceded modified coinsurance reserves of $3,914,521, resulting in a pre-tax loss of $350,000 which has been included in the Statement of Operations.

Effective October 1, 2014, the Company recaptured fixed annuity contracts previously reinsured to TIRe for which the Company received net consideration of $43,360, released a funds withheld liability of $1,975,937, and established benefit reserves and claim reserves $2,004,673 resulting in a pre-tax gain of $14,624 which has been included in the Statement of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cession of this business to TIRe in the amount of $15,795, which included the recapture of IMR gains in the amount of $19,852 on an after-tax basis, with a corresponding charge to unassigned surplus.

Effective October 1, 2014, the Company recaptured the variable BOLI/COLI business that was previously reinsured to Transamerica International Re (Bermuda), Ltd. (TIRe), an affiliate, for which the Company paid net consideration of $17,769, released the funds withheld liability of $1,080,541, and recaptured separate account and general account policy and claims reserves of $1,080,541, resulting in a pre-tax loss of $17,769 which was included in the Statement of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cession of this business to TIRe in the amount of $94,571 ($61,471 after-tax) with a corresponding charge to unassigned surplus.

Effective October 1, 2014, the Company recaptured the single premium universal life, credit life and credit disability business previously reinsured to TIRe for which the Company paid net consideration of $50,000, released a funds withheld liability of $516,472, recaptured policy and claims reserves of $560,275 and other liabilities of $13,334, and recaptured policy loans in the amount of $2,048, resulting in a pre-tax loss of $105,091 which has been included in the Statement of Operations. In addition, the Company released into income a previously deferred unamortized gain resulting from the original cession of this business to TIRe in the amount of $1,323 ($860 after-tax) with a corresponding charge to unassigned surplus.

Subsequently, effective October 1, 2014, the Company ceded this business to Ironwood Re Corp. (IRC) for which the Company received net consideration of $50,000, established a funds withheld liability of $516,472, released policy and claim reserves of $560,275 and other liabilities of $13,334, resulting in a pre-tax gain of $107,138 ($69,640 after-tax) which has been credited directly to unassigned surplus.

 

75

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Effective October 1, 2014, SLIC, prior to the merger, recaptured the business that was previously reinsured to TIRe, an affiliate, for which net consideration received was $19,000, funds withheld liability released was $572,468, policy and claims reserves recaptured were $869,488, and other assets recaptured were $34,500, resulting in a pre-tax loss of $243,519 which was 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 TIRe in the amount of $243,586 ($158,331 after-tax) with a corresponding charge to unassigned surplus.

Subsequently, October 1, 2014, SLIC ceded this business to Ironwood Re Corp. (IRC), an affiliate, for which net consideration paid was $19,000, a funds withheld liability of $572,468 was established, policy and claims reserves released were $869,660, and other assets released were $34,501, resulting in a pre-tax gain of $243,691 ($158,399 after-tax) which has been credited directly to unassigned surplus.

Effective June 30, 2014, the Company ceded level term life and universal life secondary guarantee business to TLIC Oakbrook Reinsurance, Inc., an affiliate, on a coinsurance funds withheld basis. The Company paid an initial reinsurance premium of $25,667, transferred other net assets of $1,852 and released life and claim reserves of $535,211 and $25,667, respectively, resulting in a pre-tax gain of $533,359 ($346,683 net of tax) which was credited directly to unassigned surplus on a net of tax basis.

Effective June 30, 2014, the Company ceded to Transamerica Premier Life Insurance Company on a YRT basis the net amount paid in excess of $3,000 on covered level term and universal life secondary guarantee policies. The Company paid an initial reinsurance premium of $858 and released reserves of $5,685 resulting in a pre-tax gain of $4,826 which has been included in the Statement of Operations.

During 2016, 2015 and 2014 amortization of deferred gains associated with previously transacted reinsurance agreements was released into income in the amount of $255,425 ($176,996 after tax), $133,048 ($106,755 after tax) and $175,042 ($114,198, net of tax), respectively.

The Company reports a reinsurance deposit receivable of $199,500 and $203,429 as of December 31, 2016 and 2015, respectively. In 1996, the Company entered into a reinsurance agreement with an unaffiliated company where, for a net consideration of $59,716, the Company ceded certain portions of future obligations under single premium annuity contracts originally written by the Company in 1993. Consistent with the requirements of SSAP No. 75, Reinsurance Deposit Accounting, the Company reports the net consideration paid as a deposit. The amount reported is the present value of the future payment streams discounted at the effective yield rate determined at inception.

During 2016, 2015 and 2014, the Company obtained letters of credit of $98,006, $242,957 and $123,006, respectively, for the benefit of affiliated and nonaffiliated companies that have reinsured business to the Company where the ceding company’s state of domicile does not recognize the Company as an authorized reinsurer.

 

76

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company reinsures a closed block of guaranteed minimum income benefit (GMIB), guaranteed minimum death benefit (GMDB), and guaranteed minimum withdrawal benefit (GMWB) risks to Firebird Re Corp. The affiliated reinsurance treaties have been in place for a number of years and do not include any new business since the inception but were initiated to better align hedging and capital requirements. The risk reinsured to the affiliated reinsurer is retained by the Transamerica group. The risks assumed by Firebird Re Corp. are all affiliated variable annuity treaties.

Variable annuity reserves established by Firebird Re Corp. are equal to the US GAAP reserve requirements. In addition, the captive establishes an additional variable annuity reserve above the US GAAP reserve to the greater of the mirror of the reserve ceded to the Captive (US statutory) and a total asset requirement (CTE 80) level. The TAR CTE80 is calculated assuming a 50% best estimate model (with hedge credit) and 50% stochastic model.

The Company took reserve credits for variable annuities of $746,339 and $790,284 in 2016 and 2015, respectively. The amount of collateral supporting the reserve credits was $730,545 and $776,072 in 2016 and 2015, respectively. All of the collateral held to support the reserve credit is funds withheld. The collateral is made up of bonds, cash and short-term assets.

The Company ceded modified coinsurance reserves of $4,536,010 and $4,236,392 as of December 31, 2016 and 2015, respectively, for certain stand-alone long-term care policies under the indemnity reinsurance agreement with TPLIC, an affiliate. Ceded losses incurred of $361,167 and $346,166 for years ended December 31, 2016 and 2015, respectively, are presented net within the claims development table in Note 1.

 

77

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

7. Income Taxes

The net deferred income tax asset at December 31, 2016 and 2015 and the change from the prior year are comprised of the following components:

 

     December 31, 2016  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 2,481,049      $ 215,092      $ 2,696,141  

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      2,481,049        215,092        2,696,141  

Deferred Tax Assets Nonadmitted

      515,901        —          515,901  
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      1,965,148        215,092        2,180,240  

Deferred Tax Liabilities

      1,152,105        164,291        1,316,396  
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ 813,043      $ 50,801      $ 863,844  
  

 

 

     

 

 

     

 

 

  
     December 31, 2015  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 2,057,430      $ 292,685      $ 2,350,115  

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      2,057,430        292,685        2,350,115  

Deferred Tax Assets Nonadmitted

      618,270        —          618,270  
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      1,439,160        292,685        1,731,845  

Deferred Tax Liabilities

      687,781        260,956        948,737  
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ 751,379      $ 31,729      $ 783,108  
  

 

 

     

 

 

     

 

 

  
            Change         
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 423,619      $ (77,593 )     $ 346,026  

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      423,619        (77,593 )       346,026  

Deferred Tax Assets Nonadmitted

      (102,369 )       —          (102,369 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      525,988        (77,593 )       448,395  

Deferred Tax Liabilities

      464,324        (96,665 )       367,659  
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ 61,664      $ 19,072      $ 80,736  
  

 

 

     

 

 

     

 

 

  

 

78

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Year Ended December 31         
     2016      2015      Change  

Deferred Tax Assets:

         

Ordinary

         

Discounting of unpaid losses

    $ 5,995      $ 2,382      $ 3,613  

Policyholder reserves

      936,738        769,309        167,429  

Investments

      570,496        471,638        98,858  

Deferred acquisition costs

      626,204        621,902        4,302  

Compensation and benefits accrual

      33,383        26,365        7,018  

Receivables - nonadmitted

      28,232        33,000        (4,768 ) 

Tax credit carry-forward

      222,313        67,359        154,954  

Section 197 Intangible Amortization

      —          6,250        (6,250 ) 

Corporate Provision

      —          474        (474 ) 

Assumption Reinsurance

      9,545        10,715        (1,170 ) 

CFC FTC Offset

      15,020        —          15,020  

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

      33,123        48,036        (14,913 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal

      2,481,049        2,057,430        423,619  

Nonadmitted

      515,901        618,270        (102,369 ) 
  

 

 

     

 

 

     

 

 

  

Admitted ordinary deferred tax assets

      1,965,148        1,439,160        525,988  

Capital:

         

Investments

      215,092        292,685        (77,593 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal

      215,092        292,685        (77,593 ) 

Nonadmitted

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Admitted capital deferred tax assets

      215,092        292,685        (77,593 ) 
  

 

 

     

 

 

     

 

 

  

Admitted deferred tax assets

    $ 2,180,240      $ 1,731,845      $ 448,395  
  

 

 

     

 

 

     

 

 

  

 

79

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Year Ended December 31         
     2016      2015      Change  

Deferred Tax Liabilities:

         

Ordinary

         

Investments

    $ 787,307      $ 565,039      $ 222,268  

Fixed assets

      40,867        26,944        13,923  

§807(f) adjustment

      75,844        64,659        11,185  

Separate Account Adjustments

      34,766        31,139        3,627  

CFC FTC Offset

      11,579        —          11,579  

Hedge Reserve Offset

      201,554        —          201,554  

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

      188        —          188  
  

 

 

     

 

 

     

 

 

  

Subtotal

      1,152,105        687,781        464,324  

Capital

         

Investments

      164,291        260,956        (96,665 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal

      164,291        260,956        (96,665 ) 
  

 

 

     

 

 

     

 

 

  

Deferred tax liabilities

      1,316,396        948,737        367,659  
  

 

 

     

 

 

     

 

 

  

Net deferred tax assets/liabilities

    $ 863,844      $ 783,108      $ 80,736  
  

 

 

     

 

 

     

 

 

  

The Company did not report a valuation allowance for deferred income tax assets as of December 31, 2016 or 2015.

The Company made a modification in 2015 to its groupings of DTAs and DTLs (as permitted under SSAP No. 101 Q&A 2.9). Prior to this change, the Company had DTAs and DTLs that were netted together within two specific categories of temporary differences. The Company determined, in accordance with its practice of recording DTAs and DTLs separately for purposes of application of SSAP No. 101, that it is more appropriate and consistent to present DTAs and DTLs with respect to 1) reserves and deferred and uncollected premiums and 2) bonds and derivatives on certain blocks of business.

 

80

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

As discussed in Note 1, for the years ended December 31, 2016 and 2015 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, 2016  
              

Ordinary

    Capital      Total  

Admission Calculation Components SSAP No. 101

         

2(a)

   

Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks

    $226,217    $ 30,862      $ 257,079  

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)

    550,512      56,253        606,765  
   1.   

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

    550,512      56,253        606,765  
   2.   

Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

    XXX      XXX        655,637  

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

    1,188,419      127,977        1,316,396  
        

 

   

 

 

     

 

 

  

2(d)

   

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

    $1,965,148    $ 215,092      $ 2,180,240  
        

 

   

 

 

     

 

 

  

 

81

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

               December 31, 2015  
              

Ordinary

    Capital     Total  

Admission Calculation Components SSAP No. 101

        

2(a)

   

Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks

    $286,447    $ 61,384     $ 347,831  

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)

    357,063      78,214       435,277  
   1.   

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

    357,063      78,214       435,277  
   2.   

Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

    XXX      XXX       717,412  

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

    795,650      153,087       948,737  
        

 

   

 

 

    

 

 

  

2(d)

   

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

    $1,439,160    $ 292,685     $ 1,731,845  
        

 

   

 

 

    

 

 

  
               Change  
              

Ordinary

    Capital     Total  

Admission Calculation Components SSAP No. 101

        

2(a)

   

Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks

    $(60,230)    $ (30,522 )    $ (90,752 ) 

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)

    193,449      (21,961 )      171,488  
   1.   

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

    193,449      (21,961 )      171,488  
   2.   

Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

    XXX      XXX       (61,775 ) 

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

    392,769      (25,110 )      367,659  
        

 

   

 

 

    

 

 

  

2(d)

   

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

    $525,988    $ (77,593 )    $ 448,395  
        

 

   

 

 

    

 

 

  

 

82

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31        
     2016     2015     Change  

Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount

      708 %      844 %      -136 % 
  

 

 

    

 

 

    

 

 

  

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

       
  

 

 

    

 

 

    

 

 

  

Limitation in 2(b)2 above

    $ 4,370,911     $ 4,700,489     $ (329,578 ) 
  

 

 

    

 

 

    

 

 

  

The impact of tax planning strategies at December 31, 2016 and 2015 was as follows:

 

     December 31, 2016  
     Ordinary
Percent		     Capital
Percent		     Total Percent  

Impact of Tax Planning Strategies:

       

(% of Total Adjusted Gross DTAs)

      0 %      0 %      0 % 
  

 

 

    

 

 

    

 

 

  

(% of Total Net Admitted Adjusted Gross DTAs)

      3 %      25 %      6 % 
  

 

 

    

 

 

    

 

 

  
     December 31, 2015  
     Ordinary
Percent		     Capital
Percent		     Total Percent  

Impact of Tax Planning Strategies:

       

(% of Total Adjusted Gross DTAs)

      0 %      36 %      4 % 
  

 

 

    

 

 

    

 

 

  

(% of Total Net Admitted Adjusted Gross DTAs)

      3 %      35 %      8 % 
  

 

 

    

 

 

    

 

 

  

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         
     2016      2015      Change  

Current Income Tax

         

Federal

    $ (101,440 )     $ (9,592 )     $ (91,848 ) 

Foreign

      (1 )       (26 )       25  
  

 

 

     

 

 

     

 

 

  

Subtotal

      (101,441 )       (9,618 )       (91,823 ) 
  

 

 

     

 

 

     

 

 

  

Federal income tax on net capital gains

      5,234        50,995        (45,761 ) 
  

 

 

     

 

 

     

 

 

  

Federal and foreign income taxes incurred

    $ (96,207 )     $ 41,377      $ (137,584 ) 
  

 

 

     

 

 

     

 

 

  

 

83

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Year Ended December 31         
     2015      2014      Change  

Current Income Tax

         

Federal

    $ (9,592 )     $ 258,554      $ (268,146 ) 

Foreign

      (26 )       —          (26 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal

      (9,618 )       258,554        (268,172 ) 
  

 

 

     

 

 

     

 

 

  

Federal income tax on net capital gains

      50,995        121,064        (70,069 ) 
  

 

 

     

 

 

     

 

 

  

Federal and foreign income taxes incurred

    $ 41,377      $ 379,618      $ (338,241 ) 
  

 

 

     

 

 

     

 

 

  

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income before tax as follows:

 

     Year Ended December 31  
     2016     2015     2014  

Current income taxes incurred

    $ (96,207 )    $ 41,377     $ 379,618  

Change in deferred income taxes

(without tax on unrealized gains and losses)

      (183,307 )      (300,764 )      331,883  
  

 

 

    

 

 

    

 

 

  

Total income tax reported

    $ (279,514 )    $ (259,387 )    $ 711,501  
  

 

 

    

 

 

    

 

 

  

Income before taxes

    $ 299,572     $ (181,353 )    $ 1,060,978  
     35 %      35 %      35 % 
  

 

 

    

 

 

    

 

 

  

Expected income tax expense (benefit) at 35% statutory rate

    $ 104,850     $ (63,474 )    $ 371,342  

Increase (decrease) in actual tax reported resulting from:

       

Dividends received deduction

      (74,012 )      (69,204 )      (46,828 ) 

Tax credits

      (25,037 )      (81,829 )      (37,788 ) 

Tax-exempt income

      (11 )      (7 )      —    

Tax adjustment for IMR

      669       (33,936 )      (16,620 ) 

Surplus adjustment for in-force ceded

      608       (40,327 )      76,692  

Nondeductible expenses

      1,049       976       1,264  

Deferred tax benefit on other items in surplus

      (233,112 )      (3,152 )      319,999  

Provision to return

      (2,177 )      (4,546 )      8,055  

Life-owned life insurance

      (2,966 )      (2,948 )      (3,132 ) 

Dividends from certain foreign corporations

      1,620       2,093       1,066  

Pre-tax income of single member limited liability company

      14,093       46,193       52,362  

Intercompany dividends

      (47,766 )      —         —    

Partnership permanent adjustment

      (1,913 )      (13,177 )      (11,764 ) 

Audit adjustment—Permanent

      (21,196 )      —         —    

Other

      5,787       3,951       (3,147 ) 
  

 

 

    

 

 

    

 

 

  

Total income tax reported

    $ (279,514 )    $ (259,387 )    $ 711,501  
  

 

 

    

 

 

    

 

 

  

 

84

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company’s federal income tax return is consolidated with other affiliated companies. Please see attached listing of companies in the 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 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 yet been filed for 2016.

As of December 31, 2016 and 2015, respectively, the Company had a $222,314 and $67,359 tax credit carryforward available for tax purposes. Included in the 2016 tax credit carryforward is a general business tax credit carryforward of $164,764.

 

Carryovers from:    Expiration:       

12-31-2010

    12-31-2030      21,817  

12-31-2011

    12-31-2031      45,391  

12-31-2012

    12-31-2032      28,827  

12-31-2013

    12-31-2033      22,676  

12-31-2014

    12-31-2034      20,601  

12-31-2015

    12-31-2035      20,931  

12-31-2016

    12-31-2036      4,521  

 

   

 

   

 

 

  

Standard GBC Carryovers

      164,764  

The Company also has an alternative minimum tax credit carryforward of $57,550 available for tax purposes that carries forward indefinitely. As of December 31, 2016 and 2015, the Company had no operating loss or capital loss carryfowards available for tax purposes.

The Company incurred income taxes of $0, $12,699, and $252,550 during 2016, 2015, and 2014, respectively, which will be available for recoupment in the event of future net losses.

The amount of tax contingencies calculated for the Company as of December 31, 2016 and 2015 is $9,763 and $4,152, respectively. The total amount of the tax contingencies that if recognized, would affect the effective income tax rate is $9,763. The Company classifies interest and penalties related to income taxes as income tax expense. The Company’s interest (benefit) expense related to income taxes for the years ending in December 31, 2016, 2015, and 2014 is $864, ($270), and $12,961, respectively. The total interest payable balance as of December 31, 2016 and 2015 is $10,768 and $9,903, respectively. The Company recorded no liability for penalties. It is not anticipated that the total amounts of unrecognized tax benefits will significantly increase within twelve months of the reporting date.

During 2016 the company modified its calculation of dividends that are eligible for the dividends received deduction. This resulted in recording a permanent tax benefit of $20,250 in the Company’s 2016 financial statements for years 2011 – 2015. This has been treated as a change in estimate, the impact on future years is not currently determinable.

 

85

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company’s federal income tax returns have been examined by the Internal Revenue Service and closing agreements have been executed through 2008. We expect receivables and payables for 2005-2008 to be settled in early 2017. An examination is in progress for the year 2009 through 2013. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions.

8. Policy and Contract Attributes

Participating life insurance policies were issued by the Company 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 approximately 0.05% of ordinary life insurance in force at December 31, 2016 and 2015, respectively.

For the years ended December 31, 2016, 2015 and 2014, premiums for life participating policies were $12,036, $13,196 and $14,110, respectively. The Company accounts for its policyholder dividends based on dividend scales and experience of the policies. The Company paid dividends in the amount of $5,967, $5,894 and $8,045 to policyholders during 2016, 2015 and 2014, respectively, and did not allocate any additional income to such policyholders.

 

86

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 and deposit fund products. There may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on these products, by withdrawal characteristics, is summarized as follows:

 

     December 31
2016		  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account Non-
Guaranteed		      Total      Percent  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

    $ 1,141,878      $ —        $ —        $ 1,141,878        1 % 

At book value less surrender charge of 5% or more

      273,919        —          —          273,919        0  

At fair value

      126,155        —          66,886,612        67,012,767        73  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total with adjustment or at fair value

      1,541,952        —          66,886,612        68,428,564        74  

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

      13,413,613        17,739        —          13,431,352        14  

Not subject to discretionary withdrawal provision

      10,732,102        41,507        38,256        10,811,865        12  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total annuity reserves and deposit liabilities

      25,687,667        59,246        66,924,868        92,671,781        100 % 
              

 

 

  

Less reinsurance ceded

      4,680,333        —          —          4,680,333     
  

 

 

     

 

 

     

 

 

     

 

 

     

Net annuity reserves and deposit liabilities

    $ 21,007,334      $ 59,246      $ 66,924,868      $ 87,991,448     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

87

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31
2015		  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account Non-
Guaranteed		      Total      Percent  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

    $ 1,275,215      $ —        $ —        $ 1,275,215        1 % 

At book value less surrender charge of 5% or more

      250,597        —          —          250,597        0  

At fair value

      134,954        —          63,388,970        63,523,924        69  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total with adjustment or at fair value

      1,660,766        —          63,388,970        65,049,736        72  

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

      14,346,775        34,954        —          14,381,729        16  

Not subject to discretionary withdrawal provision

      11,126,108        43,311        38,287        11,207,706        12  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total annuity reserves and deposit liabilities

      27,133,649        78,265        63,427,257        90,639,171        100 % 
              

 

 

  

Less reinsurance ceded

      9,235,531        —          —          9,235,531     
  

 

 

     

 

 

     

 

 

     

 

 

     

Net annuity reserves and deposit liabilities

    $ 17,898,118      $ 78,265      $ 63,427,257      $ 81,403,640     
  

 

 

     

 

 

     

 

 

     

 

 

     

The Company’s liability for deposit-type contracts includes GIC’s and Funding Agreements assumed from Transamerica Premier Life Insurance Company, an affiliate. The liabilities assumed are $0 and $167,933 at December 31, 2016 and 2015, respectively.

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.

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.

 

88

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Information regarding the separate accounts of the Company as of and for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2016

    $ —        $ 64      $ 10,970      $ 8,767,639      $ 8,778,673  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts as of December 31, 2016 with assets at:

               

Fair value

    $ —        $ 21,505      $ 20,001      $ 70,154,420      $ 70,195,926  

Amortized cost

      —          633,674        —          —          633,674  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total as of December 31, 2016

    $ —        $ 655,179      $ 20,001      $ 70,154,420      $ 70,829,600  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2016:

               

Subject to discretionary withdrawal

    $ —        $ —        $ —        $ —        $ —    

With fair value adjustment

      —          —          —          —          —    

At fair value

      —          —          —          70,116,163        70,116,163  

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

      —          633,674        —          —          633,674  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Subtotal

      —          633,674        —          70,116,163        70,749,837  

Not subject to discretionary withdrawal

      —          21,505        20,001        38,257        79,763  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total separate account reserve liabilities at December 31, 2016

    $ —        $ 655,179      $ 20,001      $ 70,154,420      $ 70,829,600  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

89

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2015

    $ —        $ 31      $ 9,244      $ 12,203,423      $ 12,212,698  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts as of December 31, 2015 with assets at:

               

Fair value

    $ —        $ 19,818      $ 23,493      $ 66,606,612      $ 66,649,923  

Amortized cost

      —          633,332        —          —          633,332  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total as of December 31, 2015

    $ —        $ 653,150      $ 23,493      $ 66,606,612      $ 67,283,255  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2015:

               

Subject to discretionary withdrawal

    $ —        $ —        $ —        $ —        $ —    

With fair value adjustment

      —          —          —          —          —    

At fair value

      —          —          —          66,568,326        66,568,326  

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

      —          633,332        —          —          633,332  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Subtotal

      —          633,332        —          66,568,326        67,201,658  

Not subject to discretionary withdrawal

      —          19,818        23,493        38,286        81,597  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total separate account reserve liabilities at December 31, 2015

    $ —        $ 653,150      $ 23,493      $ 66,606,612      $ 67,283,255  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

90

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2014

    $ —        $ 53      $ 11,846      $ 13,127,469      $ 13,139,368  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts as of December 31, 2014 with assets at:

               

Fair value

    $ —        $ 20,574      $ 35,038      $ 65,194,925      $ 65,250,537  

Amortized cost

      —          634,931        —          —          634,931  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total as of December 31, 2014

    $ —        $ 655,505      $ 35,038      $ 65,194,925      $ 65,885,468  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2014:

               

Subject to discretionary withdrawal

    $ —        $ —        $ —        $ —        $ —    

With fair value adjustment

      —          —          —          —          —    

At fair value

      —          —          —          65,152,722        65,152,722  

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

      —          634,931        —          —          634,931  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Subtotal

      —          634,931        —          65,152,722        65,787,653  

Not subject to discretionary withdrawal

      —          20,574        35,038        42,203        97,815  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total separate account reserve liabilities at December 31, 2014

    $ —        $ 655,505      $ 35,038      $ 65,194,925      $ 65,885,468  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

 

     Year Ended December 31  
     2016      2015      2014  

Transfer as reported in the summary of operations of the separate accounts statement:

         

Transfers to separate accounts

    $ 8,767,931      $ 12,204,163      $ 13,127,680  

Transfers from separate accounts

      (7,872,107 )       (8,389,740 )       (6,499,970 ) 
  

 

 

     

 

 

     

 

 

  

Net transfers to separate accounts

      895,824        3,814,423        6,627,710  

Miscellaneous reconciling adjustments

      469,247        1,337,434        1,882,846  
  

 

 

     

 

 

     

 

 

  

Net transfers as reported in the statements of operations of the life, accident and health annual statement

    $ 1,365,071      $ 5,151,857      $ 8,510,556  
  

 

 

     

 

 

     

 

 

  

 

91

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016 and 2015, the Company’s separate account statement included legally insulated assets of $73,597,682 and $72,128,772, respectively. The assets legally insulated from general account claims at December 31, 2016 and 2015 are attributed to the following products:

 

     2016      2015  

Group annuities

    $ 24,388,135      $ 24,948,800  

Variable annuities

      44,163,304        42,603,715  

Fixed universal life

      729,291        695,852  

Variable universal life

      4,212,641        3,602,521  

Variable life

      37,918        196,411  

Modified separate accounts

      53,201        70,353  

Registered Market Value Annuity Product - SPL

      13,192        11,120  
  

 

 

     

 

 

  

Total separate account assets

    $ 73,597,682      $ 72,128,772  
  

 

 

     

 

 

  

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. As of December 31, 2016 and 2015, the general account of the Company had a maximum guarantee for separate account liabilities of $2,852,548 and $3,029,017 respectively. To compensate the general account for the risk taken, the separate account paid risk charges of $483,307, $434,084, $342,823, $242,109, and $180,478 to the general account in 2016, 2015, 2014, 2013, and 2012, respectively. During the years ended December 31, 2016, 2015, 2014, 2013, and 2012 the general account of the Company had paid $77,232, $223,304, $35,985, $30,830, and $61,901 respectively, toward separate account guarantees.

At December 31, 2016 and 2015, the Company reported guaranteed separate account assets at amortized cost in the amount of $672,491 and $668,367, respectively, based upon the prescribed practice granted by the State of Iowa as described in Note 2. These assets had a fair value of $709,808 and $695,578 at December 31, 2016 and 2015, respectively, which would have resulted in an unrealized gain of $37,317 and $27,211, respectively, had these assets been reported at fair value.

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

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with Actuarial Guideline XLIII (AG 43), which replaces Actuarial Guidelines 34 and 39. AG 43 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The AG 43 reserve calculation includes variable annuity products issued after January 1, 1981. 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 AG 43 is equal to the conditional tail expectation (CTE) Amount, but not less than the standard scenario amount (SSA).

 

92

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

To determine the CTE Amount, the Company used 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) produced in October 2005 and prudent estimate assumptions based on Company experience. The SSA was determined using the assumptions and methodology prescribed in AG 43 for determining the SSA.

At December 31, 2016 and 2015, the Company had variable and separate account annuities with minimum guaranteed benefits as follows:

 

Benefit and Type of Risk

    Subjected
Account
Value		      Gross
Amount of
Reserve Held		      Reinsurance
Reserve
Credit		  

December 31, 2016

         

Minimum guaranteed death benefit

    $ 9,966,666      $ 341,249      $ 173,898  

Minimum guaranteed income benefit

      4,095,173        957,867        769,259  

Guaranteed premium accumulation fund

      235,183        25,312        —    

Minimum guaranteed withdrawal benefit

      33,170,833        371,165        15,601  

December 31, 2015

         

Minimum guaranteed death benefit

    $ 9,824,534      $ 305,392      $ 205,460  

Minimum guaranteed income benefit

      3,845,600        585,083        921,716  

Guaranteed premium accumulation fund

      266,040        24,086        —    

Minimum guaranteed withdrawal benefit

      32,000,725        255,044        (72 ) 

Reserves on the Company’s traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policies’ paid-through date to the policies’ next anniversary date. At December 31, 2016 and 2015, the gross premium and loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:

 

     Gross      Loading      Net  

December 31, 2016

         

Life and annuity:

         

Ordinary first-year business

    $ 5,026      $ 1,336      $ 3,690  

Ordinary renewal business

      775,352        10,855        764,497  

Group life direct business

      44,988        9,649        35,339  

Credit direct business

      556        —          556  

Reinsurance ceded

      (687,316 )       —          (687,316 ) 
  

 

 

     

 

 

     

 

 

  
   $ 138,606      $ 21,840      $ 116,766  

Accident and health

      32,651        —          32,651  
  

 

 

     

 

 

     

 

 

  
   $ 171,257      $ 21,840      $ 149,417  
  

 

 

     

 

 

     

 

 

  

 

93

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Gross      Loading      Net  

December 31, 2015

         

Life and annuity:

         

Ordinary first-year business

    $ 5,595      $ 5,322      $ 273  

Ordinary renewal business

      526,286        11,110        515,176  

Group life business

      49,752        10,235        39,517  

Credit direct business

      1,214        —          1,214  

Reinsurance ceded

      (459,372 )       —          (459,372 ) 
  

 

 

     

 

 

     

 

 

  
   $ 123,475      $ 26,667      $ 96,808  

Accident and health

      42,708        —          42,708  
  

 

 

     

 

 

     

 

 

  
   $ 166,183      $ 26,667      $ 139,516  
  

 

 

     

 

 

     

 

 

  

Amounts recorded as supplementary contracts without life contingencies of $3,370,720 and $2,738,140 at December 31, 2016 and 2015, respectively, are subject to discretionary withdrawals without adjustments.

The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Health Contracts. As of December 31, 2016 and 2015, the Company had insurance in force aggregating $108,217,769 and $96,861,149, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Iowa Insurance Division. The Company established policy reserves of $1,636,310 and $1,588,202 to cover these deficiencies as of December 31, 2016 and 2015, respectively.

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.

9. Capital and Surplus

The Company is subject to limitations, imposed by the State of Iowa, on the payment of dividends to its shareholders. 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 2017, without the prior approval of insurance regulatory authorities, is $779,799.

On December 22, 2016, the Company paid a preferred stock dividend of $35,630 and a cash return of capital of $314,056 to its parent. In addition, the Company paid $314 representing the redemption of 31,437 shares of Series B non-voting preferred stock at par value to its parent also on December 22, 2016.

 

94

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

On June 20, 2016 the Company paid a preferred stock dividend of $104,555 and an ordinary common stock dividend of $245,445 to its parent company.

On December 22, 2015, the Company paid a cash return of capital of $300,000 to its parent. The Company did not pay any ordinary dividends during 2015.

On September 28, 2016 the Company made a capital contribution in the amount of $2,500 to TWRI in exchange for 25,000 common shares of TWRI. The Company also made an additional capital contribution to TWRI of $122,500 on September 28, 2016.

The Company received a capital contribution of $10 from TIHI on March 31, 2015.

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 the various risk factors related to it. At December 31, 2016, the Company meets the minimum RBC requirements.

On September 30, 2002, Life Investors Insurance Company of America (LIICA), which merged in to the Company effective October 2, 2008, received $150,000 from TA Corp in exchange for surplus notes. These notes are due 20 years from the date of issuance at an interest rate of 6%, and are subordinate and junior in right of payment to all obligations and liabilities of the Company. In the event of liquidation of the Company, the holders of the issued and outstanding preferred stock shall be entitled to priority only with respect to accumulated but unpaid dividends before the holder of the surplus notes and full payment of the surplus notes shall be made before the holders of common stock become entitled to any distribution of the remaining assets of the Company. The Company received approval from the Iowa Insurance Division prior to paying quarterly interest payments.

Additional information related to the outstanding surplus notes at December 31, 2016 and 2015 is as follows:

 

For Year

Ending

    Balance
Outstanding		      Interest
Paid
Current
Year		      Cumulative
Interest
Paid		      Accrued
Interest		  

2016

    $ 150,000      $ 9,000      $ 126,000      $ 2,250  

2015

    $ 150,000      $ 9,000      $ 117,000      $ 2,250  

10. Securities Lending

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

 

95

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements –  Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, respectively, securities with a fair value of $2,251,377 and $2,692,737 were on loan under securities lending agreements. At December 31, 2016, 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 $2,303,603 and $2,760,922 at December 31, 2016 and 2015, respectively.

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

 

     Fair Value  

Open

    $ 2,303,289  

30 days or less

      —    

31 to 60 days

      —    

61 to 90 days

      —    

Greater than 90 days

      —    
  

 

 

  

Total

      2,303,289  

Securities received

      —    
  

 

 

  

Total collateral received

    $ 2,303,289  
  

 

 

  

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:

 

     Amortized Cost      Fair Value  

Open

    $ 349,742      $ 349,742  

30 days or less

      1,045,472        1,045,472  

31 to 60 days

      320,865        320,865  

61 to 90 days

      200,597        200,597  

91 to 120 days

      110,054        110,054  

121 to 180 days

      276,873        276,873  
  

 

 

     

 

 

  

Total

      2,303,603        2,303,603  

Securities received

      —          —    
  

 

 

     

 

 

  

Total collateral reinvested

    $ 2,303,603      $ 2,303,603  
  

 

 

     

 

 

  

For securities lending, the Company’s sources of cash that it uses to return the cash collateral are dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $2,304,719 (fair value of $2,303,603) that are currently tradable securities that could be sold and used to pay for the $2,303,289 in collateral calls that could come due under a worst-case scenario.

 

96

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

11. Retirement and Compensation Plans

The Company’s employees participate in a qualified defined benefit pension plan sponsored by Transamerica. 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 Company recognizes pension expense equal to its allocation from Transamerica. The pension expense 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. 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 the Employee Retirement Income Security Act of 1974. Pension expenses were $35,812, $32,799 and $29,648 for the years ended December 31, 2016, 2015 and 2014, respectively.

The Company’s employees participate in a contributory defined contribution plan sponsored by Transamerica, the Company’s parent, 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. The Company’s allocation of benefits expense was $15,745, $16,439 and $14,742 for the years ended December 31, 2016, 2015 and 2014 respectively.

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 Service Code. In addition, 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, 2016, 2015 and 2014 was insignificant. TA Corp also sponsors an employee stock option plan/stock appreciation rights for employees of the Company and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been funded as deemed appropriate by management of TA Corp and the Company.

In addition to pension benefits, the Company participates in plans sponsored by TA Corp that provide postretirement medical, dental and life insurance benefits to 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. The Company expensed $6,527, $6,361 and $6,609 related to these plans for the years ended December 31, 2016, 2015 and 2014, respectively.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company announced an update of its restructuring plan in December 2016 that includes a significant number of position eliminations. Affected employees were offered a severance package contingent upon completion of the terms of their employment. In accordance with SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets, an expense was accrued in 2016 for the severance benefit of $21,615.

During December 2015, the Company offered select employees the opportunity to participate in the Transamerica Voluntary Separation Incentive Plan (VSIP). Eligible employees were given until January 18, 2016 to make an election. Following SSAP No. 11, Postemployment Benefits and Compensated Absences, and SSAP No. 5R, an expense was accrued in 2015 for the post-employment benefit in the amount of $34,824. The remaining accrual balance at the year ended December 31, 2016 was $5,876.

12. Related Party Transactions

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

The Company is party to a common cost allocation service agreement between TA Corp companies, in 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. The Company is also party to a service agreement with TFLIC, in which the Company provides services, including accounting, data processing and other professional services, in consideration of reimbursement of the actual costs of services rendered. The Company is also a party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the advisor serves as the administrator and advisor for the Company’s mortgage loan operations. AEGON USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. The amount received by the Company as a result of being a party to these agreements was $993,182 $802,298 and $1,144,599 during 2016, 2015 and 2014, respectively. The amount paid as a result of being a party to these agreements was $610,754, $445,462 and $859,389 during 2016, 2015 and 2014, respectively. Fees charged between affiliates approximate their cost. The Company has an administration service agreement with Transamerica Asset Management, Inc. to provide administrative services to the AEGON/Transamerica Series Trust. The Company received $136,494, $133,831 and $124,653 for these services during 2016, 2015 and 2014, respectively.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $56,076, $71,184 and $143,027 for the years ended December 31, 2016, 2015 and 2014, respectively.

Receivables from and payables to affiliates bear interest at the thirty-day commercial paper rate. During 2016, the Company received net interest of $63 from affiliates. During 2015 and 2014, the Company paid net interest of $90 and $50, respectively, to affiliates. At December 31, 2016 and 2015, respectively, the Company reported receivables from affiliates of $111,305 and $59,963. At December 31, 2016 and 2015, respectively, the Company reported payables to affiliates of $115,256 and $18,965. Terms of settlement require that these amounts are settled within 90 days.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016, the Company had no short-term intercompany notes receivable. At December 31, 2015, the Company had short-term intercompany notes receivable of $278,771 as follows. In accordance with SSAP No. 25, Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties, these notes are reported as short-term investments.

 

Receivable from

    Amount      Due By      Interest Rate  

Transamerica Corporation

    $ 254,271        October 27, 2016        0.25 % 

Transamerica Corporation

      24,500        October 28, 2016        0.25 % 

During 1998, the Company issued life insurance policies to two affiliated companies, covering the lives of certain employees of those affiliates. Aggregate reserves for policies and contracts related to these policies are $165,912 and $162,440 at December 31, 2016 and 2015, respectively.

In prior years, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2016 and 2015, the cash surrender value of these policies was $171,075 and $167,132, respectively.

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

 

Real Estate Alternatives Portfolio 2, LLC (REAP 2)

    $ 33,145  

Real Estate Alternatives Portfolio 3, LLC (REAP 3)

    $ 65,966  

Real Estate Alternatives Portfolio 4 HR, LLC (REAP 4 HR)

    $ 116,110  

SB Frazer Owner, LLC (SB Frazer)

    $ 1,203  

The financial statements for these entities 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 of SCA entities and/or non-SCA SSAP No. 48 entities owned by REAP 2, REAP 3, REAP 4 HR, and SB Frazer, and valued in accordance with the relevant paragraphs of SSAP No. 97. All liabilities, commitments, contingencies, guarantees, or obligations of REAP 2, REAP 3, REAP 4 HR, and SB Frazer, 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 REAP 2, REAP 3, REAP 4HR, and SB Frazer, if not already recorded in the financial statements of REAP 2, REAP 3, REAP 4HR, and SB Frazer.

 

99

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table shows the disclosures for all SCA investments, except 8bi entities, and balance sheet value (admitted and nonadmitted) as of December 31, 2016:

 

     Percentage of     Gross      Admitted      Nonadmitted  

SCA Entity

    SCA Ownership     Amount      Amount      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

           

REAL ESTATE ALTERN PORT 3A INC

      53.60 %    $ 17,252      $ 17,252      $ —    

GARNET ASSURANCE CORP

      100.00       —          —          —    

LIFE INVESTORS ALLIANCE LLC

      100.00       —          —          —    

ASIA INVESTMENT HOLDING LTD

      100.00       —          —          —    

AEGON FINANCIAL SERVICES GROUP

      100.00       —          —          —    

GARNET ASSURANCE CORP III

      100.00       —          —          —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8b(iii) Entities

      XXX     $ 17,252      $ 17,252      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

SSAP No. 97 8b(iv) Entities

           

TRANSAMERICA LIFE (BERMUDA) LTD

      94.07 %    $ 924,100      $ 924,100      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8b(iv) Entities

      XXX     $ 924,100      $ 924,100      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

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

      XXX     $ 941,352      $ 941,352      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Aggregate Total

      XXX     $ 941,352      $ 941,352      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

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

                  

REAL ESTATE ALTERN PORT 3A INC

      S2        12/8/2016      $ 20,592        Y        N        I  

GARNET ASSURANCE CORP

      NA           —          N        N        I  

LIFE INVESTORS ALLIANCE LLC

      NA           —          N        N        I  

ASIA INVESTMENT HOLDING LTD

      NA           —          N        N        I  

AEGON FINANCIAL SERVICES GROUP

      NA           —          N        N        I  

GARNET ASSURANCE CORP III

      NA           —          N        N        I  
        

 

 

           

Total SSAP No. 97 8b(iii) Entities

      —          —        $ 20,592        —          —          —    
        

 

 

           

SSAP No. 97 8b(iv) Entities

                  

TRANSAMERICA LIFE (BERMUDA) LTD

      NA         $ 924,100        N        N        I  
        

 

 

           

Total SSAP No. 97 8b(iv) Entities

      —          —        $ 924,100        —          —          —    
        

 

 

           

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

      —          —        $ 944,692        —          —          —    
        

 

 

           

Aggregate Total

      —          —        $ 944,692        —          —          —    
        

 

 

           

 

* S1 – Sub1, S2 – Sub2 or RDF – Resubmission of Disallowed Filing
** I – Immaterial or M – Material

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 letter of credit provided by an unaffiliated company, whereas this would not be an admitted asset recognized by SSAP No. 4, Assets and Non Admitted Assets.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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  
                          If the Insurance  
                          SCA Had  
     Net             Per      Completed  
     Income      Surplus      Reported      Statutory  
SCA Entity    Increase      Increase      Statutory      Financial  

(Investments in Insurance SCA Entities)

    (Decrease)      (Decrease)      Equity      Statements*  

LIICA Re II

    $ —        $ (120,000 )     $ 107,327      $ —    

Pine Falls Re

      —          (1,181,330 )       368,914        —    

Stonebridge Reinsurance Company

      —          (900,422 )       84,068        —    

MLIC Re

      —          (990,000 )       420,607        —    

 

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

The above SCA entities had not been permitted to include a letter of credit as an admitted asset recognized in the financial statements, the risk- based capital would have been below the mandatory control level. If the RBC for each of the insurance SCA entities listed above would have triggered a regulatory event had they not used a prescribed practice.

13. Commitments and Contingencies

At December 31, 2016 and 2015, the Company has mortgage loan commitments of $24,877 and $3,000, respectively.

The Company has contingent commitments for $809,291 and $374,233 as of December 31, 2016 and 2015, respectively, to provide additional funding for various joint ventures, partnerships, and limited liability companies, which includes LIHTC commitments of $48,742 and $8,611, respectively.

The company leases office buildings under various non-cancelable operating lease agreements. Rental expense for years 2016 and 2015 was $12,837 and $13,009, respectively. The minimum aggregate rental commitments are as follows:

 

Year

    Amount  

2017

    $ 14,987  

2018

      11,738  

2019

      8,314  

2020

      8,445  

2021

      8,265  

The Company is not involved in any material sales-leaseback transactions. Leasing (lessor leasing) is not a significant part of the Company’s business activities in terms of revenue, net income or assets.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the Company has private placement commitments outstanding of $21,679 and $69,000, respectively.

The Company sold $5,858 of securities on a TBA basis as of December 31, 2016. Due to different counterparties, the receivable related to these TBAs was not reclassed. The Company sold $209,176 securities on a TBA basis as of December 31, 2015. The receivable related to these TBAs was reclassed. Note 5, Investments, provides details on the offsetting and netting of assets and liabilities related to this transaction.

The Company may pledge assets as collateral for derivative transactions. At December 31, 2016 and 2015, the Company has pledged invested assets with a carrying value of $989,453 and $314,892, respectively, and fair value of $1,081,242 and $349,075, respectively, in conjunction with these transactions.

Cash collateral received from derivative counterparties as well as the obligation to return the collateral is recorded on the Company’s balance sheet. The amount of cash collateral received as of December 31, 2016 and 2015, respectively, was $714,431 and $1,057,821. In addition, securities in the amount of $198,786 and $339,479 were also posted to the Company as of December 31, 2016 and 2015, respectively, which were not included on the balance sheet of the Company as the Company does not have the ability to sell or repledge the collateral.

The Company may pledge assets as collateral for transactions involving funding agreements. At December 31, 2016 and 2015, the Company has pledged invested assets with a carrying amount of $42,588 and $45,928 respectively, and fair value of $44,079 and $48,843 respectively, in conjunction with these transactions

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. The Company did not recognize a liability for the low income housing tax credit guarantees at December 31, 2016 or 2015, as the maximum potential amount of future payments the Company could be required to make is immaterial to the Company’s financial results. 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. The maximum potential amount of future payments (undiscounted) that the Company could be required to make under these guarantees was $59 and $88 at December 31, 2016 and 2015, respectively. No payments are required as of December 31, 2016. The current assessment of risk of making payments under these guarantees is remote.

The Company has guaranteed to the Monetary Authority of Singapore (MAS) that it will provide adequate funds to make up for any liquidity shortfall in its wholly-owned foreign life insurance subsidiary, TLB (Singapore Branch), and continues to meet, pay and settle all present and future obligations of TLB. As of December 31, 2016, there is no payment or performance risk because TLB has adequate liquidity as of this date.

 

103

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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, defined as 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, 2016, 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 S&P 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. TLIC can terminate this agreement upon thirty days written notice, but not until TLB attains a rating from S&P 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 TLIC’s then current rating or AA, whichever is lower. As of December 31, 2016, 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 three 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, 2016 and 2015, TLB holds related statutory-basis policy and claim reserves of $1,880,923 and $1,567,299, 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, 2016, 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, 2016 and 2015, TLB holds related statutory-basis policy and claim reserves of $3,005,979 and 2,587,349, 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, 2016, there is no payment or performance risk because TLB is not insolvent as of this date.

 

104

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company did not recognize a liability for any of the TLB guarantees due to the adoption of SSAP No. 5R at December 31, 2016 or 2015, 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.

Effective July 1, 2016, the Company became 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 $260 under this agreement in 2016.

The Company has provided guarantees for the obligations of noninsurance affiliates who have accepted assignments of structured settlement payment obligations from other insurers and purchased structured settlement insurance policies from subsidiaries of the Company that match those obligations. The guarantees made by the Company are specific to each structured settlement contract and vary in date and duration of the obligation. These are numerous and are backed by the reserves established by the Company to represent the present value of the future payments for those contracts. The statutory reserve established at December 31, 2016 and 2015 for the total payout block is $3,363,290 and $3,448,503, respectively. As this reserve is already recorded on the balance sheet of the Company, there was no additional liability recorded due to the adoption of SSAP No. 5R.

The following table provides an aggregate compilation of guarantee obligations as of December 31, 2016 and 2015:

 

     December 31  
     2016      2015  

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

    $ 4,886,961      $ 4,154,736  
  

 

 

     

 

 

  

Current liability recognized in financial statements:

      

Noncontingent liabilities

      —          —    
  

 

 

     

 

 

  

Contingent liabilities

      —          —    
  

 

 

     

 

 

  

Ultimate financial statement impact if action required:

      

Incurred claims

      4,886,902        4,154,648  

Other

      59        88  
  

 

 

     

 

 

  

Total impact if action required

    $ 4,886,961      $ 4,154,736  
  

 

 

     

 

 

  

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 $4,614,389. The Company calculated this amount in accordance with the terms and conditions of agreement with FHLB of Des Moines.

 

105

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the Company purchased/owned the following FHLB stock as part of the agreement:

 

     Year Ended December 31  
     2016      2015  

Membership Stock:

      

Class A

    $ —        $ —    

Class B

      10,000        10,000  

Activity Stock

      166,800        94,000  

Excess Stock

      —          —    
  

 

 

     

 

 

  

Total

      $176,800        $104,000  
  

 

 

     

 

 

  

At December 31, 2016, 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		  

Membership Stock

            

Class A

    $ —        $ —        $ —        $ —    

Class B

      —          —          —          10,000  

Total

    $ —        $ —        $ —        $ 10,000  

At December 31, 2016 and 2015, the amount of collateral pledged to the FHLB was as follows:

 

     Fair Value      Carry Value  

December 31, 2016

      

Total Collateral Pledged

    $ 5,344,860      $ 5,155,703  

 

     Fair Value      Carry Value  

Decemeber 31, 2015

      

Total Collateral Pledged

    $ 3,463,755      $ 3,299,057  

During 2016 and 2015, the maximum amount pledged to the FHLB during reporting period was as follows:

 

     Fair Value      Carry Value  

2016

      

Maximum Collateral Pledged

    $ 5,344,860      $ 5,155,703  

 

     Fair Value      Carry Value  

2015

      

Maximum Collateral Pledged

    $ 3,841,327      $ 3,554,195  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the borrowings from the FHLB were as follows:

 

            Funding  
            Agreements  
     General      Reserves  
     Account      Established  

December 31, 2016

      

Debt

    $ 1,820,000      $ —    

Funding agreements

      2,350,000        2,350,742  

Other

      —          —    
  

 

 

     

 

 

  

Total

    $ 4,170,000        $2,350,742  
  

 

 

     

 

 

  

 

            Funding  
            Agreements  
     General      Reserves  
     Account      Established  

December 31, 2015

      

Debt

    $ —        $ —    

Funding agreements

      2,350,000        1,450,418  

Other

      108,156        —    
  

 

 

     

 

 

  

Total

    $ 2,458,156      $ 1,450,418  
  

 

 

     

 

 

  

During 2016, the maximum amount of borrowings during reporting period was as follows:

 

     General
Account		  

2016

   

Debt

    $ 1,820,000  

Funding agreements

      2,350,000  

Other

      —    
  

 

 

  

Total

    $ 4,170,000  
  

 

 

  

At December 31, 2016 the prepayment penalties information is as follows:

 

     Does the Company have
prepayment obligations
under the following
arrangements (yes/no)?
Debt    NO
Funding Agreements    NO
Other    N/A

 

107

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company has issued synthetic GIC contracts to benefit plan sponsors totaling $2,704,658 and $2,503,747 as of December 31, 2016 and 2015, respectively. A synthetic GIC is an off-balance sheet fee-based product sold primarily to tax qualified plans. The plan sponsor retains ownership and control of the related plan assets. The Company provides book value benefit responsiveness in the event that qualified plan benefit requests exceed plan cash flows. In certain contracts, the Company agrees to make advances to meet benefit payment needs and earns a market interest rate on these advances. The periodically adjusted contract-crediting rate is the means by which investment and benefit responsive experience is passed through to participants. In return for the book value benefit responsive guarantee, the Company receives a premium that varies based on such elements as benefit responsive 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 to ensure appropriate credit quality and cash flow. Funding requirements to date have been minimal and management does not anticipate any future material funding requirements that would have a material impact on reported financial results. To comply with statutory guidelines no related reserves have been recorded at December 31, 2016.

The Company has guaranteed the full faith and complete performance of Mid-West National Life Insurance Company of Tennessee (Mid-West), an unaffiliated company, through execution of a Cut-Through Endorsement and Substitution Agreement and a Stop-Loss Reinsurance Agreement, with respect to the obligations of Mid-West on a block of annuity contracts assumed by Mid-West from Mutual Security Life Insurance Company in Liquidation (Transferred Contracts). The Company agrees to substitute itself in Mid-West’s place with respect to the Transferred Contracts if Mid-West fails to perform any of the terms, duties, and conditions of the reinsurance agreement between Mid-West and Mutual Security Life Insurance Company. This guarantee is in force until all duties and obligations of the Transferred Contracts and the agreements have been completely satisfied. Wilton Reinsurance Company has agreed to reimburse TLIC for any payments made. As of December 31, 2016, the most recent reserve balance reported to the Company (as of September 30, 2016) is $8,290. As of December 31, 2016, the Company does not anticipate future action under the guarantee will be required.

The Company is a party to legal proceedings involving a variety of issues incidental to its business, including class actions. Lawsuits may be brought in nearly 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 its complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

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 sheet. 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 $20,034 and $6,375 and an offsetting premium tax benefit of $13,593 and $3,205 at December 31, 2016 and 2015, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund (benefit) expense was $6,142, $1,112 and $(57), for the years ended December 31, 2016, 2015 and 2014, respectively.

 

108

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

The Company has recorded liabilities of $91,808 and $90,299 for municipal repurchase agreements as of December 31, 2016 and 2015, respectively. The repurchase agreements are primarily collateralized by investment-grade corporate bonds with book values of $147,444 and $109,792, respectively, and fair values of $156,407 and $114,644, respectively, as of December 31, 2016 and 2015. These securities have maturity dates that range from 2017 to 2097.

For 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.

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2016 and 2015, the Company had dollar repurchase agreements outstanding in the amount of $453,474 and $705,253, respectively. The Company had an outstanding liability for borrowed money in the amount $445,656 and $496,529, which included accrued interest of $1,217 and $1,941, at December 31, 2016 and 2015, respectively due to participation in dollar repurchase agreements.

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

 

     Fair Value  

Open

    $ 444,439  

30 days or less

      —    

31 to 60 days

      —    

61 to 90 days

      —    

Greater than 90 days

      —    
  

 

 

  

Total

      444,439  

Securities received

      —    
  

 

 

  

Total collateral received

    $ 444,439  
  

 

 

  

 

109

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 2016 and reacquired within 30 days of the sale date are:

 

     Number of
Transactions		      Book Value of
Securities
Sold		      Cost of
Securities
Repurchased		      Gain/(Loss)  

Bonds:

            

NAIC 4

      1      $ 1,071      $ 1,067      $ 4  

Common stocks:

            

NAIC L

      2      $ 8      $ 8      $ 1  

15. Reconciliation to Statutory Statement

The following is a reconciliation of amounts previously reported to the Iowa Department of Financial Regulation in the 2016 Annual Statement, to those reported in the accompanying statutory-basis financial statements:

 

     December 31,
2016		  

Balance Sheet

   

Total assets as reported in the Company’s Annual Statement

    $ 131,790,028  

Increase in receivable from parent, subsidiaries and affiliates

      111,305  

Decrease in other invested asset receivable

      (111,305 ) 
  

 

 

  

Total assets as reported in the accompanying audited statutory basis balance sheet

    $ 131,790,028  
  

 

 

  

Statement of Cash Flow

   

Investing activities

   

Total net cash from investing activities in the Company’s Annual Statement

    $ (1,613,038 ) 

Decrease in miscellaneous applications

      111,610  
  

 

 

  

Total net cash from investing activities as reported in the accompanying audited statutory basis statement of cash flow

    $ (1,501,428 ) 

Financing and miscellaneous activities

   

Total net cash from financing and miscellaneous sources in the Company’s Annual Statement

    $ 625,357  

Increase in change in receivable from parent, subsidaries, and affiliates

      (111,610 ) 
  

 

 

  

Total net cash from financing and miscellaneous sources as reported in the accompanying audited statutory basis statement of cash flow

    $ 513,747  

In the 2016 Annual Statement, a receivable was incorrectly classified as an other invested asset rather than a receivable from parent, subsidiaries and affiliates.

 

110

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

16. 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 issued, provided they give evidence of conditions that existed at the balance sheet date (Type I). Events that are indicative of conditions that arose after the balance sheet date are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). The Company has not identified any Type I or Type II subsequent events for the year ended December 31, 2016 through April 24, 2017.

 

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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, 2016

Attachment to Note 7

 

Entity Name

    FEIN  

Transamerica Corporation

      42-1484983  

AEGON Alliances Inc

      56-1358257  

AEGON Asset Management Services Inc

      39-1884868  

AEGON Assignment Corp (Illinois)

      42-1477359  

AEGON Assignment Corp of Kentucky

      61-1314968  

AEGON Direct Marketing Services Inc

      42-1470697  

AEGON Direct Marketing Services International Inc

      52-1291367  

AEGON Financial Services Group Inc

      41-1479568  

AEGON Institutional Markets Inc

      61-1085329  

AEGON Management Company

      35-1113520  

AEGON Structured Settlements Inc

      61-1068209  

AEGON USA Real Estate Services Inc

      61-1098396  

AEGON USA Realty Advisors of CA FKA Pensaprima Inc

      20-5023693  

AFSG Securities Corporation

      23-2421076  

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  

Firebird Reinsurance Corporation

      47-3331975  

Garnet Assurance Corporation

      11-3674132  

Garnet Assurance Corporation II

      14-1893533  

Garnet Assurance Corporation III

      01-0947856  

Global Preferred RE LTD

      98-0164807  

Intersecurities Ins Agency

      42-1517005  

Investors Warranty of America Inc

      42-1154276  

LIICA RE I

      20-5984601  

LIICA RE II

      20-5927773  

 

112

Table of Contents

Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

EIN: 42-1484983

AFFILIATIONS SCHEDULE

YEAR ENDED DECEMBER 31, 2016

Attachment to Note 7

 

Entity Name

    FEIN  

Massachusetts Fidelity Trust

      42-0947998  

MLIC RE I Inc

      01-0930908  

Money Services Inc

      42-1079580  

Monumental General Administrators Inc

      52-1243288  

Pearl Holdings Inc I

      20-1063558  

Pearl Holdings Inc II

      20-1063571  

Pine Falls Re Inc

      26-1552330  

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  

Stonebridge Reinsurance Company

      61-1497252  

TCF Asset Management Corp

      84-0642550  

TCFC Air Holdings Inc

      32-0092333  

TCFC Asset Holdings Inc

      32-0092334  

TLIC Oakbrook Reinsurance Inc.

      47-1026613  

TLIC Riverwood Reinsurance Inc

      45-3193055  

TLIC Watertree Reinsurance Inc

      81-3715574  

Tranasmerica Advisors Life Insurance Company (FKA MLLIC)

      91-1325756  

Transamerica Accounts Holding Corp

      36-4162154  

Transamerica Affinity Services Inc

      42-1523438  

Transamerica Affordable Housing Inc

      94-3252196  

Transamerica Agency Network Inc (FKA: Life Inv Fin Group)

      61-1513662  

Transamerica Annuity Service Corporation

      85-0325648  

Transamerica Asset Management (fka Transamerica Fund Adviso)

      59-3403585  

Transamerica Capital Inc

      95-3141953  

Transamerica Casualty Insurance Company

      31-4423946  

Transamerica Commercial Finance Corp I

      94-3054228  

Transamerica Consumer Finance Holding Company

      95-4631538  

Transamerica Corporation (OREGON)

      98-6021219  

Transamerica Distribution Finance Overseas Inc

      36-4254366  

Transamerica Finance Corporation

      95-1077235  

 

113

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

EIN: 42-1484983

AFFILIATIONS SCHEDULE

YEAR ENDED DECEMBER 31, 2016

Attachment to Note 7

 

Entity Name

    FEIN  

Transamerica Financial Advisors FKA InterSecurities

      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 Leasing Holdings Inc

      13-3452993  

Transamerica Life Insurance Company

      39-0989781  

Transamerica Pacific Insurance Co Ltd

      94-3304740  

Transamerica Premier Life Insurance Company

      52-0419790  

Transamerica Resources Inc (FKA: Nat Assoc Mgmt)

      52-1525601  

Transamerica Small Business Capital Inc

      36-4251204  

Transamerica Stable Value Solutions Inc

      27-0648897  

Transamerica Vendor Financial Services Corporation

      36-4134790  

United Financial Services Inc

      52-1263786  

WFG China Holdings Inc

      20-2541057  

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  

 

114

Table of Contents

Statutory-Basis Financial

Statement Schedules

Table of Contents

Transamerica Life Insurance Company

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Thousands)

December 31, 2016

SCHEDULE I

 

                   Amount at  
                   Which Shown  
            Fair      in the  

Type of Investment

    Cost (1)      Value      Balance Sheet (2)  

Fixed maturities

         

Bonds:

         

United States government and government agencies and authorities

    $ 8,179,856      $ 8,441,228      $ 8,229,805  

States, municipalities and political subdivisions

      1,440,915        1,423,882        1,440,864  

Foreign governments

      399,387        409,234        399,387  

Hybrid securities

      649,843        636,492        649,822  

All other corporate bonds

      27,930,336        30,832,582        27,907,174  

Preferred stocks

      95,648        94,325        95,547  
  

 

 

     

 

 

     

 

 

  

Total fixed maturities

      38,695,985        41,837,743        38,722,599  

Equity securities

         

Common stocks:

         

Industrial, miscellaneous and all other

      179,505        194,833        194,833  
  

 

 

     

 

 

     

 

 

  

Total equity securities

      179,505        194,833        194,833  

Mortgage loans on real estate

      5,641,558           5,641,558  

Real estate

      121,897           121,897  

Policy loans

      607,746           607,746  

Other long-term investments

      764,618           764,618  

Receivable for Securities

      120,312           120,312  

Securities Lending

      2,303,603           2,303,603  

Cash, cash equivalents and short-term investments

      1,470,814           1,470,814  
  

 

 

        

 

 

  

Total investments

    $ 49,906,038         $ 49,947,980  
  

 

 

        

 

 

  

 

(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.
(2) United States government, state, municipal and political, hybrid and corporate bonds of $42,659 are held at fair value rather than amortized cost due to having an NAIC 6 rating. A preferred stock security is held at its fair value of $3,153 due to having an NAIC 6 rating.

 

116

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Transamerica Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

SCHEDULE III

 

                                  Benefits,        
                                  Claims        
    Future Policy           Policy and           Net     Losses and     Other  
    Benefits and     Unearned     Contract     Premium     Investment     Settlement     Operating  
    Expenses     Premiums     Liabilities     Revenue     Income*     Expenses     Expenses*  

Year ended December 31, 2016

              

Individual life

   $ 14,039,759     $ —       $ 241,127     $ 1,044,264     $ 741,186     $ 1,793,850     $ 856,746  

Individual health

     4,102,287       96,408       177,690       128,097       285,489       358,011       164,250  

Group life and health

     1,920,903       26,223       111,533       646,226       123,645       395,670       313,984  

Annuity

     17,189,479       —         18,703       12,204,066       1,016,736       11,951,569       2,040,802  

Other

     —         —         —         —         286,762       —         —    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 37,252,428     $ 122,631     $ 549,053     $ 14,022,653     $ 2,453,818     $ 14,499,100     $ 3,375,782  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Year ended December 31, 2015

              

Individual life

   $ 14,281,360     $ —       $ 294,838     $ 973,383     $ 725,919     $ 2,085,979     $ 800,784  

Individual health

     3,825,220       101,563       171,161       247,524       281,181       465,188       259,508  

Group life and health

     1,893,922       26,260       109,739       664,396       95,206       277,444       307,198  

Annuity

     15,700,664       —         25,920       12,919,985       1,109,860       8,792,427       5,983,656  

Other

     —         —         —         —         114,826       —         —    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 35,701,166     $ 127,823     $ 601,658     $ 14,805,288     $ 2,326,992     $ 11,621,038     $ 7,351,146  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Year ended December 31, 2014

              

Individual life

   $ 14,077,989     $ —       $ 235,349     $ 2,255,406     $ 784,891     $ 1,474,878     $ 2,078,598  

Individual health

     3,469,272       108,308       173,505       (3,366,284 )      233,091       593,464       184,228  

Group life and health

     2,039,392       26,474       111,607       709,068       167,144       418,964       402,714  

Annuity

     17,498,115       —         22,001       16,656,874       1,174,388       9,961,398       8,490,721  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 37,084,768     $ 134,782     $ 542,462     $ 16,255,064     $ 2,359,514     $ 12,448,704     $ 11,156,261  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* 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.

 

117

Table of Contents

Transamerica Life Insurance Company

Reinsurance

(Dollars in Thousands)

SCHEDULE IV

 

                  Assumed            Percentage  
            Ceded to     From            of Amount  
     Gross      Other     Other      Net     Assumed  
     Amount      Companies     Companies      Amount     to Net  

Year ended December 31, 2016

             

Life insurance in force

    $ 529,122,141      $ 916,395,356     $ 525,650,271      $ 138,377,056       380 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Premiums:

             

Individual life

    $ 2,501,843      $ 2,887,979     $ 1,430,399      $ 1,044,263       137 % 

Individual health

      554,332        431,437       5,202        128,097       4 % 

Group life and health

      820,508        203,774       29,492        646,226       5 % 

Annuity

      10,204,544        (1,953,227 )      46,295        12,204,066       0 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
   $ 14,081,227      $ 1,569,963     $ 1,511,388      $ 14,022,652       11 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Year ended December 31, 2015

             

Life insurance in force

    $ 526,735,949      $ 884,406,081     $ 541,956,160      $ 184,286,028       294 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Premiums:

             

Individual life

    $ 2,399,330      $ 2,771,123     $ 1,345,164      $ 973,371       138 % 

Individual health

      705,974        468,848       11,260        248,386       5 % 

Group life and health

      864,846        234,779       34,330        664,397       5 % 

Annuity

      13,651,819        826,310       94,476        12,919,985       1 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
   $ 17,621,969      $ 4,301,060     $ 1,485,230      $ 14,806,139       10 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Year ended December 31, 2014

             

Life insurance in force

    $ 495,242,330      $ 938,375,587     $ 580,466,611      $ 137,333,354       423 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Premiums:

             

Individual life

    $ 2,671,642      $ 1,856,326     $ 1,440,367      $ 2,255,683       64 % 

Individual health

      638,552        4,021,733       16,898        (3,366,283 )      -1 % 

Group life and health

      855,114        185,824       39,779        709,069       6 % 

Annuity

      14,697,625        (1,859,920 )      99,330        16,656,875       1 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
   $ 18,862,933      $ 4,203,963     $ 1,596,374      $ 16,255,344       10 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

 

118

Table of Contents

FINANCIAL STATEMENTS

Transamerica Life Insurance Company

Separate Account VA B

Years Ended December 31, 2016 and 2015

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Financial Statements

Years Ended December 31, 2016 and 2015

Contents

 

Report of Independent Registered Public Accounting Firm

      1  

Financial Statements

   

Statements of Assets and Liabilities

      2  

Statements of Operations and Changes in Net Assets

      7  

Notes to Financial Statements

      34  

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Contract Owners of

Subaccounts of Separate Account VA B and

Board of Directors of

Transamerica Life Insurance Company

In our opinion, for each of the subaccounts of Separate Account VA B indicated in the table below, the accompanying statements of assets and liabilities, and the related statement of operations and change in net assets present fairly, in all material respects, the financial position of each of the subaccounts of Separate Account VA B as of the date indicated in the table, and the results of each of their operations and changes in each of their net assets for each of the periods indicated in the table, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Transamerica Life Insurance Company. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the transfer agents of the investee mutual funds, provide a reasonable basis for our opinions.

 

AB Balanced Wealth Strategy Class B Shares (1)    TA BlackRock Tactical Allocation Service Class (1)
AB Growth and Income Class B Shares (1)    TA Clarion Global Real Estate Securities Initial Class (1)
AB Large Cap Growth Class B Shares (1)    TA Clarion Global Real Estate Securities Service Class (1)
American Funds - Asset Allocation Class 2 Shares (1)    TA International Moderate Growth Initial Class (1)
American Funds - Bond Class 2 Shares (1)    TA International Moderate Growth Service Class (1)
American Funds - Growth Class 2 Shares (1)    TA Janus Balanced Service Class (1)
American Funds - Growth-Income Class 2 Shares (1)    TA Janus Mid-Cap Growth Initial Class (1)
American Funds - International Class 2 Shares (1)    TA Janus Mid-Cap Growth Service Class (1)
BlackRock Basic Value V.I. Class I Shares (1)    TA Jennison Growth Initial Class (1)
BlackRock Global Allocation V.I. Class I Shares (1)    TA Jennison Growth Service Class (1)
BlackRock High Yield V.I. Class I Shares (1)    TA JPMorgan Core Bond Service Class (1)
Catalyst Dividend Capture VA (1)    TA JPMorgan Enhanced Index Initial Class (1)
Catalyst Insider Buying VA (1)    TA JPMorgan Enhanced Index Service Class (1)
Fidelity® VIP Balanced Service Class 2 (1)    TA JPMorgan Mid Cap Value Service Class (1)
Fidelity® VIP Contrafund® Initial Class (1)    TA JPMorgan Tactical Allocation Service Class (1)
Fidelity® VIP Contrafund® Service Class 2 (1)   

TA Legg Mason Dynamic Allocation - Balanced Service

Class (1)

Fidelity® VIP Equity-Income Initial Class (1)   

TA Legg Mason Dynamic Allocation - Growth Service

Class (1)

Fidelity® VIP Equity-Income Service Class 2 (1)    TA Madison Balanced Allocation Service Class (1)
Fidelity® VIP Growth Initial Class (1)    TA Madison Conservative Allocation Service Class (1)
Fidelity® VIP Growth Service Class 2 (1)    TA Madison Diversified Income Service Class (1)
Fidelity® VIP Growth Opportunities Service Class 2 (1)    TA Managed Risk - Balanced ETF Service Class (1)
Fidelity® VIP Mid Cap Initial Class (1)    TA Managed Risk - Conservative ETF Service Class (1)
Fidelity® VIP Mid Cap Service Class 2 (1)    TA Managed Risk - Growth ETF Service Class (1)
Fidelity® VIP Value Strategies Initial Class (1)    TA Market Participation Strategy Service Class (1)
Fidelity® VIP Value Strategies Service Class 2 (1)    TA MFS International Equity Initial Class (1)
Franklin Founding Funds Allocation Class 4 Shares (1)    TA MFS International Equity Service Class (1)
Franklin Income Class 2 Shares (1)    TA Morgan Stanley Capital Growth Initial Class (1)
Franklin Mutual Shares Class 2 Shares (1)    TA Morgan Stanley Capital Growth Service Class (1)
Franklin Templeton Foreign Class 2 Shares (1)    TA Multi-Managed Balanced Initial Class (1)
Invesco V.I. American Franchise Series II Shares (1)    TA Multi-Managed Balanced Service Class (1)
Invesco V.I. Value Opportunities Series II Shares (1)    TA Multi-Manager Alternative Strategies Service Class (1)
Janus Aspen - Enterprise Service Shares (1)    TA PIMCO Tactical - Balanced Service Class (1)
Janus Aspen - Global Research Service Shares (1)    TA PIMCO Tactical - Conservative Service Class (1)
Janus Aspen - Perkins Mid Cap Value Service Shares (1)    TA PIMCO Tactical - Growth Service Class (1)
MFS® New Discovery Service Class (1)    TA PIMCO Total Return Initial Class (1)
MFS® Total Return Service Class (1)    TA PIMCO Total Return Service Class (1)
NVIT Emerging Markets Class D Shares (4)    TA PineBridge Inflation Opportunities Service Class (1)
State Street Total Return V.I.S. Class 3 Shares (1)    TA ProFunds UltraBear Service Class (OAM) (1)
TA AB Dynamic Allocation Initial Class (1)    TA QS Investors Active Asset Allocation - Conservative Service Class (1)
TA AB Dynamic Allocation Service Class (1)    TA QS Investors Active Asset Allocation - Moderate Service Class (1)
TA Aegon Government Money Market Initial Class (1)    TA QS Investors Active Asset Allocation - Moderate Growth Service Class (1)
TA Aegon Government Money Market Service Class (1)    TA Small/Mid Cap Value Initial Class (1)
TA Aegon High Yield Bond Initial Class (1)    TA Small/Mid Cap Value Service Class (1)
TA Aegon High Yield Bond Service Class (1)    TA T. Rowe Price Small Cap Initial Class (1)
TA Aegon U.S. Government Securities Initial Class (1)    TA T. Rowe Price Small Cap Service Class (1)
TA Aegon U.S. Government Securities Service Class (1)    TA Torray Concentrated Growth Initial Class (1)
TA American Funds Managed Risk - Balanced Service Class (2)    TA Torray Concentrated Growth Service Class (1)
TA Asset Allocation - Conservative Initial Class (1)    TA TS&W International Equity Initial Class (1)
TA Asset Allocation - Conservative Service Class (1)    TA TS&W International Equity Service Class (1)
TA Asset Allocation - Growth Initial Class (1)    TA WMC US Growth Initial Class (1)
TA Asset Allocation - Growth Service Class (1)    TA WMC US Growth Service Class (1)
TA Asset Allocation - Moderate Initial Class (1)    Vanguard® Equity Index (1)
TA Asset Allocation - Moderate Service Class (1)    Vanguard® International (1)
TA Asset Allocation - Moderate Growth Initial Class (1)    Vanguard® Mid-Cap Index (1)
TA Asset Allocation - Moderate Growth Service Class (1)    Vanguard® REIT Index (1)
TA Barrow Hanley Dividend Focused Initial Class (1)    Vanguard® Short-Term Investment Grade (1)
TA Barrow Hanley Dividend Focused Service Class (1)    Vanguard® Total Bond Market Index (1)
TA BlackRock Equity Smart Beta 100 Service Class (3)    Voya Global Perspectives Class S Shares (2)
TA BlackRock Global Allocation Service Class (1)    Voya Large Cap Value Class S Shares (2)
TA BlackRock Global Allocation Managed Risk - Balanced Service Class (1)    Voya Strategic Allocation Conservative Class S Shares (2)
TA BlackRock Global Allocation Managed Risk - Growth Service Class (1)    Voya Strategic Allocation Moderate Class S Shares (2)
TA BlackRock Smart Beta 50 Service Class (3)    Wanger International (1)
TA BlackRock Smart Beta 75 Service Class (3)    Wanger USA (1)

 

(1) Statement of assets and liabilities as of December 31, 2016, and statement of operations and change in net assets for the years ended December 31, 2016 and 2015
(2) Statement of assets and liabilities as of December 31, 2016 and statement of operations and change in net assets for the year ended December 31, 2016 and the period May 1, 2015 (commencement of operations) through December 31, 2015
(3) Statement of assets and liabilities as of December 31, 2016 and statement of operations and change in net assets for the period March 21, 2016 (commencement of operations) through December 31, 2016
(4) Statement of assets and liabilities as of December 31, 2016 and statement of operations and change in net assets for the period August 4, 2016 (commencement of operations) through December 31, 2016

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

April 24, 2017

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

AB Balanced Wealth Strategy Class B Shares

     9,029,168.460     $ 105,004,100     $ 94,083,935     $ (78 )    $ 94,083,857       44,034,478     $ 1.258038     $ 12.014964  

AB Growth and Income Class B Shares

     7,145,146.579       191,580,210       220,284,869       (204 )      220,284,665       86,181,039       1.370953       14.432762  

AB Large Cap Growth Class B Shares

     653,843.436       20,459,505       28,324,498       (128 )      28,324,370       17,594,877       1.419757       2.286318  

American Funds—Asset Allocation Class 2 Shares

     29,503,928.946       601,721,330       634,039,433       175       634,039,608       250,143,519       1.449151       12.875039  

American Funds—Bond Class 2 Shares

     18,995,978.835       207,933,710       202,687,094       91       202,687,185       86,249,797       1.039007       10.243697  

American Funds—Growth Class 2 Shares

     4,498,962.014       310,264,251       301,070,538       154       301,070,692       68,512,929       1.562645       14.768988  

American Funds—Growth-Income Class 2 Shares

     7,020,272.568       327,082,987       308,891,993       58       308,892,051       60,127,114       1.641719       14.686895  

American Funds—International Class 2 Shares

     7,735,580.042       144,181,250       129,648,322       37       129,648,359       49,934,063       0.990422       10.655038  

BlackRock Basic Value V.I. Class I Shares

     1,451,018.780       20,796,647       22,069,996       (71 )      22,069,925       8,011,814       2.001823       3.411430  

BlackRock Global Allocation V.I. Class I Shares

     863,544.484       13,320,911       13,393,575       (12 )      13,393,563       7,054,931       1.598086       2.718528  

BlackRock High Yield V.I. Class I Shares

     665,239.956       4,851,518       4,816,337       22,431       4,838,768       2,044,390       1.990293       2.442628  

Catalyst Dividend Capture VA

     178,874.601       2,137,449       2,218,045       7       2,218,052       1,558,996       1.304305       1.429243  

Catalyst Insider Buying VA

     189,771.906       3,268,289       2,561,921       21       2,561,942       1,753,688       1.340545       1.468956  

Fidelity® VIP Balanced Service Class 2

     20,533,880.316       330,340,691       336,960,976       (80 )      336,960,896       161,273,927       1.355244       13.018170  

Fidelity® VIP Contrafund® Initial Class

     13,010.036       423,508       431,673       8       431,681       113,495       1.568736       14.354772  

Fidelity® VIP Contrafund® Service Class 2

     14,679,804.065       449,478,531       476,359,642       61       476,359,703       158,259,292       1.409294       14.088132  

Fidelity® VIP Equity-Income Initial Class

     2,779.700       54,627       61,070       (1 )      61,069       38,845       1.412115       1.643872  

Fidelity® VIP Equity-Income Service Class 2

     2,294,043.177       45,824,361       49,230,167       89       49,230,256       27,073,880       1.249471       2.217119  

Fidelity® VIP Growth Initial Class

     329.569       16,411       19,547       8       19,555       12,155       1.563060       1.847607  

Fidelity® VIP Growth Service Class 2

     587,256.008       22,929,024       34,319,241       139       34,319,380       22,172,573       1.372161       2.227887  

Fidelity® VIP Growth Opportunities Service Class 2

     64,907.454       1,260,587       1,992,659       22       1,992,681       1,186,013       1.318888       2.013506  

Fidelity® VIP Mid Cap Initial Class

     1,538.551       51,961       52,280       —         52,280       21,135       1.457076       14.364630  

Fidelity® VIP Mid Cap Service Class 2

     9,573,919.426       304,455,790       316,226,559       (37 )      316,226,522       89,788,590       1.412837       14.094151  

Fidelity® VIP Value Strategies Initial Class

     11,859.938       161,243       187,031       (1 )      187,030       45,032       1.451545       13.167998  

Fidelity® VIP Value Strategies Service Class 2

     8,085,178.924       102,230,044       128,230,938       46       128,230,984       48,667,743       1.314783       12.914970  

Franklin Founding Funds Allocation Class 4 Shares

     15,547,797.490       113,068,958       112,099,620       58       112,099,678       59,149,514       1.285967       2.057170  

Franklin Income Class 2 Shares

     5,416,962.289       80,328,192       83,312,880       (44 )      83,312,836       61,395,564       1.230919       1.437778  

Franklin Mutual Shares Class 2 Shares

     914,275.433       15,474,555       18,358,651       51       18,358,702       13,977,761       1.180187       1.474499  

Franklin Templeton Foreign Class 2 Shares

     2,399,270.437       32,993,866       32,654,071       148       32,654,219       33,720,848       0.887600       1.004514  

Invesco V.I. American Franchise Series II Shares

     125,931.936       4,949,915       6,543,423       47       6,543,470       4,459,627       1.413934       1.550704  

Invesco V.I. Value Opportunities Series II Shares

     2,842,206.066       16,499,113       18,332,229       78       18,332,307       13,110,788       1.043219       1.750859  

See accompanying notes.

 

2

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

Janus Aspen—Enterprise Service Shares

     351,328.678     $ 14,513,021     $ 19,751,698     $ (116 )    $ 19,751,582       10,584,742     $ 1.186408     $ 3.711912  

Janus Aspen—Global Research Service Shares

     647,227.067       18,580,540       25,804,943       1       25,804,944       23,820,520       0.796839       1.706763  

Janus Aspen—Perkins Mid Cap Value Service Shares

     184,616.078       2,872,928       2,972,319       (12 )      2,972,307       1,278,394       1.638813       2.411849  

MFS® New Discovery Service Class

     2,753,868.348       42,676,457       41,335,564       (3 )      41,335,561       20,116,052       1.239496       2.599008  

MFS® Total Return Service Class

     2,276,720.968       42,937,915       51,932,005       158       51,932,163       30,104,493       1.287309       1.859665  

NVIT Emerging Markets Class D Shares

     1,947.479       19,565       18,774       —         18,774       1,907       9.832784       9.852693  

State Street Total Return V.I.S. Class 3 Shares

     3,002,340.993       53,570,384       54,132,208       81       54,132,289       34,109,465       1.190539       11.592712  

TA AB Dynamic Allocation Initial Class

     2,267,446.106       20,318,143       21,495,389       155       21,495,544       13,620,346       1.063905       1.680861  

TA AB Dynamic Allocation Service Class

     36,120,995.857       317,708,040       339,898,571       97       339,898,668       181,601,690       0.979889       10.784372  

TA Aegon Government Money Market Initial Class

     109,373,819.523       109,373,819       109,373,820       116       109,373,936       98,022,427       0.883955       1.328679  

TA Aegon Government Money Market Service Class

     383,959,335.322       383,959,334       383,959,335       (151 )      383,959,184       218,009,250       0.821228       9.838155  

TA Aegon High Yield Bond Initial Class

     10,878,897.398       85,230,709       85,399,345       161       85,399,506       40,104,822       1.321828       11.429710  

TA Aegon High Yield Bond Service Class

     19,546,157.704       155,475,297       155,587,415       43       155,587,458       44,271,533       1.303775       11.146563  

TA Aegon U.S. Government Securities Initial Class

     6,228,842.092       77,319,080       73,562,625       145       73,562,770       46,351,895       1.061904       1.973476  

TA Aegon U.S. Government Securities Service Class

     31,779,915.680       394,002,546       384,536,980       27       384,537,007       139,466,169       1.026506       9.902034  

TA American Funds Managed Risk—Balanced Service Class

     35,616,656.732       349,242,448       362,577,566       13       362,577,579       36,223,701       9.831422       10.236549  

TA Asset Allocation—Conservative Initial Class

     17,375,408.550       181,735,588       176,881,659       235       176,881,894       110,451,298       1.119868       1.694263  

TA Asset Allocation—Conservative Service Class

     101,455,588.677       1,047,077,542       1,021,657,778       (133 )      1,021,657,645       491,730,606       1.101287       10.828489  

TA Asset Allocation—Growth Initial Class

     22,422,129.550       204,190,598       254,491,170       16       254,491,186       145,360,910       1.176730       1.839475  

TA Asset Allocation—Growth Service Class

     16,400,145.007       164,113,135       184,665,633       (185 )      184,665,448       80,740,471       1.062496       12.147169  

TA Asset Allocation—Moderate Initial Class

     35,690,493.262       373,007,134       403,302,574       (118 )      403,302,456       237,955,333       1.161654       1.798554  

TA Asset Allocation—Moderate Service Class

     437,684,450.244       4,891,820,307       4,884,558,465       461       4,884,558,926       1,901,152,605       1.120954       11.173763  

TA Asset Allocation—Moderate Growth Initial Class

     40,396,893.755       440,623,507       477,491,284       (179 )      477,491,105       272,203,035       1.197111       1.848530  

TA Asset Allocation—Moderate Growth Service Class

     278,416,493.450       3,131,258,835       3,249,120,479       376       3,249,120,855       1,528,662,864       1.099113       11.659963  

TA Barrow Hanley Dividend Focused Initial Class

     16,120,422.055       237,134,441       363,999,130       (109 )      363,999,021       160,020,752       1.348495       14.358328  

TA Barrow Hanley Dividend Focused Service Class

     7,453,471.158       137,957,713       168,373,913       (92 )      168,373,821       60,943,596       1.251247       13.981645  

TA BlackRock Equity Smart Beta 100 Service Class

     2,183,473.134       23,030,129       23,122,980       (1 )      23,122,979       2,202,649       10.390986       10.590000  

TA BlackRock Global Allocation Service Class

     95,486,274.263       1,261,818,450       1,268,057,722       (185 )      1,268,057,537       629,799,019       1.105533       11.166514  

TA BlackRock Global Allocation Managed Risk—Balanced Service Class

     18,341,512.262       177,102,550       162,138,968       (8 )      162,138,960       17,333,758       9.138409       9.625613  

TA BlackRock Global Allocation Managed Risk—Growth Service Class    

     19,469,615.629       187,087,725       168,412,175       (54 )      168,412,121       18,505,605       8.897856       9.372265  

See accompanying notes.

 

3

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA BlackRock Smart Beta 50 Service Class

     4,087,127.865     $ 42,081,925     $ 41,974,803     $ (4 )    $ 41,974,799       4,130,044     $ 10.076941     $ 10.270000  

TA BlackRock Smart Beta 75 Service Class

     1,112,806.186       11,436,868       11,506,416       —         11,506,416       1,123,248       10.145639       10.340000  

TA BlackRock Tactical Allocation Service Class

     96,991,981.190       1,468,278,239       1,444,210,600       376       1,444,210,976       544,782,967       1.221303       11.553302  

TA Clarion Global Real Estate Securities Initial Class

     3,632,628.333       43,029,757       44,536,023       138       44,536,161       18,463,874       0.977201       10.372372  

TA Clarion Global Real Estate Securities Service Class

     6,581,712.304       84,623,598       84,311,735       (112 )      84,311,623       36,306,707       0.981129       10.111068  

TA International Moderate Growth Initial Class

     8,624.415       78,206       80,121       1       80,122       69,400       1.154499       1.173034  

TA International Moderate Growth Service Class

     59,838,773.040       545,610,234       551,115,100       (175 )      551,114,925       358,429,603       0.879674       10.320954  

TA Janus Balanced Service Class

     51,725,448.522       665,891,967       687,948,465       (225 )      687,948,240       197,498,662       1.146023       12.248668  

TA Janus Mid-Cap Growth Initial Class

     2,387,169.108       69,880,046       60,228,277       26       60,228,303       44,776,658       1.071645       11.397285  

TA Janus Mid-Cap Growth Service Class

     2,609,060.673       76,514,051       63,321,903       (1 )      63,321,902       22,970,554       1.056406       11.101466  

TA Jennison Growth Initial Class

     18,813,128.302       166,769,549       165,555,529       (17 )      165,555,512       95,799,898       1.288816       15.068576  

TA Jennison Growth Service Class

     10,464,634.987       102,435,841       88,426,166       (29 )      88,426,137       23,846,550       1.604878       14.683544  

TA JPMorgan Core Bond Service Class

     16,464,879.572       229,229,571       225,404,201       11       225,404,212       84,929,968       1.022724       10.266455  

TA JPMorgan Enhanced Index Initial Class

     5,803,716.717       88,711,298       106,614,276       (81 )      106,614,195       46,917,262       1.496650       14.849813  

TA JPMorgan Enhanced Index Service Class

     2,833,490.226       49,771,243       51,966,211       44       51,966,255       13,075,401       1.473010       14.480829  

TA JPMorgan Mid Cap Value Service Class

     10,367,804.248       210,237,979       198,647,129       78       198,647,207       52,307,287       1.748540       14.745935  

TA JPMorgan Tactical Allocation Service Class

     84,266,687.257       1,198,015,191       1,253,888,306       183       1,253,888,489       379,479,465       1.102589       11.050062  

TA Legg Mason Dynamic Allocation—Balanced Service Class

     104,858,625.201       1,214,035,858       1,174,416,602       150       1,174,416,752       290,004,410       1.069800       10.790923  

TA Legg Mason Dynamic Allocation—Growth Service Class

     43,996,935.018       540,780,223       513,884,201       (117 )      513,884,084       132,145,826       1.108479       11.067720  

TA Madison Balanced Allocation Service Class

     9,897,510.860       107,995,686       105,012,590       (49 )      105,012,541       41,735,960       1.186146       11.312215  

TA Madison Conservative Allocation Service Class

     7,061,606.757       75,133,655       73,017,014       82       73,017,096       34,682,524       1.102036       10.624275  

TA Madison Diversified Income Service Class

     9,329,640.318       106,309,679       115,967,429       73       115,967,502       55,129,242       1.200168       11.200348  

TA Managed Risk—Balanced ETF Service Class

     510,636,912.112       5,825,693,967       5,673,176,094       (288 )      5,673,175,806       1,640,125,949       1.128008       11.092061  

TA Managed Risk—Conservative ETF Service Class

     66,467,375.045       791,573,618       777,003,614       (134 )      777,003,480       324,381,240       1.148998       11.054517  

TA Managed Risk—Growth ETF Service Class

     282,688,436.498       2,859,027,394       2,699,674,569       (268 )      2,699,674,301       1,128,966,441       1.131591       11.432595  

TA Market Participation Strategy Service Class

     39,086,389.871       446,023,117       453,011,259       43       453,011,302       112,269,327       1.134082       11.768654  

TA MFS International Equity Initial Class

     8,275,533.046       62,864,756       65,293,956       (136 )      65,293,820       47,110,409       1.030614       10.484602  

TA MFS International Equity Service Class

     10,893,288.058       87,674,561       84,422,982       (137 )      84,422,845       29,624,976       0.964416       10.219366  

TA Morgan Stanley Capital Growth Initial Class

     6,908,202.301       90,151,262       92,915,321       (75 )      92,915,246       43,698,169       1.584005       2.507588  

TA Morgan Stanley Capital Growth Service Class

     4,036,101.536       60,844,596       53,195,818       (12 )      53,195,806       13,431,257       1.538339       15.303842  

TA Multi-Managed Balanced Initial Class    

     5,828,029.201       77,955,057       79,028,076       (153 )      79,027,923       35,420,588       1.448446       2.352670  

See accompanying notes.

 

4

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA Multi-Managed Balanced Service Class

     67,982,256.000     $ 890,512,532     $ 904,843,827     $ (173 )    $ 904,843,654       219,709,404     $ 1.428377     $ 12.822377  

TA Multi-Manager Alternative Strategies Service Class

     165,230.809       1,693,061       1,601,087       20       1,601,107       163,253       9.636402       10.008076  

TA PIMCO Tactical—Balanced Service Class

     51,839,565.421       596,588,048       610,151,685       (32 )      610,151,653       192,663,294       1.014282       11.484122  

TA PIMCO Tactical—Conservative Service Class

     23,876,176.256       269,163,826       273,382,218       (7 )      273,382,211       87,765,386       0.968384       11.288971  

TA PIMCO Tactical—Growth Service Class

     29,293,939.155       330,433,972       334,243,846       133       334,243,979       97,932,555       0.967569       11.552115  

TA PIMCO Total Return Initial Class

     16,291,030.944       187,731,730       181,319,174       (4 )      181,319,170       116,273,391       1.098833       1.643290  

TA PIMCO Total Return Service Class

     74,765,371.085       867,204,211       826,905,004       160       826,905,164       432,200,049       1.074326       10.135749  

TA PineBridge Inflation Opportunities Service Class

     17,587,499.590       183,842,577       175,347,371       114       175,347,485       101,867,579       0.948874       9.208316  

TA ProFunds UltraBear Service Class (OAM)

     49,789,555.151       46,083,023       33,856,898       299       33,857,197       557,626,487       0.058417       0.189933  

TA QS Investors Active Asset Allocation—Conservative Service Class

     41,476,784.328       437,931,182       425,137,039       (471 )      425,136,568       201,671,367       1.033259       10.495530  

TA QS Investors Active Asset Allocation—Moderate Service Class

     136,292,468.408       1,530,378,074       1,448,788,939       312       1,448,789,251       492,652,371       1.035718       10.496305  

TA QS Investors Active Asset Allocation—Moderate Growth Service Class

     58,041,101.151       644,922,971       591,438,821       264       591,439,085       254,015,317       1.038594       10.523814  

TA Small/Mid Cap Value Initial Class

     6,254,475.489       117,659,370       129,842,911       173       129,843,084       24,866,417       1.575209       15.018692  

TA Small/Mid Cap Value Service Class

     5,502,989.059       110,461,275       111,710,678       154       111,710,832       37,602,330       1.553004       14.632240  

TA T. Rowe Price Small Cap Initial Class

     8,262,722.614       97,233,302       112,290,400       (69 )      112,290,331       47,515,529       1.671725       15.530319  

TA T. Rowe Price Small Cap Service Class

     14,788,625.989       191,519,659       191,512,707       67       191,512,774       40,379,882       1.649695       15.141733  

TA Torray Concentrated Growth Initial Class

     7,914,281.934       119,081,809       141,507,361       122       141,507,483       45,742,580       1.480087       13.702517  

TA Torray Concentrated Growth Service Class

     1,777,687.617       33,909,259       32,531,683       (55 )      32,531,628       11,214,378       1.449300       13.349697  

TA TS&W International Equity Initial Class

     5,992,080.021       72,682,299       71,904,960       12       71,904,972       41,696,215       0.935567       10.863282  

TA TS&W International Equity Service Class

     2,866,443.201       35,152,233       34,110,674       64       34,110,738       13,541,992       0.860255       10.577180  

TA WMC US Growth Initial Class

     10,170,729.291       239,678,608       236,977,992       362       236,978,354       152,376,830       1.324835       14.521443  

TA WMC US Growth Service Class

     4,309,793.536       107,206,395       98,349,488       (68 )      98,349,420       31,337,681       1.261862       14.149385  

Vanguard® Equity Index

     53,908.067       1,710,450       1,920,744       2       1,920,746       411,968       1.698773       14.861114  

Vanguard® International

     62,956.813       1,216,902       1,229,547       (2 )      1,229,545       441,335       1.023327       10.868870  

Vanguard® Mid-Cap Index

     40,068.228       763,021       845,840       (2 )      845,838       243,199       1.624525       14.442511  

Vanguard® REIT Index

     26,612.200       341,185       358,732       10       358,742       136,899       1.482857       12.587633  

Vanguard® Short-Term Investment Grade

     255,683.825       2,714,207       2,717,919       1       2,717,920       1,010,860       1.060377       10.340130  

Vanguard® Total Bond Market Index

     126,042.378       1,496,567       1,483,519       6       1,483,525       445,728       1.108377       10.280120  

Voya Global Perspectives Class S Shares

     1,568.201       15,657       16,121       —         16,121       1,665       9.543355       9.889978  

Voya Large Cap Value Class S Shares    

     84.807       903       1,006       —         1,006       97       10.258396       10.630966  

See accompanying notes.

 

5

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

Voya Strategic Allocation Conservative Class S Shares

     —       $ —       $ —       $ —       $ —         —       $ 9.861563     $ 10.219710  

Voya Strategic Allocation Moderate Class S Shares

     —         —         —         —         —         —         9.837219       10.194506  

Wanger International

     13,040.737       372,382       308,283       —         308,283       141,836       1.133927       10.295749  

Wanger USA

     6,683.390       212,872       177,310       2       177,312       67,832       1.757581       14.347877  

See accompanying notes.

 

6

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

   

AB Balanced

Wealth
Strategy Class B
Shares

     AB Growth and
Income Class B
Shares		     AB Large
Cap Growth
Class B
Shares		     American
Funds - Asset
Allocation Class
2 Shares		     American
Funds - Bond
Class 2 Shares		  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $  91,875,603     $ 190,026,748     $ 35,592,264     $ 468,882,755     $ 142,447,050  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,964,980       2,331,815       —         8,419,874       2,835,508  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,608,024       2,885,658       490,480       8,596,781       2,733,999  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     356,956       (553,843 )      (490,480 )      (176,907 )      101,509  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     8,973,462       —         2,888,272       35,364,723       3,090,505  

Realized Gain (Loss) on Investments

     (140,940 )      12,664,141       4,290,143       8,919,791       (235,687 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     8,832,522       12,664,141       7,178,415       44,284,514       2,854,818  

Net Change in Unrealized Appreciation (Depreciation)

     (9,687,251 )      (12,429,579 )      (3,658,603 )      (47,070,650 )      (5,400,717 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (854,729 )      234,562       3,519,812       (2,786,136 )      (2,545,899 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (497,773 )      (319,281 )      3,029,332       (2,963,043 )      (2,444,390 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     4,122,766       4,599,868       (7,927,603 )      45,804,097       28,446,412  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     3,624,993       4,280,587       (4,898,271 )      42,841,054       26,002,022  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 95,500,596     $ 194,307,335     $ 30,693,993     $ 511,723,809     $ 168,449,072  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,726,409       1,672,743       —         9,668,445       3,406,309  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,555,412       2,900,764       426,912       9,450,490       3,306,661  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     170,997       (1,228,021 )      (426,912 )      217,955       99,648  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     6,390,894       12,421,233       3,428,931       13,205,395       670,487  

Realized Gain (Loss) on Investments

     (1,645,297 )      8,726,133       1,685,316       4,434,469       (432,581 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     4,745,597       21,147,366       5,114,247       17,639,864       237,906  

Net Change in Unrealized Appreciation (Depreciation)

     (2,418,416 )      (1,588,392 )      (4,514,642 )      22,855,077       1,009,600  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     2,327,181       19,558,974       599,605       40,494,941       1,247,506  

Net Increase (Decrease) in Net Assets Resulting from Operations

     2,498,178       18,330,953       172,693       40,712,896       1,347,154  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (3,914,917 )      7,646,377       (2,542,316 )      81,602,903       32,890,959  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (1,416,739 )      25,977,330       (2,369,623 )      122,315,799       34,238,113  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 94,083,857     $ 220,284,665     $ 28,324,370     $ 634,039,608     $ 202,687,185  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

7

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     American
Funds - Growth
Class 2 Shares		     American Funds -
Growth-Income
Class 2 Shares		    

American

Funds - International
Class 2 Shares

     BlackRock
Basic Value
V.I. Class I
Shares		     BlackRock
Global
Allocation
V.I. Class I
Shares		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $ 174,197,876     $ 180,173,950     $ 94,057,736     $ 28,532,280     $ 19,447,094  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,407,972       3,077,938       1,814,431       347,297       174,728  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      3,612,807       3,640,372       1,942,262       357,805       241,918  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,204,835 )      (562,434 )      (127,831 )      (10,508 )      (67,190 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      43,190,040       31,609,718       6,459,243       2,530,004       789,357  

Realized Gain (Loss) on Investments

      2,596,966       3,410,221       1,221,166       1,535,557       556,729  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      45,787,006       35,019,939       7,680,409       4,065,561       1,346,086  

Net Change in Unrealized Appreciation (Depreciation)

      (34,982,541 )      (36,705,090 )      (16,471,933 )      (5,567,230 )      (1,491,389 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      10,804,465       (1,685,151 )      (8,791,524 )      (1,501,669 )      (145,303 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      8,599,630       (2,247,585 )      (8,919,355 )      (1,512,177 )      (212,493 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      58,914,515       58,170,750       29,797,209       (6,162,576 )      (4,714,039 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      67,514,145       55,923,165       20,877,854       (7,674,753 )      (4,926,532 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 241,712,021     $ 236,097,115     $ 114,935,590     $ 20,857,527     $ 14,520,562  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,142,815       4,189,447       1,783,610       316,880       171,223  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      4,302,075       4,324,268       2,062,245       301,923       197,744  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,159,260 )      (134,821 )      (278,635 )      14,957       (26,521 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      22,498,997       28,109,838       10,276,564       498,719       —    

Realized Gain (Loss) on Investments

      (1,802,721 )      (1,541,716 )      (4,497,431 )      142,249       26,109  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      20,696,276       26,568,122       5,779,133       640,968       26,109  

Net Change in Unrealized Appreciation (Depreciation)

      982,591       (1,580,080 )      (3,012,604 )      2,542,500       336,401  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      21,678,867       24,988,042       2,766,529       3,183,468       362,510  

Net Increase (Decrease) in Net Assets Resulting from Operations

      19,519,607       24,853,221       2,487,894       3,198,425       335,989  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      39,839,064       47,941,715       12,224,875       (1,986,027 )      (1,462,988 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      59,358,671       72,794,936       14,712,769       1,212,398       (1,126,999 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 301,070,692     $ 308,892,051     $ 129,648,359     $ 22,069,925     $ 13,393,563  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

8

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     BlackRock High
Yield V.I. Class
I Shares		     Catalyst
Dividend
Capture VA		     Catalyst
Insider
Buying VA		    

Fidelity® VIP
Balanced
Service

Class 2

     Fidelity® VIP
Contrafund®
Initial Class		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $ 7,122,273     $ 3,069,679     $ 3,951,760     $ 250,216,054     $ 798,211  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      310,236       110,082       16,936       4,045,837       7,632  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      87,162       36,126       45,202       4,069,171       4,964  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      223,074       73,956       (28,266 )      (23,334 )      2,668  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      35,113       —         425,433       8,053,687       61,530  

Realized Gain (Loss) on Investments

      104,457       119,208       299,620       2,087,470       58,659  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      139,570       119,208       725,053       10,141,157       120,189  

Net Change in Unrealized Appreciation (Depreciation)

      (606,024 )      (310,861 )      (961,484 )      (14,015,224 )      (131,147 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (466,454 )      (191,653 )      (236,431 )      (3,874,067 )      (10,958 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (243,380 )      (117,697 )      (264,697 )      (3,897,401 )      (8,290 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,689,988 )      (611,713 )      (1,098,081 )      53,166,078       (72,997 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (1,933,368 )      (729,410 )      (1,362,778 )      49,268,677       (81,287 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 5,188,905     $ 2,340,269     $ 2,588,982     $ 299,484,731     $ 716,924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      269,953       105,982       15,554       3,902,078       3,484  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      70,463       30,716       32,947       4,400,736       3,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      199,490       75,266       (17,393 )      (498,658 )      259  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         720,807       7,402,751       55,870  

Realized Gain (Loss) on Investments

      (23,177 )      40,858       (15,906 )      536,594       (18,385 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (23,177 )      40,858       704,901       7,939,345       37,485  

Net Change in Unrealized Appreciation (Depreciation)

      349,367       8,020       (474,026 )      9,081,134       (13,652 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      326,190       48,878       230,875       17,020,479       23,833  

Net Increase (Decrease) in Net Assets Resulting from Operations

      525,680       124,144       213,482       16,521,821       24,092  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (875,817 )      (246,361 )      (240,522 )      20,954,344       (309,335 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (350,137 )      (122,217 )      (27,040 )      37,476,165       (285,243 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 4,838,768     $ 2,218,052     $ 2,561,942     $ 336,960,896     $ 431,681  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

9

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

Fidelity® VIP
Contrafund®
Service

Class 2

     Fidelity® VIP
Equity-Income
Initial Class		     Fidelity®
VIP Equity-
Income
Service
Class 2		     Fidelity® VIP
Growth
Initial Class		     Fidelity®
VIP Growth
Service
Class 2		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  465,848,417     $ 89,679     $ 63,824,949     $ 38,477     $ 48,200,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,698,022       2,379       1,517,703       105       13,207  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,813,795       567       822,940       294       658,958  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (3,115,773 )      1,812       694,763       (189 )      (645,751 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      42,396,933       8,016       5,738,759       1,202       1,502,472  

Realized Gain (Loss) on Investments

      28,058,788       2,773       1,758,791       269       4,964,874  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      70,455,721       10,789       7,497,550       1,471       6,467,346  

Net Change in Unrealized Appreciation (Depreciation)

      (72,317,351 )      (15,565 )      (11,064,161 )      1,164       (3,336,430 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,861,630 )      (4,776 )      (3,566,611 )      2,635       3,130,916  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (4,977,403 )      (2,964 )      (2,871,848 )      2,446       2,485,165  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (11,011,946 )      (15,968 )      (13,029,927 )      (366 )      (10,067,701 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (15,989,349 )      (18,932 )      (15,901,775 )      2,080       (7,582,536 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 449,859,068     $ 70,747     $ 47,923,174     $ 40,557     $ 40,617,613  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,864,504       1,312       990,166       8       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,435,763       402       700,072       179       538,848  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (3,571,259 )      910       290,094       (171 )      (538,848 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      34,845,813       4,562       3,154,700       3,734       3,746,975  

Realized Gain (Loss) on Investments

      6,787,899       (1,999 )      233,152       8,495       2,821,129  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      41,633,712       2,563       3,387,852       12,229       6,568,104  

Net Change in Unrealized Appreciation (Depreciation)

      (11,502,168 )      4,722       3,345,510       (13,326 )      (6,540,553 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      30,131,544       7,285       6,733,362       (1,097 )      27,551  

Net Increase (Decrease) in Net Assets Resulting from Operations

      26,560,285       8,195       7,023,456       (1,268 )      (511,297 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (59,650 )      (17,873 )      (5,716,374 )      (19,734 )      (5,786,936 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      26,500,635       (9,678 )      1,307,082       (21,002 )      (6,298,233 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 476,359,703     $ 61,069     $ 49,230,256     $ 19,555     $ 34,319,380  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

10

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

Fidelity® VIP
Growth
Opportunities
Service

Class 2

     Fidelity® VIP
Mid Cap
Initial Class		     Fidelity® VIP
Mid Cap
Service
Class 2		     Fidelity® VIP
Value
Strategies
Initial Class		     Fidelity® VIP
Value
Strategies
Service Class 2		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  2,517,712     $ 59,307     $ 345,744,918     $ 104,026     $ 144,232,335  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      63       261       795,832       1,048       1,172,410  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      34,764       398       4,861,986       647       2,041,997  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (34,701 )      (137 )      (4,066,154 )      401       (869,587 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      223,392       6,978       41,570,179       73       109,392  

Realized Gain (Loss) on Investments

      285,402       (1,215 )      9,635,575       1,231       14,358,376  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      508,794       5,763       51,205,754       1,304       14,467,768  

Net Change in Unrealized Appreciation (Depreciation)

      (374,595 )      (6,910 )      (55,343,666 )      (4,907 )      (19,545,421 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      134,199       (1,147 )      (4,137,912 )      (3,603 )      (5,077,653 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      99,498       (1,284 )      (8,204,066 )      (3,202 )      (5,947,240 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (438,193 )      (6,866 )      (39,284,949 )      (11,330 )      (13,693,317 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (338,695 )      (8,150 )      (47,489,015 )      (14,532 )      (19,640,557 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 2,179,017     $ 51,157     $ 298,255,903     $ 89,494     $ 124,591,778  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      997       250       945,060       2,007       1,111,388  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      29,161       321       4,302,516       929       1,751,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (28,164 )      (71 )      (3,357,456 )      1,078       (640,596 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      41,055       3,122       18,184,106       —         —    

Realized Gain (Loss) on Investments

      161,808       (544 )      (1,011,452 )      11,600       6,606,582  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      202,863       2,578       17,172,654       11,600       6,606,582  

Net Change in Unrealized Appreciation (Depreciation)

      (213,033 )      3,151       14,705,971       7,015       2,621,496  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (10,170 )      5,729       31,878,625       18,615       9,228,078  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (38,334 )      5,658       28,521,169       19,693       8,587,482  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (148,002 )      (4,535 )      (10,550,550 )      77,843       (4,948,276 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (186,336 )      1,123       17,970,619       97,536       3,639,206  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,992,681     $ 52,280     $ 316,226,522     $ 187,030     $ 128,230,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

11

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Franklin
Founding Funds
Allocation
Class 4 Shares		     Franklin
Income Class
2 Shares		     Franklin
Mutual Shares
Class 2 Shares		     Franklin
Templeton
Foreign
Class 2 Shares		     Invesco V.I.
American
Franchise Series
II Shares		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  149,122,631     $ 125,848,593     $ 26,638,380     $ 49,421,163     $ 9,493,323  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,633,219       4,953,955       637,203       1,424,902       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,205,989       1,561,912       330,188       665,142       122,596  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,427,230       3,392,043       307,015       759,760       (122,596 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      208,623       —         1,405,930       1,455,367       41,886  

Realized Gain (Loss) on Investments

      602,421       1,722,010       2,296,472       1,035,999       899,456  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      811,044       1,722,010       3,702,402       2,491,366       941,342  

Net Change in Unrealized Appreciation (Depreciation)

      (12,006,665 )      (13,768,805 )      (5,197,619 )      (6,180,383 )      (520,431 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (11,195,621 )      (12,046,795 )      (1,495,217 )      (3,689,017 )      420,911  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (9,768,391 )      (8,654,752 )      (1,188,202 )      (2,929,257 )      298,315  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (23,844,442 )      (27,721,069 )      (7,143,383 )      (10,750,447 )      (2,377,393 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (33,612,833 )      (36,375,821 )      (8,331,585 )      (13,679,704 )      (2,079,078 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 115,509,798     $ 89,472,772     $ 18,306,795     $ 35,741,459     $ 7,414,245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      4,097,691       4,297,727       352,679       642,573       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,818,276       1,231,465       258,830       491,444       99,836  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,279,415       3,066,262       93,849       151,129       (99,836 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,606,410       —         1,452,874       575,540       616,766  

Realized Gain (Loss) on Investments

      (1,378,168 )      (211,397 )      503,479       (298,522 )      327,694  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,228,242       (211,397 )      1,956,353       277,018       944,460  

Net Change in Unrealized Appreciation (Depreciation)

      7,041,900       6,973,332       328,700       1,241,231       (827,299 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      9,270,142       6,761,935       2,285,053       1,518,249       117,161  

Net Increase (Decrease) in Net Assets Resulting from Operations

      11,549,557       9,828,197       2,378,902       1,669,378       17,325  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (14,959,677 )      (15,988,133 )      (2,326,995 )      (4,756,618 )      (888,100 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (3,410,120 )      (6,159,936 )      51,907       (3,087,240 )      (870,775 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 112,099,678     $ 83,312,836     $ 18,358,702     $ 32,654,219     $ 6,543,470  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

12

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Invesco V.I. Value
Opportunities
Series II Shares		     Janus Aspen -
Enterprise
Service
Shares		    

Janus Aspen -
Global Research

Service

Shares

     Janus Aspen -
Perkins Mid
Cap Value
Service
Shares		     MFS® New
Discovery
Service
Class		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  27,970,466     $ 24,097,729     $ 41,374,871     $ 3,689,741     $ 59,862,477  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      495,129       162,842       180,980       31,154       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      342,472       325,794       531,364       45,328       799,408  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      152,657       (162,952 )      (350,384 )      (14,174 )      (799,408 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,626,918       2,365,036       —         296,531       1,694,842  

Realized Gain (Loss) on Investments

      3,254,944       2,507,120       4,074,938       128,483       256,358  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,881,862       4,872,156       4,074,938       425,014       1,951,200  

Net Change in Unrealized Appreciation (Depreciation)

      (7,722,638 )      (4,025,974 )      (4,561,140 )      (571,455 )      (2,374,538 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (2,840,776 )      846,182       (486,202 )      (146,441 )      (423,338 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (2,688,119 )      683,230       (836,586 )      (160,615 )      (1,222,746 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (6,715,952 )      (5,016,733 )      (10,640,874 )      (794,088 )      (13,606,076 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (9,404,071 )      (4,333,503 )      (11,477,460 )      (954,703 )      (14,828,822 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 18,566,395     $ 19,764,226     $ 29,897,411     $ 2,735,038     $ 45,033,655  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      13,225       139,288       255,751       24,773       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      255,672       288,240       398,630       39,767       611,267  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (242,447 )      (148,952 )      (142,879 )      (14,994 )      (611,267 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      5,198,723       1,493,333       —         371,882       1,985,386  

Realized Gain (Loss) on Investments

      729,529       1,036,543       1,369,861       9,687       (743,625 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      5,928,252       2,529,876       1,369,861       381,569       1,241,761  

Net Change in Unrealized Appreciation (Depreciation)

      (3,090,789 )      (446,215 )      (1,247,346 )      70,741       2,020,238  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      2,837,463       2,083,661       122,515       452,310       3,261,999  

Net Increase (Decrease) in Net Assets Resulting from Operations

      2,595,016       1,934,709       (20,364 )      437,316       2,650,732  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (2,829,104 )      (1,947,353 )      (4,072,103 )      (200,047 )      (6,348,826 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (234,088 )      (12,644 )      (4,092,467 )      237,269       (3,698,094 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 18,332,307     $ 19,751,582     $ 25,804,944     $ 2,972,307     $ 41,335,561  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

13

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     MFS® Total
Return Service
Class		     NVIT Emerging
Markets Class
D Shares		     State Street
Total Return
V.I.S. Class
3 Shares		     TA AB
Dynamic
Allocation
Initial Class		     TA AB
Dynamic
Allocation
Service Class		  
     Subaccount     Subaccount(1)     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $ 73,196,447     $ —       $ 59,012,874     $ 29,143,207     $ 339,267,725  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,409,107       —         875,526       330,895       3,693,566  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      922,857       —         976,790       392,257       4,925,850  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      486,250       —         (101,264 )      (61,362 )      (1,232,284 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,229,277       —         1,794,079       —         —    

Realized Gain (Loss) on Investments

      4,602,814       —         945,126       1,707,173       5,786,865  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      6,832,091       —         2,739,205       1,707,173       5,786,865  

Net Change in Unrealized Appreciation (Depreciation)

      (8,369,029 )      —         (4,395,417 )      (2,021,086 )      (11,155,923 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,536,938 )      —         (1,656,212 )      (313,913 )      (5,369,058 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,050,688 )      —         (1,757,476 )      (375,275 )      (6,601,342 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (16,903,770 )      —         (2,178,035 )      (5,320,364 )      13,574,872  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (17,954,458 )      —         (3,935,511 )      (5,695,639 )      6,973,530  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 55,241,989     $ —       $ 55,077,363     $ 23,447,568     $ 346,241,255  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,415,825       164       871,307       328,523       4,342,754  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      780,587       42       902,389       329,186       4,826,497  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      635,238       122       (31,082 )      (663 )      (483,743 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,747,849       —         1,010,082       —         —    

Realized Gain (Loss) on Investments

      1,709,584       (50 )      500,432       640,386       4,633,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,457,433       (50 )      1,510,514       640,386       4,633,225  

Net Change in Unrealized Appreciation (Depreciation)

      (369,178 )      (792 )      830,845       (464,247 )      (2,067,014 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      3,088,255       (842 )      2,341,359       176,139       2,566,211  

Net Increase (Decrease) in Net Assets Resulting from Operations

      3,723,493       (720 )      2,310,277       175,476       2,082,468  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (7,033,319 )      19,494       (3,255,351 )      (2,127,500 )      (8,425,055 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (3,309,826 )      18,774       (945,074 )      (1,952,024 )      (6,342,587 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 51,932,163     $ 18,774     $ 54,132,289     $ 21,495,544     $ 339,898,668  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

14

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Aegon
Government
Money Market
Initial Class		     TA Aegon
Government
Money
Market
Service Class		     TA Aegon
High Yield
Bond Initial
Class		     TA Aegon
High Yield
Bond Service
Class		     TA Aegon
U.S.
Government
Securities
Initial Class		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  115,039,216     $ 345,246,865     $ 102,904,592     $ 132,109,914     $ 87,871,181  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      5,787       17,859       5,552,200       8,987,761       1,640,727  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,672,642       4,906,835       1,391,082       2,218,029       1,145,841  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,666,855 )      (4,888,976 )      4,161,118       6,769,732       494,886  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         382,505  

Realized Gain (Loss) on Investments

      —         (1 )      1,308,863       (1,908,312 )      (2,141,421 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —         (1 )      1,308,863       (1,908,312 )      (1,758,916 ) 

Net Change in Unrealized Appreciation (Depreciation)

      —         1       (10,115,169 )      (13,769,324 )      293,375  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —         —         (8,806,306 )      (15,677,636 )      (1,465,541 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,666,855 )      (4,888,976 )      (4,645,188 )      (8,907,904 )      (970,655 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      4,688,536       43,406,646       (18,719,946 )      13,821,563       (15,786,691 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,021,681       38,517,670       (23,365,134 )      4,913,659       (16,757,346 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 118,060,897     $ 383,764,535     $ 79,539,458     $ 137,023,573     $ 71,113,835  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      6,614       19,966       4,964,898       9,026,847       514,498  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,740,504       5,415,665       1,198,512       2,196,070       1,159,428  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,733,890 )      (5,395,699 )      3,766,386       6,830,777       (644,930 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      —         —         (420,462 )      (3,922,638 )      (1,190,529 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —         —         (420,462 )      (3,922,638 )      (1,190,529 ) 

Net Change in Unrealized Appreciation (Depreciation)

      —         —         7,191,741       16,022,419       865,081  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —         —         6,771,279       12,099,781       (325,448 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,733,890 )      (5,395,699 )      10,537,665       18,930,558       (970,378 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (6,953,071 )      5,590,348       (4,677,617 )      (366,673 )      3,419,313  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (8,686,961 )      194,649       5,860,048       18,563,885       2,448,935  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 109,373,936     $ 383,959,184     $ 85,399,506     $ 155,587,458     $ 73,562,770  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

15

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Aegon
U.S. Government
Securities
Service Class		     TA American
Funds Managed
Risk - Balanced
Service Class		    

TA Asset

Allocation -

Conservative
Initial Class

    

TA Asset

Allocation -

Conservative
Service Class

    

TA Asset
Allocation -

Growth
Initial Class

  
     Subaccount     Subaccount(1)     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  211,171,453     $ —       $ 239,339,037     $ 1,091,927,020     $ 361,493,975  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,472,704       —         4,594,846       21,351,803       4,956,244  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      3,463,714       458,757       3,190,965       15,201,451       4,712,292  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      8,990       (458,757 )      1,403,881       6,150,352       243,952  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      928,571       —         8,160,003       42,839,235       —    

Realized Gain (Loss) on Investments

      (3,580,596 )      (57,129 )      4,886,778       11,790,763       28,886,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (2,652,025 )      (57,129 )      13,046,781       54,629,998       28,886,904  

Net Change in Unrealized Appreciation (Depreciation)

      (2,468,059 )      (986,156 )      (20,730,926 )      (98,097,936 )      (36,260,278 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (5,120,084 )      (1,043,285 )      (7,684,145 )      (43,467,938 )      (7,373,374 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (5,111,094 )      (1,502,042 )      (6,280,264 )      (37,317,586 )      (7,129,422 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      143,804,229       121,357,288       (43,308,579 )      (15,391,424 )      (81,321,524 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      138,693,135       119,855,246       (49,588,843 )      (52,709,010 )      (88,450,946 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 349,864,588     $ 119,855,246     $ 189,750,194     $ 1,039,218,010     $ 273,043,029  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,918,535       1,398,218       3,824,970       18,785,162       5,643,952  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,220,947       2,949,953       2,789,492       14,446,620       3,807,339  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (4,302,412 )      (1,551,735 )      1,035,478       4,338,542       1,836,613  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         4,172,201       23,463,654       —    

Realized Gain (Loss) on Investments

      389,755       3,230       (645,513 )      (2,920,930 )      10,367,544  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      389,755       3,230       3,526,688       20,542,724       10,367,544  

Net Change in Unrealized Appreciation (Depreciation)

      162,748       14,321,273       1,201,733       4,855,411       (1,185,117 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      552,503       14,324,503       4,728,421       25,398,135       9,182,427  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (3,749,909 )      12,772,768       5,763,899       29,736,677       11,019,040  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      38,422,328       229,949,565       (18,632,199 )      (47,297,042 )      (29,570,883 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      34,672,419       242,722,333       (12,868,300 )      (17,560,365 )      (18,551,843 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 384,537,007     $ 362,577,579     $ 176,881,894     $ 1,021,657,645     $ 254,491,186  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

16

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

TA Asset
Allocation -

Growth
Service Class

    

TA Asset
Allocation -

Moderate
Initial Class

    

TA Asset
Allocation -

Moderate
Service Class

    

TA Asset
Allocation -

Moderate
Growth Initial
Class

    

TA Asset
Allocation -

Moderate Growth
Service Class

  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  203,683,787     $ 558,320,285     $ 5,316,426,982     $ 658,335,948     $ 3,454,997,510  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,986,874       9,409,831       97,853,622       12,062,611       67,908,038  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      3,033,060       7,233,701       72,227,359       8,608,076       50,560,848  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (46,186 )      2,176,130       25,626,263       3,454,535       17,347,190  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         15,913,077       185,685,562       9,000,628       57,223,768  

Realized Gain (Loss) on Investments

      7,578,194       26,749,798       52,855,461       33,089,626       73,236,586  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      7,578,194       42,662,875       238,541,023       42,090,254       130,460,354  

Net Change in Unrealized Appreciation (Depreciation)

      (15,218,624 )      (59,032,066 )      (464,964,052 )      (61,416,275 )      (281,657,622 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (7,640,430 )      (16,369,191 )      (226,423,029 )      (19,326,021 )      (151,197,268 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (7,686,616 )      (14,193,061 )      (200,796,766 )      (15,871,486 )      (133,850,078 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,160,284       (125,413,007 )      (82,221,301 )      (142,493,677 )      (48,501,523 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (6,526,332 )      (139,606,068 )      (283,018,067 )      (158,365,163 )      (182,351,601 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 197,157,455     $ 418,714,217     $ 5,033,408,915     $ 499,970,785     $ 3,272,645,909  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,494,762       8,882,508       96,247,253       9,746,867       56,957,967  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,597,904       5,964,442       66,093,891       7,117,512       46,501,257  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      896,858       2,918,066       30,153,362       2,629,355       10,456,710  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         10,122,008       124,897,398       26,214,499       176,561,797  

Realized Gain (Loss) on Investments

      5,398,467       6,571,800       15,643,392       9,183,006       33,846,317  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      5,398,467       16,693,808       140,540,790       35,397,505       210,408,114  

Net Change in Unrealized Appreciation (Depreciation)

      306,619       (3,909,028 )      13,812,981       (15,175,708 )      (73,965,923 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      5,705,086       12,784,780       154,353,771       20,221,797       136,442,191  

Net Increase (Decrease) in Net Assets Resulting from Operations

      6,601,944       15,702,846       184,507,133       22,851,152       146,898,901  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (19,093,951 )      (31,114,607 )      (333,357,122 )      (45,330,832 )      (170,423,955 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (12,492,007 )      (15,411,761 )      (148,849,989 )      (22,479,680 )      (23,525,054 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 184,665,448     $ 403,302,456     $ 4,884,558,926     $ 477,491,105     $ 3,249,120,855  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

17

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Barrow
Hanley Dividend
Focused Initial
Class		     TA Barrow
Hanley Dividend
Focused Service
Class		     TA BlackRock
Equity Smart
Beta 100
Service Class		     TA BlackRock
Global Allocation
Service Class		  
     Subaccount     Subaccount     Subaccount(1)     Subaccount  

Net Assets as of December 31, 2014:

    $ 461,315,863     $ 153,661,743     $ —       $ 1,227,043,635  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      7,229,224       2,538,416       —         20,124,352  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      5,813,525       2,218,421       —         17,130,052  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,415,699       319,995       —         2,994,300  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         —         103,477,350  

Realized Gain (Loss) on Investments

      37,598,433       7,272,555       —         14,152,071  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      37,598,433       7,272,555       —         117,629,421  

Net Change in Unrealized Appreciation (Depreciation)

      (58,547,745 )      (15,960,503 )      —         (150,689,022 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (20,949,312 )      (8,687,948 )      —         (33,059,601 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (19,533,613 )      (8,367,953 )      —         (30,065,301 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (91,972,454 )      (269,934 )      —         (18,801,909 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (111,506,067 )      (8,637,887 )      —         (48,867,210 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 349,809,796     $ 145,023,856     $ —       $ 1,178,176,425  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      7,455,376       2,939,251       —         4,606,808  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      5,024,268       2,180,690       59,366       17,009,729  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,431,108       758,561       (59,366 )      (12,402,921 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         —         7,136,776  

Realized Gain (Loss) on Investments

      16,331,527       4,909,031       (12,833 )      (4,943,716 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      16,331,527       4,909,031       (12,833 )      2,193,060  

Net Change in Unrealized Appreciation (Depreciation)

      24,445,825       12,677,327       92,851       48,221,462  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      40,777,352       17,586,358       80,018       50,414,522  

Net Increase (Decrease) in Net Assets Resulting from Operations

      43,208,460       18,344,919       20,652       38,011,601  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (29,019,235 )      5,005,046       23,102,327       51,869,511  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      14,189,225       23,349,965       23,122,979       89,881,112  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 363,999,021     $ 168,373,821     $ 23,122,979     $ 1,268,057,537  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

18

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA BlackRock
Global Allocation
Managed Risk -
Balanced Service
Class		     TA BlackRock
Global Allocation
Managed Risk -
Growth Service
Class		     TA BlackRock
Smart Beta 50
Service Class		     TA BlackRock
Smart Beta 75
Service Class		  
     Subaccount     Subaccount     Subaccount(1)     Subaccount(1)  

Net Assets as of December 31, 2014:

    $ 9,560,920     $ 10,712,850     $ —       $ —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      —         —         —         —    

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,017,426       1,224,736       —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,017,426 )      (1,224,736 )      —         —    

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         —         —    

Realized Gain (Loss) on Investments

      (230,711 )      (165,659 )      —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (230,711 )      (165,659 )      —         —    

Net Change in Unrealized Appreciation (Depreciation)

      (5,890,788 )      (9,055,506 )      —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (6,121,499 )      (9,221,165 )      —         —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      (7,138,925 )      (10,445,901 )      —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      125,776,300       150,383,397       —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      118,637,375       139,937,496       —         —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 128,198,295     $ 150,650,346     $ —       $ —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      2,971,545       3,417,364       —         —    

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,995,164       2,237,482       209,021       43,691  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      976,381       1,179,882       (209,021 )      (43,691 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      9,905,149       9,574,729       —         —    

Realized Gain (Loss) on Investments

      (2,766,262 )      (3,284,911 )      30,186       15,965  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      7,138,887       6,289,818       30,186       15,965  

Net Change in Unrealized Appreciation (Depreciation)

      (9,013,055 )      (9,554,872 )      (107,122 )      69,548  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,874,168 )      (3,265,054 )      (76,936 )      85,513  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (897,787 )      (2,085,172 )      (285,957 )      41,822  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      34,838,452       19,846,947       42,260,756       11,464,594  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      33,940,665       17,761,775       41,974,799       11,506,416  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 162,138,960     $ 168,412,121     $ 41,974,799     $ 11,506,416  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

19

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA BlackRock
Tactical Allocation
Service Class		     TA Clarion
Global Real
Estate Securities
Initial Class		     TA Clarion
Global Real
Estate Securities
Service Class		     TA International
Moderate
Growth Initial
Class		     TA International
Moderate
Growth Service
Class		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $  1,394,587,714     $ 61,698,855     $ 92,625,420     $ 79,791     $ 560,090,151  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      24,822,499       2,377,646       3,845,688       1,600       10,741,850  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      20,234,861       834,135       1,385,199       367       8,837,503  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      4,587,638       1,543,511       2,460,489       1,233       1,904,347  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      70,454,904       —         —         —         —    

Realized Gain (Loss) on Investments

      16,629,358       3,012,971       2,199,070       68       8,676,357  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      87,084,262       3,012,971       2,199,070       68       8,676,357  

Net Change in Unrealized Appreciation (Depreciation)

      (113,949,656 )      (5,696,062 )      (7,130,408 )      (2,994 )      (33,452,459 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (26,865,394 )      (2,683,091 )      (4,931,338 )      (2,926 )      (24,776,102 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (22,277,756 )      (1,139,580 )      (2,470,849 )      (1,693 )      (22,871,755 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      30,165,405       (10,531,067 )      (692,535 )      18       58,234,693  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      7,887,649       (11,670,647 )      (3,163,384 )      (1,675 )      35,362,938  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 1,402,475,363     $ 50,028,208     $ 89,462,036     $ 78,116     $ 595,453,089  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      32,932,340       846,761       1,245,132       1,679       10,463,387  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      19,963,698       700,110       1,276,356       349       8,201,821  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      12,968,642       146,651       (31,224 )      1,330       2,261,566  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      47,921,849       —         —         —         —    

Realized Gain (Loss) on Investments

      5,164,483       1,299,128       1,175,789       34       3,144,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      53,086,332       1,299,128       1,175,789       34       3,144,149  

Net Change in Unrealized Appreciation (Depreciation)

      (17,726,377 )      (1,903,615 )      (2,257,078 )      (739 )      (8,217,658 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      35,359,955       (604,487 )      (1,081,289 )      (705 )      (5,073,509 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      48,328,597       (457,836 )      (1,112,513 )      625       (2,811,943 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (6,592,984 )      (5,034,211 )      (4,037,900 )      1,381       (41,526,221 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      41,735,613       (5,492,047 )      (5,150,413 )      2,006       (44,338,164 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,444,210,976     $ 44,536,161     $ 84,311,623     $ 80,122     $ 551,114,925  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

20

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Janus
Balanced
Service
Class
Subaccount		     TA Janus
Mid-Cap
Growth
Initial Class
Subaccount		     TA Janus
Mid-Cap
Growth
Service
Class
Subaccount		     TA Jennison
Growth
Initial Class
Subaccount		     TA Jennison
Growth
Service
Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 351,230,964     $ 99,193,842     $ 69,299,132     $ 218,374,436     $ 67,454,449  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,908,812       —         —         —         —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,632,710       1,231,936       1,036,410       2,959,287       1,186,731  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,723,898 )      (1,231,936 )      (1,036,410 )      (2,959,287 )      (1,186,731 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      11,945,213       11,794,971       11,270,467       14,924,169       6,715,916  

Realized Gain (Loss) on Investments

      5,623,981       6,232,778       546,636       18,944,936       2,443,911  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      17,569,194       18,027,749       11,817,103       33,869,105       9,159,827  

Net Change in Unrealized Appreciation (Depreciation)

      (22,374,696 )      (21,505,251 )      (15,873,878 )      (10,851,481 )      (1,560,670 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (4,805,502 )      (3,477,502 )      (4,056,775 )      23,017,624       7,599,157  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (7,529,400 )      (4,709,438 )      (5,093,185 )      20,058,337       6,412,426  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      218,707,249       (25,359,931 )      3,953,617       (46,205,552 )      22,814,125  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      211,177,849       (30,069,369 )      (1,139,568 )      (26,147,215 )      29,226,551  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 562,408,813     $ 69,124,473     $ 68,159,564     $ 192,227,221     $ 96,681,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      6,859,000       —         —         —         —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      8,769,636       886,818       884,029       2,475,472       1,288,467  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,910,636 )      (886,818 )      (884,029 )      (2,475,472 )      (1,288,467 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      5,696,795       5,689,511       5,997,840       30,242,323       16,495,741  

Realized Gain (Loss) on Investments

      8,381,278       (960,178 )      (4,559,216 )      6,003,051       533,825  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      14,078,073       4,729,333       1,438,624       36,245,374       17,029,566  

Net Change in Unrealized Appreciation (Depreciation)

      7,012,769       (6,480,033 )      (3,241,525 )      (40,251,968 )      (19,026,960 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      21,090,842       (1,750,700 )      (1,802,901 )      (4,006,594 )      (1,997,394 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      19,180,206       (2,637,518 )      (2,686,930 )      (6,482,066 )      (3,285,861 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      106,359,221       (6,258,652 )      (2,150,732 )      (20,189,643 )      (4,969,002 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      125,539,427       (8,896,170 )      (4,837,662 )      (26,671,709 )      (8,254,863 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 687,948,240     $ 60,228,303     $ 63,321,902     $ 165,555,512     $ 88,426,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

21

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA JPMorgan
Core Bond
Service Class		     TA JPMorgan
Enhanced
Index Initial
Class		     TA JPMorgan
Enhanced
Index Service
Class		     TA JPMorgan
Mid Cap
Value Service
Class		  
     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

    $ 139,476,584     $ 117,249,774     $ 36,235,761     $ 151,741,957  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      2,895,415       1,022,961       333,275       1,207,345  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,215,741       1,584,921       571,680       2,407,416  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      679,674       (561,960 )      (238,405 )      (1,200,071 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         7,581,613       2,961,755       10,820,181  

Realized Gain (Loss) on Investments

      107,777       11,453,420       894,360       7,400,370  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      107,777       19,035,033       3,856,115       18,220,551  

Net Change in Unrealized Appreciation (Depreciation)

      (2,678,494 )      (19,852,431 )      (4,555,306 )      (24,789,737 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (2,570,717 )      (817,398 )      (699,191 )      (6,569,186 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,891,043 )      (1,379,358 )      (937,596 )      (7,769,257 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      36,316,443       (14,584,831 )      4,416,154       13,184,089  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      34,425,400       (15,964,189 )      3,478,558       5,414,832  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 173,901,984     $ 101,285,585     $ 39,714,319     $ 157,156,789  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      4,016,554       410,103       78,214       3,377,193  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,855,817       1,449,464       611,090       2,502,761  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,160,737       (1,039,361 )      (532,876 )      874,432  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         2,241,555       982,439       28,246,982  

Realized Gain (Loss) on Investments

      319,871       4,525,574       120,864       1,317,823  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      319,871       6,767,129       1,103,303       29,564,805  

Net Change in Unrealized Appreciation (Depreciation)

      (1,333,081 )      3,708,951       3,374,395       (10,255,191 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,013,210 )      10,476,080       4,477,698       19,309,614  

Net Increase (Decrease) in Net Assets Resulting from Operations

      147,527       9,436,719       3,944,822       20,184,046  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      51,354,701       (4,108,109 )      8,307,114       21,306,372  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      51,502,228       5,328,610       12,251,936       41,490,418  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 225,404,212     $ 106,614,195     $ 51,966,255     $ 198,647,207  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

22

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA JPMorgan
Tactical
Allocation
Service Class
Subaccount		     TA Legg Mason
Dynamic
Allocation - Balanced
Service Class
Subaccount		     TA Legg Mason
Dynamic
Allocation - Growth
Service Class
Subaccount		     TA Madison
Balanced
Allocation
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 825,197,475     $ 738,870,798     $ 297,102,967     $ 94,800,820  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      11,211,154       8,701,510       3,076,373       1,782,986  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      12,873,561       12,631,655       6,141,470       1,294,954  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,662,407 )      (3,930,145 )      (3,065,097 )      488,032  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         —         6,486,117  

Realized Gain (Loss) on Investments

      5,721,994       6,297,322       4,342,812       344,533  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      5,721,994       6,297,322       4,342,812       6,830,650  

Net Change in Unrealized Appreciation (Depreciation)

      (23,551,564 )      (40,236,273 )      (24,690,023 )      (9,381,701 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (17,829,570 )      (33,938,951 )      (20,347,211 )      (2,551,051 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (19,491,977 )      (37,869,096 )      (23,412,308 )      (2,063,019 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      291,369,258       424,799,604       254,917,490       5,863,990  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      271,877,281       386,930,508       231,505,182       3,800,971  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 1,097,074,756     $ 1,125,801,306     $ 528,608,149     $ 98,601,791  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      13,684,866       13,072,935       5,528,319       1,889,811  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      15,208,773       15,615,654       7,304,109       1,362,509  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,523,907 )      (2,542,719 )      (1,775,790 )      527,302  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         25,657,065       10,154,887       2,282,273  

Realized Gain (Loss) on Investments

      9,038,809       7,622,987       4,367,250       (197,050 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      9,038,809       33,280,052       14,522,137       2,085,223  

Net Change in Unrealized Appreciation (Depreciation)

      24,826,380       (54,146,056 )      (25,051,336 )      1,361,517  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      33,865,189       (20,866,004 )      (10,529,199 )      3,446,740  

Net Increase (Decrease) in Net Assets Resulting from Operations

      32,341,282       (23,408,723 )      (12,304,989 )      3,974,042  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      124,472,451       72,024,169       (2,419,076 )      2,436,708  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      156,813,733       48,615,446       (14,724,065 )      6,410,750  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,253,888,489     $ 1,174,416,752     $ 513,884,084     $ 105,012,541  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

23

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

TA Madison
Conservative

Allocation
Service
Class

Subaccount

    

TA Madison

Diversified
Income
Service Class
Subaccount

     TA Managed
Risk - Balanced
ETF Service
Class
Subaccount		     TA Managed
Risk - Conservative
ETF Service Class
Subaccount		     TA Managed
Risk - Growth
ETF Service
Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 74,746,336     $ 105,588,057     $ 4,522,734,970     $ 674,485,127     $ 2,857,654,356  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,287,137       1,109,464       67,420,882       11,000,626       42,541,783  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,034,341       1,445,518       68,014,311       9,527,478       39,352,101  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      252,796       (336,054 )      (593,429 )      1,473,148       3,189,682  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,245,703       2,024,035       212,281,563       32,162,091       248,375,813  

Realized Gain (Loss) on Investments

      99,639       778,401       20,434,582       3,606,482       16,481,858  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,345,342       2,802,436       232,716,145       35,768,573       264,857,671  

Net Change in Unrealized Appreciation (Depreciation)

      (5,193,961 )      (3,767,223 )      (406,937,442 )      (52,355,524 )      (412,358,295 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,848,619 )      (964,787 )      (174,221,297 )      (16,586,951 )      (147,500,624 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,595,823 )      (1,300,841 )      (174,814,726 )      (15,113,803 )      (144,310,942 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      961,996       5,471,192       1,146,022,054       74,705,661       115,526,343  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (633,827 )      4,170,351       971,207,328       59,591,858       (28,784,599 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 74,112,509     $ 109,758,408     $ 5,493,942,298     $ 734,076,985     $ 2,828,869,757  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,541,347       1,498,483       92,495,544       12,583,206       44,426,261  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,026,659       1,515,608       71,370,880       10,122,887       36,719,505  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      514,688       (17,125 )      21,124,664       2,460,319       7,706,756  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      561,806       733,575       45,389,462       7,042,590       —    

Realized Gain (Loss) on Investments

      (224,877 )      1,058,643       892,376       (554,939 )      (33,716,208 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      336,929       1,792,218       46,281,838       6,487,651       (33,716,208 ) 

Net Change in Unrealized Appreciation (Depreciation)

      1,149,175       4,191,893       70,095,663       11,605,547       113,828,987  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      1,486,104       5,984,111       116,377,501       18,093,198       80,112,779  

Net Increase (Decrease) in Net Assets Resulting from Operations

      2,000,792       5,966,986       137,502,165       20,553,517       87,819,535  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,096,205 )      242,108       41,731,343       22,372,978       (217,014,991 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (1,095,413 )      6,209,094       179,233,508       42,926,495       (129,195,456 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 73,017,096     $ 115,967,502     $ 5,673,175,806     $ 777,003,480     $ 2,699,674,301  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

24

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

   

TA Market

Participation
Strategy Service
Class

    

TA MFS

International
Equity Initial
Class

    

TA MFS

International
Equity Service
Class

    

TA Morgan

Stanley Capital
Growth Initial
Class

    

TA Morgan

Stanley
Capital Growth
Service Class

  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 418,144,147     $ 79,559,722     $ 62,827,783     $ 118,184,347     $ 34,839,910  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     —         1,222,548       1,180,061       —         —    

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     6,171,551       1,148,166       1,103,114       1,633,471       660,849  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (6,171,551 )      74,382       76,947       (1,633,471 )      (660,849 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     16,303,256       —         —         8,514,582       3,934,405  

Realized Gain (Loss) on Investments

     3,716,754       4,471,311       1,332,986       11,546,982       2,573,808  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     20,020,010       4,471,311       1,332,986       20,061,564       6,508,213  

Net Change in Unrealized Appreciation (Depreciation)

     (34,973,956 )      (4,947,339 )      (4,072,034 )      (7,131,057 )      (2,285,365 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (14,953,946 )      (476,028 )      (2,739,048 )      12,930,507       4,222,848  

Net Increase (Decrease) in Net Assets Resulting from Operations

     (21,125,497 )      (401,646 )      (2,662,101 )      11,297,036       3,561,999  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     55,748,721       (8,033,630 )      22,532,029       (25,213,565 )      14,933,229  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     34,623,224       (8,435,276 )      19,869,928       (13,916,529 )      18,495,228  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 452,767,371     $ 71,124,446     $ 82,697,711     $ 104,267,818     $ 53,335,138  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     714,062       991,276       1,090,723       —         —    

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     6,254,015       951,438       1,145,639       1,422,288       768,600  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (5,539,953 )      39,838       (54,916 )      (1,422,288 )      (768,600 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     6,490,035       496,051       635,990       14,344,336       8,256,630  

Realized Gain (Loss) on Investments

     3,380,884       1,343,577       (425,275 )      3,794,332       (15,455 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     9,870,919       1,839,628       210,715       18,138,668       8,241,175  

Net Change in Unrealized Appreciation (Depreciation)

     7,934,888       (3,029,157 )      (1,543,402 )      (20,711,980 )      (9,585,791 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     17,805,807       (1,189,529 )      (1,332,687 )      (2,573,312 )      (1,344,616 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     12,265,854       (1,149,691 )      (1,387,603 )      (3,995,600 )      (2,113,216 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (12,021,923 )      (4,680,935 )      3,112,737       (7,356,972 )      1,973,884  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     243,931       (5,830,626 )      1,725,134       (11,352,572 )      (139,332 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 453,011,302     $ 65,293,820     $ 84,422,845     $ 92,915,246     $ 53,195,806  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

25

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    TA Multi-Managed
Balanced Initial
Class		     TA Multi-Managed
Balanced Service
Class		     TA Multi-Manager
Alternative
Strategies Service
Class		    

TA PIMCO

Tactical -
Balanced
Service Class

    

TA PIMCO
Tactical -

Conservative
Service Class

  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 73,575,633     $ 270,653,285     $ 1,029,166     $ 533,120,857     $ 132,338,428  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Investment Income:          

Reinvested Dividends

     991,087       3,447,148       5,360       —         580,104  
Investment Expense:          

Mortality and Expense Risk and Administrative Charges

     1,061,733       4,250,262       16,036       7,801,053       2,646,211  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (70,646 )      (803,114 )      (10,676 )      (7,801,053 )      (2,066,107 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     3,464,198       14,001,712       12,101       19,506,100       4,642,670  

Realized Gain (Loss) on Investments

     1,720,238       5,134,757       (2,785 )      3,255,106       1,643,727  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     5,184,436       19,136,469       9,316       22,761,206       6,286,397  

Net Change in Unrealized Appreciation (Depreciation)

     (5,974,237 )      (22,892,603 )      (115,489 )      (38,287,536 )      (12,212,113 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (789,801 )      (3,756,134 )      (106,173 )      (15,526,330 )      (5,925,716 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (860,447 )      (4,559,248 )      (116,849 )      (23,327,383 )      (7,991,823 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (1,157,100 )      81,313,819       848,459       62,143,501       99,012,760  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (2,017,547 )      76,754,571       731,610       38,816,118       91,020,937  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 71,558,086     $ 347,407,856     $ 1,760,776     $ 571,936,975     $ 223,359,365  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     726,357       5,228,016       41,999       1,686,498       987,047  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,080,640       7,651,445       18,026       7,972,300       3,282,792  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (354,283 )      (2,423,429 )      23,973       (6,285,802 )      (2,295,745 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     2,459,419       20,339,320       —         —         —    

Realized Gain (Loss) on Investments

     428,893       1,620,349       (25,612 )      2,371,624       1,374,624  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     2,888,312       21,959,669       (25,612 )      2,371,624       1,374,624  

Net Change in Unrealized Appreciation (Depreciation)

     2,050,774       16,043,324       17,856       26,187,946       8,847,951  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     4,939,086       38,002,993       (7,756 )      28,559,570       10,222,575  

Net Increase (Decrease) in Net Assets Resulting from Operations

     4,584,803       35,579,564       16,217       22,273,768       7,926,830  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     2,885,034       521,856,234       (175,886 )      15,940,910       42,096,016  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     7,469,837       557,435,798       (159,669 )      38,214,678       50,022,846  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 79,027,923     $ 904,843,654     $ 1,601,107     $ 610,151,653     $ 273,382,211  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

26

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    TA PIMCO
Tactical -
Growth
Service Class		     TA PIMCO
Total Return
Initial Class		     TA PIMCO
Total Return
Service Class		     TA PineBridge
Inflation
Opportunities
Service Class		  
    Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 171,846,465     $ 245,905,910     $ 859,856,281     $ 182,242,932  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     —         5,338,577       21,682,640       2,253,316  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     3,487,693       3,147,140       11,911,408       2,604,572  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (3,487,693 )      2,191,437       9,771,232       (351,256 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     6,264,639       5,061,690       22,623,475       —    

Realized Gain (Loss) on Investments

     1,320,701       (154,838 )      (4,050,122 )      (2,181,206 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     7,585,340       4,906,852       18,573,353       (2,181,206 ) 

Net Change in Unrealized Appreciation (Depreciation)

     (18,145,091 )      (8,290,619 )      (35,736,097 )      (5,298,527 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (10,559,751 )      (3,383,767 )      (17,162,744 )      (7,479,733 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (14,047,444 )      (1,192,330 )      (7,391,512 )      (7,830,989 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     130,805,006       (51,771,662 )      (18,888,316 )      3,845,211  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     116,757,562       (52,963,992 )      (26,279,828 )      (3,985,778 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 288,604,027     $ 192,941,918     $ 833,576,453     $ 178,257,154  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     —         4,477,719       18,743,258       1,041,227  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     4,360,063       2,792,877       11,780,932       2,508,809  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (4,360,063 )      1,684,842       6,962,326       (1,467,582 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     —         148,397       691,966       —    

Realized Gain (Loss) on Investments

     984,394       (1,377,576 )      (6,181,135 )      (3,163,036 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     984,394       (1,229,179 )      (5,489,169 )      (3,163,036 ) 

Net Change in Unrealized Appreciation (Depreciation)

     14,188,586       1,836,492       7,649,836       8,321,693  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     15,172,980       607,313       2,160,667       5,158,657  

Net Increase (Decrease) in Net Assets Resulting from Operations

     10,812,917       2,292,155       9,122,993       3,691,075  
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     34,827,035       (13,914,903 )      (15,794,282 )      (6,600,744 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     45,639,952       (11,622,748 )      (6,671,289 )      (2,909,669 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 334,243,979     $ 181,319,170     $ 826,905,164     $ 175,347,485  
 

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

27

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    TA ProFunds
UltraBear
Service Class
(OAM)		     TA QS
Investors
Active Asset
Allocation -
Conservative
Service Class		     TA QS
Investors
Active Asset
Allocation -
Moderate
Service Class		     TA QS
Investors
Active Asset
Allocation -
Moderate
Growth
Service Class		  
    Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 18,066,570     $ 413,140,719     $ 1,586,689,643     $ 650,876,591  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     —         4,379,106       15,589,397       6,764,124  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     317,248       5,806,251       21,171,889       9,274,689  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (317,248 )      (1,427,145 )      (5,582,492 )      (2,510,565 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     —         12,679,800       64,628,984       39,308,606  

Realized Gain (Loss) on Investments

     (5,772,636 )      1,190,875       4,845,553       4,564,821  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     (5,772,636 )      13,870,675       69,474,537       43,873,427  

Net Change in Unrealized Appreciation (Depreciation)

     1,262,781       (28,892,011 )      (155,342,713 )      (96,791,769 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (4,509,855 )      (15,021,336 )      (85,868,176 )      (52,918,342 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (4,827,103 )      (16,448,481 )      (91,450,668 )      (55,428,907 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     19,570,200       36,270,448       41,887,543       51,426,785  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     14,743,097       19,821,967       (49,563,125 )      (4,002,122 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 32,809,667     $ 432,962,686     $ 1,537,126,518     $ 646,874,469  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     —         5,547,781       18,533,964       6,675,387  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     605,139       5,772,933       19,710,056       8,447,086  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (605,139 )      (225,152 )      (1,176,092 )      (1,771,699 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     —         —         —         —    

Realized Gain (Loss) on Investments

     (9,349,658 )      (1,303,348 )      (3,421,943 )      (8,043,648 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     (9,349,658 )      (1,303,348 )      (3,421,943 )      (8,043,648 ) 

Net Change in Unrealized Appreciation (Depreciation)

     (7,131,852 )      7,341,945       17,811,376       13,180,018  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (16,481,510 )      6,038,597       14,389,433       5,136,370  

Net Increase (Decrease) in Net Assets Resulting from Operations

     (17,086,649 )      5,813,445       13,213,341       3,364,671  
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     18,134,179       (13,639,563 )      (101,550,608 )      (58,800,055 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     1,047,530       (7,826,118 )      (88,337,267 )      (55,435,384 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 33,857,197     $ 425,136,568     $ 1,448,789,251     $ 591,439,085  
 

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

28

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    TA Small/
Mid Cap
Value Initial
Class		     TA Small/
Mid Cap
Value
Service Class		     TA T. Rowe
Price Small
Cap Initial
Class		     TA T. Rowe
Price Small
Cap Service
Class		     TA Torray
Concentrated
Growth
Initial Class		  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 156,210,025     $ 91,247,465     $ 126,270,687     $ 141,930,797     $ 191,072,993  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,369,169       744,807       —         —         894,066  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     2,006,645       1,357,713       1,773,652       2,395,848       2,503,829  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (637,476 )      (612,906 )      (1,773,652 )      (2,395,848 )      (1,609,763 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     15,624,664       11,178,382       8,891,417       13,280,694       31,028,105  

Realized Gain (Loss) on Investments

     6,057,853       429,525       14,272,113       5,809,210       20,207,504  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     21,682,517       11,607,907       23,163,530       19,089,904       51,235,609  

Net Change in Unrealized Appreciation (Depreciation)

     (25,692,546 )      (15,134,915 )      (19,070,077 )      (17,031,737 )      (53,384,058 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (4,010,029 )      (3,527,008 )      4,093,453       2,058,167       (2,148,449 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (4,647,505 )      (4,139,914 )      2,319,801       (337,681 )      (3,758,212 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (27,874,305 )      1,462,226       (20,208,222 )      25,123,126       (36,649,055 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (32,521,810 )      (2,677,688 )      (17,888,421 )      24,785,445       (40,407,267 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 123,688,215     $ 88,569,777     $ 108,382,266     $ 166,716,242     $ 150,665,726  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     937,320       488,506       —         —         699,544  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,706,851       1,311,027       1,522,633       2,462,346       2,110,392  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (769,531 )      (822,521 )      (1,522,633 )      (2,462,346 )      (1,410,848 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     12,083,953       9,420,132       12,867,239       22,161,103       —    

Realized Gain (Loss) on Investments

     1,232,919       (2,491,942 )      5,535,730       2,118,475       7,852,106  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     13,316,872       6,928,190       18,402,969       24,279,578       7,852,106  

Net Change in Unrealized Appreciation (Depreciation)

     9,055,489       10,002,219       (7,368,415 )      (6,290,023 )      931,430  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     22,372,361       16,930,409       11,034,554       17,989,555       8,783,536  

Net Increase (Decrease) in Net Assets Resulting from Operations

     21,602,830       16,107,888       9,511,921       15,527,209       7,372,688  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (15,447,961 )      7,033,167       (5,603,856 )      9,269,323       (16,530,931 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     6,154,869       23,141,055       3,908,065       24,796,532       (9,158,243 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 129,843,084     $ 111,710,832     $ 112,290,331     $ 191,512,774     $ 141,507,483  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

29

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    TA Torray
Concentrated
Growth
Service Class		     TA TS&W
International
Equity Initial
Class		     TA TS&W
International
Equity
Service Class		     TA WMC
US Growth
Initial Class		     TA WMC
US Growth
Service Class		  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 36,258,952     $ 87,463,695     $ 29,124,189     $ 301,151,694     $ 77,258,557  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     115,420       2,492,158       1,015,642       1,978,905       465,538  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     560,346       1,210,147       500,201       4,086,020       1,267,022  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (444,926 )      1,282,011       515,441       (2,107,115 )      (801,484 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     6,954,626       —         —         86,819,517       29,353,729  

Realized Gain (Loss) on Investments

     492,536       2,286,539       802,978       21,399,301       1,902,673  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     7,447,162       2,286,539       802,978       108,218,818       31,256,402  

Net Change in Unrealized Appreciation (Depreciation)

     (8,197,958 )      (3,154,963 )      (1,960,711 )      (90,078,369 )      (26,738,755 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (750,796 )      (868,424 )      (1,157,733 )      18,140,449       4,517,647  

Net Increase (Decrease) in Net Assets Resulting from Operations

     (1,195,722 )      413,587       (642,292 )      16,033,334       3,716,163  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (2,081,812 )      (11,308,328 )      7,571,877       (59,298,693 )      15,996,958  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (3,277,534 )      (10,894,741 )      6,929,585       (43,265,359 )      19,713,121  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 32,981,418     $ 76,568,954     $ 36,053,774     $ 257,886,335     $ 96,971,678  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     44,491       1,992,611       927,427       986,109       170,663  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     481,142       1,042,729       522,220       3,544,463       1,390,765  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (436,651 )      949,882       405,207       (2,558,354 )      (1,220,102 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     —         —         —         10,189,114       4,166,092  

Realized Gain (Loss) on Investments

     (741,465 )      366,738       (733,105 )      1,267,187       (3,290,490 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     (741,465 )      366,738       (733,105 )      11,456,301       875,602  

Net Change in Unrealized Appreciation (Depreciation)

     2,553,875       (1,768,516 )      179,442       (5,959,260 )      1,120,971  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     1,812,410       (1,401,778 )      (553,663 )      5,497,041       1,996,573  

Net Increase (Decrease) in Net Assets Resulting from Operations

     1,375,759       (451,896 )      (148,456 )      2,938,687       776,471  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (1,825,549 )      (4,212,086 )      (1,794,580 )      (23,846,668 )      601,271  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (449,790 )      (4,663,982 )      (1,943,036 )      (20,907,981 )      1,377,742  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 32,531,628     $ 71,904,972     $ 34,110,738     $ 236,978,354     $ 98,349,420  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

30

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    Vanguard®
Equity Index		     Vanguard®
International		     Vanguard®
Mid-Cap
Index		     Vanguard®
REIT Index		     Vanguard®
Short-Term
Investment
Grade		  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2014:

   $ 948,899     $ 424,932     $ 427,668     $ 315,866     $ 1,468,028  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     15,889       7,942       5,068       5,339       31,013  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     8,332       4,272       4,155       2,238       12,173  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     7,557       3,670       913       3,101       18,840  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     29,098       6,524       22,709       10,104       315  

Realized Gain (Loss) on Investments

     24,843       (8,903 )      (1,946 )      4,072       (1,786 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     53,941       (2,379 )      20,763       14,176       (1,471 ) 

Net Change in Unrealized Appreciation (Depreciation)

     (62,998 )      (44,994 )      (44,565 )      (12,919 )      (14,283 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (9,057 )      (47,373 )      (23,802 )      1,257       (15,754 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     (1,500 )      (43,703 )      (22,889 )      4,358       3,086  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     905,224       788,000       483,889       29,809       1,431,249  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     903,724       744,297       461,000       34,167       1,434,335  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

   $ 1,852,623     $ 1,169,229     $ 888,668     $ 350,033     $ 2,902,363  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     46,967       17,847       12,698       9,472       53,677  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     13,365       8,156       5,778       2,503       17,967  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     33,602       9,691       6,920       6,969       35,710  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     38,366       20,779       63,140       25,132       —    

Realized Gain (Loss) on Investments

     36,000       (1,711 )      (12,078 )      6,152       (4,329 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     74,366       19,068       51,062       31,284       (4,329 ) 

Net Change in Unrealized Appreciation (Depreciation)

     108,455       (501 )      28,394       (10,552 )      26,697  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     182,821       18,567       79,456       20,732       22,368  

Net Increase (Decrease) in Net Assets Resulting from Operations

     216,423       28,258       86,376       27,701       58,078  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (148,300 )      32,058       (129,206 )      (18,992 )      (242,521 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     68,123       60,316       (42,830 )      8,709       (184,443 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 1,920,746     $ 1,229,545     $ 845,838     $ 358,742     $ 2,717,920  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

31

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Vanguard®
Total Bond
Market
Index
Subaccount		      Voya Global
Perspectives
Class S
Shares
Subaccount(1)		      Voya Large
Cap Value
Class S
Shares
Subaccount(1)		      Voya
Strategic
Allocation
Conservative
Class S
Shares
Subaccount(1)		      Voya
Strategic
Allocation
Moderate
Class S
Shares
Subaccount(1)		  

Net Assets as of December 31, 2014:

    $ 823,633      $ —        $ —        $  —        $  —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investment Income:

               

Reinvested Dividends

      17,769        —          —          —          —    

Investment Expense:

               

Mortality and Expense Risk and Administrative Charges

      6,103        36        —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      11,666        (36)        —          —          —    

Increase (Decrease) in Net Assets from Operations:

               

Capital Gain Distributions

      3,332        —          —          —          —    

Realized Gain (Loss) on Investments

      (3,066)        —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      266        —          —          —          —    

Net Change in Unrealized Appreciation (Depreciation)

      (13,899)        (115)        —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      (13,633)        (115)        —          —          —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,967)        (151)        —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      805,933        15,179        —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      803,966        15,028        —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2015:

    $ 1,627,599      $ 15,028      $ —        $ —        $ —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investment Income:

               

Reinvested Dividends

      36,099        412        21        —          —    

Investment Expense:

               

Mortality and Expense Risk and Administrative Charges

      10,431        204        9        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      25,668        208        12        —          —    

Increase (Decrease) in Net Assets from Operations:

               

Capital Gain Distributions

      4,301        —          28        —          —    

Realized Gain (Loss) on Investments

      (476)        10        1        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,825        10        29        —          —    

Net Change in Unrealized Appreciation (Depreciation)

      924        579        102        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      4,749        589        131        —          —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      30,417        797        143        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (174,491)        296        863        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      (144,074)        1,093        1,006        —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2016:

    $ 1,483,525      $ 16,121      $ 1,006      $ —        $ —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

32

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

Wanger
International

Subaccount

    

Wanger
USA

Subaccount

  

Net Assets as of December 31, 2014:

    $  232,919     $ 204,779  
  

 

 

    

 

 

  

Investment Income:

     

Reinvested Dividends

      3,791       —    

Investment Expense:

     

Mortality and Expense Risk and Administrative Charges

      1,260       1,646  
  

 

 

    

 

 

  

Net Investment Income (Loss)

      2,531       (1,646 ) 

Increase (Decrease) in Net Assets from Operations:

     

Capital Gain Distributions

      21,340       34,162  

Realized Gain (Loss) on Investments

      (684 )      (5,597 ) 
  

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      20,656       28,565  

Net Change in Unrealized Appreciation (Depreciation)

      (24,338 )      (42,594 ) 
  

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (3,682 )      (14,029 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (1,151 )      (15,675 ) 
  

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      86,313       85,341  
  

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      85,162       69,666  
  

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 318,081     $ 274,445  
  

 

 

    

 

 

  

Investment Income:

     

Reinvested Dividends

      3,641       —    

Investment Expense:

     

Mortality and Expense Risk and Administrative Charges

      1,478       1,066  
  

 

 

    

 

 

  

Net Investment Income (Loss)

      2,163       (1,066 ) 

Increase (Decrease) in Net Assets from Operations:

     

Capital Gain Distributions

      24,818       43,647  

Realized Gain (Loss) on Investments

      (13,782 )      (15,073 ) 
  

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      11,036       28,574  

Net Change in Unrealized Appreciation (Depreciation)

      (19,559 )      (9,800 ) 
  

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (8,523 )      18,774  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (6,360 )      17,708  
  

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,438 )      (114,841 ) 
  

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (9,798 )      (97,133 ) 
  

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 308,283     $ 177,312  
  

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

33

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization

Separate Account VA B (the Separate Account) is a segregated investment account of Transamerica Life Insurance Company (TLIC), an indirect wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.

The Separate Account is registered with the Securities and Exchange Commission as a Unit Investment Trust pursuant to provisions of the Investment Company Act of 1940. TLIC and the Separate Account are regulated by the Securities and Exchange Commission. The assets and liabilities of the Separate Account are clearly identified and distinguished from TLIC other assets and liabilities. The Separate Account consists of multiple investment subaccounts. Each subaccount invests exclusively in the corresponding portfolio of a Mutual Fund. Each Mutual Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. Activity in these specified investment subaccounts is available to contract owners of Transamerica Variable Annuity Series, MEMBERS® Variable Annuity Series, Partners Variable Annuity Series, Transamerica LandmarkSM Variable Annuity, MEMBERS® LandmarkSM Variable Annuity, Transamerica FreedomSM Variable Annuity, MEMBERS® FreedomSM Variable Annuity, Transamerica Advisor Elite II, Transamerica Income EliteSM II, Transamerica AxiomSM II, Transamerica PrincipiumSM III, Transamerica Retirement Income Plus, Transamerica Variable Annuity O-Share, Transamerica ABC Variable Annuity Series, Transamerica 123 Variable Annuity, Transamerica ExtraSM Variable Annuity, MEMBERS® ExtraSM Variable Annuity, Transamerica LibertySSM Variable Annuity, MEMBERS® LibertySM Variable Annuity, Transamerica Advisor EliteSM Variable Annuity, Income EliteSM Variable Annuity, Transamerica AxiomSM Variable Annuity, and Transamerica PrincipiumSM II Variable Annuity.

The TA Profunds UltraBear-Open Allocation Method-Service Class (OAM) is included in the subaccount listing only to facilitate a contract owner purchase option.

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

AB Variable Products Series Fund, Inc.    AB Variable Products Series Fund, Inc.

AB Balanced Wealth Strategy Class B Shares

   

AB Balanced Wealth Strategy Portfolio Class B Shares

AB Growth and Income Class B Shares

   

AB Growth and Income Portfolio Class B Shares

AB Large Cap Growth Class B Shares

   

AB Large Cap Growth Portfolio Class B Shares

American Funds Insurance Series®    American Funds Insurance Series®

American Funds - Asset Allocation Class 2 Shares

   

American Funds - Asset Allocation Fund Class 2 Shares

American Funds - Bond Class 2 Shares

   

American Funds - Bond Fund Class 2 Shares

American Funds - Growth Class 2 Shares

   

American Funds - Growth Fund Class 2 Shares

American Funds - Growth-Income Class 2 Shares

   

American Funds - Growth-Income Fund Class 2 Shares

American Funds - International Class 2 Shares

   

American Funds - International Fund Class 2 Shares

BlackRock Variable Series Funds, Inc.    BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Class I Shares

   

BlackRock Basic Value V.I. Fund Class I Shares

BlackRock Global Allocation V.I. Class I Shares

   

BlackRock Global Allocation V.I. Fund Class I Shares

BlackRock High Yield V.I. Class I Shares

   

BlackRock High Yield V.I. Fund Class I Shares

Mutual Fund and Variable Insurance Trust    Mutual Fund and Variable Insurance Trust

Catalyst Dividend Capture VA

   

Catalyst Dividend Capture VA Fund

Catalyst Insider Buying VA

   

Catalyst Insider Buying VA Fund

Fidelity® Variable Insurance Products Fund    Fidelity® Variable Insurance Products Fund

Fidelity® VIP Balanced Service Class 2

   

Fidelity® VIP Balanced Service Portfolio Class 2

Fidelity® VIP Contrafund® Initial Class

   

Fidelity® VIP Contrafund® Portfolio Initial Class

Fidelity® VIP Contrafund® Service Class 2

   

Fidelity® VIP Contrafund® Portfolio Service Class 2

Fidelity® VIP Equity-Income Initial Class

   

Fidelity® VIP Equity-Income Portfolio Initial Class

 

34

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

Fidelity® Variable Insurance Products Fund

   

Fidelity® Variable Insurance Products Fund

Fidelity® VIP Equity-Income Service Class 2

   

Fidelity® VIP Equity-Income Portfolio Service Class 2

Fidelity® VIP Growth Initial Class

   

Fidelity® VIP Growth Portfolio Initial Class

Fidelity® VIP Growth Service Class 2

   

Fidelity® VIP Growth Portfolio Service Class 2

Fidelity® VIP Growth Opportunities Service Class 2

   

Fidelity® VIP Growth Opportunities Portfolio Service Class 2

Fidelity® VIP Mid Cap Initial Class

   

Fidelity® VIP Mid Cap Portfolio Initial Class

Fidelity® VIP Mid Cap Service Class 2

   

Fidelity® VIP Mid Cap Portfolio Service Class 2

Fidelity® VIP Value Strategies Initial Class

   

Fidelity® VIP Value Strategies Portfolio Initial Class

Fidelity® VIP Value Strategies Service Class 2

   

Fidelity® VIP Value Strategies Portfolio Service Class 2

Franklin Templeton Variable Insurance Products Trust

   

Franklin Templeton Variable Insurance Products Trust

Franklin Founding Funds Allocation Class 4 Shares

   

Franklin Founding Funds Allocation Fund Class 4 Shares

Franklin Income Class 2 Shares

   

Franklin Income Class Fund 2 Shares

Franklin Mutual Shares Class 2 Shares

   

Franklin Mutual Shares Fund Class 2 Shares

Franklin Templeton Foreign Class 2 Shares

   

Franklin Templeton Foreign Fund Class 2 Shares

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

   

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

Invesco V.I. American Franchise Series II Shares

   

Invesco V.I. American Franchise Fund Series II Shares

Invesco V.I. Value Opportunities Series II Shares

   

Invesco V.I. Value Opportunities Fund Series II Shares

Janus Aspen Series

   

Janus Aspen Series

Janus Aspen - Enterprise Service Shares

   

Janus Aspen - Enterprise Portfolio Service Shares

Janus Aspen - Global Research Service Shares

   

Janus Aspen - Global Research Portfolio Service Shares

Janus Aspen - Perkins Mid Cap Value Service Shares

   

Janus Aspen - Perkins Mid Cap Value Portfolio Service Shares

MFS® Variable Insurance Trust

   

MFS® Variable Insurance Trust

MFS® New Discovery Service Class

   

MFS® New Discovery Series Service Class

MFS® Total Return Service Class

   

MFS® Total Return Series Service Class

Nationwide Variable Insurance Trust

   

Nationwide Variable Insurance Trust

NVIT Emerging Markets Class D Shares

   

NVIT Emerging Markets Fund Class D Shares

State Street Variable Insurance Series Funds, Inc.

   

State Street Variable Insurance Series Funds, Inc.

State Street Total Return V.I.S. Class 3 Shares

   

State Street Total Return V.I.S. Fund Class 3 Shares

Transamerica Series Trust

   

Transamerica Series Trust

TA AB Dynamic Allocation Initial Class

   

Transamerica AB Dynamic Allocation VP Initial Class

TA AB Dynamic Allocation Service Class

   

Transamerica AB Dynamic Allocation VP Service Class

TA Aegon Government Money Market Initial Class

   

Transamerica Aegon Government Money Market VP Initial Class

TA Aegon Government Money Market Service Class

   

Transamerica Aegon Government Money Market VP Service Class

TA Aegon High Yield Bond Initial Class

   

Transamerica Aegon High Yield Bond VP Initial Class

TA Aegon High Yield Bond Service Class

   

Transamerica Aegon High Yield Bond VP Service Class

TA Aegon U.S. Government Securities Initial Class

   

Transamerica Aegon U.S. Government Securities VP Initial Class

TA Aegon U.S. Government Securities Service Class

   

Transamerica Aegon U.S. Government Securities VP Service Class

TA American Funds Managed Risk - Balanced Service Class

   

Transamerica American Funds Managed Risk - Balanced VP Service Class

TA Asset Allocation - Conservative Initial Class

   

Transamerica Asset Allocation - Conservative VP Initial Class

TA Asset Allocation - Conservative Service Class

   

Transamerica Asset Allocation - Conservative VP Service Class

TA Asset Allocation - Growth Initial Class

   

Transamerica Asset Allocation - Growth VP Initial Class

TA Asset Allocation - Growth Service Class

   

Transamerica Asset Allocation - Growth VP Service Class

TA Asset Allocation - Moderate Initial Class

   

Transamerica Asset Allocation - Moderate VP Initial Class

 

35

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

Transamerica Series Trust

   

Transamerica Series Trust

TA Asset Allocation - Moderate Service Class

   

Transamerica Asset Allocation - Moderate VP Service Class

TA Asset Allocation - Moderate Growth Initial Class

   

Transamerica Asset Allocation - Moderate Growth VP Initial Class

TA Asset Allocation - Moderate Growth Service Class

   

Transamerica Asset Allocation - Moderate Growth VP Service Class

TA Barrow Hanley Dividend Focused Initial Class

   

Transamerica Barrow Hanley Dividend Focused VP Initial Class

TA Barrow Hanley Dividend Focused Service Class

   

Transamerica Barrow Hanley Dividend Focused VP Service Class

TA BlackRock Equity Smart Beta 100 Service Class

   

Transamerica BlackRock Equity Smart Beta 100 VP Service Class

TA BlackRock Global Allocation Service Class

   

Transamerica BlackRock Global Allocation VP Service Class

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

   

Transamerica BlackRock Global Allocation Managed Risk - Balanced VP Service Class

TA BlackRock Global Allocation Managed Risk - Growth Service Class

   

Transamerica BlackRock Global Allocation Managed Risk - Growth VP Service Class

TA BlackRock Smart Beta 50 Service Class

   

Transamerica BlackRock Smart Beta 50 VP Service Class

TA BlackRock Smart Beta 75 Service Class

   

Transamerica BlackRock Smart Beta 75 VP Service Class

TA BlackRock Tactical Allocation Service Class

   

Transamerica BlackRock Tactical Allocation VP Service Class

TA Clarion Global Real Estate Securities Initial Class

   

Transamerica Clarion Global Real Estate Securities VP Initial Class

TA Clarion Global Real Estate Securities Service Class

   

Transamerica Clarion Global Real Estate Securities VP Service Class

TA International Moderate Growth Initial Class

   

Transamerica International Moderate Growth VP Initial Class

TA International Moderate Growth Service Class

   

Transamerica International Moderate Growth VP Service Class

TA Janus Balanced Service Class

   

Transamerica Janus Balanced VP Service Class

TA Janus Mid-Cap Growth Initial Class

   

Transamerica Janus Mid-Cap Growth VP Initial Class

TA Janus Mid-Cap Growth Service Class

   

Transamerica Janus Mid-Cap Growth VP Service Class

TA Jennison Growth Initial Class

   

Transamerica Jennison Growth VP Initial Class

TA Jennison Growth Service Class

   

Transamerica Jennison Growth VP Service Class

TA JPMorgan Core Bond Service Class

   

Transamerica JPMorgan Core Bond VP Service Class

TA JPMorgan Enhanced Index Initial Class

   

Transamerica JPMorgan Enhanced Index VP Initial Class

TA JPMorgan Enhanced Index Service Class

   

Transamerica JPMorgan Enhanced Index VP Service Class

TA JPMorgan Mid Cap Value Service Class

   

Transamerica JPMorgan Mid Cap Value VP Service Class

TA JPMorgan Tactical Allocation Service Class

   

Transamerica JPMorgan Tactical Allocation VP Service Class

TA Legg Mason Dynamic Allocation - Balanced Service Class

   

Transamerica Legg Mason Dynamic Allocation - Balanced VP Service Class

TA Legg Mason Dynamic Allocation - Growth Service Class

   

Transamerica Legg Mason Dynamic Allocation - Growth VP Service Class

TA Madison Balanced Allocation Service Class

   

Transamerica Madison Balanced Allocation VP Service Class

TA Madison Conservative Allocation Service Class

   

Transamerica Madison Conservative Allocation VP Service Class

TA Madison Diversified Income Service Class

   

Transamerica Madison Diversified Income VP Service Class

TA Managed Risk - Balanced ETF Service Class

   

Transamerica Managed Risk - Balanced ETF VP Service Class

TA Managed Risk - Conservative ETF Service Class

   

Transamerica Managed Risk - Conservative ETF VP Service Class

TA Managed Risk - Growth ETF Service Class

   

Transamerica Managed Risk - Growth ETF VP Service Class

TA Market Participation Strategy Service Class

   

Transamerica Market Participation Strategy VP Service Class

TA MFS International Equity Initial Class

   

Transamerica MFS International Equity VP Initial Class

TA MFS International Equity Service Class

   

Transamerica MFS International Equity VP Service Class

TA Morgan Stanley Capital Growth Initial Class

   

Transamerica Morgan Stanley Capital Growth VP Initial Class

TA Morgan Stanley Capital Growth Service Class

   

Transamerica Morgan Stanley Capital Growth VP Service Class

 

36

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

Transamerica Series Trust

   

Transamerica Series Trust

TA Multi-Managed Balanced Initial Class

   

Transamerica Multi-Managed Balanced VP Initial Class

TA Multi-Managed Balanced Service Class

   

Transamerica Multi-Managed Balanced VP Service Class

TA Multi-Manager Alternative Strategies Service Class

   

Transamerica Multi-Manager Alternative Strategies VP Service Class

TA PIMCO Tactical - Balanced Service Class

   

Transamerica PIMCO Tactical - Balanced VP Service Class

TA PIMCO Tactical - Conservative Service Class

   

Transamerica PIMCO Tactical - Conservative VP Service Class

TA PIMCO Tactical - Growth Service Class

   

Transamerica PIMCO Tactical - Growth VP Service Class

TA PIMCO Total Return Initial Class

   

Transamerica PIMCO Total Return VP Initial Class

TA PIMCO Total Return Service Class

   

Transamerica PIMCO Total Return VP Service Class

TA PineBridge Inflation Opportunities Service Class

   

Transamerica PineBridge Inflation Opportunities VP Service Class

TA ProFunds UltraBear Service Class (OAM)

   

Transamerica ProFunds UltraBear VP Service Class (OAM)

TA QS Investors Active Asset Allocation - Conservative Service Class

   

Transamerica QS Investors Active Asset Allocation - Conservative VP Service Class

TA QS Investors Active Asset Allocation - Moderate Service Class

   

Transamerica QS Investors Active Asset Allocation - Moderate VP Service Class

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

   

Transamerica QS Investors Active Asset Allocation - Moderate Growth VP Service Class

TA Small/Mid Cap Value Initial Class

   

Transamerica Small/Mid Cap Value VP Initial Class

TA Small/Mid Cap Value Service Class

   

Transamerica Small/Mid Cap Value VP Service Class

TA T. Rowe Price Small Cap Initial Class

   

Transamerica T. Rowe Price Small Cap VP Initial Class

TA T. Rowe Price Small Cap Service Class

   

Transamerica T. Rowe Price Small Cap VP Service Class

TA Torray Concentrated Growth Initial Class

   

Transamerica Torray Concentrated Growth VP Initial Class

TA Torray Concentrated Growth Service Class

   

Transamerica Torray Concentrated Growth VP Service Class

TA TS&W International Equity Initial Class

   

Transamerica TS&W International Equity VP Initial Class

TA TS&W International Equity Service Class

   

Transamerica TS&W International Equity VP Service Class

TA WMC US Growth Initial Class

   

Transamerica WMC US Growth VP Initial Class

TA WMC US Growth Service Class

   

Transamerica WMC US Growth VP Service Class

Vanguard® Variable Insurance Fund

   

Vanguard® Variable Insurance Fund

Vanguard® Equity Index

   

Vanguard® Equity Index Portfolio

Vanguard® International

   

Vanguard® International Portfolio

Vanguard® Mid-Cap Index

   

Vanguard® Mid-Cap Index Portfolio

Vanguard® REIT Index

   

Vanguard® REIT Index Portfolio

Vanguard® Short-Term Investment Grade

   

Vanguard® Short-Term Investment Grade Portfolio

Vanguard® Total Bond Market Index

   

Vanguard® Total Bond Market Index Portfolio

Voya Investors Trust

   

Voya Investors Trust

Voya Global Perspectives Class S Shares

   

Voya Global Perspectives Portfolio Class S Shares

Voya Large Cap Value Class S Shares

   

Voya Large Cap Value Portfolio Class S Shares

Voya Strategic Allocation Portfolios, Inc.

   

Voya Strategic Allocation Portfolios, Inc.

Voya Strategic Allocation Conservative Class S Shares

   

Voya Strategic Allocation Conservative Portfolio Class S Shares

Voya Strategic Allocation Moderate Class S Shares

   

Voya Strategic Allocation Moderate Portfolio Class S Shares

 

37

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

Wanger Advisors Trust

   

Wanger Advisors Trust

Wanger International

   

Wanger International

Wanger USA

   

Wanger USA

Each period reported on reflects a full twelve month period except as follows:

 

Subaccount

   

Inception Date

NVIT Emerging Markets Class D Shares

   

August 4, 2016

TA BlackRock Equity Smart Beta 100 Service Class

   

March 21, 2016

TA BlackRock Smart Beta 50 Service Class

   

March 21, 2016

TA BlackRock Smart Beta 75 Service Class

   

March 21, 2016

TA American Funds Managed Risk - Balanced Service Class

   

May 1, 2015

Voya Global Perspectives Class S Shares

   

May 1, 2015

Voya Large Cap Value Class S Shares

   

May 1, 2015

Voya Strategic Allocation Conservative Class S Shares

   

May 1, 2015

Voya Strategic Allocation Moderate Class S Shares

   

May 1, 2015

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

   

November 10, 2014

TA BlackRock Global Allocation Managed Risk - Growth Service Class

   

November 10, 2014

TA Multi-Manager Alternative Strategies Service Class

   

November 4, 2013

TA Market Participation Strategy Service Class

   

September 17, 2012

TA Legg Mason Dynamic Allocation - Balanced Service Class

   

May 1, 2012

TA Legg Mason Dynamic Allocation - Growth Service Class

   

May 1, 2012

Invesco V.I. American Franchise Series II Shares

   

April 27, 2012

The following subaccount name changes were made effective during the fiscal year ended December 31, 2016:

 

Subaccount

   

Formerly

Catalyst Dividend Capture VA

   

Huntington VA Dividend Capture

Catalyst Insider Buying VA

   

Huntington VA Situs

State Street Total Return V.I.S. Class 3 Shares

   

GE Investments Total Return Class 3 Shares

TA Aegon Government Money Market Initial Class

   

TA Aegon Money Market Initial Class

TA Aegon Government Money Market Service Class

   

TA Aegon Money Market Service Class

TA Janus Mid-Cap Growth Initial Class

   

TA Morgan Stanley Mid-Cap Growth Initial Class

TA Janus Mid-Cap Growth Service Class

   

TA Morgan Stanley Mid-Cap Growth Service Class

TA Small/Mid Cap Value Initial Class

   

TA Systematic Small/Mid Cap Value Initial Class

TA Small/Mid Cap Value Service Class

   

TA Systematic Small/Mid Cap Value Service Class

 

38

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

During the current year the following subaccounts were liquidated and subsequently reinvested:

 

Reinvested Subaccount

   

Liquidated Subaccount

NVIT Emerging Markets Class D Shares

   

NVIT Developing Markets Class II Shares

TA Janus Mid-Cap Growth Service Class

   

TA Voya Mid Cap Opportunities Service Class

TA JPMorgan Core Bond Service Class

   

TA Voya Limited Maturity Bond Service Class

 

39

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

2. Summary of Significant Accounting Policies

The financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for variable annuity separate accounts registered as unit investment trusts. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions regarding matters that affect the reported amount of assets and liabilities. Actual results could differ from those estimates.

Investments

Net purchase payments received by the Separate Account are invested in the portfolios of the Mutual Funds as selected by the contract owner. Investments are stated at the closing net asset values per share on December 31, 2016.

Realized capital gains and losses from sales of shares in the Separate Account are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the Mutual Funds are included in the Statements of Operations and Changes in Net Assets.

Dividend Income

Dividends received from the Mutual Fund investments are reinvested to purchase additional mutual fund shares.

Fair Value Measurements and Fair Value Hierarchy

The Accounting Standards Codification™ (ASC) 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the nature of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

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

Financial assets and liabilities recorded at fair value on the Statements of Assets and Liabilities are categorized as follows:

Level 1. Unadjusted quoted prices for identical assets or liabilities in an active market.

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 management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

All investments in the Mutual Funds included in the Statements of Assets and Liabilities are stated at fair value and are based upon published closing NAV per share and therefore are considered Level 1.

There were no transfers between Level 1, Level 2 and Level 3 during the year ended December 31, 2016.

 

40

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

3. Investments

The Aggregate cost of purchases and proceeds from sales of investments for the period ended December 31, 2016 were as follows:

 

Subaccount

    Purchases      Sales  

AB Balanced Wealth Strategy Class B Shares

    $ 19,706,044      $ 17,059,044  

AB Growth and Income Class B Shares

      58,822,052        39,982,395  

AB Large Cap Growth Class B Shares

      4,339,909        3,880,186  

American Funds - Asset Allocation Class 2 Shares

      166,369,332        71,343,326  

American Funds - Bond Class 2 Shares

      67,993,734        34,332,840  

American Funds - Growth Class 2 Shares

      98,812,122        38,633,413  

American Funds - Growth-Income Class 2 Shares

      108,705,382        32,788,639  

American Funds - International Class 2 Shares

      51,909,784        29,687,114  

BlackRock Basic Value V.I. Class I Shares

      1,384,419        2,856,740  

BlackRock Global Allocation V.I. Class I Shares

      541,765        2,031,298  

BlackRock High Yield V.I. Class I Shares

      386,944        1,060,664  

Catalyst Dividend Capture VA

      142,849        313,944  

Catalyst Insider Buying VA

      813,116        350,237  

Fidelity® VIP Balanced Service Class 2

      78,698,528        50,840,171  

Fidelity® VIP Contrafund® Initial Class

      113,011        366,218  

Fidelity® VIP Contrafund® Service Class 2

      108,832,472        77,617,511  

Fidelity® VIP Equity-Income Initial Class

      22,722        35,124  

Fidelity® VIP Equity-Income Service Class 2

      4,674,746        6,946,364  

Fidelity® VIP Growth Initial Class

      16,101        32,262  

Fidelity® VIP Growth Service Class 2

      4,956,516        7,535,321  

Fidelity® VIP Growth Opportunities Service Class 2

      217,509        352,621  

Fidelity® VIP Mid Cap Initial Class

      6,988        8,469  

Fidelity® VIP Mid Cap Service Class 2

      53,960,595        49,684,631  

Fidelity® VIP Value Strategies Initial Class

      140,992        62,073  

Fidelity® VIP Value Strategies Service Class 2

      20,330,796        25,919,639  

Franklin Founding Funds Allocation Class 4 Shares

      8,550,493        17,624,569  

Franklin Income Class 2 Shares

      5,546,453        18,468,382  

Franklin Mutual Shares Class 2 Shares

      2,023,557        2,803,846  

Franklin Templeton Foreign Class 2 Shares

      1,711,858        5,741,805  

Invesco V.I. American Franchise Series II Shares

      676,660        1,047,850  

Invesco V.I. Value Opportunities Series II Shares

      5,366,019        3,238,863  

Janus Aspen - Enterprise Service Shares

      2,102,334        2,705,310  

Janus Aspen - Global Research Service Shares

      654,158        4,869,165  

Janus Aspen - Perkins Mid Cap Value Service Shares

      426,823        269,976  

MFS® New Discovery Service Class

      3,195,764        8,170,436  

MFS® Total Return Service Class  

      3,392,227        8,042,463  

 

41

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

NVIT Emerging Markets Class D Shares

    $ 20,676      $ 1,061  

State Street Total Return V.I.S. Class 3 Shares

      8,060,423        10,336,841  

TA AB Dynamic Allocation Initial Class

      2,248,075        4,376,247  

TA AB Dynamic Allocation Service Class

      35,729,010        44,637,975  

TA Aegon Government Money Market Initial Class

      61,610,623        70,297,649  

TA Aegon Government Money Market Service Class

      350,783,717        350,588,807  

TA Aegon High Yield Bond Initial Class

      18,392,984        19,304,290  

TA Aegon High Yield Bond Service Class

      84,351,898        77,887,742  

TA Aegon U.S. Government Securities Initial Class

      19,273,767        16,499,587  

TA Aegon U.S. Government Securities Service Class

      284,994,326        250,874,501  

TA American Funds Managed Risk - Balanced Service Class

      238,671,628        10,273,811  

TA Asset Allocation - Conservative Initial Class

      38,451,779        51,876,609  

TA Asset Allocation - Conservative Service Class

      151,354,372        170,848,961  

TA Asset Allocation - Growth Initial Class

      16,369,084        44,103,413  

TA Asset Allocation - Growth Service Class

      28,360,417        46,557,388  

TA Asset Allocation - Moderate Initial Class

      42,494,397        60,569,142  

TA Asset Allocation - Moderate Service Class

      333,379,626        511,686,550  

TA Asset Allocation - Moderate Growth Initial Class

      60,891,640        77,378,334  

TA Asset Allocation - Moderate Growth Service Class

      436,111,010        419,517,098  

TA Barrow Hanley Dividend Focused Initial Class

      20,339,325        46,927,219  

TA Barrow Hanley Dividend Focused Service Class

      30,714,471        24,950,885  

TA BlackRock Equity Smart Beta 100 Service Class

      24,653,680        1,610,718  

TA BlackRock Global Allocation Service Class

      207,530,815        160,927,260  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      70,959,135        25,239,128  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      57,276,497        26,674,897  

TA BlackRock Smart Beta 50 Service Class

      44,540,782        2,489,043  

TA BlackRock Smart Beta 75 Service Class

      12,172,855        751,952  

TA BlackRock Tactical Allocation Service Class

      215,103,310        160,805,890  

TA Clarion Global Real Estate Securities Initial Class

      5,500,307        10,387,866  

TA Clarion Global Real Estate Securities Service Class

      16,413,894        20,482,921  

TA International Moderate Growth Initial Class

      3,791        1,080  

TA International Moderate Growth Service Class

      54,609,359        93,873,925  

TA Janus Balanced Service Class

      185,101,744        74,956,356  

TA Janus Mid-Cap Growth Initial Class

      10,846,200        12,302,027  

TA Janus Mid-Cap Growth Service Class

      19,593,678        16,630,611  

TA Jennison Growth Initial Class

      37,668,045        30,090,816  

 

42

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA Jennison Growth Service Class

    $ 39,313,613      $ 29,075,367  

TA JPMorgan Core Bond Service Class

      90,065,987        37,550,586  

TA JPMorgan Enhanced Index Initial Class

      12,858,067        15,763,911  

TA JPMorgan Enhanced Index Service Class

      18,040,927        9,284,334  

TA JPMorgan Mid Cap Value Service Class

      87,772,896        37,345,072  

TA JPMorgan Tactical Allocation Service Class

      216,855,726        93,907,367  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      205,420,142        110,281,629  

TA Legg Mason Dynamic Allocation - Growth Service Class

      103,879,493        97,919,617  

TA Madison Balanced Allocation Service Class

      13,964,936        8,718,495  

TA Madison Conservative Allocation Service Class

      7,473,428        9,493,181  

TA Madison Diversified Income Service Class

      11,487,299        10,528,733  

TA Managed Risk - Balanced ETF Service Class

      525,099,812        416,853,909  

TA Managed Risk - Conservative ETF Service Class

      142,848,137        110,972,009  

TA Managed Risk - Growth ETF Service Class

      218,413,179        427,721,544  

TA Market Participation Strategy Service Class

      39,277,943        50,349,715  

TA MFS International Equity Initial Class

      7,752,506        11,897,495  

TA MFS International Equity Service Class

      19,540,978        15,847,123  

TA Morgan Stanley Capital Growth Initial Class

      21,596,351        16,031,153  

TA Morgan Stanley Capital Growth Service Class

      25,360,196        15,898,290  

TA Multi-Managed Balanced Initial Class

      15,788,748        10,798,494  

TA Multi-Managed Balanced Service Class

      588,323,326        48,551,063  

TA Multi-Manager Alternative Strategies Service Class

      282,104        434,017  

TA PIMCO Tactical - Balanced Service Class

      63,731,599        54,076,246  

TA PIMCO Tactical - Conservative Service Class

      66,023,446        26,223,245  

TA PIMCO Tactical - Growth Service Class

      68,426,158        37,959,361  

TA PIMCO Total Return Initial Class

      29,516,882        41,598,569  

TA PIMCO Total Return Service Class

      124,702,318        132,841,877  

TA PineBridge Inflation Opportunities Service Class

      44,354,011        52,422,397  

TA ProFunds UltraBear Service Class (OAM)

      57,973,444        40,444,650  

TA QS Investors Active Asset Allocation - Conservative Service Class

      47,843,086        61,707,704  

TA QS Investors Active Asset Allocation - Moderate Service Class

      53,385,843        156,112,655  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      42,898,617        103,470,322  

TA Small/Mid Cap Value Initial Class

      15,326,266        19,459,717  

TA Small/Mid Cap Value Service Class

      35,327,647        19,697,005  

TA T. Rowe Price Small Cap Initial Class

      25,017,070        19,276,391  

TA T. Rowe Price Small Cap Service Class

      61,047,539        32,079,347  

 

43

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA Torray Concentrated Growth Initial Class

    $ 4,696,565      $ 22,638,375  

TA Torray Concentrated Growth Service Class

      5,940,853        8,203,037  

TA TS&W International Equity Initial Class

      8,731,301        11,993,471  

TA TS&W International Equity Service Class

      10,353,900        11,743,263  

TA WMC US Growth Initial Class

      25,280,252        41,496,242  

TA WMC US Growth Service Class

      22,622,179        19,074,831  

Vanguard® Equity Index

      409,180        485,511  

Vanguard® International

      186,202        123,675  

Vanguard® Mid-Cap Index

      145,255        204,400  

Vanguard® REIT Index

      80,474        67,365  

Vanguard® Short-Term Investment Grade

      270,699        477,517  

Vanguard® Total Bond Market Index

      151,486        296,008  

Voya Global Perspectives Class S Shares

      926        422  

Voya Large Cap Value Class S Shares

      911        9  

Voya Strategic Allocation Conservative Class S Shares

      —          —    

Voya Strategic Allocation Moderate Class S Shares

      —           —    

Wanger International

      79,260        55,717  

Wanger USA

      44,962        117,223  

 

44

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units

 

The change in units outstanding were as follows:

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

      4,577,856        (7,871,857 )      (3,294,001 )      7,801,858        (7,845,531 )      (43,673 ) 

AB Growth and Income Class B Shares

      16,757,360        (17,469,368 )      (712,008 )      15,142,282        (22,912,376 )      (7,770,094 ) 

AB Large Cap Growth Class B Shares

      617,367        (2,249,013 )      (1,631,646 )      372,492        (5,577,073 )      (5,204,581 ) 

American Funds - Asset Allocation Class 2 Shares

      47,671,587        (27,321,969 )      20,349,618       30,648,847        (38,928,994 )      (8,280,147 ) 

American Funds - Bond Class 2 Shares

      20,476,877        (18,150,697 )      2,326,180       15,687,246        (15,679,930 )      7,316  

American Funds - Growth Class 2 Shares

      12,744,488        (13,575,516 )      (831,028 )      13,469,859        (9,801,718 )      3,668,141  

American Funds - Growth-Income Class 2 Shares

      12,491,516        (9,359,598 )      3,131,918       11,929,525        (10,795,719 )      1,133,806  

American Funds - International Class 2 Shares

      8,751,397        (13,148,033 )      (4,396,636 )      13,262,738        (11,323,587 )      1,939,151  

BlackRock Basic Value V.I. Class I Shares

      205,685        (1,011,112 )      (805,427 )      417,309        (2,768,680 )      (2,351,371 ) 

BlackRock Global Allocation V.I. Class I Shares

      219,393        (1,007,025 )      (787,632 )      234,557        (2,517,324 )      (2,282,767 ) 

BlackRock High Yield V.I. Class I Shares

      51,530        (448,970 )      (397,440 )      237,785        (983,239 )      (745,454 ) 

Catalyst Dividend Capture VA

      28,250        (205,201 )      (176,951 )      113,790        (556,578 )      (442,788 ) 

Catalyst Insider Buying VA

      61,397        (248,311 )      (186,914 )      60,627        (834,961 )      (774,334 ) 

Fidelity® VIP Balanced Service Class 2

      28,760,829        (26,805,861 )      1,954,968       37,501,703        (24,254,018 )      13,247,685  

Fidelity® VIP Contrafund® Initial Class

      18,534        (106,705 )      (88,171 )      118,678        (132,728 )      (14,050 ) 

Fidelity® VIP Contrafund® Service Class 2

      14,749,503        (28,635,135 )      (13,885,632 )      22,292,618        (48,472,864 )      (26,180,246 ) 

Fidelity® VIP Equity-Income Initial Class

      12,302        (25,718 )      (13,416 )      —          (11,173 )      (11,173 ) 

Fidelity® VIP Equity-Income Service Class 2

      337,338        (3,828,617 )      (3,491,279 )      216,384        (8,001,119 )      (7,784,735 ) 

Fidelity® VIP Growth Initial Class

      8,151        (21,195 )      (13,044 )      —          (232 )      (232 ) 

Fidelity® VIP Growth Service Class 2

      782,581        (4,585,757 )      (3,803,176 )      73,277        (6,604,685 )      (6,531,408 ) 

Fidelity® VIP Growth Opportunities Service Class 2

      105,912        (201,872 )      (95,960 )      32,388        (282,670 )      (250,282 ) 

Fidelity® VIP Mid Cap Initial Class

      560        (4,170 )      (3,610 )      16,572        (23,258 )      (6,686 ) 

Fidelity® VIP Mid Cap Service Class 2

      8,057,888        (16,295,207 )      (8,237,319 )      10,441,124        (27,414,540 )      (16,973,416 ) 

Fidelity® VIP Value Strategies Initial Class

      21,120        (23,855 )      (2,735 )      4,449        (3,231 )      1,218  

Fidelity® VIP Value Strategies Service Class 2

      6,214,470        (11,246,409 )      (5,031,939 )      6,845,417        (17,139,712 )      (10,294,295 ) 

Franklin Founding Funds Allocation Class 4 Shares

      509,827        (9,042,678 )      (8,532,851 )      391,716        (13,307,459 )      (12,915,743 ) 

Franklin Income Class 2 Shares

      1,024,813        (13,767,939 )      (12,743,126 )      916,418        (22,435,970 )      (21,519,552 ) 

 

45

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

Franklin Mutual Shares Class 2 Shares

      181,921        (2,158,889 )      (1,976,968 )      225,716        (6,105,449 )      (5,879,733 ) 

Franklin Templeton Foreign Class 2 Shares

      568,053        (5,820,055 )      (5,252,002 )      315,934        (11,044,639 )      (10,728,705 ) 

Invesco V.I. American Franchise Series II Shares

      43,705        (662,328 )      (618,623 )      88,958        (1,722,892 )      (1,633,934 ) 

Invesco V.I. Value Opportunities Series II Shares

      133,570        (2,455,738 )      (2,322,168 )      318,641        (5,300,561 )      (4,981,920 ) 

Janus Aspen - Enterprise Service Shares

      231,691        (1,343,533 )      (1,111,842 )      286,041        (3,287,514 )      (3,001,473 ) 

Janus Aspen - Global Research Service Shares

      369,955        (4,174,401 )      (3,804,446 )      350,685        (9,743,887 )      (9,393,202 ) 

Janus Aspen - Perkins Mid Cap Value Service Shares

      15,068        (118,736 )      (103,668 )      28,662        (413,115 )      (384,453 ) 

MFS® New Discovery Service Class

      634,982        (4,009,910 )      (3,374,928 )      338,083        (6,959,525 )      (6,621,442 ) 

MFS® Total Return Service Class

      152,891        (4,401,290 )      (4,248,399 )      160,941        (10,279,469 )      (10,118,528 ) 

NVIT Emerging Markets Class D Shares

      2,011        (104 )      1,907       —          —         —    

State Street Total Return V.I.S. Class 3 Shares

      3,334,812        (6,485,858 )      (3,151,046 )      2,651,660        (6,425,521 )      (3,773,861 ) 

TA AB Dynamic Allocation Initial Class

      1,240,382        (2,548,909 )      (1,308,527 )      3,215,771        (6,545,324 )      (3,329,553 ) 

TA AB Dynamic Allocation Service Class

      6,008,368        (24,731,613 )      (18,723,245 )      14,960,285        (29,621,326 )      (14,661,041 ) 

TA Aegon Government Money Market Initial Class

      56,224,988        (62,558,630 )      (6,333,642 )      92,230,347        (88,504,587 )      3,725,760  

TA Aegon Government Money Market Service Class

      178,862,053        (200,684,879 )      (21,822,826 )      235,261,266        (229,681,523 )      5,579,743  

TA Aegon High Yield Bond Initial Class

      6,640,395        (9,020,389 )      (2,379,994 )      8,206,539        (17,591,260 )      (9,384,721 ) 

TA Aegon High Yield Bond Service Class

      24,001,274        (26,126,532 )      (2,125,258 )      23,771,596        (28,941,335 )      (5,169,739 ) 

TA Aegon U.S. Government Securities Initial Class

      11,879,386        (9,868,404 )      2,010,982       8,122,205        (17,590,816 )      (9,468,611 ) 

TA Aegon U.S. Government Securities Service Class

      75,622,651        (75,528,728 )      93,923       72,407,061        (50,138,862 )      22,268,199  

TA American Funds Managed Risk - Balanced Service Class

      24,615,790        (963,868 )      23,651,922       12,743,576        (171,797 )      12,571,779  

TA Asset Allocation - Conservative Initial Class

      19,586,337        (31,111,191 )      (11,524,854 )      15,694,337        (43,125,299 )      (27,430,962 ) 

TA Asset Allocation - Conservative Service Class

      30,018,868        (88,082,485 )      (58,063,617 )      34,431,167        (111,624,027 )      (77,192,860 ) 

TA Asset Allocation - Growth Initial Class

      6,793,260        (24,512,256 )      (17,718,996 )      7,563,918        (53,444,296 )      (45,880,378 ) 

TA Asset Allocation - Growth Service Class

      6,414,031        (21,921,775 )      (15,507,744 )      9,594,475        (18,261,524 )      (8,667,049 ) 

TA Asset Allocation - Moderate Initial Class

      14,245,267        (33,604,411 )      (19,359,144 )      8,759,291        (82,353,501 )      (73,594,210 ) 

TA Asset Allocation - Moderate Service Class

      28,826,637        (232,781,096 )      (203,954,459 )      59,164,618        (248,525,151 )      (189,360,533 ) 

TA Asset Allocation - Moderate Growth Initial Class

      15,252,932        (42,180,513 )      (26,927,581 )      10,713,332        (91,234,803 )      (80,521,471 ) 

 

46

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA Asset Allocation - Moderate Growth Service Class

      44,580,749        (213,203,528 )      (168,622,779 )      63,459,578        (242,790,235 )      (179,330,657 ) 

TA Barrow Hanley Dividend Focused Initial Class

      6,321,900        (20,767,712 )      (14,445,812 )      3,576,024        (47,958,892 )      (44,382,868 ) 

TA Barrow Hanley Dividend Focused Service Class

      7,858,173        (10,458,110 )      (2,599,937 )      6,102,647        (13,773,168 )      (7,670,521 ) 

TA BlackRock Equity Smart Beta 100 Service Class

      2,356,687        (154,038 )      2,202,649       —          —         —    

TA BlackRock Global Allocation Service Class

      31,886,592        (87,490,264 )      (55,603,672 )      29,409,552        (103,347,929 )      (73,938,377 ) 

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      6,377,216        (2,623,136 )      3,754,080       13,691,559        (1,076,808 )      12,614,751  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      5,040,120        (2,836,125 )      2,203,995       15,825,759        (609,610 )      15,216,149  

TA BlackRock Smart Beta 50 Service Class

      4,361,085        (231,041 )      4,130,044       —          —         —    

TA BlackRock Smart Beta 75 Service Class

      1,192,778        (69,530 )      1,123,248       —          —         —    

TA BlackRock Tactical Allocation Service Class

      21,474,186        (69,537,978 )      (48,063,792 )      32,416,992        (84,494,910 )      (52,077,918 ) 

TA Clarion Global Real Estate Securities Initial Class

      1,856,319        (4,051,687 )      (2,195,368 )      2,822,406        (7,047,644 )      (4,225,238 ) 

TA Clarion Global Real Estate Securities Service Class

      4,555,494        (10,572,342 )      (6,016,848 )      6,690,081        (13,563,450 )      (6,873,369 ) 

TA International Moderate Growth Initial Class

      1,849        (630 )      1,219       584        (597 )      (13 ) 

TA International Moderate Growth Service Class

      16,224,478        (63,931,554 )      (47,707,076 )      36,293,009        (55,311,200 )      (19,018,191 ) 

TA Janus Balanced Service Class

      39,032,182        (33,567,931 )      5,464,251       56,037,894        (19,753,359 )      36,284,535  

TA Janus Mid-Cap Growth Initial Class

      4,131,990        (8,874,027 )      (4,742,037 )      3,606,230        (20,617,256 )      (17,011,026 ) 

TA Janus Mid-Cap Growth Service Class

      3,608,727        (7,851,191 )      (4,242,464 )      4,119,905        (5,868,903 )      (1,748,998 ) 

TA Jennison Growth Initial Class

      4,439,921        (16,655,789 )      (12,215,868 )      6,382,952        (33,490,066 )      (27,107,114 ) 

TA Jennison Growth Service Class

      4,138,539        (9,768,111 )      (5,629,572 )      8,574,158        (5,806,628 )      2,767,530  

TA JPMorgan Core Bond Service Class

      25,022,781        (20,520,038 )      4,502,743       20,389,056        (23,149,849 )      (2,760,793 ) 

TA JPMorgan Enhanced Index Initial Class

      4,996,032        (7,280,429 )      (2,284,397 )      7,566,713        (15,205,669 )      (7,638,956 ) 

TA JPMorgan Enhanced Index Service Class

      3,811,970        (3,374,799 )      437,171       3,741,009        (4,283,653 )      (542,644 ) 

TA JPMorgan Mid Cap Value Service Class

      13,507,757        (10,763,245 )      2,744,512       12,008,812        (14,288,798 )      (2,279,986 ) 

TA JPMorgan Tactical Allocation Service Class

      33,415,860        (42,376,743 )      (8,960,883 )      48,290,396        (33,980,066 )      14,310,330  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      27,463,153        (41,259,723 )      (13,796,570 )      81,884,699        (27,517,681 )      54,367,018  

TA Legg Mason Dynamic Allocation - Growth Service Class

      17,413,891        (34,950,045 )      (17,536,154 )      64,960,448        (15,138,136 )      49,822,312  

TA Madison Balanced Allocation Service Class

      1,707,056        (3,336,316 )      (1,629,260 )      1,934,921        (3,160,832 )      (1,225,911 ) 

 

47

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA Madison Conservative Allocation Service Class

      733,244        (4,546,770 )      (3,813,526 )      1,895,479        (4,542,885 )      (2,647,406 ) 

TA Madison Diversified Income Service Class

      2,446,006        (4,650,935 )      (2,204,929 )      2,198,068        (4,568,649 )      (2,370,581 ) 

TA Managed Risk - Balanced ETF Service Class

      70,078,652        (179,753,782 )      (109,675,130 )      165,638,917        (172,416,949 )      (6,778,032 ) 

TA Managed Risk - Conservative ETF Service Class

      31,195,491        (51,716,980 )      (20,521,489 )      41,392,316        (60,246,538 )      (18,854,222 ) 

TA Managed Risk - Growth ETF Service Class

      37,846,184        (210,585,217 )      (172,739,033 )      87,101,410        (232,402,552 )      (145,301,142 ) 

TA Market Participation Strategy Service Class

      9,303,963        (15,003,497 )      (5,699,534 )      21,959,357        (15,044,527 )      6,914,830  

TA MFS International Equity Initial Class

      4,529,027        (8,434,870 )      (3,905,843 )      8,404,497        (13,801,042 )      (5,396,545 ) 

TA MFS International Equity Service Class

      4,704,689        (7,974,528 )      (3,269,839 )      9,682,318        (6,764,133 )      2,918,185  

TA Morgan Stanley Capital Growth Initial Class

      3,486,371        (7,070,316 )      (3,583,945 )      3,730,426        (15,683,446 )      (11,953,020 ) 

TA Morgan Stanley Capital Growth Service Class

      3,011,586        (5,230,043 )      (2,218,457 )      7,366,786        (4,368,728 )      2,998,058  

TA Multi-Managed Balanced Initial Class

      5,998,439        (4,667,176 )      1,331,263       8,087,764        (8,835,296 )      (747,532 ) 

TA Multi-Managed Balanced Service Class

      96,343,104        (19,787,266 )      76,555,838       35,095,546        (26,917,281 )      8,178,265  

TA Multi-Manager Alternative Strategies Service Class

      24,930        (42,740 )      (17,810 )      95,383        (13,192 )      82,191  

TA PIMCO Tactical - Balanced Service Class

      20,422,364        (22,592,129 )      (2,169,765 )      22,563,435        (23,251,724 )      (688,289 ) 

TA PIMCO Tactical - Conservative Service Class

      15,470,938        (11,805,874 )      3,665,064       24,612,310        (13,240,593 )      11,371,717  

TA PIMCO Tactical - Growth Service Class

      14,216,644        (16,190,983 )      (1,974,339 )      34,188,794        (12,190,050 )      21,998,744  

TA PIMCO Total Return Initial Class

      16,071,319        (25,031,254 )      (8,959,935 )      19,350,446        (52,527,210 )      (33,176,764 ) 

TA PIMCO Total Return Service Class

      29,868,111        (72,805,371 )      (42,937,260 )      30,023,649        (85,619,885 )      (55,596,236 ) 

TA PineBridge Inflation Opportunities Service Class

      11,765,833        (20,093,418 )      (8,327,585 )      7,363,268        (18,268,700 )      (10,905,432 ) 

TA ProFunds UltraBear Service Class (OAM)

      686,441,209        (535,616,523 )      150,824,686       339,489,718        (137,519,758 )      201,969,960  

TA QS Investors Active Asset Allocation - Conservative Service Class

      10,145,092        (33,723,903 )      (23,578,811 )      19,305,354        (39,319,996 )      (20,014,642 ) 

TA QS Investors Active Asset Allocation - Moderate Service Class

      10,330,505        (63,026,944 )      (52,696,439 )      28,389,273        (64,786,251 )      (36,396,978 ) 

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      7,740,285        (50,946,692 )      (43,206,407 )      29,591,498        (60,569,570 )      (30,978,072 ) 

TA Small/Mid Cap Value Initial Class

      522,126        (4,143,308 )      (3,621,182 )      203,353        (6,763,971 )      (6,560,618 ) 

TA Small/Mid Cap Value Service Class

      7,977,974        (8,084,028 )      (106,054 )      3,909,098        (7,639,444 )      (3,730,346 ) 

 

48

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA T. Rowe Price Small Cap Initial Class

      5,548,522        (8,335,225 )      (2,786,703 )      6,339,554        (15,544,885 )      (9,205,331 ) 

TA T. Rowe Price Small Cap Service Class

      6,357,624        (8,494,242 )      (2,136,618 )      8,716,699        (7,906,280 )      810,419  

TA Torray Concentrated Growth Initial Class

      1,616,487        (6,791,243 )      (5,174,756 )      1,425,182        (13,902,997 )      (12,477,815 ) 

TA Torray Concentrated Growth Service Class

      1,403,687        (3,156,100 )      (1,752,413 )      1,350,897        (4,156,367 )      (2,805,470 ) 

TA TS&W International Equity Initial Class

      4,441,998        (7,067,853 )      (2,625,855 )      4,983,675        (11,391,476 )      (6,407,801 ) 

TA TS&W International Equity Service Class

      2,249,231        (5,495,812 )      (3,246,581 )      5,116,331        (4,231,392 )      884,939  

TA WMC US Growth Initial Class

      8,822,726        (24,557,097 )      (15,734,371 )      5,578,590        (43,579,369 )      (38,000,779 ) 

TA WMC US Growth Service Class

      3,710,129        (6,247,767 )      (2,537,638 )      7,929,698        (7,008,341 )      921,357  

Vanguard® Equity Index

      159,092        (209,979 )      (50,887 )      119,463        (133,545 )      (14,082 ) 

Vanguard® International

      54,824        (39,634 )      15,190       315,650        (279,769 )      35,881  

Vanguard® Mid-Cap Index

      29,372        (102,492 )      (73,120 )      126,217        (59,319 )      66,898  

Vanguard® REIT Index

      23,905        (37,266 )      (13,361 )      12,682        (37,150 )      (24,468 ) 

Vanguard® Short-Term Investment Grade

      107,340        (243,629 )      (136,289 )      354,890        (139,716 )      215,174  

Vanguard® Total Bond Market Index

      16,267        (114,873 )      (98,606 )      109,371        (146,453 )      (37,082 ) 

Voya Global Perspectives Class S Shares

      55        (23 )      32       1,633        —         1,633  

Voya Large Cap Value Class S Shares

      97        —         97       —          —         —    

Voya Strategic Allocation Conservative Class S Shares

      —          —         —         —          —         —    

Voya Strategic Allocation Moderate Class S Shares

      —          —         —         —          —         —    

Wanger International

      24,261        (42,512 )      (18,251 )      19,662        (5,083 )      14,579  

Wanger USA

      918        (66,956 )      (66,038 )      101,080        (56,603 )      44,477  

 

49

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

   $ 11,799,095     $ (15,714,012 )    $ (3,914,917 )    $ 19,605,958     $ (15,483,192 )    $ 4,122,766  

AB Growth and Income Class B Shares

     45,454,355       (37,807,978 )      7,646,377       49,941,550       (45,341,682 )      4,599,868  

AB Large Cap Growth Class B Shares

     916,454       (3,458,770 )      (2,542,316 )      545,577       (8,473,180 )      (7,927,603 ) 

American Funds - Asset Allocation
Class 2 Shares

     146,972,375       (65,369,472 )      81,602,903       124,380,921       (78,576,824 )      45,804,097  

American Funds - Bond Class 2 Shares

     65,269,511       (32,378,552 )      32,890,959       58,518,428       (30,072,016 )      28,446,412  

American Funds - Growth Class 2 Shares

     75,975,624       (36,136,560 )      39,839,064       86,978,559       (28,064,044 )      58,914,515  

American Funds - Growth-Income
Class 2 Shares

     78,385,499       (30,443,784 )      47,941,715       90,182,553       (32,011,803 )      58,170,750  

American Funds - International Class 2 Shares

     40,700,972       (28,476,097 )      12,224,875       49,168,371       (19,371,162 )      29,797,209  

BlackRock Basic Value V.I. Class I Shares

     580,348       (2,566,375 )      (1,986,027 )      1,096,068       (7,258,644 )      (6,162,576 ) 

BlackRock Global Allocation V.I.
Class I Shares

     373,087       (1,836,075 )      (1,462,988 )      530,254       (5,244,293 )      (4,714,039 ) 

BlackRock High Yield V.I. Class I Shares

     115,750       (991,567 )      (875,817 )      530,478       (2,220,466 )      (1,689,988 ) 

Catalyst Dividend Capture VA

     38,967       (285,328 )      (246,361 )      156,660       (768,373 )      (611,713 ) 

Catalyst Insider Buying VA

     79,661       (320,183 )      (240,522 )      83,923       (1,182,004 )      (1,098,081 ) 

Fidelity® VIP Balanced Service Class 2

     68,631,757       (47,677,413 )      20,954,344       94,813,150       (41,647,072 )      53,166,078  

Fidelity® VIP Contrafund® Initial Class

     53,743       (363,078 )      (309,335 )      265,899       (338,896 )      (72,997 ) 

Fidelity® VIP Contrafund® Service
Class 2

     73,039,231       (73,098,881 )      (59,650 )      100,082,541       (111,094,487 )      (11,011,946 ) 

Fidelity® VIP Equity-Income Initial Class

     16,848       (34,721 )      (17,873 )      —         (15,968 )      (15,968 ) 

Fidelity® VIP Equity-Income Service Class 2

     539,694       (6,256,068 )      (5,716,374 )      355,262       (13,385,189 )      (13,029,927 ) 

Fidelity® VIP Growth Initial Class

     12,359       (32,093 )      (19,734 )      —         (366 )      (366 ) 

Fidelity® VIP Growth Service Class 2

     1,216,160       (7,003,096 )      (5,786,936 )      112,598       (10,180,299 )      (10,067,701 ) 

Fidelity® VIP Growth Opportunities Service Class 2

     176,363       (324,365 )      (148,002 )      46,129       (484,322 )      (438,193 ) 

Fidelity® VIP Mid Cap Initial Class

     3,633       (8,168 )      (4,535 )      25,958       (32,824 )      (6,866 ) 

Fidelity® VIP Mid Cap Service Class 2

     35,863,728       (46,414,278 )      (10,550,550 )      46,196,218       (85,481,167 )      (39,284,949 ) 

Fidelity® VIP Value Strategies Initial Class

     139,023       (61,180 )      77,843       9,654       (20,984 )      (11,330 ) 

Fidelity® VIP Value Strategies Service Class 2

     19,606,698       (24,554,974 )      (4,948,276 )      24,731,476       (38,424,793 )      (13,693,317 ) 

Franklin Founding Funds Allocation Class 4 Shares

     858,522       (15,818,199 )      (14,959,677 )      685,287       (24,529,729 )      (23,844,442 ) 

Franklin Income Class 2 Shares

     1,269,839       (17,257,972 )      (15,988,133 )      1,180,666       (28,901,735 )      (27,721,069 ) 

 

50

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

Franklin Mutual Shares Class 2 Shares

   $ 219,238     $ (2,546,233 )    $ (2,326,995 )    $ 270,448     $ (7,413,831 )    $ (7,143,383 ) 

Franklin Templeton Foreign Class 2 Shares

     503,266       (5,259,884 )      (4,756,618 )      320,381       (11,070,828 )      (10,750,447 ) 

Invesco V.I. American Franchise
Series II Shares

     60,086       (948,186 )      (888,100 )      132,116       (2,509,509 )      (2,377,393 ) 

Invesco V.I. Value Opportunities
Series II Shares

     159,102       (2,988,206 )      (2,829,104 )      410,570       (7,126,522 )      (6,715,952 ) 

Janus Aspen - Enterprise Service Shares

     473,566       (2,420,919 )      (1,947,353 )      429,501       (5,446,234 )      (5,016,733 ) 

Janus Aspen - Global Research Service Shares

     403,895       (4,475,998 )      (4,072,103 )      418,985       (11,059,859 )      (10,640,874 ) 

Janus Aspen - Perkins Mid Cap Value Service Shares

     30,526       (230,573 )      (200,047 )      59,580       (853,668 )      (794,088 ) 

MFS® New Discovery Service Class

     1,217,815       (7,566,641 )      (6,348,826 )      690,362       (14,296,438 )      (13,606,076 ) 

MFS® Total Return Service Class

     242,335       (7,275,654 )      (7,033,319 )      263,981       (17,167,751 )      (16,903,770 ) 

NVIT Emerging Markets Class D Shares

     20,512       (1,018 )      19,494       —         —         —    

State Street Total Return V.I.S. Class 3 Shares

     6,298,949       (9,554,300 )      (3,255,351 )      8,022,270       (10,200,305 )      (2,178,035 ) 

TA AB Dynamic Allocation Initial Class

     1,943,780       (4,071,280 )      (2,127,500 )      5,254,139       (10,574,503 )      (5,320,364 ) 

TA AB Dynamic Allocation Service Class

     32,344,874       (40,769,929 )      (8,425,055 )      57,423,367       (43,848,495 )      13,574,872  

TA Aegon Government Money Market Initial Class

     61,962,295       (68,915,366 )      (6,953,071 )      102,752,128       (98,063,592 )      4,688,536  

TA Aegon Government Money Market Service Class

     352,217,056       (346,626,708 )      5,590,348       463,894,406       (420,487,760 )      43,406,646  

TA Aegon High Yield Bond Initial Class

     13,583,955       (18,261,572 )      (4,677,617 )      16,306,947       (35,026,893 )      (18,719,946 ) 

TA Aegon High Yield Bond Service Class

     75,925,907       (76,292,580 )      (366,673 )      74,921,382       (61,099,819 )      13,821,563  

TA Aegon U.S. Government Securities Initial Class

     18,913,159       (15,493,846 )      3,419,313       12,987,312       (28,774,003 )      (15,786,691 ) 

TA Aegon U.S. Government Securities Service Class

     284,020,839       (245,598,511 )      38,422,328       287,041,090       (143,236,861 )      143,804,229  

TA American Funds Managed Risk - Balanced Service Class

     239,322,229       (9,372,664 )      229,949,565       123,002,523       (1,645,235 )      121,357,288  

TA Asset Allocation - Conservative Initial Class

     30,750,848       (49,383,047 )      (18,632,199 )      25,508,420       (68,816,999 )      (43,308,579 ) 

TA Asset Allocation - Conservative Service Class

     112,211,098       (159,508,140 )      (47,297,042 )      166,974,107       (182,365,531 )      (15,391,424 ) 

TA Asset Allocation - Growth Initial Class

     11,114,899       (40,685,782 )      (29,570,883 )      13,398,156       (94,719,680 )      (81,321,524 ) 

TA Asset Allocation - Growth Service Class

     25,299,082       (44,393,033 )      (19,093,951 )      39,501,742       (38,341,458 )      1,160,284  

TA Asset Allocation - Moderate Initial Class

     24,091,043       (55,205,650 )      (31,114,607 )      14,853,309       (140,266,316 )      (125,413,007 ) 

TA Asset Allocation - Moderate Service Class

     123,033,381       (456,390,503 )      (333,357,122 )      368,583,257       (450,804,558 )      (82,221,301 ) 

TA Asset Allocation - Moderate Growth Initial Class

     25,811,572       (71,142,404 )      (45,330,832 )      18,504,214       (160,997,891 )      (142,493,677 ) 

 

51

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Asset Allocation - Moderate Growth Service Class

   $ 210,725,982     $ (381,149,937 )    $ (170,423,955 )    $ 375,661,496     $ (424,163,019 )    $ (48,501,523 ) 

TA Barrow Hanley Dividend Focused Initial Class

     13,456,258       (42,475,493 )      (29,019,235 )      7,271,310       (99,243,764 )      (91,972,454 ) 

TA Barrow Hanley Dividend Focused Service Class

     28,239,471       (23,234,425 )      5,005,046       28,042,100       (28,312,034 )      (269,934 ) 

TA BlackRock Equity Smart Beta 100 Service Class

     24,665,460       (1,563,133 )      23,102,327       —         —         —    

TA BlackRock Global Allocation Service Class

     199,822,270       (147,952,759 )      51,869,511       150,074,959       (168,876,868 )      (18,801,909 ) 

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

     59,155,665       (24,317,213 )      34,838,452       136,214,051       (10,437,751 )      125,776,300  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

     45,467,475       (25,620,528 )      19,846,947       156,260,385       (5,876,988 )      150,383,397  

TA BlackRock Smart Beta 50 Service Class

     44,618,681       (2,357,925 )      42,260,756       —         —         —    

TA BlackRock Smart Beta 75 Service Class

     12,177,322       (712,728 )      11,464,594       —         —         —    

TA BlackRock Tactical Allocation Service Class

     139,679,982       (146,272,966 )      (6,592,984 )      192,226,037       (162,060,632 )      30,165,405  

TA Clarion Global Real Estate Securities Initial Class

     4,770,168       (9,804,379 )      (5,034,211 )      7,195,217       (17,726,284 )      (10,531,067 ) 

TA Clarion Global Real Estate Securities Service Class

     15,554,106       (19,592,006 )      (4,037,900 )      22,032,698       (22,725,233 )      (692,535 ) 

TA International Moderate Growth Initial Class

     2,115       (734 )      1,381       712       (694 )      18  

TA International Moderate Growth Service Class

     46,164,977       (87,691,198 )      (41,526,221 )      126,666,088       (68,431,395 )      58,234,693  

TA Janus Balanced Service Class

     177,183,176       (70,823,955 )      106,359,221       254,589,601       (35,882,352 )      218,707,249  

TA Janus Mid-Cap Growth Initial Class

     5,272,371       (11,531,023 )      (6,258,652 )      5,361,977       (30,721,908 )      (25,359,931 ) 

TA Janus Mid-Cap Growth Service Class

     13,863,427       (16,014,159 )      (2,150,732 )      17,842,097       (13,888,480 )      3,953,617  

TA Jennison Growth Initial Class

     7,698,925       (27,888,568 )      (20,189,643 )      11,680,403       (57,885,955 )      (46,205,552 ) 

TA Jennison Growth Service Class

     23,200,977       (28,169,979 )      (4,969,002 )      38,232,929       (15,418,804 )      22,814,125  

TA JPMorgan Core Bond Service Class

     87,412,186       (36,057,485 )      51,354,701       74,177,200       (37,860,757 )      36,316,443  

TA JPMorgan Enhanced Index Initial Class

     10,385,101       (14,493,210 )      (4,108,109 )      15,564,612       (30,149,443 )      (14,584,831 ) 

TA JPMorgan Enhanced Index Service Class

     17,101,303       (8,794,189 )      8,307,114       16,404,629       (11,988,475 )      4,416,154  

TA JPMorgan Mid Cap Value Service Class

     57,022,033       (35,715,661 )      21,306,372       53,450,485       (40,266,396 )      13,184,089  

TA JPMorgan Tactical Allocation Service Class

     210,438,567       (85,966,116 )      124,472,451       345,799,124       (54,429,866 )      291,369,258  

TA Legg Mason Dynamic Allocation - Balanced Service Class

     174,350,460       (102,326,291 )      72,024,169       476,970,988       (52,171,384 )      424,799,604  

TA Legg Mason Dynamic Allocation - Growth Service Class

     91,439,069       (93,858,145 )      (2,419,076 )      295,199,364       (40,281,874 )      254,917,490  

 

52

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Madison Balanced Allocation Service Class

   $ 10,074,472     $ (7,637,764 )    $ 2,436,708     $ 10,848,018     $ (4,984,028 )    $ 5,863,990  

TA Madison Conservative Allocation Service Class

     5,464,541       (8,560,746 )      (3,096,205 )      10,647,199       (9,685,203 )      961,996  

TA Madison Diversified Income Service Class

     9,468,357       (9,226,249 )      242,108       12,797,854       (7,326,662 )      5,471,192  

TA Managed Risk - Balanced ETF Service Class

     412,893,951       (371,162,608 )      41,731,343       1,432,244,387       (286,222,333 )      1,146,022,054  

TA Managed Risk - Conservative ETF Service Class

     126,094,830       (103,721,852 )      22,372,978       176,559,511       (101,853,850 )      74,705,661  

TA Managed Risk - Growth ETF Service Class

     183,488,838       (400,503,829 )      (217,014,991 )      510,051,434       (394,525,091 )      115,526,343  

TA Market Participation Strategy Service Class

     33,875,388       (45,897,311 )      (12,021,923 )      92,881,130       (37,132,409 )      55,748,721  

TA MFS International Equity Initial Class

     6,490,882       (11,171,817 )      (4,680,935 )      12,548,963       (20,582,593 )      (8,033,630 ) 

TA MFS International Equity Service Class

     18,223,889       (15,111,152 )      3,112,737       35,408,556       (12,876,527 )      22,532,029  

TA Morgan Stanley Capital Growth Initial Class

     7,456,615       (14,813,587 )      (7,356,972 )      8,296,460       (33,510,025 )      (25,213,565 ) 

TA Morgan Stanley Capital Growth Service Class

     17,294,161       (15,320,277 )      1,973,884       26,952,411       (12,019,182 )      14,933,229  

TA Multi-Managed Balanced Initial Class

     12,785,644       (9,900,610 )      2,885,034       17,383,761       (18,540,861 )      (1,157,100 ) 

TA Multi-Managed Balanced Service Class

     567,124,285       (45,268,051 )      521,856,234       134,043,594       (52,729,775 )      81,313,819  

TA Multi-Manager Alternative Strategies Service Class

     242,550       (418,436 )      (175,886 )      981,560       (133,101 )      848,459  

TA PIMCO Tactical - Balanced Service Class

     64,517,391       (48,576,481 )      15,940,910       105,336,879       (43,193,378 )      62,143,501  

TA PIMCO Tactical - Conservative Service Class

     66,357,295       (24,261,279 )      42,096,016       120,176,789       (21,164,029 )      99,012,760  

TA PIMCO Tactical - Growth Service Class

     70,321,227       (35,494,192 )      34,827,035       152,748,106       (21,943,100 )      130,805,006  

TA PIMCO Total Return Initial Class

     25,341,461       (39,256,364 )      (13,914,903 )      30,262,269       (82,033,931 )      (51,771,662 ) 

TA PIMCO Total Return Service Class

     108,085,761       (123,880,043 )      (15,794,282 )      114,663,894       (133,552,210 )      (18,888,316 ) 

TA PineBridge Inflation Opportunities Service Class

     44,051,179       (50,651,923 )      (6,600,744 )      32,381,221       (28,536,010 )      3,845,211  

TA ProFunds UltraBear Service Class (OAM)

     58,145,177       (40,010,998 )      18,134,179       31,161,320       (11,591,120 )      19,570,200  

TA QS Investors Active Asset Allocation - Conservative Service Class

     43,554,540       (57,194,103 )      (13,639,563 )      101,083,668       (64,813,220 )      36,270,448  

TA QS Investors Active Asset Allocation - Moderate Service Class

     38,093,100       (139,643,708 )      (101,550,608 )      168,202,683       (126,315,140 )      41,887,543  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

     38,457,289       (97,257,344 )      (58,800,055 )      154,099,842       (102,673,057 )      51,426,785  

TA Small/Mid Cap Value Initial Class

     2,380,933       (17,828,894 )      (15,447,961 )      926,676       (28,800,981 )      (27,874,305 ) 

 

53

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Small/Mid Cap Value Service Class

   $ 25,805,765     $ (18,772,598 )    $ 7,033,167     $ 18,619,175     $ (17,156,949 )    $ 1,462,226  

TA T. Rowe Price Small Cap Initial Class

     12,421,822       (18,025,678 )      (5,603,856 )      14,837,053       (35,045,275 )      (20,208,222 ) 

TA T. Rowe Price Small Cap Service Class

     39,755,899       (30,486,576 )      9,269,323       52,103,983       (26,980,857 )      25,123,126  

TA Torray Concentrated Growth Initial Class

     4,145,727       (20,676,658 )      (16,530,931 )      4,671,432       (41,320,487 )      (36,649,055 ) 

TA Torray Concentrated Growth Service Class

     5,967,912       (7,793,461 )      (1,825,549 )      7,075,189       (9,157,001 )      (2,081,812 ) 

TA TS&W International Equity Initial Class

     6,916,000       (11,128,086 )      (4,212,086 )      8,998,255       (20,306,583 )      (11,308,328 ) 

TA TS&W International Equity Service Class

     9,555,073       (11,349,653 )      (1,794,580 )      15,374,497       (7,802,620 )      7,571,877  

TA WMC US Growth Initial Class

     14,451,763       (38,298,431 )      (23,846,668 )      9,071,647       (68,370,340 )      (59,298,693 ) 

TA WMC US Growth Service Class

     18,622,658       (18,021,387 )      601,271       31,947,154       (15,950,196 )      15,996,958  

Vanguard® Equity Index

     324,385       (472,685 )      (148,300 )      1,182,922       (277,698 )      905,224  

Vanguard® International

     147,782       (115,724 )      32,058       1,143,115       (355,115 )      788,000  

Vanguard® Mid-Cap Index

     69,512       (198,718 )      (129,206 )      619,165       (135,276 )      483,889  

Vanguard® REIT Index

     45,917       (64,909 )      (18,992 )      93,721       (63,912 )      29,809  

Vanguard® Short-Term Investment Grade

     217,258       (459,779 )      (242,521 )      1,653,362       (222,113 )      1,431,249  

Vanguard® Total Bond Market Index

     111,343       (285,834 )      (174,491 )      1,004,123       (198,190 )      805,933  

Voya Global Perspectives Class S Shares

     515       (219 )      296       15,178       1       15,179  

Voya Large Cap Value Class S Shares

     862       1       863       —         —         —    

Voya Strategic Allocation Conservative Class S Shares

     —         —         —         —         —         —    

Voya Strategic Allocation Moderate Class S Shares

     —         —         —         —         —         —    

Wanger International

     50,848       (54,286 )      (3,438 )      92,864       (6,551 )      86,313  

Wanger USA

     1,329       (116,170 )      (114,841 )      218,105       (132,764 )      85,341  

 

54

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights

The Separate Account offers various death benefit options, which have differing fees that are charged against the contract owner’s account balance. These charges are discussed in more detail in the individual’s policy. Differences in the fee structures for these units result in different unit values, expense ratios, and total returns.

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

AB Balanced Wealth Strategy Class B Shares

 

     

12/31/2016

      44,034,478      $ 12.01        to      $ 1.63      $ 94,083,857        1.82 %      0.65 %      to        2.65 %      3.77 %      to        1.75 % 

12/31/2015

      47,328,479        11.58        to        1.60        95,500,596        2.02       0.65       to        2.65       0.64       to        (1.32 ) 

12/31/2014

      47,372,152        11.51        to        1.62        91,875,603        2.43       0.65       to        2.65       6.42       to        4.34  

12/31/2013

      50,928,333        1.19        to        1.56        87,360,846        2.31       0.65       to        2.65       15.52       to        13.27  

12/31/2012

      47,661,048        1.03        to        1.37        67,988,859        1.93       0.65       to        2.65       12.64       to        10.43  

AB Growth and Income Class B Shares

 

     

12/31/2016

      86,181,039        2.02        to        1.37        220,284,665        0.84       0.30       to        2.30       10.74       to        8.58  

12/31/2015

      86,893,047        1.82        to        1.26        194,307,335        1.19       0.30       to        2.30       1.12       to        (0.85 ) 

12/31/2014

      94,663,141        1.80        to        1.27        190,026,748        1.14       0.30       to        2.30       8.96       to        6.83  

12/31/2013

      96,773,079        1.65        to        1.19        156,306,109        1.06       0.30       to        2.30       34.19       to        31.57  

12/31/2012

      77,780,377        1.23        to        0.91        89,263,201        1.32       0.30       to        2.30       16.89       to        14.59  

AB Large Cap Growth Class B Shares

 

     

12/31/2016

      17,594,877        2.12        to        1.57        28,324,370        —         0.30       to        2.30       2.05       to        0.06  

12/31/2015

      19,226,523        2.08        to        1.57        30,693,993        —         0.30       to        2.30       10.52       to        8.36  

12/31/2014

      24,431,104        1.88        to        1.45        35,592,264        —         0.30       to        2.30       13.50       to        11.28  

12/31/2013

      27,375,375        1.66        to        1.30        35,597,034        —         0.30       to        2.30       36.59       to        33.92  

12/31/2012

      30,870,141        1.21        to        0.97        29,684,480        0.03       0.30       to        2.30       16.35       to        14.06  

American Funds - Asset Allocation Class 2 Shares

 

     

12/31/2016

      250,143,519        12.88        to        1.60        634,039,608        1.74       0.75       to        2.75       8.60       to        6.49  

12/31/2015

      229,793,901        11.86        to        1.50        511,723,809        1.70       0.75       to        2.75       0.64       to        (1.31 ) 

12/31/2014

      238,074,048        11.78        to        1.52        468,882,755        1.58       0.75       to        2.75       4.61       to        2.57  

12/31/2013

      233,042,233        1.33        to        1.48        379,469,267        1.66       0.75       to        2.75       22.77       to        20.38  

12/31/2012

      169,210,476        1.08        to        1.23        214,081,441        2.12       0.75       to        2.75       15.32       to        13.07  

American Funds - Bond Class 2 Shares

 

     

12/31/2016

      86,249,797        10.24        to        1.04        202,687,185        1.75       0.75       to        2.75       2.18       to        0.20  

12/31/2015

      83,923,617        10.03        to        1.04        168,449,072        1.79       0.75       to        2.75       (0.47 )      to        (2.41 ) 

12/31/2014

      83,916,301        10.07        to        1.06        142,447,050        2.18       0.75       to        2.75       4.50       to        2.46  

12/31/2013

      85,631,756        1.05        to        1.04        103,432,773        1.87       0.75       to        2.75       (2.89 )      to        (4.78 ) 

12/31/2012

      84,904,847        1.08        to        1.09        95,250,272        3.06       0.75       to        2.75       4.59       to        2.54  

American Funds - Growth Class 2 Shares

 

     

12/31/2016

      68,512,929        14.77        to        1.85        301,070,692        0.84       0.75       to        2.60       8.67       to        6.72  

12/31/2015

      69,343,957        13.59        to        1.74        241,712,021        0.67       0.75       to        2.60       6.06       to        4.15  

12/31/2014

      65,675,816        12.81        to        1.67        174,197,876        0.95       0.75       to        2.60       7.70       to        5.76  

12/31/2013

      61,017,259        1.32        to        1.58        116,392,175        1.03       0.75       to        2.60       29.13       to        26.81  

12/31/2012

      50,472,876        1.02        to        1.24        64,264,152        0.90       0.75       to        2.60       17.01       to        14.89  

American Funds - Growth-Income Class 2 Shares

 

     

12/31/2016

      60,127,114        14.69        to        1.81        308,892,051        1.61       0.75       to        2.60       10.69       to        8.70  

12/31/2015

      56,995,196        13.27        to        1.66        236,097,115        1.44       0.75       to        2.60       0.70       to        (1.12 ) 

12/31/2014

      55,861,390        13.18        to        1.68        180,173,950        1.59       0.75       to        2.60       9.81       to        7.83  

12/31/2013

      47,215,255        1.41        to        1.56        93,879,498        1.63       0.75       to        2.60       32.51       to        30.12  

12/31/2012

      36,300,214        1.06        to        1.20        44,580,566        1.93       0.75       to        2.60       16.60       to        14.49  

American Funds - International Class 2 Shares

 

     

12/31/2016

      49,934,063        10.66        to        1.04        129,648,359        1.48       0.75       to        2.60       2.76       to        0.92  

12/31/2015

      54,330,699        10.37        to        1.03        114,935,590        1.62       0.75       to        2.60       (5.24 )      to        (6.95 ) 

12/31/2014

      52,391,548        10.94        to        1.11        94,057,736        1.62       0.75       to        2.60       (3.38 )      to        (5.12 ) 

12/31/2013

      50,035,861        1.10        to        1.17        69,810,558        1.55       0.75       to        2.60       20.73       to        18.55  

12/31/2012

      40,673,990        0.91        to        0.99        41,084,363        1.66       0.75       to        2.60       17.02       to        14.90  

 

55

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

BlackRock Basic Value V.I. Class I Shares

 

                          

12/31/2016

      8,011,814      $ 2.21        to      $ 2.40      $ 22,069,925        1.52 %      1.25 %      to        2.30 %      16.73 %      to        15.54 % 

12/31/2015

      8,817,241        1.89        to        2.07        20,857,527        1.42       1.25       to        2.30       (7.11 )      to        (8.07 ) 

12/31/2014

      11,168,612        2.04        to        2.26        28,532,280        1.38       1.25       to        2.30       8.57       to        7.46  

12/31/2013

      12,781,068        1.88        to        2.10        30,389,242        1.44       1.25       to        2.30       36.37       to        34.97  

12/31/2012

      14,266,398        1.38        to        1.56        25,008,298        1.71       1.25       to        2.30       12.63       to        11.47  

BlackRock Global Allocation V.I. Class I Shares

 

              

12/31/2016

      7,054,931        2.66        to        2.61        13,393,563        1.25       1.25       to        2.30       2.83       to        1.78  

12/31/2015

      7,842,563        2.58        to        2.57        14,520,562        1.04       1.25       to        2.30       (1.94 )      to        (2.94 ) 

12/31/2014

      10,125,330        2.63        to        2.64        19,447,094        2.05       1.25       to        2.30       0.85       to        (0.19 ) 

12/31/2013

      11,656,814        2.61        to        2.65        22,385,439        1.15       1.25       to        2.30       13.34       to        12.18  

12/31/2012

      12,057,417        2.30        to        2.36        20,528,710        1.45       1.25       to        2.30       8.91       to        7.79  

BlackRock High Yield V.I. Class I Shares

 

                          

12/31/2016

      2,044,390        2.44        to        1.99        4,838,768        5.46       1.25       to        2.30       11.52       to        10.38  

12/31/2015

      2,441,830        2.19        to        1.80        5,188,905        5.10       1.25       to        2.30       (4.77 )      to        (5.74 ) 

12/31/2014

      3,187,284        2.30        to        1.91        7,122,273        5.37       1.25       to        2.30       1.62       to        0.58  

12/31/2013

      3,709,697        2.26        to        1.90        8,168,931        5.90       1.25       to        2.30       7.99       to        6.88  

12/31/2012

      4,567,350        2.10        to        1.78        9,321,250        6.57       1.25       to        2.30       14.23       to        13.05  

Catalyst Dividend Capture VA

 

                          

12/31/2016

      1,558,996        1.43        to        1.30        2,218,052        4.61       1.30       to        2.30       5.60       to        4.57  

12/31/2015

      1,735,947        1.35        to        1.25        2,340,269        4.11       1.30       to        2.30       (4.30 )      to        (5.24 ) 

12/31/2014

      2,178,735        1.41        to        1.32        3,069,679        4.32       1.30       to        2.30       8.75       to        7.68  

12/31/2013

      3,214,274        1.30        to        1.22        4,166,880        3.17       1.30       to        2.30       18.42       to        17.27  

12/31/2012

      2,751,811        1.10        to        1.04        3,013,918        4.83       1.30       to        2.30       10.03       to        8.95  

Catalyst Insider Buying VA

 

                          

12/31/2016

      1,753,688        1.47        to        1.34        2,561,942        0.64       1.30       to        2.30       9.58       to        8.52  

12/31/2015

      1,940,602        1.34        to        1.24        2,588,982        0.51       1.30       to        2.30       (8.36 )      to        (9.25 ) 

12/31/2014

      2,714,936        1.46        to        1.36        3,951,760        0.42       1.30       to        2.30       (3.32 )      to        (4.27 ) 

12/31/2013

      3,253,720        1.51        to        1.42        4,902,232        0.34       1.30       to        2.30       30.23       to        28.96  

12/31/2012

      3,178,655        1.16        to        1.10        3,678,626        —         1.30       to        2.30       21.04       to        19.86  

Fidelity® VIP Balanced Service Class 2

 

                          

12/31/2016

      161,273,927        1.66        to        1.38        336,960,896        1.26       0.30       to        2.45       6.66       to        4.43  

12/31/2015

      159,318,959        1.56        to        1.32        299,484,731        1.43       0.30       to        2.45       0.06       to        (2.04 ) 

12/31/2014

      146,071,274        1.56        to        1.35        250,216,054        1.51       0.30       to        2.45       9.69       to        7.39  

12/31/2013

      129,108,936        1.42        to        1.26        181,860,843        1.44       0.30       to        2.45       18.93       to        16.43  

12/31/2012

      117,724,325        1.19        to        1.08        132,706,666        1.76       0.30       to        2.45       14.47       to        12.06  

Fidelity® VIP Contrafund® Initial Class

 

             

12/31/2016

      113,495        1.80        to        1.57        431,681        0.73       0.30       to        1.00       7.68       to        6.93  

12/31/2015

      201,666        1.67        to        1.47        716,924        1.05       0.30       to        1.00       0.37       to        (0.33 ) 

12/31/2014

      215,716        1.67        to        1.47        798,211        0.87       0.30       to        1.00       11.61       to        10.83  

12/31/2013

      263,301        1.49        to        1.33        875,305        1.72       0.30       to        1.00       30.89       to        29.99  

12/31/2012

      193,665        1.14        to        1.02        205,876        1.10       0.30       to        1.00       16.07       to        15.26  

Fidelity® VIP Contrafund® Service Class 2

 

                      

12/31/2016

      158,259,292        2.16        to        1.41        476,359,703        0.64       0.30       to        2.30       7.41       to        5.31  

12/31/2015

      172,144,924        2.01        to        1.34        449,859,068        0.80       0.30       to        2.30       0.11       to        (1.84 ) 

12/31/2014

      198,325,170        2.01        to        1.36        465,848,417        0.81       0.30       to        2.30       11.32       to        9.14  

12/31/2013

      196,958,822        1.81        to        1.25        377,299,296        0.88       0.30       to        2.30       30.56       to        28.01  

12/31/2012

      193,279,626        1.38        to        0.98        277,085,608        1.13       0.30       to        2.30       15.79       to        13.52  

Fidelity® VIP Equity-Income Initial Class

 

                       

12/31/2016

      38,845        1.49        to        1.61        61,069        2.28       0.30       to        1.00       17.67       to        16.85  

12/31/2015

      52,261        1.27        to        1.38        70,747        3.01       0.30       to        1.00       (4.25 )      to        (4.92 ) 

12/31/2014

      63,434        1.33        to        1.45        89,679        2.89       0.30       to        1.00       8.39       to        7.64  

12/31/2013

      64,315        1.22        to        1.35        84,226        2.26       0.30       to        1.00       27.76       to        26.88  

12/31/2012

      85,423        0.96        to        1.06        88,654        1.79       0.30       to        1.00       16.95       to        16.14  

 

56

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Fidelity® VIP Equity-Income Service Class 2

 

                          

12/31/2016

      27,073,880      $ 1.90        to      $ 1.25      $ 49,230,256        2.09 %      0.30 %      to        2.30 %      17.36 %      to        15.07 % 

12/31/2015

      30,565,159        1.62        to        1.09        47,923,174        2.74       0.30       to        2.30       (4.52 )      to        (6.39 ) 

12/31/2014

      38,349,894        1.70        to        1.16        63,824,949        2.52       0.30       to        2.30       8.16       to        6.04  

12/31/2013

      44,412,638        1.57        to        1.09        69,246,230        2.24       0.30       to        2.30       27.45       to        24.95  

12/31/2012

      50,311,687        1.23        to        0.88        62,328,811        2.69       0.30       to        2.30       16.70       to        14.41  

Fidelity® VIP Growth Initial Class

 

                             

12/31/2016

      12,155        1.85        to        1.61        19,555        0.03       0.30       to        1.00       0.50       to        (0.19 ) 

12/31/2015

      25,199        1.84        to        1.61        40,557        0.26       0.30       to        1.00       6.85       to        6.11  

12/31/2014

      25,431        1.72        to        1.52        38,477        0.19       0.30       to        1.00       10.96       to        10.20  

12/31/2013

      25,647        1.55        to        1.38        35,124        0.20       0.30       to        1.00       35.93       to        34.99  

12/31/2012

      53,789        1.14        to        1.02        54,726        0.61       0.30       to        1.00       14.34       to        13.55  

Fidelity® VIP Growth Service Class 2

 

                             

12/31/2016

      22,172,573        2.08        to        1.37        34,319,380        —         0.30       to        2.30       0.25       to        (1.71 ) 

12/31/2015

      25,975,749        2.07        to        1.40        40,617,613        0.03       0.30       to        2.30       6.58       to        4.50  

12/31/2014

      32,507,157        1.94        to        1.34        48,200,149        —         0.30       to        2.30       10.68       to        8.52  

12/31/2013

      37,005,028        1.76        to        1.23        50,162,145        0.04       0.30       to        2.30       35.59       to        32.94  

12/31/2012

      43,087,084        1.30        to        0.93        43,606,757        0.32       0.30       to        2.30       14.06       to        11.82  

Fidelity® VIP Growth Opportunities  Service Class 2

 

                          

12/31/2016

      1,186,013        1.83        to        1.32        1,992,681        0.05       1.25       to        1.75       (1.17 )      to        (1.65 ) 

12/31/2015

      1,281,973        1.85        to        1.34        2,179,017        0.00       1.25       to        1.75       4.04       to        3.53  

12/31/2014

      1,532,255        1.78        to        1.30        2,517,712        0.01       1.25       to        1.75       10.57       to        10.02  

12/31/2013

      1,760,793        1.61        to        1.18        2,628,111        0.05       1.25       to        1.75       35.84       to        35.18  

12/31/2012

      1,898,669        1.18        to        0.87        2,089,207        0.15       1.25       to        1.75       17.84       to        17.26  

Fidelity® VIP Mid Cap Initial Class

 

                             

12/31/2016

      21,135        1.88        to        1.46        52,280        0.50       0.30       to        1.00       11.90       to        11.12  

12/31/2015

      24,745        1.68        to        1.31        51,157        0.42       0.30       to        1.00       (1.68 )      to        (2.37 ) 

12/31/2014

      31,431        1.71        to        1.34        59,307        0.26       0.30       to        1.00       5.97       to        5.23  

12/31/2013

      31,222        1.61        to        1.28        48,484        0.53       0.30       to        1.00       35.82       to        34.88  

12/31/2012

      36,492        1.19        to        0.95        35,291        0.38       0.30       to        1.00       14.49       to        13.69  

Fidelity® VIP Mid Cap Service Class 2

 

                             

12/31/2016

      89,788,590        2.32        to        1.48        316,226,522        0.32       0.30       to        2.30       11.59       to        9.41  

12/31/2015

      98,025,909        2.08        to        1.35        298,255,903        0.24       0.30       to        2.30       (1.92 )      to        (3.84 ) 

12/31/2014

      114,999,325        2.12        to        1.41        345,744,918        0.02       0.30       to        2.30       5.71       to        3.65  

12/31/2013

      124,383,437        2.01        to        1.36        334,770,485        0.29       0.30       to        2.30       35.46       to        32.82  

12/31/2012

      123,526,673        1.48        to        1.02        246,581,179        0.38       0.30       to        2.30       14.22       to        11.97  

Fidelity® VIP Value Strategies Initial Class

 

                          

12/31/2016

      45,032        1.53        to        1.48        187,030        1.43       0.30       to        1.00       9.30       to        8.54  

12/31/2015

      47,767        1.40        to        1.37        89,494        1.13       0.30       to        1.00       (3.28 )      to        (3.95 ) 

12/31/2014

      46,549        1.45        to        1.42        104,026        1.15       0.30       to        1.00       6.48       to        5.73  

12/31/2013

      45,742        1.36        to        1.35        84,623        1.04       0.30       to        1.00       30.10       to        29.20  

12/31/2012

      43,606        1.05        to        1.04        45,983        0.65       0.30       to        1.00       26.90       to        26.02  

Fidelity® VIP Value Strategies Service Class 2

 

                          

12/31/2016

      48,667,743        2.02        to        1.31        128,230,984        0.93       0.30       to        2.30       8.95       to        6.82  

12/31/2015

      53,699,682        1.85        to        1.23        124,591,778        0.85       0.30       to        2.30       (3.48 )      to        (5.37 ) 

12/31/2014

      63,993,977        1.92        to        1.30        144,232,335        0.84       0.30       to        2.30       6.19       to        4.12  

12/31/2013

      67,754,937        1.80        to        1.25        134,957,220        0.73       0.30       to        2.30       29.79       to        27.26  

12/31/2012

      60,326,082        1.39        to        0.98        91,138,385        0.39       0.30       to        2.30       26.68       to        24.19  

Franklin Founding Funds Allocation Class 4 Shares

 

                          

12/31/2016

      59,149,514        1.35        to        1.76        112,099,678        3.70       0.60       to        2.60       12.25       to        10.07  

12/31/2015

      67,682,365        1.20        to        1.60        115,509,798        2.72       0.60       to        2.60       (6.80 )      to        (8.62 ) 

12/31/2014

      80,598,108        1.29        to        1.75        149,122,631        2.72       0.60       to        2.60       2.14       to        0.15  

12/31/2013

      93,477,182        1.26        to        1.75        171,063,034        10.55       0.60       to        2.60       22.94       to        20.55  

12/31/2012

      103,151,130        1.03        to        1.45        155,140,789        2.74       0.60       to        2.60       14.48       to        12.24  

 

57

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Franklin Income Class 2 Shares

 

                             

12/31/2016

      61,395,564      $ 1.39        to      $ 1.23      $ 83,312,836        5.07 %      1.00 %      to        2.30 %      12.90 %      to        11.47 % 

12/31/2015

      74,138,690        1.23        to        1.10        89,472,772        4.62       1.00       to        2.30       (7.97 )      to        (9.14 ) 

12/31/2014

      95,658,242        1.34        to        1.22        125,848,593        4.99       1.00       to        2.30       3.58       to        2.26  

12/31/2013

      108,189,372        1.29        to        1.19        138,042,260        6.43       1.00       to        2.30       12.81       to        11.38  

12/31/2012

      127,426,124        1.15        to        1.07        144,705,853        6.59       1.00       to        2.30       11.53       to        10.11  

Franklin Mutual Shares Class 2 Shares

 

              

12/31/2016

      13,977,761        1.34        to        1.18        18,358,702        1.99       1.00       to        2.30       14.91       to        13.46  

12/31/2015

      15,954,729        1.16        to        1.04        18,306,795        2.83       1.00       to        2.30       (5.88 )      to        (7.07 ) 

12/31/2014

      21,834,462        1.23        to        1.12        26,638,380        2.00       1.00       to        2.30       6.06       to        4.71  

12/31/2013

      24,724,453        1.16        to        1.07        28,581,308        2.06       1.00       to        2.30       26.99       to        25.38  

12/31/2012

      28,932,267        0.92        to        0.85        26,468,882        1.98       1.00       to        2.30       13.11       to        11.66  

Franklin Templeton Foreign Class 2 Shares

 

              

12/31/2016

      33,720,848        1.00        to        0.89        32,654,219        1.95       1.00       to        2.30       6.12       to        4.77  

12/31/2015

      38,972,850        0.95        to        0.85        35,741,459        3.22       1.00       to        2.30       (7.42 )      to        (8.60 ) 

12/31/2014

      49,701,555        1.02        to        0.93        49,421,163        1.89       1.00       to        2.30       (12.01 )      to        (13.13 ) 

12/31/2013

      57,209,468        1.16        to        1.07        64,992,850        2.37       1.00       to        2.30       21.75       to        20.21  

12/31/2012

      69,413,713        0.95        to        0.89        65,078,952        3.01       1.00       to        2.30       17.06       to        15.56  

Invesco V.I. American Franchise Series II Shares

 

                 

12/31/2016

      4,459,627        1.55        to        1.41        6,543,470        —         0.30       to        2.30       1.71       to        (0.27 ) 

12/31/2015

      5,078,250        1.52        to        1.42        7,414,245        —         0.30       to        2.30       4.44       to        2.39  

12/31/2014

      6,712,184        1.46        to        1.38        9,493,323        —         0.30       to        2.30       7.85       to        5.74  

12/31/2013

      8,029,737        1.35        to        1.31        10,656,379        0.25       0.30       to        2.30       39.38       to        36.65  

12/31/2012(1)

      8,709,208        0.97        to        0.96        8,390,522        —         0.30       to        2.30       —         to        —    

Invesco V.I. Value Opportunities Series II Shares

 

                 

12/31/2016

      13,110,788        1.48        to        1.04        18,332,307        0.08       0.30       to        2.30       17.57       to        15.28  

12/31/2015

      15,432,956        1.26        to        0.90        18,566,395        2.13       0.30       to        2.30       (10.92 )      to        (12.67 ) 

12/31/2014

      20,414,876        1.41        to        1.04        27,970,466        1.15       0.30       to        2.30       6.07       to        3.99  

12/31/2013

      22,673,790        1.33        to        1.00        29,639,814        1.19       0.30       to        2.30       32.87       to        30.28  

12/31/2012

      25,663,471        1.00        to        0.76        25,580,729        1.18       0.30       to        2.30       17.30       to        15.00  

Janus Aspen - Enterprise Service Shares

 

                    

12/31/2016

      10,584,742        2.82        to        1.78        19,751,582        0.71       0.30       to        2.30       11.77       to        9.59  

12/31/2015

      11,696,584        2.52        to        1.62        19,764,226        0.74       0.30       to        2.30       3.46       to        1.43  

12/31/2014

      14,698,057        2.43        to        1.60        24,097,729        0.03       0.30       to        2.30       11.91       to        9.72  

12/31/2013

      16,708,779        2.18        to        1.46        24,789,340        0.37       0.30       to        2.30       31.64       to        29.07  

12/31/2012

      19,107,051        1.65        to        1.13        21,633,510        —         0.30       to        2.30       16.64       to        14.34  

Janus Aspen - Global Research Service Shares

 

                 

12/31/2016

      23,820,520        1.59        to        1.00        25,804,944        0.94       0.30       to        2.30       1.51       to        (0.47 ) 

12/31/2015

      27,624,966        1.56        to        1.01        29,897,411        0.50       0.30       to        2.30       (2.82 )      to        (4.72 ) 

12/31/2014

      37,018,168        1.61        to        1.06        41,374,871        0.96       0.30       to        2.30       6.86       to        4.77  

12/31/2013

      41,929,396        1.51        to        1.01        44,449,345        1.08       0.30       to        2.30       27.69       to        25.20  

12/31/2012

      49,711,489        1.18        to        0.81        41,538,639        0.74       0.30       to        2.30       19.50       to        17.15  

Janus Aspen - Perkins Mid Cap Value Service Shares

 

              

12/31/2016

      1,278,394        2.41        to        2.22        2,972,307        0.90       1.25       to        1.75       17.30       to        16.73  

12/31/2015

      1,382,062        2.06        to        1.90        2,735,038        1.00       1.25       to        1.75       (4.88 )      to        (5.35 ) 

12/31/2014

      1,766,515        2.16        to        2.01        3,689,741        3.33       1.25       to        1.75       7.10       to        6.57  

12/31/2013

      1,956,635        2.02        to        1.89        3,820,732        1.10       1.25       to        1.75       24.26       to        23.65  

12/31/2012

      2,218,259        1.62        to        1.52        3,500,990        0.82       1.25       to        1.75       9.42       to        8.88  

 

58

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

MFS® New Discovery Service  Class

 

                    

12/31/2016

      20,116,052      $ 2.28        to      $ 1.60      $ 41,335,561        —   %      0.30 %      to        2.30 %      8.47 %      to        6.36 % 

12/31/2015

      23,490,980        2.10        to        1.50        45,033,655        —         0.30       to        2.30       (2.44 )      to        (4.35 ) 

12/31/2014

      30,112,422        2.15        to        1.57        59,862,477        —         0.30       to        2.30       (7.77 )      to        (9.58 ) 

12/31/2013

      36,964,451        2.33        to        1.74        80,534,952        —         0.30       to        2.30       40.80       to        38.05  

12/31/2012

      43,982,546        1.66        to        1.26        68,911,525        —         0.30       to        2.30       20.54       to        18.17  

MFS® Total Return Service Class

 

                    

12/31/2016

      30,104,493        1.76        to        1.29        51,932,163        2.65       0.30       to        2.30       8.49       to        6.38  

12/31/2015

      34,352,892        1.62        to        1.21        55,241,989        2.24       0.30       to        2.30       (0.88 )      to        (2.82 ) 

12/31/2014

      44,471,420        1.64        to        1.25        73,196,447        1.69       0.30       to        2.30       7.91       to        5.80  

12/31/2013

      51,491,986        1.52        to        1.18        79,265,752        1.63       0.30       to        2.30       18.38       to        16.07  

12/31/2012

      57,925,364        1.28        to        1.01        76,287,748        2.47       0.30       to        2.30       10.60       to        8.43  

NVIT Emerging Markets Class D Shares

 

                    

12/31/2016(1)

      1,907        9.85        to        9.83        18,774        0.83       0.30       to        0.80       —         to        —    

State Street Total Return V.I.S. Class 3 Shares

 

                 

12/31/2016

      34,109,465        11.59        to        1.25        54,132,289        1.59       0.65       to        2.65       5.40       to        3.35  

12/31/2015

      37,260,511        11.00        to        1.21        55,077,363        1.49       0.65       to        2.65       (1.98 )      to        (3.89 ) 

12/31/2014

      41,034,372        11.22        to        1.26        59,012,874        1.54       0.65       to        2.65       4.40       to        2.36  

12/31/2013

      40,799,489        1.16        to        1.23        53,548,298        1.36       0.65       to        2.65       13.90       to        11.68  

12/31/2012

      38,454,844        1.02        to        1.10        43,652,748        1.48       0.65       to        2.65       11.52       to        9.34  

TA AB Dynamic Allocation Initial Class

 

                    

12/31/2016

      13,620,346        1.48        to        1.50        21,495,544        1.45       0.30       to        2.05       1.92       to        0.18  

12/31/2015

      14,928,873        1.45        to        1.49        23,447,568        1.24       0.30       to        2.05       (0.37 )      to        (2.08 ) 

12/31/2014

      18,258,426        1.45        to        1.53        29,143,207        1.00       0.30       to        2.05       5.24       to        3.44  

12/31/2013

      17,270,135        1.38        to        1.48        26,503,255        1.16       0.30       to        2.05       6.86       to        5.03  

12/31/2012

      18,419,818        1.29        to        1.41        26,950,888        0.83       0.30       to        2.05       5.82       to        4.00  

TA AB Dynamic Allocation Service Class

 

                    

12/31/2016

      181,601,690        1.27        to        1.11        339,898,668        1.25       0.30       to        2.45       1.69       to        (0.44 ) 

12/31/2015

      200,324,935        1.25        to        1.12        346,241,255        1.06       0.30       to        2.45       (0.72 )      to        (2.80 ) 

12/31/2014

      214,985,976        1.26        to        1.15        339,267,725        0.80       0.30       to        2.45       5.04       to        2.84  

12/31/2013

      232,172,788        1.20        to        1.12        321,999,069        0.99       0.30       to        2.45       6.57       to        4.33  

12/31/2012

      237,111,221        1.13        to        1.07        289,207,913        0.77       0.30       to        2.45       5.48       to        3.25  

TA Aegon Government Money Market Initial Class

 

                 

12/31/2016

      98,022,427        1.10        to        0.88        109,373,936        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2015

      104,356,069        1.11        to        0.90        118,060,897        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2014

      100,630,309        1.11        to        0.92        115,039,216        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2013

      115,626,119        1.11        to        0.94        134,398,735        0.01       0.30       to        2.05       (0.29 )      to        (2.00 ) 

12/31/2012

      124,755,704        1.12        to        0.96        147,358,506        0.01       0.30       to        2.05       (0.30 )      to        (2.01 ) 

TA Aegon Government Money Market Service Class

 

                 

12/31/2016

      218,009,250        9.84        to        0.82        383,959,184        0.01       0.45       to        2.45       (0.44 )      to        (2.38 ) 

12/31/2015

      239,832,076        9.88        to        0.84        383,764,535        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

12/31/2014

      234,252,333        9.93        to        0.86        345,246,865        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

12/31/2013

      233,587,476        0.99        to        0.88        313,266,679        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

12/31/2012

      280,994,935        0.99        to        0.90        281,054,359        0.01       0.45       to        2.45       (0.44 )      to        (2.40 ) 

TA Aegon High Yield Bond Initial Class

 

                    

12/31/2016

      40,104,822        2.03        to        2.05        85,399,506        6.01       0.30       to        2.05       15.00       to        13.03  

12/31/2015

      42,484,816        1.77        to        1.82        79,539,458        5.83       0.30       to        2.05       (4.51 )      to        (6.15 ) 

12/31/2014

      51,869,537        1.85        to        1.94        102,904,592        5.51       0.30       to        2.05       3.67       to        1.89  

12/31/2013

      59,560,153        1.78        to        1.90        114,989,061        5.61       0.30       to        2.05       6.28       to        4.46  

12/31/2012

      67,109,725        1.68        to        1.82        123,537,535        6.03       0.30       to        2.05       17.02       to        15.00  

 

59

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Aegon High Yield Bond Service Class

 

                          

12/31/2016

      44,271,533      $ 11.15        to      $ 1.49      $ 155,587,458        5.98 %      0.90 %      to        2.30 %      13.97 %      to        12.42 % 

12/31/2015

      46,396,791        9.78        to        1.33        137,023,573        5.96       0.90       to        2.30       (5.16 )      to        (6.45 ) 

12/31/2014

      51,566,530        10.31        to        1.42        132,109,914        5.60       0.90       to        2.30       2.68       to        1.28  

12/31/2013

      62,948,842        1.62        to        1.40        147,133,548        5.62       1.00       to        2.30       5.28       to        3.94  

12/31/2012

      57,767,619        1.54        to        1.35        93,495,432        5.81       1.00       to        2.30       15.93       to        14.45  

TA Aegon U.S. Government Securities Initial Class

 

                 

12/31/2016

      46,351,895        1.44        to        1.27        73,562,770        0.65       0.30       to        2.05       0.00       to        (1.71 ) 

12/31/2015

      44,340,913        1.44        to        1.29        71,113,835        2.10       0.30       to        2.05       (0.20 )      to        (1.91 ) 

12/31/2014

      53,809,524        1.45        to        1.32        87,871,181        3.98       0.30       to        2.05       4.34       to        2.55  

12/31/2013

      56,147,152        1.39        to        1.28        88,308,492        2.18       0.30       to        2.05       (2.53 )      to        (4.20 ) 

12/31/2012

      75,180,321        1.42        to        1.34        122,675,859        1.66       0.30       to        2.05       4.83       to        3.02  

TA Aegon U.S. Government Securities Service Class

 

                 

12/31/2016

      139,466,169        1.27        to        1.05        384,537,007        0.43       0.30       to        2.45       (0.16 )      to        (2.25 ) 

12/31/2015

      139,372,246        1.27        to        1.08        349,864,588        1.40       0.30       to        2.45       (0.47 )      to        (2.56 ) 

12/31/2014

      117,104,047        1.28        to        1.10        211,171,453        3.42       0.30       to        2.45       4.11       to        1.92  

12/31/2013

      146,722,112        1.23        to        1.08        221,420,439        1.78       0.30       to        2.45       (2.78 )      to        (4.82 ) 

12/31/2012

      341,204,505        1.26        to        1.14        434,585,330        1.52       0.30       to        2.45       4.55       to        2.34  

TA American Funds Managed Risk - Balanced Service Class

 

                 

12/31/2016

      36,223,701        10.16        to        9.83        362,577,579        0.63       0.45       to        2.45       5.94       to        3.87  

12/31/2015(1)

      12,571,779        9.59        to        9.46        119,855,246        —         0.45       to        2.45       —         to        —    

TA Asset Allocation - Conservative Initial Class

 

                 

12/31/2016

      110,451,298        1.56        to        1.51        176,881,894        2.02       0.30       to        2.05       4.31       to        2.53  

12/31/2015

      121,976,152        1.49        to        1.47        189,750,194        2.14       0.30       to        2.05       (2.25 )      to        (3.93 ) 

12/31/2014

      149,407,114        1.53        to        1.53        239,339,037        2.63       0.30       to        2.05       1.88       to        0.14  

12/31/2013

      182,063,673        1.50        to        1.53        289,462,189        3.08       0.30       to        2.05       9.04       to        7.17  

12/31/2012

      220,471,598        1.38        to        1.43        325,902,062        3.06       0.30       to        2.05       7.14       to        5.29  

TA Asset Allocation - Conservative Service Class

 

                 

12/31/2016

      491,730,606        10.83        to        1.10        1,021,657,645        1.80       0.45       to        2.45       3.84       to        1.82  

12/31/2015

      549,794,223        10.43        to        1.08        1,039,218,010        1.98       0.45       to        2.45       (2.58 )      to        (4.49 ) 

12/31/2014

      626,987,083        10.70        to        1.13        1,091,927,020        2.46       0.45       to        2.45       1.49       to        (0.49 ) 

12/31/2013

      715,012,210        1.13        to        1.14        1,111,348,299        2.92       0.45       to        2.45       8.60       to        6.48  

12/31/2012

      810,487,619        1.04        to        1.07        1,109,383,355        3.02       0.45       to        2.45       6.71       to        4.62  

TA Asset Allocation - Growth Initial Class

 

                 

12/31/2016

      145,360,910        1.64        to        1.64        254,491,186        2.18       0.30       to        2.05       5.76       to        3.95  

12/31/2015

      163,079,906        1.55        to        1.58        273,043,029        1.55       0.30       to        2.05       (2.22 )      to        (3.90 ) 

12/31/2014

      208,960,284        1.58        to        1.64        361,493,975        2.34       0.30       to        2.05       2.42       to        0.67  

12/31/2013

      226,469,806        1.55        to        1.63        387,054,260        1.22       0.30       to        2.05       26.43       to        24.26  

12/31/2012

      222,217,868        1.22        to        1.31        304,794,406        1.29       0.30       to        2.05       12.26       to        10.32  

TA Asset Allocation - Growth Service Class

 

                 

12/31/2016

      80,740,471        12.15        to        1.06        184,665,448        1.91       0.45       to        2.30       5.35       to        3.45  

12/31/2015

      96,248,215        11.53        to        1.03        197,157,455        1.43       0.45       to        2.30       (2.55 )      to        (4.32 ) 

12/31/2014

      104,915,264        11.83        to        1.07        203,683,787        2.23       0.45       to        2.30       1.98       to        0.13  

12/31/2013

      112,093,073        1.32        to        1.07        186,689,604        1.03       0.45       to        2.30       25.82       to        23.55  

12/31/2012

      111,253,373        0.97        to        0.87        142,775,685        1.11       0.45       to        2.30       12.00       to        10.00  

TA Asset Allocation - Moderate Initial Class

 

                 

12/31/2016

      237,955,333        1.64        to        1.60        403,302,456        2.19       0.30       to        2.05       5.25       to        3.45  

12/31/2015

      257,314,477        1.56        to        1.55        418,714,217        1.92       0.30       to        2.05       (2.52 )      to        (4.19 ) 

12/31/2014

      330,908,687        1.60        to        1.62        558,320,285        2.22       0.30       to        2.05       2.46       to        0.70  

12/31/2013

      367,006,552        1.56        to        1.61        611,618,677        2.45       0.30       to        2.05       13.16       to        11.22  

12/31/2012

      406,276,343        1.38        to        1.44        605,408,440        2.62       0.30       to        2.05       9.11       to        7.23  

 

 

 

60

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Asset Allocation - Moderate Service Class

 

                 

12/31/2016

      1,901,152,605      $ 11.17        to      $ 1.14      $ 4,884,558,926        1.96 %      0.45 %      to        2.45 %      4.78 %      to        2.74 % 

12/31/2015

      2,105,107,064        10.66        to        1.11        5,033,408,915        1.84       0.45       to        2.45       (2.91 )      to        (4.81 ) 

12/31/2014

      2,294,467,597        10.98        to        1.16        5,316,426,982        2.16       0.45       to        2.45       2.15       to        0.16  

12/31/2013

      2,350,061,942        1.18        to        1.16        4,173,835,738        2.36       0.45       to        2.45       12.73       to        10.53  

12/31/2012

      2,144,313,750        1.03        to        1.05        3,002,243,579        2.56       0.45       to        2.45       8.62       to        6.49  

TA Asset Allocation - Moderate Growth Initial Class

 

                 

12/31/2016

      272,203,035        1.65        to        1.65        477,491,105        2.03       0.30       to        2.05       6.23       to        4.41  

12/31/2015

      299,130,616        1.56        to        1.58        499,970,785        2.09       0.30       to        2.05       (2.53 )      to        (4.20 ) 

12/31/2014

      379,652,087        1.60        to        1.65        658,335,948        2.68       0.30       to        2.05       2.27       to        0.51  

12/31/2013

      414,888,563        1.56        to        1.64        710,476,313        2.28       0.30       to        2.05       19.03       to        16.99  

12/31/2012

      451,770,419        1.31        to        1.40        658,658,023        2.45       0.30       to        2.05       10.31       to        8.41  

TA Asset Allocation - Moderate Growth Service Class

 

                 

12/31/2016

      1,528,662,864        11.66        to        1.15        3,249,120,855        1.78       0.45       to        2.45       5.78       to        3.72  

12/31/2015

      1,697,285,643        11.02        to        1.11        3,272,645,909        1.98       0.45       to        2.45       (2.96 )      to        (4.85 ) 

12/31/2014

      1,876,616,300        11.36        to        1.17        3,454,997,510        2.50       0.45       to        2.45       1.99       to        (0.00 ) 

12/31/2013

      2,079,647,029        1.24        to        1.17        3,503,337,599        2.11       0.45       to        2.45       18.51       to        16.20  

12/31/2012

      2,125,509,526        1.00        to        1.00        2,923,286,005        2.26       0.45       to        2.45       9.88       to        7.72  

TA Barrow Hanley Dividend Focused Initial Class

 

                 

12/31/2016

      160,020,752        1.87        to        2.04        363,999,021        2.15       0.30       to        2.05       14.57       to        12.61  

12/31/2015

      174,466,564        1.63        to        1.81        349,809,796        1.81       0.30       to        2.05       (3.88 )      to        (5.53 ) 

12/31/2014

      218,849,432        1.69        to        1.92        461,315,863        1.33       0.30       to        2.05       11.83       to        9.92  

12/31/2013

      238,118,309        1.51        to        1.75        453,761,343        2.30       0.30       to        2.05       29.85       to        27.63  

12/31/2012

      262,265,811        1.17        to        1.37        390,319,419        1.79       0.30       to        2.05       11.39       to        9.47  

TA Barrow Hanley Dividend Focused Service Class

 

                 

12/31/2016

      60,943,596        13.98        to        1.25        168,373,821        1.97       0.90       to        2.30       13.57       to        12.02  

12/31/2015

      63,543,533        12.31        to        1.12        145,023,856        1.69       0.90       to        2.30       (4.69 )      to        (5.99 ) 

12/31/2014

      71,214,054        12.92        to        1.19        153,661,743        1.21       0.90       to        2.30       10.93       to        9.42  

12/31/2013

      70,626,332        1.30        to        1.09        121,748,244        2.16       1.00       to        2.30       28.64       to        27.01  

12/31/2012

      66,923,145        1.01        to        0.86        84,450,060        1.67       1.00       to        2.30       10.36       to        8.95  

TA BlackRock Equity Smart Beta 100 Service Class

 

                 

12/31/2016(1)

      2,202,649        10.55        to        10.39        23,122,979        —         0.45       to        2.45       —         to        —    

TA BlackRock Global Allocation Service Class

 

                 

12/31/2016

      629,799,019        11.17        to        1.42        1,268,057,537        0.38       0.45       to        2.30       4.09       to        2.22  

12/31/2015

      685,402,691        10.73        to        1.39        1,178,176,425        1.68       0.45       to        2.30       (1.67 )      to        (3.45 ) 

12/31/2014

      759,341,068        10.91        to        1.44        1,227,043,635        1.75       0.45       to        2.30       1.29       to        (0.63 ) 

12/31/2013

      821,637,564        1.18        to        1.45        1,266,112,947        1.12       0.45       to        2.40       13.92       to        11.75  

12/31/2012

      846,867,037        0.98        to        1.29        1,129,271,147        2.33       0.55       to        2.40       9.37       to        7.39  

TA BlackRock Global Allocation Managed Risk - Balanced Service  Class

 

                 

12/31/2016

      17,333,758        9.53        to        9.14        162,138,960        2.00       0.45       to        2.45       (0.08 )      to        (2.02 ) 

12/31/2015

      13,579,678        9.54        to        9.33        128,198,295        —         0.45       to        2.45       (3.86 )      to        (5.73 ) 

12/31/2014(1)

      964,927        9.92        to        9.89        9,560,920        —         0.45       to        2.45       —         to        —    

TA BlackRock Global Allocation Managed Risk - Growth Service  Class

 

                 

12/31/2016

      18,505,605        9.28        to        8.90        168,412,121        2.10       0.45       to        2.45       (0.63 )      to        (2.57 ) 

12/31/2015

      16,301,610        9.34        to        9.13        150,650,346        —         0.45       to        2.45       (5.48 )      to        (7.33 ) 

12/31/2014(1)

      1,085,461        9.88        to        9.85        10,712,850        —         0.45       to        2.45       —         to        —    

TA BlackRock Smart Beta 50 Service Class

 

                 

12/31/2016(1)

      4,130,044        10.23        to        10.08        41,974,799        —         0.45       to        2.45       —         to        —    

TA BlackRock Smart Beta 75 Service Class

 

                 

12/31/2016(1)

      1,123,248        10.30        to        10.15        11,506,416        —         0.45       to        2.45       —         to        —    

 

61

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA BlackRock Tactical Allocation Service Class

 

                 

12/31/2016

      544,782,967      $ 11.55        to      $ 1.34      $ 1,444,210,976        2.31 %      0.45 %      to        2.30 %      4.44 %      to        2.56 % 

12/31/2015

      592,846,759        11.06        to        1.31        1,402,475,363        1.75       0.45       to        2.30       (0.57 )      to        (2.37 ) 

12/31/2014

      644,924,677        11.13        to        1.34        1,394,587,714        1.32       0.45       to        2.30       4.60       to        2.71  

12/31/2013

      595,858,562        1.18        to        1.31        1,085,728,107        1.34       0.45       to        2.30       11.84       to        9.82  

12/31/2012

      497,898,301        1.05        to        1.19        722,967,466        1.47       0.45       to        2.30       9.52       to        7.53  

TA Clarion Global Real Estate Securities Initial Class

 

                 

12/31/2016

      18,463,874        1.64        to        2.35        44,536,161        1.76       0.30       to        2.05       0.32       to        (1.39 ) 

12/31/2015

      20,659,242        1.64        to        2.38        50,028,208        4.17       0.30       to        2.05       (0.90 )      to        (2.60 ) 

12/31/2014

      24,884,480        1.65        to        2.44        61,698,855        1.53       0.30       to        2.05       13.22       to        11.28  

12/31/2013

      25,898,917        1.46        to        2.19        57,062,615        5.48       0.30       to        2.05       3.59       to        1.81  

12/31/2012

      26,594,009        1.41        to        2.16        57,605,091        3.51       0.30       to        2.05       24.88       to        22.72  

TA Clarion Global Real Estate Securities Service Class

 

                 

12/31/2016

      36,306,707        10.11        to        0.98        84,311,623        1.41       0.90       to        2.30       (0.48 )      to        (1.83 ) 

12/31/2015

      42,323,555        10.16        to        1.00        89,462,036        4.08       0.90       to        2.30       (1.76 )      to        (3.10 ) 

12/31/2014

      49,196,924        10.34        to        1.03        92,625,420        1.31       0.90       to        2.30       12.28       to        10.75  

12/31/2013

      42,999,885        1.12        to        0.93        67,513,394        5.20       1.00       to        2.30       2.68       to        1.37  

12/31/2012

      39,824,782        1.09        to        0.92        56,463,326        3.39       1.00       to        2.30       23.73       to        22.15  

TA International Moderate Growth Initial Class

 

                    

12/31/2016

      69,400        1.17        to        1.15        80,122        2.15       0.30       to        0.45       0.92       to        0.77  

12/31/2015

      68,181        1.16        to        1.15        78,116        1.96       0.30       to        0.45       (1.93 )      to        (2.08 ) 

12/31/2014

      68,194        1.19        to        1.17        79,791        2.28       0.30       to        0.45       (0.77 )      to        (0.92 ) 

12/31/2013

      68,883        1.19        to        1.18        81,344        2.06       0.30       to        0.45       12.38       to        12.21  

12/31/2012

      69,730        1.06        to        1.05        73,383        3.07       0.30       to        0.45       12.47       to        12.30  

TA International Moderate Growth Service Class

 

                 

12/31/2016

      358,429,603        10.32        to        0.92        551,114,925        1.85       0.45       to        2.45       0.62       to        (1.33 ) 

12/31/2015

      406,136,679        10.26        to        0.93        595,453,089        1.79       0.45       to        2.45       (2.32 )      to        (4.23 ) 

12/31/2014

      425,154,870        10.50        to        0.98        560,090,151        2.11       0.45       to        2.45       (1.23 )      to        (3.16 ) 

12/31/2013

      462,667,833        1.19        to        1.01        540,097,455        1.89       0.45       to        2.45       11.96       to        9.77  

12/31/2012

      435,812,829        0.96        to        0.92        421,817,595        2.76       0.45       to        2.45       11.98       to        9.78  

TA Janus Balanced Service Class

 

                       

12/31/2016

      197,498,662        12.25        to        1.16        687,948,240        1.09       0.45       to        2.30       3.65       to        1.78  

12/31/2015

      192,034,411        11.82        to        1.14        562,408,813        0.84       0.45       to        2.30       (0.33 )      to        (2.13 ) 

12/31/2014

      155,749,876        11.86        to        1.17        351,230,964        0.65       0.45       to        2.30       7.35       to        5.41  

12/31/2013

      134,857,638        1.26        to        1.11        202,083,341        0.79       0.45       to        2.30       18.49       to        16.34  

12/31/2012

      79,178,162        0.91        to        0.95        77,245,177        —         0.45       to        2.30       11.99       to        9.96  

TA Janus Mid-Cap Growth Initial Class

 

                       

12/31/2016

      44,776,658        2.04        to        1.64        60,228,303        —         0.30       to        2.05       (2.34 )      to        (4.01 ) 

12/31/2015

      49,518,695        2.09        to        1.71        69,124,473        —         0.30       to        2.05       (5.32 )      to        (6.94 ) 

12/31/2014

      66,529,721        2.20        to        1.84        99,193,842        —         0.30       to        2.05       (0.28 )      to        (1.99 ) 

12/31/2013

      71,916,354        2.21        to        1.87        108,803,629        0.81       0.30       to        2.05       38.72       to        36.35  

12/31/2012

      80,353,211        1.59        to        1.37        88,377,560        —         0.30       to        2.05       8.75       to        6.88  

TA Janus Mid-Cap Growth Service Class

 

                    

12/31/2016

      22,970,554        11.10        to        1.32        63,321,902        —         0.90       to        2.30       (3.18 )      to        (4.49 ) 

12/31/2015

      27,213,018        11.47        to        1.38        68,159,564        —         0.90       to        2.30       (6.11 )      to        (7.39 ) 

12/31/2014

      28,962,016        12.21        to        1.49        69,299,132        —         0.90       to        2.30       (1.15 )      to        (2.50 ) 

12/31/2013

      30,804,833        2.05        to        1.53        66,970,148        0.59       1.00       to        2.30       37.45       to        35.71  

12/31/2012

      29,136,983        1.49        to        1.12        43,649,147        —         1.00       to        2.30       7.69       to        6.32  

TA Jennison Growth Initial Class

 

                       

12/31/2016

      95,799,898        2.23        to        1.95        165,555,512        —         0.30       to        2.05       (1.94 )      to        (3.62 ) 

12/31/2015

      108,015,766        2.27        to        2.03        192,227,221        —         0.30       to        2.05       11.07       to        9.16  

12/31/2014

      135,122,880        2.05        to        1.86        218,374,436        —         0.30       to        2.05       9.63       to        7.75  

12/31/2013

      144,329,746        1.87        to        1.72        215,213,377        0.26       0.30       to        2.05       37.29       to        34.94  

12/31/2012

      157,817,221        1.36        to        1.28        173,130,001        0.07       0.30       to        2.05       15.42       to        13.43  

 

62

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Jennison Growth Service Class

 

                          

12/31/2016

      23,846,550      $ 14.68        to      $ 1.60      $ 88,426,137        —   %      0.90 %      to        2.30 %      (2.78 )%      to        (4.10 )% 

12/31/2015

      29,476,122        15.10        to        1.67        96,681,000        —         0.90       to        2.30       10.12       to        8.61  

12/31/2014

      26,708,592        13.72        to        1.54        67,454,449        —         0.90       to        2.30       8.81       to        7.32  

12/31/2013

      27,380,560        1.80        to        1.44        54,998,264        0.07       1.00       to        2.30       35.94       to        34.21  

12/31/2012

      27,585,024        1.33        to        1.07        37,902,871        —         1.00       to        2.30       14.26       to        12.80  

TA JPMorgan Core Bond Service Class

 

                          

12/31/2016

      84,929,968        10.27        to        1.02        225,404,212        1.90       0.45       to        2.30       1.60       to        (0.23 ) 

12/31/2015

      80,427,225        10.10        to        1.03        173,901,984        1.82       0.45       to        2.30       (0.11 )      to        (1.92 ) 

12/31/2014

      83,188,018        10.12        to        1.05        139,476,584        1.77       0.45       to        2.30       4.63       to        2.74  

12/31/2013

      73,167,181        1.07        to        1.02        90,622,618        2.78       0.45       to        2.30       (2.57 )      to        (4.33 ) 

12/31/2011(1)

      72,763,993        1.10        to        1.06        78,449,061        2.67       0.45       to        2.30       4.28       to        2.39  

TA JPMorgan Enhanced Index Initial Class

 

                    

12/31/2016

      46,917,262        2.18        to        1.98        106,614,195        0.41       0.30       to        2.05       11.02       to        9.12  

12/31/2015

      49,201,659        1.96        to        1.82        101,285,585        0.93       0.30       to        2.05       (0.37 )      to        (2.08 ) 

12/31/2014

      56,840,615        1.97        to        1.85        117,249,774        0.81       0.30       to        2.05       13.84       to        11.89  

12/31/2013

      55,031,777        1.73        to        1.66        100,660,653        0.67       0.30       to        2.05       32.12       to        29.86  

12/31/2012

      52,526,919        1.31        to        1.28        74,350,888        1.13       0.30       to        2.05       16.00       to        14.00  

TA JPMorgan Enhanced Index Service Class

 

                    

12/31/2016

      13,075,401        14.48        to        1.47        51,966,255        0.18       0.90       to        2.30       10.13       to        8.63  

12/31/2015

      12,638,230        13.15        to        1.36        39,714,319        0.85       0.90       to        2.30       (1.25 )      to        (2.60 ) 

12/31/2014

      13,180,874        13.32        to        1.39        36,235,761        0.66       0.90       to        2.30       12.95       to        11.41  

12/31/2013

      9,913,185        1.56        to        1.25        20,941,794        0.52       1.00       to        2.30       30.83       to        29.16  

12/31/2012

      5,368,914        1.19        to        0.97        7,225,436        0.99       1.00       to        2.30       14.94       to        13.47  

TA JPMorgan Mid Cap Value Service Class

 

                    

12/31/2016

      52,307,287        14.75        to        2.21        198,647,207        1.97       0.45       to        2.30       13.77       to        11.71  

12/31/2015

      49,562,775        12.96        to        1.98        157,156,789        0.75       0.45       to        2.30       (3.37 )      to        (5.12 ) 

12/31/2014

      51,842,761        13.41        to        2.09        151,741,957        0.60       0.45       to        2.30       14.47       to        12.40  

12/31/2013

      44,759,206        1.49        to        1.85        92,720,076        0.40       0.45       to        2.30       30.88       to        28.51  

12/31/2012

      31,803,797        1.11        to        1.44        46,730,625        0.65       0.45       to        2.30       19.69       to        17.52  

TA JPMorgan Tactical Allocation Service Class

 

                    

12/31/2016

      379,479,465        11.05        to        1.10        1,253,888,489        1.15       0.45       to        2.30       3.73       to        1.86  

12/31/2015

      388,440,348        10.65        to        1.08        1,097,074,756        1.14       0.45       to        2.30       (0.85 )      to        (2.64 ) 

12/31/2014

      374,130,018        10.74        to        1.11        825,197,475        0.95       0.45       to        2.30       5.81       to        3.89  

12/31/2013

      375,443,522        1.12        to        1.07        546,988,848        1.04       0.45       to        2.30       4.82       to        2.92  

12/31/2012

      283,194,118        1.07        to        1.04        298,886,788        0.62       0.45       to        2.30       6.98       to        5.04  

TA Legg Mason Dynamic Allocation - Balanced Service Class

 

              

12/31/2016

      290,004,410        10.79        to        1.07        1,174,416,752        1.09       0.45       to        2.05       (1.11 )      to        (2.66 ) 

12/31/2015

      303,800,980        10.91        to        1.10        1,125,801,306        0.92       0.45       to        2.05       (2.51 )      to        (4.04 ) 

12/31/2014

      249,433,962        11.19        to        1.15        738,870,798        0.66       0.45       to        2.05       8.00       to        6.30  

12/31/2013

      197,557,983        1.11        to        1.08        365,842,243        0.23       0.45       to        2.05       8.88       to        7.18  

12/31/2012(1)

      68,365,547        1.02        to        1.01        69,030,904        —         0.45       to        2.05       —         to        —    

TA Legg Mason Dynamic Allocation - Growth Service Class

 

              

12/31/2016

      132,145,826        11.07        to        1.11        513,884,084        1.03       0.45       to        2.05       (1.43 )      to        (2.97 ) 

12/31/2015

      149,681,980        11.23        to        1.14        528,608,149        0.69       0.45       to        2.05       (3.38 )      to        (4.90 ) 

12/31/2014

      99,859,668        11.62        to        1.20        297,102,967        0.57       0.45       to        2.05       7.69       to        6.00  

12/31/2013

      76,448,745        1.16        to        1.13        144,223,614        0.21       0.45       to        2.05       15.09       to        13.29  

12/31/2012(1)

      20,091,884        1.01        to        1.00        20,178,001        —         0.45       to        2.05       —         to        —    

TA Madison Balanced Allocation Service Class

 

                    

12/31/2016

      41,735,960        11.31        to        1.19        105,012,541        1.84       1.15       to        1.90       4.05       to        3.28  

12/31/2015

      43,365,220        10.87        to        1.15        98,601,791        1.83       1.15       to        1.90       (1.87 )      to        (2.60 ) 

12/31/2014

      44,591,131        11.08        to        1.18        94,800,820        0.69       1.15       to        1.90       4.53       to        3.75  

12/31/2013

      42,293,805        1.15        to        1.14        64,564,165        1.09       1.30       to        1.90       11.90       to        11.24  

12/31/2012

      28,210,824        1.03        to        1.02        29,065,560        0.59       1.30       to        1.90       6.91       to        6.27  

 

63

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Madison Conservative Allocation Service Class

 

                    

12/31/2016

      34,682,524      $ 10.62        to      $ 1.10      $ 73,017,096        2.05 %      1.15 %      to        1.90 %      2.90 %      to        2.14 % 

12/31/2015

      38,496,050        10.32        to        1.08        74,112,509        1.72       1.15       to        1.90       (1.88 )      to        (2.61 ) 

12/31/2014

      41,143,456        10.52        to        1.11        74,746,336        1.32       1.15       to        1.90       3.56       to        2.78  

12/31/2013

      44,440,435        1.09        to        1.08        64,098,730        1.26       1.30       to        1.90       5.49       to        4.87  

12/31/2012

      34,267,174        1.04        to        1.03        35,499,752        0.47       1.30       to        1.90       4.96       to        4.34  

TA Madison Diversified Income Service Class

 

                    

12/31/2016

      55,129,242        11.20        to        1.20        115,967,502        1.32       1.15       to        1.90       5.62       to        4.83  

12/31/2015

      57,334,171        10.60        to        1.14        109,758,408        1.03       1.15       to        1.90       (1.00 )      to        (1.74 ) 

12/31/2014

      59,704,752        10.71        to        1.16        105,588,057        0.70       1.15       to        1.90       4.60       to        3.82  

12/31/2013

      60,053,544        1.14        to        1.12        86,025,931        0.36       1.30       to        1.90       7.82       to        7.18  

12/31/2012

      44,043,920        1.06        to        1.05        46,510,212        0.09       1.30       to        1.90       4.30       to        3.68  

TA Managed Risk - Balanced ETF Service Class

 

                    

12/31/2016

      1,640,125,949        1.36        to        1.13        5,673,175,806        1.65       0.30       to        2.45       3.44       to        1.28  

12/31/2015

      1,749,801,079        1.31        to        1.11        5,493,942,298        1.28       0.30       to        2.45       (2.06 )      to        (4.12 ) 

12/31/2014

      1,756,579,111        1.34        to        1.16        4,522,734,970        0.95       0.30       to        2.45       4.24       to        2.05  

12/31/2013

      1,613,603,415        1.28        to        1.14        2,666,435,334        1.17       0.30       to        2.45       11.10       to        8.77  

12/31/2012

      1,148,678,174        1.16        to        1.05        1,281,462,055        1.26       0.30       to        2.45       8.07       to        5.79  

TA Managed Risk - Conservative ETF Service Class

 

                    

12/31/2016

      324,381,240        11.05        to        1.18        777,003,480        1.61       0.45       to        2.45       3.61       to        1.59  

12/31/2015

      344,902,729        10.67        to        1.17        734,076,985        1.52       0.45       to        2.45       (1.13 )      to        (3.06 ) 

12/31/2014

      363,756,951        10.79        to        1.20        674,485,127        1.28       0.45       to        2.45       4.77       to        2.73  

12/31/2013

      361,224,917        1.12        to        1.17        519,638,980        1.35       0.45       to        2.45       6.99       to        4.90  

12/31/2012

      317,054,059        1.05        to        1.12        366,004,420        1.11       0.45       to        2.45       6.14       to        4.05  

TA Managed Risk - Growth ETF Service Class

 

                    

12/31/2016

      1,128,966,441        1.36        to        1.13        2,699,674,301        1.61       0.30       to        2.45       4.36       to        2.17  

12/31/2015

      1,301,705,474        1.30        to        1.11        2,828,869,757        1.46       0.30       to        2.45       (3.80 )      to        (5.82 ) 

12/31/2014

      1,447,006,616        1.35        to        1.18        2,857,654,356        1.03       0.30       to        2.45       3.66       to        1.48  

12/31/2013

      1,349,170,047        1.31        to        1.16        2,009,478,549        1.29       0.30       to        2.45       18.43       to        15.94  

12/31/2012

      976,524,487        1.10        to        1.00        1,050,069,328        1.64       0.30       to        2.45       11.22       to        8.87  

TA Market Participation Strategy Service Class

 

                    

12/31/2016

      112,269,327        11.77        to        1.13        453,011,302        0.16       0.45       to        2.05       3.70       to        2.07  

12/31/2015

      117,968,861        11.35        to        1.11        452,767,371        —         0.45       to        2.05       (3.68 )      to        (5.19 ) 

12/31/2014

      111,054,031        11.78        to        1.17        418,144,147        —         0.45       to        2.05       7.56       to        5.87  

12/31/2013

      82,457,456        1.13        to        1.11        172,219,479        —         0.45       to        2.05       13.78       to        12.00  

12/31/2012(1)

      16,734,167        0.99        to        0.99        16,565,111        —         0.45       to        2.05       —         to        —    

TA MFS International Equity Initial Class

 

                    

12/31/2016

      47,110,409        1.61        to        1.51        65,293,820        1.51       0.30       to        2.05       (0.22 )      to        (1.93 ) 

12/31/2015

      51,016,252        1.61        to        1.54        71,124,446        1.55       0.30       to        2.05       (0.22 )      to        (1.93 ) 

12/31/2014

      56,412,797        1.61        to        1.57        79,559,722        0.95       0.30       to        2.05       (5.46 )      to        (7.08 ) 

12/31/2013

      59,179,818        1.71        to        1.68        88,662,107        1.17       0.30       to        2.05       17.74       to        15.72  

12/31/2012

      56,849,479        1.45        to        1.46        72,937,715        1.65       0.30       to        2.05       21.79       to        19.69  

TA MFS International Equity Service Class

 

                       

12/31/2016

      29,624,976        10.22        to        0.96        84,422,845        1.35       0.90       to        2.30       (1.03 )      to        (2.37 ) 

12/31/2015

      32,894,815        10.33        to        0.99        82,697,711        1.54       0.90       to        2.30       (1.14 )      to        (2.49 ) 

12/31/2014

      29,976,630        10.44        to        1.01        62,827,783        0.83       0.90       to        2.30       (6.26 )      to        (7.54 ) 

12/31/2013

      29,425,992        1.37        to        1.10        52,282,886        1.08       1.00       to        2.30       16.60       to        15.12  

12/31/2012

      21,745,871        1.17        to        0.95        29,441,850        1.52       1.00       to        2.30       20.66       to        19.12  

TA Morgan Stanley Capital Growth Initial Class

 

                    

12/31/2016

      43,698,169        2.27        to        2.05        92,915,246        —         0.30       to        2.05       (2.56 )      to        (4.22 ) 

12/31/2015

      47,282,114        2.33        to        2.14        104,267,818        —         0.30       to        2.05       11.45       to        9.54  

12/31/2014

      59,235,134        2.09        to        1.96        118,184,347        —         0.30       to        2.05       5.69       to        3.87  

12/31/2013

      63,858,118        1.98        to        1.88        122,190,639        0.68       0.30       to        2.05       47.81       to        45.27  

12/31/2012

      70,786,565        1.34        to        1.30        92,810,047        —         0.30       to        2.05       15.20       to        13.22  

 

64

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Morgan Stanley Capital Growth Service Class

 

                    

12/31/2016

      13,431,257      $ 15.30        to      $ 1.54      $ 53,195,806        —   %      0.90 %      to        2.30 %      (3.37 )%      to        (4.69 )% 

12/31/2015

      15,649,714        15.84        to        1.61        53,335,138        —         0.90       to        2.30       10.45       to        8.95  

12/31/2014

      12,651,656        14.34        to        1.48        34,839,910        —         0.90       to        2.30       4.84       to        3.41  

12/31/2013

      14,630,108        1.74        to        1.43        30,532,381        0.52       1.00       to        2.30       46.42       to        44.56  

12/31/2012

      10,678,156        1.19        to        0.99        14,654,467        —         1.00       to        2.30       14.06       to        12.60  

TA Multi-Managed Balanced Initial Class

 

                    

12/31/2016

      35,420,588        2.16        to        2.08        79,027,923        0.97       0.30       to        2.50       7.55       to        5.25  

12/31/2015

      34,089,325        2.01        to        1.98        71,558,086        1.35       0.30       to        2.50       (0.09 )      to        (1.80 ) 

12/31/2014

      34,836,857        2.01        to        2.02        73,575,633        1.41       0.30       to        2.05       10.48       to        8.58  

12/31/2013

      31,688,745        1.82        to        1.86        60,860,817        1.66       0.30       to        2.05       17.74       to        15.72  

12/31/2012

      26,984,504        1.55        to        1.61        44,551,745        1.67       0.30       to        2.05       12.23       to        10.30  

TA Multi-Managed Balanced Service Class

 

                    

12/31/2016

      219,709,404        1.82        to        1.53        904,843,654        0.93       0.30       to        2.45       7.32       to        5.07  

12/31/2015

      143,153,566        1.70        to        1.46        347,407,856        1.16       0.30       to        2.45       (0.36 )      to        (2.45 ) 

12/31/2014

      134,975,301        1.71        to        1.49        270,653,285        1.19       0.30       to        2.45       10.17       to        7.86  

12/31/2013

      121,925,978        1.55        to        1.38        209,521,553        1.51       0.30       to        2.45       17.40       to        14.94  

12/31/2012

      110,385,736        1.32        to        1.20        160,467,731        1.51       0.30       to        2.45       12.06       to        9.70  

TA Multi-Manager Alternative Strategies Service Class

 

                 

12/31/2016

      163,253        10.01        to        9.64        1,601,107        2.52       0.45       to        1.65       1.56       to        0.35  

12/31/2015

      181,063        9.85        to        9.60        1,760,776        0.36       0.45       to        1.65       (6.03 )      to        (7.15 ) 

12/31/2014

      98,872        10.49        to        10.34        1,029,166        0.68       0.45       to        1.65       2.49       to        1.27  

12/31/2013(1)

      3,504        10.23        to        10.21        35,815        —         0.45       to        1.65       —         to        —    

TA PIMCO Tactical - Balanced Service Class

 

                    

12/31/2016

      192,663,294        11.48        to        1.01        610,151,653        0.29       0.45       to        2.30       4.91       to        3.02  

12/31/2015

      194,833,059        10.95        to        0.98        571,936,975        —         0.45       to        2.30       (2.98 )      to        (4.74 ) 

12/31/2014

      195,521,348        11.28        to        1.03        533,120,857        1.07       0.45       to        2.30       7.35       to        5.41  

12/31/2013

      171,119,545        1.10        to        0.98        288,333,349        0.68       0.45       to        2.30       11.35       to        9.33  

12/31/2012

      72,354,835        0.92        to        0.90        66,584,229        1.55       0.45       to        2.30       0.53       to        (1.30 ) 

TA PIMCO Tactical - Conservative Service Class

 

                    

12/31/2016

      87,765,386        11.29        to        0.97        273,382,211        0.41       0.45       to        2.30       4.51       to        2.62  

12/31/2015

      84,100,322        10.80        to        0.94        223,359,365        0.30       0.45       to        2.30       (2.52 )      to        (4.28 ) 

12/31/2014

      72,728,605        11.08        to        0.99        132,338,428        1.23       0.45       to        2.30       8.24       to        6.28  

12/31/2013

      70,134,516        1.07        to        0.93        88,003,434        0.70       0.45       to        2.30       7.67       to        5.72  

12/31/2012

      46,065,653        0.88        to        0.88        41,475,616        1.11       0.45       to        2.30       1.07       to        (0.77 ) 

TA PIMCO Tactical - Growth Service Class

 

                    

12/31/2016

      97,932,555        11.55        to        0.97        334,243,979        —         0.45       to        2.30       4.40       to        2.52  

12/31/2015

      99,906,894        11.07        to        0.94        288,604,027        —         0.45       to        2.30       (3.89 )      to        (5.63 ) 

12/31/2014

      77,908,150        11.51        to        1.00        171,846,465        1.80       0.45       to        2.30       5.92       to        4.00  

12/31/2013

      69,528,331        1.14        to        0.96        99,998,339        0.86       0.45       to        2.30       16.28       to        14.18  

12/31/2012

      38,893,640        0.83        to        0.84        33,577,730        0.48       0.45       to        2.30       0.24       to        (1.58 ) 

TA PIMCO Total Return Initial Class

 

                       

12/31/2016

      116,273,391        1.59        to        1.46        181,319,170        2.37       0.30       to        2.05       2.41       to        0.65  

12/31/2015

      125,233,326        1.56        to        1.45        192,941,918        2.51       0.30       to        2.05       0.39       to        (1.33 ) 

12/31/2014

      158,410,090        1.55        to        1.47        245,905,910        1.89       0.30       to        2.05       4.36       to        2.57  

12/31/2013

      186,503,559        1.49        to        1.44        280,476,932        2.07       0.30       to        2.05       (2.84 )      to        (4.50 ) 

12/31/2012

      235,018,700        1.53        to        1.50        368,216,199        4.07       0.30       to        2.05       7.23       to        5.38  

TA PIMCO Total Return Service Class

 

                       

12/31/2016

      432,200,049        1.34        to        1.11        826,905,164        2.20       0.30       to        2.45       2.17       to        0.03  

12/31/2015

      475,137,309        1.31        to        1.11        833,576,453        2.54       0.30       to        2.45       0.22       to        (1.89 ) 

12/31/2014

      530,733,545        1.31        to        1.13        859,856,281        1.62       0.30       to        2.45       4.03       to        1.84  

12/31/2013

      616,854,993        1.26        to        1.11        867,475,116        2.00       0.30       to        2.45       (3.06 )      to        (5.09 ) 

12/31/2012

      659,113,836        1.30        to        1.17        888,810,204        4.13       0.30       to        2.45       7.00       to        4.74  

 

65

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA PineBridge Inflation Opportunities Service Class

 

                 

12/31/2016

      101,867,579      $ 9.21        to      $ 0.95      $ 175,347,485        0.58 %      0.45 %      to        2.30 %      3.34 %      to        1.47 % 

12/31/2015

      110,195,164        8.91        to        0.94        178,257,154        1.24       0.45       to        2.30       (3.30 )      to        (5.05 ) 

12/31/2014

      121,100,596        9.22        to        0.98        182,242,932        0.29       0.45       to        2.30       2.92       to        1.05  

12/31/2013

      129,606,833        1.02        to        0.97        146,927,777        0.33       0.45       to        2.30       (9.95 )      to        (11.58 ) 

12/31/2012

      138,283,516        1.14        to        1.10        154,482,171        0.26       0.45       to        2.30       5.82       to        3.90  

TA ProFunds UltraBear Service Class (OAM)

 

                 

12/31/2016

      557,626,487        0.19        to        0.06        33,857,197        —         0.45       to        2.00       (23.94 )      to        (25.08 ) 

12/31/2015

      406,801,801        0.25        to        0.08        32,809,667        —         0.45       to        2.00       (7.71 )      to        (9.10 ) 

12/31/2014

      204,831,841        0.27        to        0.09        18,066,570        —         0.45       to        2.00       (25.91 )      to        (27.04 ) 

12/31/2013

      150,209,677        0.37        to        0.12        18,076,038        —         0.45       to        2.00       (45.35 )      to        (46.19 ) 

12/31/2012

      408,547,854        0.67        to        0.22        90,929,238        —         0.45       to        2.00       (29.75 )      to        (30.82 ) 

TA QS Investors Active Asset Allocation - Conservative Service Class

 

                 

12/31/2016

      201,671,367        10.50        to        1.06        425,136,568        1.26       0.45       to        2.45       2.19       to        0.20  

12/31/2015

      225,250,178        10.27        to        1.05        432,962,686        1.01       0.45       to        2.45       (2.80 )      to        (4.70 ) 

12/31/2014

      245,264,820        10.57        to        1.11        413,140,719        1.06       0.45       to        2.45       3.14       to        1.13  

12/31/2013

      257,252,633        1.12        to        1.09        339,176,868        1.15       0.45       to        2.45       6.59       to        4.51  

12/31/2012

      224,069,875        1.05        to        1.05        231,402,059        0.41       0.45       to        2.45       6.30       to        4.21  

TA QS Investors Active Asset Allocation - Moderate Service Class

 

                 

12/31/2016

      492,652,371        10.50        to        1.04        1,448,789,251        1.23       0.45       to        2.50       1.73       to        (0.30 ) 

12/31/2015

      545,348,810        10.32        to        1.04        1,537,126,518        0.97       0.45       to        2.50       (4.71 )      to        (6.61 ) 

12/31/2014

      581,745,788        10.83        to        1.11        1,586,689,643        0.67       0.45       to        2.50       3.15       to        1.29  

12/31/2013

      532,328,826        1.16        to        1.10        928,089,349        0.59       0.45       to        2.30       10.62       to        8.62  

12/31/2012

      282,438,251        1.04        to        1.01        290,136,478        0.17       0.45       to        2.30       7.81       to        5.85  

TA QS Investors Active Asset Allocation - Moderate Growth Service  Class

 

              

12/31/2016

      254,015,317        10.52        to        1.04        591,439,085        1.07       0.45       to        2.30       1.51       to        (0.32 ) 

12/31/2015

      297,221,724        10.37        to        1.04        646,874,469        1.01       0.45       to        2.30       (6.95 )      to        (8.64 ) 

12/31/2014

      328,199,796        11.14        to        1.14        650,876,591        0.77       0.45       to        2.30       2.76       to        0.90  

12/31/2013

      305,459,347        1.23        to        1.13        450,516,479        0.93       0.45       to        2.30       15.99       to        13.89  

12/31/2012

      179,927,432        1.02        to        0.99        181,159,665        0.70       0.45       to        2.30       10.46       to        8.45  

TA Small/Mid Cap Value Initial Class

 

                 

12/31/2016

      24,866,417        2.35        to        3.68        129,843,084        0.78       0.30       to        2.05       20.76       to        18.70  

12/31/2015

      28,487,599        1.94        to        3.10        123,688,215        0.98       0.30       to        2.05       (2.80 )      to        (4.47 ) 

12/31/2014

      35,048,217        2.00        to        3.25        156,210,025        0.77       0.30       to        2.05       4.91       to        3.11  

12/31/2013

      39,773,037        1.91        to        3.15        170,851,041        0.41       0.30       to        2.05       35.91       to        33.58  

12/31/2012

      45,088,639        1.40        to        2.36        144,509,630        0.52       0.30       to        2.05       16.04       to        14.04  

TA Small/Mid Cap Value Service Class

 

                 

12/31/2016

      37,602,330        14.63        to        1.92        111,710,832        0.54       0.90       to        2.30       19.73       to        18.10  

12/31/2015

      37,708,384        12.22        to        1.63        88,569,777        0.81       0.90       to        2.30       (3.60 )      to        (4.92 ) 

12/31/2014

      41,438,730        12.68        to        1.71        91,247,465        0.63       0.90       to        2.30       3.99       to        2.57  

12/31/2013

      42,265,850        1.80        to        1.67        78,397,395        0.31       1.00       to        2.30       34.69       to        32.98  

12/31/2012

      38,547,842        1.34        to        1.26        50,307,310        0.29       1.00       to        2.30       14.89       to        13.42  

TA T. Rowe Price Small Cap Initial Class

 

                 

12/31/2016

      47,515,529        2.78        to        2.65        112,290,331        —         0.30       to        2.05       10.89       to        8.99  

12/31/2015

      50,302,232        2.51        to        2.43        108,382,266        —         0.30       to        2.05       2.13       to        0.38  

12/31/2014

      59,507,563        2.46        to        2.42        126,270,687        —         0.30       to        2.05       6.23       to        4.41  

12/31/2013

      66,357,693        2.31        to        2.32        133,781,369        0.07       0.30       to        2.05       43.64       to        41.18  

12/31/2012

      65,629,864        1.61        to        1.64        93,134,478        —         0.30       to        2.05       15.34       to        13.36  

TA T. Rowe Price Small Cap Service Class

 

                 

12/31/2016

      40,379,882        15.14        to        1.97        191,512,774        —         0.90       to        2.30       10.01       to        8.51  

12/31/2015

      42,516,500        13.76        to        1.82        166,716,242        —         0.90       to        2.30       1.24       to        (0.14 ) 

12/31/2014

      41,706,081        13.60        to        1.82        141,930,797        —         0.90       to        2.30       5.29       to        3.86  

12/31/2013

      43,650,997        2.20        to        1.75        116,003,107        —         1.00       to        2.30       42.28       to        40.47  

12/31/2012

      34,333,173        1.55        to        1.25        59,705,218        —         1.00       to        2.30       14.26       to        12.80  

 

66

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Torray Concentrated Growth Initial Class

 

                 

12/31/2016

      45,742,580      $ 2.20        to      $ 2.08      $ 141,507,483        0.48 %      0.30 %      to        2.05 %      6.42 %      to        4.60 % 

12/31/2015

      50,917,336        2.06        to        1.99        150,665,726        0.52       0.30       to        2.05       (1.87 )      to        (3.55 ) 

12/31/2014

      63,395,151        2.10        to        2.06        191,072,993        0.88       0.30       to        2.05       9.67       to        7.79  

12/31/2013

      70,219,032        1.92        to        1.92        194,713,563        0.97       0.30       to        2.05       32.70       to        30.43  

12/31/2012

      77,682,300        1.45        to        1.47        165,724,726        0.82       0.30       to        2.05       16.78       to        14.77  

TA Torray Concentrated Growth Service Class

 

                 

12/31/2016

      11,214,378        13.35        to        1.45        32,531,628        0.14       0.90       to        2.30       5.52       to        4.09  

12/31/2015

      12,966,791        12.65        to        1.39        32,981,418        0.31       0.90       to        2.30       (2.72 )      to        (4.04 ) 

12/31/2014

      15,772,261        13.00        to        1.45        36,258,952        0.67       0.90       to        2.30       8.76       to        7.28  

12/31/2013

      17,913,730        1.71        to        1.35        34,001,123        0.79       1.00       to        2.30       31.49       to        29.82  

12/31/2012

      15,349,874        1.30        to        1.04        21,586,847        0.65       1.00       to        2.30       15.66       to        14.19  

TA TS&W International Equity Initial Class

 

                 

12/31/2016

      41,696,215        1.49        to        1.56        71,904,972        2.76       0.30       to        2.05       0.78       to        (0.95 ) 

12/31/2015

      44,322,070        1.48        to        1.57        76,568,954        2.98       0.30       to        2.05       1.01       to        (0.72 ) 

12/31/2014

      50,729,871        1.46        to        1.59        87,463,695        2.35       0.30       to        2.05       (5.47 )      to        (7.09 ) 

12/31/2013

      52,989,718        1.55        to        1.71        97,474,795        2.32       0.30       to        2.05       23.97       to        21.85  

12/31/2012

      54,810,635        1.25        to        1.40        82,100,458        2.20       0.30       to        2.05       16.40       to        14.39  

TA TS&W International Equity Service Class

 

                 

12/31/2016

      13,541,992        10.58        to        0.86        34,110,738        2.57       0.90       to        2.30       (0.13 )      to        (1.49 ) 

12/31/2015

      16,788,573        10.59        to        0.87        36,053,774        2.99       0.90       to        2.30       0.13       to        (1.23 ) 

12/31/2014

      15,903,634        10.58        to        0.88        29,124,189        2.20       0.90       to        2.30       (6.23 )      to        (7.51 ) 

12/31/2013

      15,102,094        1.23        to        0.96        25,313,843        2.17       1.00       to        2.30       22.84       to        21.28  

12/31/2012

      11,880,393        1.00        to        0.79        15,587,968        2.03       1.00       to        2.30       15.28       to        13.81  

TA WMC US Growth Initial Class

 

                 

12/31/2016

      152,376,830        1.89        to        1.36        236,978,354        0.40       0.30       to        2.30       2.50       to        0.50  

12/31/2015

      168,111,201        1.85        to        1.35        257,886,335        0.70       0.30       to        2.30       6.53       to        4.45  

12/31/2014

      206,111,980        1.73        to        1.29        301,151,694        0.88       0.30       to        2.30       10.77       to        8.61  

12/31/2013

      228,609,102        1.56        to        1.19        305,498,682        1.04       0.30       to        2.30       32.07       to        29.49  

12/31/2012

      256,585,260        1.18        to        0.92        261,805,432        0.31       0.30       to        2.30       12.83       to        10.61  

TA WMC US Growth Service Class

 

                    

12/31/2016

      31,337,681        14.15        to        1.26        98,349,420        0.18       0.90       to        2.30       1.62       to        0.24  

12/31/2015

      33,875,319        13.92        to        1.26        96,971,678        0.54       0.90       to        2.30       5.66       to        4.21  

12/31/2014

      32,953,962        13.18        to        1.21        77,258,557        0.70       0.90       to        2.30       9.84       to        8.34  

12/31/2013

      34,571,986        1.37        to        1.11        61,053,692        0.80       1.00       to        2.30       30.82       to        29.16  

12/31/2012

      32,536,857        1.05        to        0.86        40,001,799        0.11       1.00       to        2.30       11.74       to        10.31  

Vanguard® Equity Index

 

                          

12/31/2016

      411,968        1.79        to        1.74        1,920,746        2.45       0.30       to        1.00       11.48       to        10.70  

12/31/2015

      462,855        1.60        to        1.57        1,852,623        1.41       0.30       to        1.00       0.96       to        0.26  

12/31/2014

      476,937        1.59        to        1.57        948,899        1.65       0.30       to        1.00       13.17       to        12.38  

12/31/2013

      378,998        1.40        to        1.40        578,435        1.71       0.30       to        1.00       31.79       to        30.87  

12/31/2012

      495,731        1.06        to        1.07        531,667        1.95       0.30       to        1.00       15.51       to        14.71  

Vanguard® International

 

                          

12/31/2016

      441,335        1.17        to        1.05        1,229,545        1.47       0.30       to        1.00       1.57       to        0.87  

12/31/2015

      426,145        1.15        to        1.04        1,169,229        1.30       0.30       to        1.00       (1.06 )      to        (1.76 ) 

12/31/2014

      390,264        1.16        to        1.06        424,932        1.53       0.30       to        1.00       (6.34 )      to        (6.99 ) 

12/31/2013

      472,637        1.24        to        1.14        538,704        1.42       0.30       to        1.00       22.89       to        22.04  

12/31/2012

      559,544        1.01        to        0.94        519,017        2.02       0.30       to        1.00       19.78       to        18.94  

Vanguard® Mid-Cap Index

 

                          

12/31/2016

      243,199        1.85        to        1.62        845,838        1.52       0.30       to        1.00       10.78       to        10.01  

12/31/2015

      316,319        1.67        to        1.48        888,668        0.88       0.30       to        1.00       (1.73 )      to        (2.42 ) 

12/31/2014

      249,421        1.70        to        1.51        427,668        0.93       0.30       to        1.00       13.25       to        12.46  

12/31/2013

      230,296        1.50        to        1.35        340,922        1.05       0.30       to        1.00       34.52       to        33.59  

12/31/2012

      297,422        1.12        to        1.01        325,310        1.15       0.30       to        1.00       15.47       to        14.66  

 

67

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Vanguard® REIT Index

                                

12/31/2016

      136,899      $ 1.54        to      $ 1.58      $ 358,742        2.67 %      0.30 %      to        1.00 %      8.03 %      to        7.28 % 

12/31/2015

      150,260        1.43        to        1.47        350,033        1.66       0.30       to        1.00       1.92       to        1.21  

12/31/2014

      174,728        1.40        to        1.45        315,866        3.46       0.30       to        1.00       29.72       to        28.82  

12/31/2013

      103,087        1.08        to        1.13        158,694        1.90       0.30       to        1.00       2.03       to        1.32  

12/31/2012

      140,160        1.06        to        1.11        158,685        1.90       0.30       to        1.00       17.11       to        16.29  

Vanguard® Short-Term Investment Grade

 

                    

12/31/2016

      1,010,860        1.33        to        1.06        2,717,920        1.92       0.30       to        1.00       2.41       to        1.70  

12/31/2015

      1,147,149        1.30        to        1.04        2,902,363        1.62       0.30       to        1.00       0.82       to        0.12  

12/31/2014

      931,975        1.29        to        1.04        1,468,028        1.79       0.30       to        1.00       1.45       to        0.74  

12/31/2013

      1,376,709        1.27        to        1.03        1,873,277        1.85       0.30       to        1.00       0.78       to        0.08  

12/31/2012

      1,489,155        1.26        to        1.03        1,731,237        2.47       0.30       to        1.00       4.10       to        3.38  

Vanguard® Total Bond Market Index

 

                    

12/31/2016

      445,728        1.44        to        1.11        1,483,525        2.33       0.30       to        1.00       2.16       to        1.45  

12/31/2015

      544,334        1.41        to        1.09        1,627,599        1.97       0.30       to        1.00       0.03       to        (0.66 ) 

12/31/2014

      581,416        1.41        to        1.10        823,633        2.48       0.30       to        1.00       5.58       to        4.84  

12/31/2013

      650,046        1.34        to        1.05        799,864        3.26       0.30       to        1.00       (2.58 )      to        (3.26 ) 

12/31/2012

      1,256,245        1.37        to        1.08        1,501,688        2.71       0.30       to        1.00       3.71       to        2.99  

Voya Global Perspectives Class S Shares

 

                    

12/31/2016

      1,665        9.68        to        9.54        16,121        2.60       1.29       to        2.14       5.19       to        4.30  

12/31/2015(1)

      1,633        9.20        to        9.15        15,028        —         1.29       to        2.14       —         to        —    

Voya Large Cap Value Class S Shares

 

                    

12/31/2016

      97        10.40        to        10.26        1,006        3.01       1.29       to        2.14       12.13       to        11.18  

12/31/2015(1)

      —          9.28        to        9.23        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Conservative Class S Shares

 

              

12/31/2016

      —          10.00        to        9.86        —          —         1.29       to        2.14       4.12       to        3.25  

12/31/2015(1)

      —          9.61        to        9.55        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Moderate Class S Shares

 

                 

12/31/2016

      —          9.98        to        9.84        —          —         1.29       to        2.14       4.96       to        4.07  

12/31/2015(1)

      —          9.51        to        9.45        —          —         1.29       to        2.14       —         to        —    

Wanger International

                                

12/31/2016

      141,836        1.26        to        1.13        308,283        1.18       0.30       to        0.80       (1.70 )      to        (2.19 ) 

12/31/2015

      160,087        1.29        to        1.16        318,081        1.51       0.30       to        0.80       (0.20 )      to        (0.70 ) 

12/31/2014

      145,508        1.29        to        1.17        232,919        1.44       0.30       to        0.80       (4.69 )      to        (5.17 ) 

12/31/2013

      218,810        1.35        to        1.23        304,394        2.78       0.30       to        0.80       22.00       to        21.40  

12/31/2012

      179,090        1.11        to        1.01        188,772        1.22       0.30       to        0.80       21.20       to        20.59  

Wanger USA

                                

12/31/2016

      67,832        1.85        to        1.82        177,312        —         0.30       to        0.80       13.35       to        12.78  

12/31/2015

      133,870        1.64        to        1.62        274,445        —         0.30       to        0.80       (0.91 )      to        (1.40 ) 

12/31/2014

      89,393        1.65        to        1.64        204,779        —         0.30       to        0.80       4.47       to        3.95  

12/31/2013

      88,252        1.58        to        1.58        139,724        0.14       0.30       to        0.80       33.35       to        32.69  

12/31/2012

      94,839        1.18        to        1.19        112,860        0.29       0.30       to        0.80       19.66       to        19.06  

 

(1)  See footnote 1

 

* These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the Mutual Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the Mutual Fund in which the subaccounts invest.

 

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Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

4. Financial Highlights (continued)

 

** These amounts represent the annualized contract expenses of the subaccount, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the Mutual Fund have been excluded.
*** These amounts represent the total return for the periods indicated, including changes in the value of the Mutual Fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. Total returns reflect a full twelve month period and total returns for subaccounts opened during the year have not been disclosed as they may not be indicative of a full year return. Expense ratios not in effect for the full twelve months are not reflected in the total return as they may not be indicative of a full year return.

 

69

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

6. Administrative and Mortality and Expense Risk Charges

TLIC deducts a daily administrative charge equal to an annual rate of .15% of the daily net assets value of each subaccount for administrative expenses. TLIC also deducts an annual charge during the accumulation phase, not to exceed $35, proportionately from the subaccounts’ unit values. An annual charge ranging from 0.15% to 2.30% is deducted (based on the death benefit selected) from the unit values of the subaccounts of the Separate Account for TLIC’s assumption of certain mortality and expense risks incurred in connection with the contract. The charge is assessed daily based on the net asset value of the Mutual Fund. Charges for administrative and mortality and expense risk are an expense of the subaccount. Charges reflected above are those currently assessed and may be subject to change. Contract owners should see their actual policy and any related attachments to determine their specific charges.

In addition to M&E, the following subaccounts are assessed a daily charge for fund facilitation fees:

 

Subaccount

    Additional Fund
Facilitation Fee Assessed		  

AB Balanced Wealth Strategy Class B Shares

      0.20 % 

American Funds - Asset Allocation Class 2 Shares

      0.30 % 

American Funds - Bond Class 2 Shares

      0.30 % 

American Funds - Growth Class 2 Shares

      0.30 % 

American Funds - Growth-Income Class 2 Shares

      0.30 % 

American Funds - International Class 2 Shares

      0.30 % 

Fidelity® VIP Contrafund® Initial Class

      0.20 % 

Fidelity® VIP Equity-Income Initial Class

      0.20 % 

Fidelity® VIP Growth Initial Class

      0.20 % 

Fidelity® VIP Mid Cap Initial Class

      0.20 % 

Fidelity® VIP Value Strategies Initial Class

      0.20 % 

Franklin Founding Funds Allocation Class 4 Shares

      0.15 % 

State Street Total Return V.I.S. Class 3 Shares

      0.20 % 

Vanguard® Equity Index

      0.20 % 

Vanguard® International

      0.20 % 

Vanguard® Mid-Cap Index

      0.20 % 

Vanguard® REIT Index

      0.20 % 

Vanguard® Short-Term Investment Grade

      0.20 % 

Vanguard® Total Bond Market Index

      0.20 % 

Voya Global Perspectives Class S Shares

      0.14 % 

Voya Large Cap Value Class S Shares

      0.14 % 

Voya Strategic Allocation Conservative Class S Shares

      0.14 % 

Voya Strategic Allocation Moderate Class S Shares

      0.14 % 

7. Income Tax

Operations of the Separate Account form a part of TLIC, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986, as amended (the Code). The operations of the Separate Account are accounted for separately from other operations of TLIC for purposes of federal income taxation. The Separate Account is not separately taxable as a regulated investment company under Subchapter M of the Code and is not otherwise taxable as an entity separate from TLIC. Under existing federal income tax laws, the income of the Separate Account is not taxable to TLIC, as long as earnings are credited under the variable annuity contracts.

 

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Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2016

8. Subsequent Events

The Separate Account has evaluated the financial statements for subsequent events through the date which the financial statements were issued. During this period, there were no subsequent events requiring recognition or disclosure in the financial statements.

9. Related Parties

Transamerica Capital, Inc. (“TCI”), a wholesaling broker-dealer, is an affiliated entity of TLIC and an indrect wholly owned subsidiary of AEGON N.V.. TCI distributes TLIC’s products through broker-dealers and other financial intermediaries.

The subaccounts invest in the mutual funds listed in Footnote 1. These investments include funds managed by Transamerica Asset Management, Inc. (“TAM”). Transamerica Fund Services, Inc. (“TFS”) serves as a transfer agent to TAM, and AEGON USA Asset Management Holding, LLC (“AAM”) serves as a sub-advisor for certain funds managed by TAM. TAM, TFS and AAM are affiliated entities of TLIC and indirect wholly owned subsidiaries of AEGON N.V.. Funds managed by TAM are identified by their fund name, which includes reference to Aegon, Transamerica or both. The Separate Account pays management fees to the related funds as detailed in the fund prospectus.

No charges other than those disclosed in Footnote 6 are deducted for the service rendered by related parties.

Contract owners may transfer funds between available subaccount options within the Separate Account. These transfers are performed at unit value at the time of the transfer.

 

71

Table of Contents

FINANCIAL STATEMENTS AND SCHEDULES –

STATUTORY BASIS

Transamerica Financial Life Insurance Company

Years Ended December 31, 2016, 2015 and 2014

Table of Contents

Transamerica Financial Life Insurance Company

Financial Statements – Statutory Basis

and Supplementary Information

Years Ended December 31, 2016, 2015, and 2014

Contents

 

Report of Independent Auditors

     1  

Audited Financial Statements

   

Balance Sheets – Statutory Basis

      3  

Statements of Operations – Statutory Basis

      5  

Statements of Changes in Capital and Surplus – Statutory Basis

      7  

Statements of Cash Flow – Statutory Basis

      9  

Notes to Financial Statements – Statutory Basis

      11  

Appendix A – Listing of Affiliated Companies

      75  

Statutory – Basis Financial Statement Schedules

   

Summary of Investments – Other Than Investments in Related Parties

     79  

Supplementary Insurance Information

      80  

Reinsurance

      81  

Table of Contents

LOGO

Report of Independent Auditors

To the Board of Directors of

Transamerica Financial Life Insurance Company

We have audited the accompanying statutory financial statements of Transamerica Financial Life Insurance Company (“the Company”), which comprise the statutory balance sheets as of December 31, 2016 and 2015 and the related statutory statements of operations, of changes in capital and surplus, and of cash flows for the years ended December 31, 2016, 2015 and 2014.

Management’s Responsibility 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 New York State Department of Financial Services. 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements 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, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note 1 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the New York State Department of Financial Services, 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 1 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

 

1

Table of Contents

LOGO

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” paragraph, the financial statements referred to above 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, 2016 and 2015, or the results of its operations or its cash flows for the years ended December 31, 2016, 2015 and 2014.

Opinion on Statutory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2016 and 2015 and the results of its operations and its cash flows for the years ended December 31, 2016, 2015 and 2014, in accordance with the accounting practices prescribed or permitted by the New York State Department of Financial Services described in Note 1.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Summary of Investments-Other Than Investments in Related Parties as of December 31, 2016 and the Supplementary Insurance Information and Reinsurance as of December 31, 2016 and 2015 and for the years then ended are presented for purposes of additional analysis and are not a required part of the financial statements. The Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The effects on the Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. As a consequence, the Summary of Investments-Other Than Investments in Related Parties as of December 31, 2016 and the Supplementary Insurance Information and Reinsurance as of December 31, 2016 and 2015 and for the years then ended do not present fairly, in conformity with accounting principles generally accepted in the United States of America. The Summary of Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the of Summary Investments-Other Than Investments in Related Parties, Supplementary Insurance Information and Reinsurance are fairly stated, in all material respects, in relation to the financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

April 21, 2017

PricewaterhouseCoopers LLP, One North Wacker, Chicago, IL 60606

T: (312) 298-2000, F: (312) 298-2001, www.pwc.com

 

2

Table of Contents

Transamerica Financial Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

 

     December 31  
     2016      2015  

Admitted assets

      

Cash and invested assets:

      

Cash, cash equivalents and short-term investments

    $ 420,915      $ 319,700  

Bonds

      6,401,964        6,851,692  

Preferred stocks

      4,552        3,269  

Common stocks:

      

Affiliated entities (cost: 2016 - $3,544; 2015 - $4,227)

      3,025        3,573  

Unaffiliated entities (cost: 2016 - $0; 2015 - $134)

      —          124  

Mortgage loans on real estate

      1,243,156        950,309  

Real estate: Properties held for sale

      3,600        —    

Policy loans

      122,026        119,525  

Receivables for securities

      927        1,328  

Securities lending reinvested collateral assets

      307,732        433,653  

Derivatives

      85,941        63,966  

Receivable for derivative cash collateral posted to counterparty

      280        12,353  

Other invested assets

      226,054        192,035  
  

 

 

     

 

 

  

Total cash and invested assets

      8,820,172        8,951,527  

Accrued investment income

      85,930        86,000  

Premiums deferred and uncollected

      13,792        16,461  

Current federal income tax recoverable

      39,091        12,143  

Net deferred income tax asset

      48,911        54,458  

Reinsurance receivables

      16,370        18,233  

Other assets

      12,722        26,901  

Separate account assets

      23,281,407        22,369,554  
  

 

 

     

 

 

  

Total admitted assets

    $ 32,318,395      $ 31,535,277  
  

 

 

     

 

 

  

 

3

Table of Contents

Transamerica Financial Life Insurance Company

Balance Sheets – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Data)

 

     December 31  
     2016     2015  

Liabilities and capital and surplus

     

Liabilities:

     

Aggregate reserves for policies and contracts:

     

Life

    $ 1,209,435     $ 1,116,951  

Annuity

      5,775,761       5,775,613  

Accident and health

      153,469       152,756  

Policy and contract claim reserves:

     

Life

      19,869       17,125  

Annuity

      686       937  

Accident and health

      21,459       32,821  

Liability for deposit-type contracts

      55,021       59,701  

Other policyholders’ funds

      2,131       1,478  

Commissions & expense allowances payable on reins assum

      16,177       12,327  

Transfers from separate accounts due or accrued

      (363,988 )      (195,550 ) 

Unearned investment income

      8,769       —    

Remittances and items not allocated

      339,062       144,319  

Asset valuation reserve

      124,698       117,572  

Interest maintenance reserve

      62,056       68,341  

Derivatives

      99,747       46,478  

Payable for derivative cash collateral

      42,500       28,953  

Payable for securities

      774       79,477  

Payable for securities lending

      307,732       433,653  

Borrowed money

      20,005       31,526  

Payable to parent, subsidiaries and affiliates

      12,714       26,231  

Other liabilities

      36,606       47,630  

Separate account liabilities

      23,281,407       22,369,552  
  

 

 

    

 

 

  

Total liabilities

      31,226,090       30,367,891  

Capital and surplus:

     

Common stock, $125 per share par value, 17,142 shares authorized, issued and outstanding

      2,143       2,143  

Preferred stock, $10 per share par value, 45,981 shares authorized, issued and outstanding

      460       460  

Surplus notes

      —         150,000  

Paid-in surplus

      933,659       933,659  

Special surplus funds

      9,509       8,653  

Unassigned surplus

      146,534       72,471  
  

 

 

    

 

 

  

Total capital and surplus

      1,092,305       1,167,386  
  

 

 

    

 

 

  

Total liabilities and capital and surplus

    $ 32,318,395     $ 31,535,277  
  

 

 

    

 

 

  

See accompanying notes.

 

4

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Revenues:

       

Premiums and other considerations, net of reinsurance:

       

Life

    $ 178,751     $ 163,715     $ 145,665  

Annuity

      5,469,296       5,524,045       5,180,015  

Accident and health

      127,213       125,234       113,966  

Net investment income

      395,527       401,084       410,350  

Amortization of interest maintenance reserve

      12,802       14,464       16,342  

Commissions and expense allowances on reinsurance ceded

      95,424       76,294       50,250  

Income from fees associated with investment management, administration and contract guarantees for separate accounts

      180,835       178,533       168,948  

Income from fees associated with investment management, administration and contract guarantees for general accounts

      51,462       60,118       38,954  

Other income

      39,786       37,333       34,810  
  

 

 

    

 

 

    

 

 

  
     6,551,096       6,580,820       6,159,300  

Benefits and expenses:

       

Benefits paid or provided for:

       

Life benefits

      73,456       76,149       62,203  

Annuity benefits

      121,979       127,894       124,851  

Accident and health benefits

      58,684       74,781       63,638  

Surrender benefits

      5,651,094       5,009,782       5,462,477  

Other benefits

      10,097       9,958       10,037  

Increase (decrease) in aggregate reserves for policies and contracts:

       

Life

      92,483       67,393       304,220  

Annuity

      148       (282,017 )      (456,213 ) 

Accident and health

      713       15,812       3,482  
  

 

 

    

 

 

    

 

 

  
     6,008,655       5,099,752       5,574,695  

Insurance expenses:

       

Commissions

      164,667       185,806       183,813  

General insurance expenses

      134,108       148,335       152,242  

Taxes, licenses and fees

      15,996       13,337       10,334  

Net transfers to (from) separate accounts

      (79,281 )      783,118       101,563  

Experience refunds

      239       100       567  

Interest on surplus notes

      9,167       9,375       9,375  

Other expenses

      (5,397 )      (4,328 )      (3,819 ) 
  

 

 

    

 

 

    

 

 

  
     239,499       1,135,743       454,075  
  

 

 

    

 

 

    

 

 

  

Total benefits and expenses

      6,248,154       6,235,495       6,028,770  
  

 

 

    

 

 

    

 

 

  

Gain (loss) from operations before federal income tax expense (benefit) and net realized capital gains (losses) on investments

    $ 302,942     $ 345,325     $ 130,530  

 

5

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Operations – Statutory Basis (continued)

(Dollars in Thousands)

 

Federal income tax expense (benefit)

    $ 42,388     $ 54,965     $ 73,027  
  

 

 

    

 

 

    

 

 

  

Gain (loss) from operations before and net realized capital gains (losses) on investments

      260,554       290,360       57,503  

Net realized capital gains (losses) on investments (net of related federal income taxes and amounts transferred to/from interest maintenance reserve)

      (35,577 )      (30,484 )      (33,574 ) 
  

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 224,977     $ 259,876     $ 23,929  
  

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

6

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Changes in Capital and

Surplus – Statutory Basis

(Dollars in Thousands)

 

                            Special     Unassigned     Total  
    Common     Preferred     Surplus     Paid-in     Surplus     (Deficit)     Capital and  
    Stock     Stock     Notes     Surplus     Funds     Surplus     Surplus  

Balance at January 1, 2014

   $ 2,143     $ 460     $ 150,000     $ 933,659     $ 8,085     $ (66,719 )    $ 1,027,628  

Net income (loss)

     —         —         —         —         674       23,255       23,929  

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

     —         —         —         —         —         41,844       41,844  

Change in net unrealized foreign gains/losses, net of tax

     —         —         —         —         —         36       36  

Change in nonadmitted assets

     —         —         —         —         —         (44,910 )      (44,910 ) 

Change in asset valuation reserve

     —         —         —         —         —         24,045       24,045  

Surplus withdrawn from separate account

     —         —         —         —         —         (1 )      (1 ) 

Change in net deferred income tax asset

     —         —         —         —         —         42,825       42,825  

Change in surplus as result of reinsurance

     —         —         —         —         —         (8,281 )      (8,281 ) 

Dividends to stockholders

     —         —         —         —         —         (150,000 )      (150,000 ) 

Change in reserve on account of change in valuation basis

     —         —         —         —         —         582       582  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2014

   $ 2,143     $ 460     $ 150,000     $ 933,659     $ 8,759     $ (137,324 )    $ 957,697  

Net income (loss)

     —         —         —         —         (106 )      259,982       259,876  

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

     —         —         —         —         —         2,413       2,413  

Change in net deferred income tax asset

     —         —         —         —         —         (22,410 )      (22,410 ) 

Change in nonadmitted assets

     —         —         —         —         —         13,526       13,526  

Change in provision for reinsurance in unauthorized companies

     —         —         —         —         —         (2,468 )      (2,468 ) 

Change in reserve on account of change in valuation basis

     —         —         —         —         —         (1,142 )      (1,142 ) 

Change in asset valuation reserve

     —         —         —         —         —         (5,569 )      (5,569 ) 

Change in surplus in separate accounts

     —         —         —         —         —         (2 )      (2 ) 

Change in surplus as a result of reinsurance

     —         —         —         —         —         (34,253 )      (34,253 ) 

Cumulative effect of changes in accounting principles

     —         —         —         —         —         (282 )      (282 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2015

   $ 2,143     $ 460     $ 150,000     $ 933,659     $ 8,653     $ 72,471     $ 1,167,386  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

7

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis (continued)

(Dollars in Thousands)

 

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

Balance at December 31, 2015

    $ 2,143      $ 460      $ 150,000     $ 933,659      $ 8,653        72,471     $ 1,167,386  

Net income (loss)

      —          —          —         —          856        224,121       224,977  

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

      —          —          —         —          —          (20,924 )      (20,924 ) 

Change in net deferred income tax asset

      —          —          —         —          —          3,541       3,541  

Change in other nonadmitted assets

      —          —          —         —          —          4,751       4,751  

Change in asset valuation reserve

      —          —          —         —          —          (7,126 )      (7,126 ) 

Change in surplus as a result of reinsurance

      —          —          —         —          —          (61,046 )      (61,046 ) 

Change in surplus notes

      —          —          (150,000 )      —          —          —         (150,000 ) 

Dividends to stockholders

      —          —          —         —          —          (70,000 )      (70,000 ) 

Other changes, net

      —          —          —         —          —          746       746  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

Balance at December 31, 2016

    $ 2,143      $ 460      $ —       $ 933,659      $ 9,509      $ 146,534     $ 1,092,305  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

  

See accompanying notes.

 

8

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Operating activities

       

Premiums collected, net of reinsurance

    $ 5,778,926     $ 5,809,547     $ 5,437,362  

Net investment income received

      400,563       408,238       421,203  

Miscellaneous income

      304,792       315,661       287,549  

Benefit and loss related payments

      (5,921,651 )      (5,288,477 )      (5,724,166 ) 

Net transfers to separate accounts

      (89,156 )      (806,817 )      (141,346 ) 

Commissions, expenses paid, and other deductions

      (315,012 )      (352,330 )      (355,492 ) 

Federal income taxes paid

      (72,571 )      (66,187 )      (88,377 ) 
  

 

 

    

 

 

    

 

 

  

Net cash provided by (used in) operating activities

      85,891       19,635       (163,267 ) 

Investing activities

       

Proceeds from investments sold, matured or repaid:

       

Bonds

      1,879,956       2,273,822       1,517,656  

Stocks

      897       1,560       2,000  

Mortgage loans

      58,315       146,025       118,566  

Other invested assets

      57,692       43,477       29,682  

Securities lending reinvested collateral assets

      125,921       37,639       —    

Miscellaneous proceeds

      14,507       1,752       6,006  
  

 

 

    

 

 

    

 

 

  

Total investment proceeds

      2,137,288       2,504,275       1,673,910  

Costs of investments acquired:

       

Bonds

      (1,420,519 )      (1,819,135 )      (1,126,261 ) 

Common stocks

      (1,331 )      —         (100 ) 

Preferred stocks

      —         —         (2,024 ) 

Mortgage loans

      (355,434 )      (365,923 )      (297,607 ) 

Other invested assets

      (98,809 )      (167,119 )      (6,139 ) 

Payable for securities

      (78,703 )      79,476       —    

Securities lending reinvested collateral assets

      —         —         (40,614 ) 

Derivatives

      (16,280 )      —         —    

Miscellaneous applications

      1,206       (33,830 )      (25,971 ) 
  

 

 

    

 

 

    

 

 

  

Total cost of investments acquired

      (1,969,870 )      (2,306,531 )      (1,498,716 ) 

Net increase (decrease) in policy loans

      (2,501 )      (3,132 )      (2,180 ) 
  

 

 

    

 

 

    

 

 

  

Net cost of investments acquired

      (1,972,371 )      (2,309,663 )      (1,500,896 ) 
  

 

 

    

 

 

    

 

 

  

Net cash provided by (used in) investing activities

      164,917       194,612       173,014  

 

9

Table of Contents

Transamerica Financial Life Insurance Company

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

 

     Year Ended December 31  
     2016     2015     2014  

Financing and miscellaneous activities

       

Net withdrawals on deposit-type contracts and other insurance liabilities

    $ (8,341 )    $ (1,266 )    $ (869 ) 

Change in:

       

Borrowed funds

      (11,475 )      (43,385 )      54,845  

Surplus notes

      (150,000 )      —         —    

Payable to parent, subsidiaries and affiliates

      (13,516 )      5,583       20,137  

Payable for securities lending

      (125,921 )      (37,639 )      40,614  

Other cash (used) provided

      229,660       (79,836 )      140,507  

Dividends paid to stockholders

      (70,000 )      —         (150,000 ) 
  

 

 

    

 

 

    

 

 

  

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

      (149,593 )      (156,543 )      105,234  
  

 

 

    

 

 

    

 

 

  

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

      101,215       57,704       114,981  

Cash, cash equivalents and short-term investments:

       

Beginning of year

      319,700       261,996       147,015  
  

 

 

    

 

 

    

 

 

  

End of year

    $ 420,915     $ 319,700     $ 261,996  
  

 

 

    

 

 

    

 

 

  

See accompanying notes.

 

10

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share amounts)

1. Organization and Summary of Significant Accounting Policies

Organization

Transamerica Financial Life Insurance Company (the Company) is a stock life insurance company and is majority owned by Transamerica Corporation (TA Corp) (87.9% of shares) and minority owned by Transamerica Life Insurance Company (TLIC) (12.1% of shares). Both TA Corp and TLIC are indirect, wholly-owned subsidiaries of AEGON N.V., a holding company organized under the laws of The Netherlands. Prior to December 31, 2015, the Company was majority owned by AEGON USA, LLC (AEGON). On December 31, 2015, AEGON merged into TA Corp, a Delaware-domiciled non-insurance affiliate.

On July 1, 2014, the Company completed a merger with Transamerica Advisors Life Insurance Company of New York (TALICNY), which was wholly-owned by AEGON. The merger was accounted for in accordance with Statement of Statutory Accounting Principles (SSAP) No. 68, Business Combinations and Goodwill, as a statutory merger. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of TALICNY were carried forward to the merged company. As a result of the merger, TALICNY’s common stock was deemed cancelled by operation of law. In exchange for its agreement to merge TALICNY into the Company, AEGON received a proportionate number of TFLIC shares equal in value to the fair market value of TALICNY relative to the fair market value of the combined companies. Specifically, AEGON received 676 shares of the Company’s common stock and 1,806 shares of the Company’s preferred stock.

 

11

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Nature of Business

The Company sells fixed and variable pension and annuity products, group life coverages, life insurance, investment contracts, structured settlements and guaranteed interest contracts and funding agreements. The Company is licensed in 50 states and the District of Columbia. Sales of the Company’s products are primarily through brokers.

Basis of Presentation

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.

The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the New York Department of Financial Services (formerly known as the Department of Insurance of the State of New York), which practices differ from accounting principles generally accepted in the United States (GAAP). The more significant variances from GAAP are as follows:

Investments: Investments in bonds and mandatory redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (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. Fair value for GAAP is based on indices, third-party pricing services, brokers, external fund managers and internal models. For statutory reporting, the NAIC allows insurance companies to report the fair value determined by the Securities Valuation Office of the NAIC (SVO) or determine the fair value by using a permitted valuation method.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If the fair value of the mortgage-backed/asset-backed security is less than amortized cost, an entity shall assess whether the impairment is other-than-temporary. An other-than-temporary impairment (OTTI) is considered to have occurred if the fair value of the mortgage-backed/asset-backed 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.

If it is determined an OTTI has occurred as a result of the cash flow analysis, the security is written down to the discounted estimated future cash flows. If an OTTI has occurred due to intent to sell or lack of intent and ability to hold, the security is written down to fair value.

For GAAP, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), 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. 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 should be 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 and it is not more likely than not that the entity will 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.

 

12

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. 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 US 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.

Derivative instruments are also used in replication (synthetic asset) transactions. In these transactions, the derivative is valued in a manner consistent with the cash instrument and replicated asset. For US GAAP, the derivative is reported at fair value, with the changes in fair value reported in income.

Investments in real estate are reported net of related obligations rather than on a gross basis as for GAAP. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses for statutory reporting include rent for the Company’s occupancy of those properties. Changes between depreciated cost and admitted amounts are credited or charged directly to unassigned surplus rather than to income as would be required under GAAP.

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.

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 over the remaining period to maturity of the bond or mortgage loan based on groupings of individual securities sold in five year bands. That 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 statement 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.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Subsidiaries: Investments in subsidiaries, controlled and affiliated companies (SCA) companies 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, A Replacement of SSAP No. 88. 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).

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 would be 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 policy contracts and contract charges, 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 Accounting Practices and Procedures Manual.

Separate Accounts with Guarantees: Some of the Company’s separate accounts provide policyholders with a guaranteed return. 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. These separate accounts are included in the general account for GAAP due to the nature of the guaranteed return.

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 sheet to the extent they are not impaired.

Universal Life and Annuity Policies: Revenues for universal 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. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk and guaranteed interest in group annuity contracts are recorded directly to a policy reserve account using deposit accounting, without recognizing premium income or benefits expense. Interest on these policies is reflected in other benefits. Under GAAP, for universal life policies, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies without significant mortality risk, premiums received and benefits paid would be recorded directly to the reserve liability using deposit accounting.

Benefit Reserves: Certain policy reserves are calculated based on statutorily required interest and mortality assumptions rather than on estimated expected experience or actual account balances as would be required under GAAP.

 

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Reinsurance: 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 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, A Replacement of SSAP No. 10R and SSAP No. 10. Under SSAP No. 101, admitted adjusted deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of adjusted gross deferred income 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 adjusted gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities after considering the character (i.e., ordinary versus capital) and reversal patterns of the deferred tax assets and liabilities. The remaining adjusted deferred income tax assets are nonadmitted. Deferred state income taxes are not recorded under SSAP No. 101, whereas under GAAP state income taxes are included in the computation of deferred income taxes.

Goodwill: Goodwill is measured as the difference between the cost of acquiring the entity and the reporting entity’s share of the book value of the acquired entity. Goodwill is admitted subject to an aggregate limitation of ten percent of the capital and surplus in the most recently filed annual statement excluding electronic data processing equipment, operating system software, net deferred income tax assets and net positive goodwill. Excess goodwill is nonadmitted. Goodwill is amortized over ten years. Under GAAP, goodwill is measured as the excess of the consideration transferred plus the fair value of any noncontrolling interest in the acquiree at the acquisition date as compared to the fair values of the identifiable net assets acquired. Goodwill is not amortized but is assessed for impairment on an annual basis, or more frequently if circumstances indicate that a possible impairment has occurred.

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

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

 

15

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less.

Securities Lending Assets and Liabilities: For securities lending programs, cash collateral received which may be sold or repledged by the Company is reflected as a one-line entry on the balance sheet (securities lending reinvested collateral assets) and a corresponding liability is established to record the obligation to return the cash collateral. Collateral received which may not be sold or repledged is not recorded on the Company’s balance sheet. Under GAAP, the reinvested collateral is included within invested assets (i.e. it is not one-line reported).

The effects of the foregoing variances from GAAP on the accompanying statutory-basis financial statements have not been determined by the Company, but are presumed to be material.

Other significant accounting policies are as follows:

Investments

Investments in bonds, except those to which the SVO has ascribed an NAIC designation of 6, are reported at amortized cost using the interest method.

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. 26, Bonds, excluding Loan-backed and Structured Securities and therefore, are reported at amortized cost or fair value based upon their NAIC rating.

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. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. 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.

The Company closely monitors below investment grade holdings and investment grade issuers where the Company has concerns to determine if an OTTI has occurred. The Company also regularly monitors industry sectors. The Company considers relevant facts and circumstances in evaluating whether the impairment is other-than-temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; (2) the Company’s decision to 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. 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. For structured securities, cash flow trends and underlying levels of collateral are monitored. The Company will record a charge to the statement of operations to the extent that these securities are determined to be other-than-temporarily impaired.

Investments in preferred stocks in good standing are reported at cost or amortized cost. Investments in preferred stocks are stated at amortized cost, except those with NAIC designations RP4 to RP6 and P4 to P6, which are reported at lower of amortized cost or fair value, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Common stocks of unaffiliated companies are reported at fair value and the related net unrealized capital gains or losses are reported in unassigned surplus along with any adjustment for federal income taxes.

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 statement 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.

Common stocks of affiliated noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in the change in net unrealized capital gains or losses, reported in unassigned surplus along with any adjustment for federal income taxes.

There are no restrictions on common or preferred stock.

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.

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized 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 that the impairment is other-than-temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

Real estate that the Company classifies as held for sale is measured at lower of carrying amount or fair value less cost to sell.

Policy loans are reported at unpaid principal balances.

The Company has minority ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying audited 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 statement 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.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Other “admitted assets” are valued principally at cost, as required or permitted by New York Insurance Laws.

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. In addition, accrued interest is excluded from investment income when payment exceeds 90 days past due. At December 31, 2016 and 2015, the Company excluded investment income due and accrued of $100 and $410, respectively, with respect to such practices.

For dollar repurchase agreements, 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. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company.

Derivative Instruments

Overview: The Company may use various derivative instruments (options, caps, floors, swaps, foreign currency 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. (B) Replications, (C) income generation and (D) held for other investment/risk management activities do not qualify for hedge accounting under SSAP No. 86, Accounting for Derivative Instruments and Hedging Activities (SSAP No. 86).

Derivative instruments used in hedging relationships are accounted for on a basis that is consistent with the hedged item (amortized cost or fair value). Derivative instruments used in replication relationships are accounted for on a basis that is consistent with the cash instrument and the replicated asset (amortized cost or fair value). 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). 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 ‘A’ 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.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 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 unassigned surplus.

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

Total return swaps are used in the asset/liability management process to mitigate the delta risk created when the Company has issued 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, on 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.

Futures contracts are used to hedge the liability risk associated with 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. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment

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

 

19

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Separate Accounts

The majority of the separate accounts held by the Company represent funds which are administered for pension plans. The assets in the managed separate accounts consist of common stock, long-term bonds, real estate and short-term investments. The non-managed separate accounts are invested by the Company in a corresponding portfolio of Diversified Investors Portfolios. The portfolios are registered under the Investment Company Act of 1940, as amended, as open-ended, diversified, management investment companies.

Except for some guaranteed separate accounts, which are carried at amortized cost, the assets are carried at fair value, and the investment risks associated with fair value changes are borne entirely by the policyholder. Some of the guaranteed separate accounts provide a guarantee of principal and some include an interest guarantee of 4% or less, so long as the contract is in effect. Separate account asset performance less than guaranteed requirements is transferred from the general account and reported in the statements of operations.

Assets held in trust for purchases of separate account contracts and the Company’s corresponding obligation to the contract owners are shown separately in the balance sheets. Income and gains and losses with respect to these assets 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 account are borne entirely by the contract owners 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 Company’s statements of operations as a component of net transfers from separate accounts.

The Company received variable contract premiums of $4,693,209, $4,948,619 and $4,687,960 in 2016, 2015 and 2014, respectively. In addition, the Company received $180,835, $178,533, and $168,948 in 2016, 2015 and 2014, respectively, related to fees associated with investment management, administration and contractual guarantees for separate accounts.

Separate account assets and liabilities reported in the accompanying financial statements consist of two types: non-indexed guaranteed and nonguaranteed. Non-indexed guaranteed separate accounts represent funds invested by the Company for the benefit of 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 amortized cost.

The non-guaranteed separate account assets and liabilities represent group annuity funds segregated by the Company for the benefit of contract owners, who bear the investment risks. The assets and liabilities of the nonguaranteed separate accounts are carried at estimated fair value.

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are developed 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.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

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.

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioners’ Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.00 to 7.25 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.

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. 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.

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 3.50 to 11.00 percent and mortality rates, where appropriate, from a variety of tables.

Annuity reserves also include guaranteed investment contracts (GICs) and funding agreements classified as life-type contracts as defined in SSAP No. 50, Classifications and Definitions of Insurance or Managed Care Contracts In Force. 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 a cash settlement option, on a change in fund basis, according to the Commissioner’s Annuity Reserve Valuation Method.

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.

Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula. On group annuity deposit funds not involving life contingencies, tabular interest has been determined by adjusting the interest credited to group annuity deposits. On other funds not involving life contingencies, tabular interest has been determined by formula.

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 sheet 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.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Liability for Deposit-Type Contracts

Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include 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 statement of operations.

Premiums and Annuity Considerations

Revenues for policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and are recognized over the premium paying periods of the related policies. Considerations received and benefits paid for annuity policies without mortality or morbidity risk are recorded using deposit accounting, and recorded directly to an appropriate policy reserve account, without recognizing premium revenue.

Claims and Claim Adjustment Expense

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

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

 

     Unpaid Claims
Liability
Beginning
of Year		      Claims
Incurred		      Claims
Paid		      Unpaid Claims
Liability End
of Year		  

Year ended December 31, 2016

            

2016

    $ —        $ 76,171      $ 43,008      $ 33,163  

2015 and prior

      47,976        (16,259 )       27,038        4,680  
  

 

 

     

 

 

     

 

 

     

 

 

  
     47,976      $ 59,912      $ 70,046        37,843  
     

 

 

     

 

 

     

Active life reserve

      137,601              137,085  
  

 

 

           

 

 

  

Total accident and health reserves

    $ 185,577            $ 174,928  
  

 

 

           

 

 

  

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Unpaid Claims
Liability
Beginning
of Year		      Claims
Incurred		      Claims
Paid		      Unpaid Claims
Liability End
of Year		  

Year ended December 31, 2015

            

2015

    $ —        $ 74,428      $ 34,235      $ 40,193  

2014 and prior

      43,111        (7,098 )       28,230        7,783  
  

 

 

     

 

 

     

 

 

     

 

 

  
     43,111      $ 67,330      $ 62,465        47,976  
     

 

 

     

 

 

     

Active life reserve

      111,952              137,601  
  

 

 

           

 

 

  

Total accident and health reserves

    $ 155,063            $ 185,577  
  

 

 

           

 

 

  

The Company’s unpaid claims reserve was decreased by $16,259 and $7,098 for the years ended December 31, 2016 and 2015, respectively, for health claims that were incurred prior to those balance sheet dates. The change in 2016 and 2015 resulted primarily from variances in the estimated frequency of claims and claim severity.

The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2016 and 2015 was $747 and $696, respectively. The Company incurred $1,320 and paid $1,264 of claim adjustment expenses during 2016, of which $602 of the paid amount was attributable to insured or covered events of prior years. The Company incurred $1,268 and paid $1,312 of claim adjustment expenses during 2015, of which $657 of the paid amount was attributable to insured or covered events of prior years. The Company did not increase or decrease the claim adjustment expense provision for insured events of prior years during 2016 or 2015.

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.

Consistency of Presentation

Differences in tabular totals and references between notes are caused by rounding differences not considered to be significant to the financial statement presentation. Prior year amounts have been reclassified to conform to current period presentation.

Recent Accounting Pronouncements

Effective January 1, 2017, the Company adopted revisions to SSAP No. 35R, Guaranty Fund and Other Assessments, which allows 1) expected renewals of short-term health contracts to be considered in determining the assets recognized from accrued guaranty fund liability assessments and 2) requires reporting entities to discount guaranty fund liabilities, and related assets, resulting from the insolvencies of insurers that wrote long-term care contracts The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

 

23

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Effective January 1, 2017, the Company adopted SSAP No. 41R, Surplus Notes. Surplus notes held by investors that are rated an equivalent NAIC 1 or 2 designation by an approved NAIC credit rating provider will be reported at amortized cost, while non-rated surplus notes or those with an equivalent designation of 3 through 6 will be reported at the lower of amortized cost or fair value adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2017, the Company adopted revisions to SSAP No. 51R, Life Contracts, which includes updates for new principle-based reserving (PBR) requirements, with references to Valuation Manual changes. The Valuation Manual allows companies to continue using current reserve methodologies for a three-year period, beginning with the Valuation Manual operative date. For policies issued after the operative date, formulaic calculations for some policies will be supplemented with more advanced deterministic and stochastic reserve methodologies. The Company adopted the new requirements for certain of its term products. 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, 2017, the Company adopted revisions to SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which incorporates explicit accounting guidance on short sales and secured borrowing transactions when the insurer is the transferee. The adoption of this guidance did not impact the financial position or results of operations of the Company.

Effective December 31, 2017, the Company will adopt revisions to SSAP No. 2R, Cash, Drafts and Short-term Investments, which reclassify money market mutual funds from short-term investments to cash equivalents and clarify that money market mutual funds shall be valued at fair value, allowing net asset value as a practical expedient. The adoption of this guidance will not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2015 the Company adopted guidance that moves wholly-owned, single member/single asset LLCs where the underlying asset is real estate, into the scope of SSAP No. 40, Real Estate Investments, when specific conditions are met, and clarifies in SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies, that these types of investments are within the scope of SSAP No. 40. The adoption of this guidance did not impact the financial position and results of operations of the Company.

Effective December 31, 2014, the Company adopted revisions of SSAP No. 104R, Share-Based Payments, which provides guidance for share-based payments transactions with non-employees. The adoption of this revision did not impact the financial position and results of operations of the Company.

Effective December 15, 2014, the Company adopted SSAP No. 107, Accounting for Risk-Sharing Provisions of the Affordable Care Act, which establishes accounting treatment for the three risk sharing programs of the Affordable Care Act (ACA). Disclosures related to the assets, liabilities and revenue elements by program, previously adopted in SSAP No. 35R, Guaranty Fund and Other Assessments – Revised, were moved to this SSAP. The adoption of this standard did not impact the financial position or results of operations of the Company.

Effective January 1, 2014, the Company adopted SSAP No. 106, Affordable Care Act Assessments, which adopted with modifications the guidance in Accounting Standards Update (ASU) 2011-06: Other Expenses – Fees Paid to the Federal Government by Health Insurers and moves the ACA Section 9010 fee guidance from SSAP No. 35R, to SSAP No. 106. The adoption of this standard did not impact the Company’s results of operations or financial position.

 

24

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Effective January 1, 2014, the Company adopted SSAP No. 105, Working Capital finance Investments, which allows working capital finance investments to be admitted assets if certain criteria are met. The adoption of this standard did not impact the financial position or results of operations of the Company.

Effective January 1, 2014, the Company adopted revisions to SSAP No. 30, Investments in Common Stock (excluding investments in common stock of subsidiary, controlled or affiliated entities), which requires Federal Home Loan Bank (FHLB) capital stock to be reported at par value and expands the disclosures related to FHLB capital stock, collateral pledged to the FHLB and borrowing from the FHLB. The adoption of this revision did not impact the Company’s financial position or results of operations, as the company has no FHLB agreements.

Going Concern

Management has evaluated the ability of the Company to continue as a going concern and has determined that no substantial doubt exists with regard to the Company’s ability to meet its obligations as they become due within one year after the issuance of the financial statements.

2. Prescribed and Permitted Statutory Accounting Practices

The New York Department of Financial Services recognizes only statutory accounting practices prescribed or permitted by the State of New York for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the New York Insurance Law.

The State of New York 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 Section 1414 of the New York Insurance Law, 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.

3. Accounting Changes and Correction of Errors

During the first quarter of 2016, management determined that the Company’s accretion policy was not correctly adjusting accretion yields for asset specific changes in future cash flow expectations which resulted in an understatement of investment income of $745 net of tax relating to prior years. This was corrected in 2016 and is reflected as other changes, net, in the Statement 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.

 

25

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 that the Company can corroborate detailed information such as assumptions, inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

Each month, the Company performs an analysis of the information obtained from indices, third-party services, and brokers to ensure that 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. 100 - Fair Value Measurements. 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.

 

26

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

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

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

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

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

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

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 estimated fair values of interest rate caps and options are based upon the latest quoted market price at the balance sheet date. The estimated fair values of swaps, including interest rate and currency swaps are based on pricing models or formulas using current assumptions. The estimated fair value 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 fair value of policy loans is equal to the book value of the loan, which is stated at unpaid principal balance.

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

 

27

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Receivable From/Payable to Parents, Subsidiaries and Affiliates: The carrying amount of receivable from/payable to affiliates approximates their fair value.

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.

Surplus Notes: Fair values for surplus notes are estimated using a discounted cash flow analysis based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

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.

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.

 

28

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016 and 2015, respectively:

 

     December 31
2016		  
     Estimated
Fair Value		     Admitted
Assets		      (Level 1)      (Level 2)     (Level 3)  

Admitted assets

             

Cash equivalents and short-term investments, other than affiliates

    $ 328,733     $ 328,734      $ —        $ 328,733     $ —    

Bonds

      6,714,779       6,401,964        577,129        5,967,691       169,959  

Preferred stocks, other than affiliates

      4,498       4,552        —          4,498       —    

Mortgage loans on real estate

      1,229,443       1,243,156        —          —         1,229,443  

Other invested assets

      23,631       20,693        —          23,401       230  

Interest rate swaps

      75,010       75,010        —          75,010       —    

Currency swaps

      1,589       2,150        —          1,589       —    

Credit default swaps

      8,327       6,399        —          8,327       —    

Equity swaps

      2,382       2,382        —          2,382       —    

Policy loans

      122,026       122,026        —          122,026       —    

Securities lending reinvested collateral

      307,732       307,732        —          307,732       —    

Separate account assets

      23,248,326       23,255,130        15,666,535        7,581,791       —    

Liabilities

 

Investment contract liabilities

      5,518,487       5,158,420           3,036       5,515,452  

Interest rate swaps

      86,436       86,910        —          44,095       42,341  

Credit default swaps

      (778 )      5,498        —          (778 )      —    

Equity swaps

      7,339       7,339        —          7,339       —    

Payable to parent, subsidiaries and affiliates

      12,714       12,714        —          12,714       —    

Separate account annuity liabilities

      22,638,491       22,638,491        —          17,049,972       5,588,519  

 

29

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31
2015		  
     Estimated
Fair Value		      Admitted
Assets		      (Level 1)      (Level 2)      (Level 3)  

Admitted assets

               

Cash equivalents and short-term investments, other than affiliates

    $ 171,797      $ 171,797      $ —        $ 171,797      $ —    

Short-term notes receivable from affiliates

      175,000        175,000        —          175,000        —    

Bonds

      7,076,222        6,851,692        683,277        6,206,728        186,217  

Preferred stocks, other than affiliates

      3,340        3,269        —          3,340        —    

Common stocks, other than affiliates

      124        124        124        —          —    

Mortgage loans on real estate

      960,243        950,309        —          —          960,243  

Other invested assets

      23,822        20,905        —          23,379        443  

Interest rate swaps

      51,173        51,173        —          47,855        3,318  

Currency swaps

      1,734        1,817        —          1,734        —    

Credit default swaps

      7,753        5,704        —          7,753        —    

Equity swaps

      5,272        5,272        —          5,272        —    

Policy loans

      119,525        119,525        —          119,525        —    

Securities lending reinvested collateral

      433,646        433,653        —          433,646        —    

Separate account assets

      22,336,195        22,366,990        14,045,139        8,290,423        633  

Liabilities

               

Investment contract liabilities

      5,231,355        5,142,489        —          2,072        5,229,283  

Interest rate swaps

      28,933        40,826        —          28,933        —    

Credit default swaps

      61        4,473        —          61        —    

Equity Swaps

      1,179        1,179        —          1,179        —    

Payable to parent, subsidiaries and affiliates

      26,231        26,231        —          26,231        —    

Separate account annuity liabilities

      21,855,736        21,855,772        —          15,793,441        6,062,295  

Surplus notes

      174,579        150,000        —          174,579        —    

 

30

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, 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, 2016 and 2015:

 

     2016  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Industrial and miscellaneous

    $ —        $ 155      $ 1,344      $ 1,499  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      —          155        1,344        1,499  

Short-term investments

            

Government

      —          57,545        —          57,545  

Industrial and miscellaneous

      —          270,723        —          270,723  

Intercompany notes receivable

      —          20,000        —          20,000  

Sweep accounts

      —          465        —          465  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total short-term

      —          348,733        —          348,733  

Securities lending reinvested collateral

      —          281,659        —          281,659  

Derivative assets

      —          77,392        —          77,392  

Separate account assets

      15,484,245        2,002,722        —          17,486,968  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets at fair value

    $ 15,484,245      $ 2,710,661      $ 1,344      $ 18,196,251  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

    $ —        $ 46,756      $ 42,341      $ 89,097  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilites at fair value

    $ —        $ 46,756      $ 42,341      $ 89,097  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

31

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     2015  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Industrial and miscellaneous

    $ —        $ 394      $ 1,630      $ 2,024  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      —          394        1,630        2,024  

Common stock

            

Industrial and miscellaneous

      124        —          —          124  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      124        —          —          124  

Short-term investments

            

Government

      —          1        —          1  

Industrial and miscellaneous

      —          44,097        —          44,097  

Money market mutual fund

      —          112,007        —          112,007  

Sweep accounts

      —          15,692        —          15,692  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total short-term

      —          171,797        —          171,797  

Securities lending reinvested collateral

      —          290,629        —          290,629  

Derivative assets

      —          53,127        3,318        56,445  

Separate account assets

      14,026,711        2,211,504        —          16,238,215  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets at fair value

    $ 14,026,835      $ 2,727,451      $ 4,948      $ 16,759,234  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

    $ —        $ 34,605      $ —        $ 34,605  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilites at fair value

    $ —        $ 34,605      $ —        $ 34,605  
  

 

 

     

 

 

     

 

 

     

 

 

  

Bonds classified in Level 2 are valued using inputs from third-party pricing services or broker quotes. Bonds classified in 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.

Short-term investments are classified as Level 2 and carried at amortized cost or fair value. Because of the highly liquid nature of these assets, carrying amounts are used to approximate fair value when amortized cost is used.

Securities lending reinvested collateral is valued and classified in the same way as the underlying collateral, which is primarily composed of 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. Derivatives classified as Level 3 represent interest rate swaps calculated by simulation using a series of market-consistent inputs to model the dynamics of the swap. The inputs are taken from market instruments to the extent that they exist.

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

During 2016 and 2015, there were no transfers between Level 1 and 2, respectively.

 

32

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables summarize the changes in assets classified in Level 3 for 2016 and 2015:

 

     Balance at
January 1,
2016		      Transfers
out of
Level 3		      Total Gains
and (Losses)
Included in
Net income (a)		      Total Gains
and (Losses)
Included in
Surplus (b)		  

Bonds

            

RMBS

    $ 335      $ 333      $ (21 )     $ 19  

Other

      1,295        —          23        221  

Derivatives

      3,318        —          7,536        (45,659 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 4,948      $ 333      $ 7,538      $ (45,419 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
     Purchases      Sales      Settlements      Balance at
December 31,
2016		  

Bonds

            

RMBS

    $ —        $ —        $ —        $ —    

Other

      —          —          195        1,344  

Derivatives

      —          —          7,536        (42,341 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —        $ —        $ 7,731      $ (40,997 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
     Balance at
January 1,
2015		      Transfers
out of
Level 3		      Total Gains
and (Losses)
Included in
Net income (a)		      Total Gains
and (Losses)
Included in
Surplus (b)		  

Bonds

            

RMBS

    $ 349      $ —        $ (62 )     $ 48  

Other

      8,086        5,838        (383 )       142  

Derivatives

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 8,435      $ 5,838      $ (445 )     $ 190  
  

 

 

     

 

 

     

 

 

     

 

 

  
     Purchases      Issuances      Settlements      Balance at
December 31,
2015		  

Bonds

            

RMBS

    $ —        $ —        $ —        $ 335  

Other

      —          —          712        1,295  

Derivatives

      3,318        —          —          3,318  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 3,318      $ —        $ 712      $ 4,948  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

33

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company’s policy is to recognize transfers in and out of level 3 as of the beginning of the reporting period.

Transfers out for bonds were the result of a security being carried at fair value at December 31, 2015, subsequently changing to being carried at amortized cost during 2016.

Other nonrecurring fair value measurements

As indicated in Note 1, real estate held for sale is measured at the lower of carrying amount or fair value less cost to sell. As of December 31, 2016, the Company has one property held for sale. The property is carried at fair value.

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

 

34

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

5. Investments

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

 

     Carrying
Amount		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses 12
Months or
More		      Gross
Unrealized
Losses less
Than 12
Months		      Estimated
Fair
Value		  

December 31, 2016

               

Unaffiliated bonds:

               

United States Government and agencies

    $ 491,592      $ 76,102      $ —        $ 3,767      $ 563,927  

State, municipal and other government

      103,905        9,498        —          1,447        111,956  

Hybrid securities

      94,244        2,163        10,127        206        86,075  

Industrial and miscellaneous

      4,648,771        255,537        23,365        35,979        4,844,963  

Mortgage and other asset-backed securities

      1,063,452        56,702        3,559        8,736        1,107,858  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     6,401,964        400,002        37,051        50,135        6,714,779  

Unaffiliated preferred stocks

      4,552        101        —          155        4,498  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 6,406,516      $ 400,103      $ 37,051      $ 50,290      $ 6,719,277  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     Carrying
Amount		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses 12
Months or
More		      Gross
Unrealized
Losses less
Than 12
Months		      Estimated
Fair
Value		  

December 31, 2015

               

Unaffiliated bonds:

               

United States Government and agencies

    $ 590,717      $ 77,946      $ 2,029      $ 5,365      $ 661,268  

State, municipal and other government

      124,262        8,764        462        3,547        129,017  

Hybrid securities

      97,931        1,868        13,727        3,438        82,634  

Industrial and miscellaneous

      4,682,570        238,251        56,816        68,292        4,795,714  

Mortgage and other asset-backed securities

      1,356,212        63,921        8,142        4,402        1,407,589  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     6,851,692        390,750        81,176        85,044        7,076,222  

Unaffiliated preferred stocks

      3,269        138        —          68        3,340  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 6,854,961      $ 390,888      $ 81,176      $ 85,112      $ 7,079,562  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

At December 31, 2016 and 2015, 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 96 and 115 securities with a carrying amount of $442,713 and $600,374 and an unrealized loss of $37,051 and $81,176 with an average price of 91.6 and 86.5 (fair value/amortized cost). Of this portfolio, 61.3% and 77.3% were investment grade with associated unrealized losses of $20,301 and $49,579, respectively.

 

35

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 328 and 396 securities with a carrying amount of $1,294,335 and $1,852,998 and an unrealized loss of $50,290 and $85,112 with an average price of 96.1 and 95.4 (fair value/amortized cost). Of this portfolio, 93.8% and 86.5% were investment grade with associated unrealized losses of $44,580 and $52,689, respectively.

At December 31, 2016 and 2015, the Company did not hold any common stocks that had been in continuous loss position for greater than or equal to twelve months.

At December 31, 2016, the Company did not hold any common stocks that had been in continuous loss position for less than twelve months. At December 31, 2015, for common stocks that had been in a continuous loss position for less than twelve months, the Company held 1 security with a cost of $134 and an unrealized loss of $10 with an average price of 92.9 (fair value/cost).

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2016 and 2015 is as follows:

 

     Losses 12
Months or
More		      Losses Less
Than 12
Months		      Total  

December 31, 2016

         

Unaffiliated bonds:

         

United States Government and agencies

    $ —        $ 67,938      $ 67,938  

State, municipal and other government

      —          14,809        14,809  

Hybrid securities

      51,909        7,149        59,058  

Industrial and miscellaneous

      284,790        839,181        1,123,971  

Mortgage and other asset-backed securities

      68,963        311,816        380,779  
  

 

 

     

 

 

     

 

 

  
     405,662        1,240,893        1,646,555  

Unaffiliated preferred stocks

      —          3,152        3,152  
  

 

 

     

 

 

     

 

 

  
   $ 405,662      $ 1,244,045      $ 1,649,707  
  

 

 

     

 

 

     

 

 

  

 

36

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Losses 12
Months or
More		      Losses Less
Than 12
Months		      Total  

December 31, 2015

         

Unaffiliated bonds:

         

United States Government and agencies

    $ 97,431      $ 97,938      $ 195,369  

State, municipal and other government

      3,306        34,287        37,593  

Hybrid securities

      35,431        20,666        56,097  

Industrial and miscellaneous

      249,044        1,244,210        1,493,254  

Mortgage and other asset-backed securities

      133,986        368,829        502,815  
  

 

 

     

 

 

     

 

 

  
   $ 519,198      $ 1,765,930      $ 2,285,128  
  

 

 

     

 

 

     

 

 

  

Unaffiliated preferred stocks

      —          1,956        1,956  

Unaffiliated common stocks

      —          124        124  
  

 

 

     

 

 

     

 

 

  
   $ 519,198      $ 1,768,010      $ 2,287,208  
  

 

 

     

 

 

     

 

 

  

The carrying amount and estimated fair value of bonds at December 31, 2016, by contractual maturity, is 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.

 

     Carrying
Amount		      Estimated
Fair
Value		  

Due in one year or less

    $ 306,265      $ 311,697  

Due after one year through five years

      2,103,103        2,190,077  

Due after five years through ten years

      1,106,209        1,124,860  

Due after ten years

      1,822,935        1,980,287  
  

 

 

     

 

 

  
     5,338,512        5,606,921  

Mortgage and other asset-backed securities

      1,063,452        1,107,858  
  

 

 

     

 

 

  
   $ 6,401,964      $ 6,714,779  
  

 

 

     

 

 

  

The following structured notes were held at December 31, 2016:

 

CUSIP

Identification

    Actual
Cost		      Fair Value      Book / Adjusted
Carrying Value		      Mortgage-
Referenced
Security

44965TAA5

    $ 1,462      $ 1,347      $ 1,463      NO

912810QV3

      39,979        40,972        42,855      NO

912810RA8

      49,933        57,905        52,869      NO

912810RL4

      24,893        26,867        25,602      NO

912810RR1

      1,925        1,800        1,931      NO
  

 

 

     

 

 

     

 

 

     

Total

    $ 118,192      $ 128,891      $ 124,720     
  

 

 

     

 

 

     

 

 

     

 

37

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Number of
5* Securities		      Book / Adjusted
Carrying Value		      Fair
Value		  

December 31, 2016

         

Bonds, amortized cost

      1      $ 3,963      $ 3,920  
  

 

 

     

 

 

     

 

 

  

Total

      1      $ 3,963      $ 3,920  

December 31, 2015

         

Bonds, amortized cost

      1      $ 3,961      $ 3,960  
  

 

 

     

 

 

     

 

 

  

Total

      1      $ 3,961      $ 3,960  

For impairment policies related to non-structured and structured securities, refer to Note 1 under Investments.

There were no loan-backed securities with a recognized OTTI due to intent to sell or lack of intent and ability to hold during the years ended December 31, 2016 and 2015.

The following tables provide the aggregate totals for loan-backed 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.

 

     Amortized Cost
before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year Ended December 31, 2016

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 10,457      $ 390      $ 10,067      $ 9,318  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      —          —          —          —    

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      13,293        462        12,831        12,354  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      3,978        43        3,934        3,947  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 27,728      $ 895      $ 26,832      $ 25,619  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

38

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Amortized Cost
before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year Ended December 31, 2015

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 13,287      $ 890      $ 12,397      $ 11,082  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      14,183        1,751        12,433        11,025  

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      1,356        631        724        664  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 28,826      $ 3,272      $ 25,554      $ 22,771  
  

 

 

     

 

 

     

 

 

     

 

 

  
     Amortized Cost
before Current
Period OTTI		      Recognized
OTTI		      Amortized Cost
After OTTI		      Fair Value  

Year Ended December 31, 2014

            

1st quarter present value of cash flows expected to be less than the amortized cost basis

    $ 12,087      $ 1,432      $ 10,655      $ 10,663  

2nd quarter present value of cash flows expected to be less than the amortized cost basis

      4,546        48        4,498        4,187  

3rd quarter present value of cash flows expected to be less than the amortized cost basis

      28,210        308        27,902        26,600  

4th quarter present value of cash flows expected to be less than the amortized cost basis

      16,062        2,099        13,963        12,937  
  

 

 

     

 

 

     

 

 

     

 

 

  

Aggregate total

    $ 60,905      $ 3,887      $ 57,018      $ 54,387  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

39

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following loan-backed and structured securities were held at December 31, 2016, 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		      Quarter in
which
Impairment
Occurred		  

759676AJ8

    $ 4,284      $ 4,173      $ 112      $ 4,173      $ 3,875        1Q 2016  

75970JAJ5

      5,642        5,387        255        5,387        4,971        1Q 2016  

75970QAH3

      530        507        23        507        472        1Q 2016  

14984WAA8

      4,650        4,306        344        4,306        3,744        3Q 2016  

126380AB0

      8,643        8,525        118        8,525        8,610        3Q 2016  

759676AJ8

      3,978        3,934        43        3,934        3,947        4Q 2016  
        

 

 

           
         $ 895           
        

 

 

           

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, 2016 and 2015 is as follows:

 

     Losses 12
Months or
More		      Losses Less
Than 12
Months		  

Year ended December 31, 2016

      

The aggregate amount of unrealized losses

    $ 3,559      $ 8,888  

The aggregate related fair value of securities with unrealized losses

      68,963        312,042  
     Losses 12
Months or
More		      Losses Less
Than 12
Months		  

Year ended December 31, 2015

      

The aggregate amount of unrealized losses

    $ 8,971      $ 4,402  

The aggregate related fair value of securities with unrealized losses

      135,616        368,829  

 

40

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Detail of net investment income is presented below:

 

     Year Ended December 31  
     2016      2015      2014  

Income:

         

Bonds

    $ 321,213      $ 333,020      $ 358,641  

Preferred stocks

      148        198        194  

Mortgage loans on real estate

      47,305        37,235        37,297  

Policy loans

      7,319        7,211        7,107  

Cash, cash equivalents and short-term investments

      2,412        479        244  

Derivatives

      21,572        18,678        17,636  

Other invested assets

      (308 )       2,183        3,742  

Other

      13,144        19,310        38  
  

 

 

     

 

 

     

 

 

  

Gross investment income

      412,805        418,314        424,899  

Less investment expenses

      17,277        17,230        14,549  
  

 

 

     

 

 

     

 

 

  

Net investment income

    $ 395,528      $ 401,084      $ 410,350  
  

 

 

     

 

 

     

 

 

  

Proceeds from sales and other disposals (excluding maturities) of bonds and preferred stock and related gross realized capital gains and losses were as follows:

 

     Year Ended December 31  
     2016      2015      2014  

Proceeds

    $ 1,682,509      $ 1,835,590      $ 1,024,169  
  

 

 

     

 

 

     

 

 

  

Gross realized gains

    $ 26,490      $ 26,268      $ 12,628  

Gross realized losses

      (15,183 )       (31,950 )       (15,724 ) 
  

 

 

     

 

 

     

 

 

  

Net realized capital gains (losses)

    $ 11,307      $ (5,682 )     $ (3,096 ) 
  

 

 

     

 

 

     

 

 

  

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, 2016, 2015 and 2014 of $8,093, $8,067 and $3,999, respectively.

 

41

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Realized  
     Year Ended December 31  
     2016      2015      2014  

Bonds

    $ 3,214      $ (14,825 )     $ (7,095 ) 

Preferred stocks

      —          1,077        —    

Common stocks

      32        (68 )       522  

Mortgage loans on real estate

      (698 )       21        —    

Cash, cash equivalents and short-term investments

      9        (11 )       1  

Derivatives

      (16,280 )       (18,751 )       (25,808 ) 

Other invested assets

      (12,505 )       8,099        7,828  
  

 

 

     

 

 

     

 

 

  
     (26,228 )       (24,458 )       (24,552 ) 

Federal income tax effect

      (2,833 )       (3,518 )       (5,405 ) 

Transfer to interest maintenance reserve

      (6,516 )       (2,507 )       (3,617 ) 
  

 

 

     

 

 

     

 

 

  

Net realized capital (losses) gains on investments

    $ (35,577 )     $ (30,483 )     $ (33,574 ) 
  

 

 

     

 

 

     

 

 

  

At December 31, 2016 and 2015, the Company had no recorded investment in restructured securities. There were no capital gains (losses) taken as a direct result of restructures in 2016, 2015 and 2014. The Company often has other-than-temporarily impaired a security prior to the restructure date. These other-than-temporary impairments are not included in the calculation of restructure related losses and are accounted for as a realized loss, reducing the cost basis of the security involved.

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  
     2016      2015      2014  

Bonds

    $ 4,433      $ (2,493 )     $ 7,613  

Common stocks

      10        (140 )       (208 ) 

Affiliated entities

      136        (294 )       (366 ) 

Cash, cash equivalents and short-term investments

      (9 )       —          —    

Derivatives

      (30,961 )       9,972        40,517  

Other invested assets

      10,833        (8,190 )       (4,548 ) 
  

 

 

     

 

 

     

 

 

  

Change in unrealized capital (losses) gains, before taxes

      (15,558 )       (1,145 )       43,008  

Taxes on unrealized capital (losses) gains

      5,366        (3,558 )       1,124  
  

 

 

     

 

 

     

 

 

  

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

    $ (20,924 )     $ 2,413      $ 41,884  
  

 

 

     

 

 

     

 

 

  

 

42

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The credit quality of mortgage loans by type of property for the year ended December 31, 2016 was as follows:

 

     Farm      Commercial      Total  

AAA - AA

    $ —        $ 493,886      $ 493,886  

A

      10,795        637,553        648,348  

BBB

      2,486        86,810        89,296  

BB

      —          11,626        11,626  
  

 

 

     

 

 

     

 

 

  
   $ 13,281      $ 1,229,875      $ 1,243,156  
  

 

 

     

 

 

     

 

 

  

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

During 2016 and 2015, respectively, the Company issued mortgage loans with a maximum interest rate of 6.23% and 5.30%, and a minimum interest rate of 3.60% and 3.51% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2016 at the time of origination or acquisitions was 79%. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated during the year ending December 31, 2015 at the time of origination was 73%. During 2016 and 2015, the Company did not reduce the interest rate on any outstanding mortgage loan. During 2016, the Company issued one farm mortgage loan with an interest rate of 4.40%.

The following tables provide the age analysis of mortgage loans aggregated by type:

 

            Residential      Commercial                

December 31, 2016

    Farm      Insured      All Other      Insured      All Other      Mezzanine      Total  

Recorded Investment (All)

                     

(a) Current

    $ 10,795      $ —        $  —        $  —        $ 1,229,875      $  —        $ 1,240,670  

(b) 30-59 Days Past Due

      2,486        —          —          —          —          —          2,486  

(c) 60-89 Days Past Due

      —          —          —          —          —          —          —    

(d) 90-179 Days Past Due

      —          —          —          —          —          —          —    

(e) 180+ Days Past Due

      —          —          —          —          —          —          —    
            Residential      Commercial                

December 31, 2015

    Farm      Insured      All Other      Insured      All Other      Mezzanine      Total  

Recorded Investment (All)

                     

(a) Current

    $ 7,828      $  —        $  —        $  —        $ 937,916      $ 1,992      $ 947,736  

(b) 30-59 Days Past Due

      2,572        —          —          —          —          —          2,572  

(c) 60-89 Days Past Due

      —          —          —          —          —          —          —    

(d) 90-179 Days Past Due

      —          —          —          —          —          —          —    

(e) 180+ Days Past Due

      —          —          —          —          —          —          —    

The Company did not have any impaired loans at December 31, 2016 or 2015. The Company did not hold an allowance for credit losses on mortgage loans at December 31, 2016, 2015 or 2014.

 

43

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis.

During 2016, one mortgage loan in the amount of $3,600 was foreclosed and transferred to real estate. No mortgage loan foreclosures occurred during 2015. At December 31, 2016 and 2015, the company held a mortgage loan loss reserve in the AVR of $12,888 and $9,171, 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  
     2016     2015          2016     2015  

South Atlantic

      26 %      24 %    Apartment      51 %      52 % 

Pacific

      23       22     Retail      16       16  

Middle Atlantic

      12       9     Industrial      12       14  

Mountain

      11       14     Office      12       13  

W. North Central

      10       12     Medical      4       4  

W. South Central

      9       12     Other      4       —    

E. North Central

      5       4     Agricultural      1       1  

E. South Central

      4       3         

New England

      —         —           

During 2016 the Company recognized $10,869 of impairment writes downs for its investments in joint ventures and limited partnerships. During 2015 and 2014, the Company did not recognize any impairment write-downs for its investments in joint ventures and limited partnerships.

At December 31, 2016, the Company had ownership interest in seven LIHTC investments. The remaining years of unexpired tax credits ranged from eight to thirteen and the properties were not subject to regulatory review. The length of time remaining for the holding period ranged from one to sixteen years. The amount of contingent equity commitments expected to be paid during the years 2017 to 2019 is $146,694. LIHTC tax credits recognized in 2016 was $2,416, and other LIHTC tax benefits recognized in 2016 was $1,231. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

At December 31, 2015, the Company had ownership interest in two LIHTC investments. The remaining years of unexpired tax credits ranged from one to nine and the properties were not subject to regulatory review. The length of time remaining for the holding period ranged from two to ten years. There are no contingent equity commitments expected to be paid in the future. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

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, was as follows:

 

44

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     2016      2015  

Fair value - positive

    $ 89,939      $ 77,911  

Fair value - negative

      (95,627 )       (42,152 ) 

For the years ended December 31, 2016, 2015 and 2014, the Company recorded unrealized gains (losses) of $(11,706), $17,627 and $8,313, respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized gain (loss). The Company did not recognize any unrealized gains or losses during 2016, 2015 or 2014 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

Summary of realized gain (losses) by derivative type for year-end December 31, is as follows:

 

     2016      2015      2014  

Swaps:

         

Interest rate

    $ 30,336      $ (10,391 )     $ 310  

Credit

      861        24        (676 ) 

Total return

      (26,807 )       (638 )       (823 ) 
  

 

 

     

 

 

     

 

 

  

Total swaps

    $ 4,390      $ (11,005 )     $ (1,189 ) 
  

 

 

     

 

 

     

 

 

  

Foreign currency forwards

      —          931        493  

Futures—net positions

      (20,669 )       (8,677 )       (25,113 ) 

Lehman settlements

      108        139        —    
  

 

 

     

 

 

     

 

 

  

Total realized (losses) gains

    $ (16,171 )     $ (18,612 )     $ (25,809 ) 
  

 

 

     

 

 

     

 

 

  

Fair value of replicated assets and credit default swaps (as underlying), as of December 31, is as follows:

 

     Year End December 31  
     2016      2015      2014  

Replicated assets

    $ 644,760      $ 666,362      $ 628,483  

Credit default

      9,105        7,691        14,591  

Credit gain (losses) to credit swap transactions (which are primary replication transactions), as of December 31, is as follows:

 

     Year End December 31  
     2016      2015      2014  

Capital gains (losses)

    $ 861      $ 23      $ 676  

As stated in Note 1, the Company replicates investment grade corporate bonds or sovereign debt 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, the Company has recourse provisions from the proceeds of the bankruptcy settlement of the underlying entity or by the sale of the underlying bond. As of December 31, 2016, credit default swaps, used in replicating corporate bonds or sovereign debt are as follows:

 

45

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

            Maximum         
            Future Payout      Current Fair  

Deal, Receive (Pay), Underlying

    Maturity Date      (Estimated)      Value  

51410,SWAP, USD 1 / (USD 0), :US168863A S74

      3/20/2017      $ 10,000      $ 16  

51409,SWAP, USD 1 / (USD 0), :XS0203685788

      3/20/2017        11,000        17  

51412,SWAP, USD 1 / (USD 0), :US50064FAD69

      3/20/2017        10,000        19  

51411,SWAP, USD 1 / (USD 0), :USY6826RAA06

      3/20/2017        12,000        17  

51413,SWAP, USD 1 / (USD 0), :US168863A S74

      3/20/2017        10,000        16  

51414,SWAP, USD 1 / (USD 0), :CDX-NAIG S18V1-5Y

      6/20/2017        20,000        87  

51415,SWAP, USD 1 / (USD 0), :CDX-NAIG S18V1-5Y

      6/20/2017        20,000        87  

43375,SWAP, USD 1 / (USD 0), :CDX-NAIG S18V1-5Y

      6/20/2017        5,000        22  

51416,SWAP, USD 1 / (USD 0), :US836205A J33

      9/20/2017        8,500        46  

43612,SWAP, USD 1 / (USD 0), :US455780A Q93

      9/20/2017        2,000        8  

46535,SWAP, USD 1 / (USD 0), :XS0292653994

      12/20/2017        15,000        130  

59021,SWAP, USD 1 / (USD 0), :CDX-NAIGS19V1-5Y

      12/20/2017        20,000        173  

59022,SWAP, USD 1 / (USD 0), :US084664BN 03

      12/20/2017        25,000        192  

49133,SWAP, USD 5 / (USD 0), :US345370BX76

      12/20/2017        10,000        462  

49374,SWAP, USD 1 / (USD 0), :US246688A F27

      12/20/2017        10,000        90  

49893,SWAP, USD 1 / (USD 0), :US29250R AC07

      12/20/2017        10,000        35  

50058,SWAP, USD 1 / (USD 0), :US444859A U63

      12/20/2017        10,000        88  

50222,SWAP, USD 1 / (USD 0), :US293791A D17

      12/20/2017        10,000        70  

60228,SWAP, USD 1 / (USD 0), :US026874A Z07

      6/20/2018        5,000        59  

78320,SWAP, USD 5 / (USD 0), :DE000A0TK UU3

      6/20/2019        10,000        1,130  

78183,SWAP, USD 5 / (USD 0), :US125581GL 68

      6/20/2019        5,000        521  

79113,SWAP, USD 5 / (USD 0), :US37045V AC46

      6/20/2019        10,000        1,034  

79606,SWAP, USD 5 / (USD 0), :US459745GF 62

      6/20/2019        10,000        1,038  

 

46

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

111718,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        2,800        (93 ) 

111728,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        1,400        (5 ) 

111731,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        1,400        (47 ) 

111734,SWAP, USD 1 / (USD 0), :US836205AN45

      6/20/2020        1,400        (21 ) 

111737,SWAP, USD 1 / (USD 0), :US105756BV13

      6/20/2020        1,400        (37 ) 

111743,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        1,400        (5 ) 

111831,SWAP, USD 1 / (USD 0), :US715638AP79

      6/20/2020        1,400        15  

111841,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2020        1,400        (4 ) 

111844,SWAP, USD 1 / (USD 0), :US195325BB02

      6/20/2020        1,400        (5 ) 

111897,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        1,400        (47 ) 

112137,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        2,800        6  

112152,SWAP, USD 1 / (USD 0), :US900123AL40

      6/20/2020        1,400        (47 ) 

112227,SWAP, USD 1 / (USD 0), :USY6826RAA06

      9/20/2020        2,800        (2 ) 

112303,SWAP, USD 1 / (USD 0), :US455780AU06

      9/20/2020        1,400        (7 ) 

112327,SWAP, USD 1 / (USD 0), :US91086QAW87

      9/20/2020        1,400        (7 ) 

112339,SWAP, USD 1 / (USD 0), :US25271CAJ18

      9/20/2020        6,650        (421 ) 

112364,SWAP, USD 1 / (USD 0), :US465410AH18

      6/20/2020        1,400        (15 ) 

112430,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        1,400        3  

112572,SWAP, USD 1 / (USD 0), :US105756BV13

      6/20/2020        1,400        (37 ) 

113397,SWAP, USD 1 / (USD 0), :US88322KAC53

      9/20/2020        1,400        22  

113436,SWAP, USD 1 / (USD 0), :US455780AU06

      9/20/2020        1,400        (7 ) 

116039,SWAP, USD 1 / (USD 0), :ES0413900384

      9/20/2020        6,665        7  

116934,SWAP, USD 1 / (USD 0), :US698299AD63

      9/20/2020        3,200        7  

120678,SWAP, USD 5 / (USD 0), :US345370BX76

      9/20/2020        10,000        1,421  

119324,SWAP, USD 1 / (USD 0), :US59156RAX61

      9/20/2020        15,000        203  

133645,SWAP, USD 1 / (USD 0), :US91086QAW87

      12/20/2020        3,600        (28 ) 

133654,SWAP, USD 1 / (USD 0), :US195325BB02

      12/20/2020        1,800        (17 ) 

133657,SWAP, USD 1 / (USD 0), :US715638AP79

      12/20/2020        1,800        15  

133739,SWAP, USD 1 / (USD 0), :US715638AP79

      12/20/2020        5,000        40  

133742,SWAP, USD 1 / (USD 0), :US712219AG90

      12/20/2020        5,000        14  

133878,SWAP, USD 1 / (USD 0), :US712219AG90

      12/20/2020        5,000        14  

133888,SWAP, USD 1 / (USD 0), :US698299AD63

      12/20/2020        5,000        1  

134317,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        10,000        (4 ) 

134318,SWAP, USD 1 / (USD 0), :US445545AD87

      12/20/2020        2,500        (1 ) 

134822,SWAP, USD 1 / (USD 0), :US455780AU06

      12/20/2020        8,000        (66 ) 

134929,SWAP, USD 1 / (USD 0), :US168863AV04

      12/20/2020        5,000        65  

137181,SWAP, USD 1 / (USD 0), :US718286AP29

      12/20/2020        2,500        18  

151442,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2021        15,000        (222 ) 

151679,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2021        20,000        (296 ) 

151451,SWAP, USD 1 / (USD 0), :US91086QAW87

      6/20/2021        5,000        (74 ) 

153790,SWAP, USD 1 / (USD 0), :CDX-NAIGS22V1-5Y

      6/20/2019        10,000        153  

164370,SWAP, USD 1 / (USD 0), :CDX-NAIGS26V1-5Y

      6/20/2021        10,000        164  

173566,SWAP, USD 5 / (USD 0), :US37045VAD29

      12/20/2021        15,000        2,390  

186523,SWAP, USD 1 / (USD 0), :XS0114288789

      12/20/2021        840        (29 ) 

186527,SWAP, USD 5 / (USD 0), :USP04808AE45

      12/20/2021        560        (3 ) 

164834,SWAP, USD 1 / (USD 0), :US74432QAB14

      9/20/2020        20,000        299  

164835,SWAP, USD 1 / (USD 0), :US36962G3H54

      9/20/2023        20,000        437  
     

 

 

     

 

 

  
      $ 503,815      $ 9,104  
     

 

 

     

 

 

  

 

47

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the Company’s outstanding financial instruments with on and off-balance sheet risks, shown in notional amounts, are summarized as follows:

 

     Notional Amount  
     2016      2015  

Interest rate and currency swaps:

      

Receive fixed—pay fixed

    $ 10,508      $ 544,124  

Receive fixed—pay floating

      15,902        —    

Interest rate swaps:

      

Receive fixed—pay fixed

      1,210,884        364,069  

Receive fixed—pay floating

      1,514,250        1,335,250  

Receive floating—pay fixed

      1,654,500        909,500  

Receive floating—pay floating

      425,236        308,735  

 

48

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables show the pledged or restricted assets as of December 31, 2016 and 2015, respectively:

 

         Gross Restricted (Admitted & Nonadmitted)  
         2016  
                G/A Supporting      Total S/A      S/A Assets         
         Total General      Separate Account      Restricted      Supporting G/A         
   

Restricted Asset Category

    Account (G/A)      (S/A) Activity      Assets      Activity      Total  

a.

  

Subject to contractual obligation for which liability is not shown

    $ —        $ —        $ —        $ —          —    

b.

  

Collateral held under security lending agreements

      307,744        —          —          —          307,744  

c.

  

Subject to repurchase agreements

      —          —          —          —          —    

d.

  

Subject to reverse repurchase agreements

      —          —          —          —          —    

e.

  

Subject to dollar repurchase agreements

      20,325        —          —          —          20,325  

f.

  

Subject to dollar reverse repurchase agreements

      —          —          —          —          —    

g.

  

Placed under option contracts

      —          —          —          —          —    

h.

  

Letter stock or securities restricted as to sale - excluding FHLB capital stock

      —          —          —          —          —    

i.

  

FHLB capital stock

      —          —          —          —          —    

j.

  

On deposit with states

      2,613        —          —          —          2,613  

k.

  

On deposit with other regulatory bodies

      —          —          —          —          —    

l.

  

Pledged as collateral to FHLB (including assets backing funding agreements)

      —          —          —          —          —    

m.

  

Pledged as collateral not captured in other categories

      80,398        —          —          —          80,398  

n.

   Other restricted assets      —          —          —          —          —    
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

o.

   Total Restricted Assets    $ 411,080      $ —        $ —        $ —          411,080  
    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

49

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

        Gross (Admitted & Nonadmitted) Restricted     Percentage  
                                Gross (Admitted &     Admitted  
                                Nonadmitted)     Restricted to  
                          Total Admitted     Restricted     Total  
        Total As of     Increase/     Total Nonadmitted     Restricted     to Total     Admitted  
   

Restricted Asset Category

   12/31/15     (Decrease)     Restricted     (5 minus 8)     Assets     Assets  

a.

  

Subject to contractual obligation for which liability is not shown

   $ —       $ —       $ —       $ —         0.00 %      0.00 % 

b.

  

Collateral held under security lending agreements

     433,773       (126,029 )      —         307,744       0.95 %      0.95 % 

c.

  

Subject to repurchase agreements

     —         —         —         —         0.00 %      0.00 % 

d.

  

Subject to reverse repurchase agreements

     —         —         —         —         0.00 %      0.00 % 

e.

  

Subject to dollar repurchase agreements

     31,307       (10,982 )      —         20,325       0.06 %      0.06 % 

f.

  

Subject to dollar reverse repurchase agreements

     —         —         —         —         0.00 %      0.00 % 

g.

  

Placed under option contracts

     —         —         —         —         0.00 %      0.00 % 

h.

  

Letter stock or securities restricted as to sale - excluding FHLB capital stock

     1,792       (1,792 )      —         —         0.00 %      0.00 % 

i.

  

FHLB capital stock

     —         —         —         —         0.00 %      0.00 % 

j.

  

On deposit with states

     2,621       (8 )      —         2,613       0.01 %      0.01 % 

k.

  

On deposit with other regulatory bodies

     —         —         —         —         0.00 %      0.00 % 

l.

  

Pledged as collateral to FHLB (including assets backing funding agreements)

     —         —         —         —         0.00 %      0.00 % 

m.

  

Pledged as collateral not captured in other categories

     35,958       44,440       —         80,398       0.25 %      0.25 % 

n.

  

Other restricted assets

     —         —         —         —         0.00 %      0.00 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

o.

  

Total Restricted Assets

   $ 505,451     $ (94,371 )    $ —       $ 411,080       1.27 %      1.27 % 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

50

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table shows the pledged or restricted assets in other categories as of December 31, 2016 and 2015, respectively:

 

     Gross (Admitted & Nonadmitted) Restricted  
     Current Year  
     1      2      3      4      5  
                   Total Separate                
                   Account (S/A)      S/A Assets         
     Total General      G/A Supporting      Restricted      Supporting G/A      Total  

Description of Assets

    Account (G/A)      S/A Activity (a)      Assets      Activity (b)      (1 plus 3)  

Derivatives

    $ 80,398      $ —        $ —        $ —          80,398  

Secured Funding Agreements

      —          —          —          —          —    

AMBAC

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total (c)

    $ 80,398      $ —        $ —        $ —          80,398  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     Gross (Admitted & Nonadmitted)
Restricted		      Percentage  
     6      7      8      9     10  
                          Gross     Admitted  
                          (Admitted &     Restricted to  
            Increase/      Total Current      Nonadmitted)     Total  
     Total as of      (Decrease)      Year Admitted      Restricted to     Admitted  

Description of Assets

    12/31/2015      (5 minus 6)      Restricted      Total Assets     Assets  

Derivatives

    $ 35,958      $ 44,440      $ 80,398        0.25 %      0.25 % 

Secured Funding Agreements

      —          —          —          0.00 %      0.00 % 

AMBAC

      —          —          —          0.00 %      0.00 % 
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Total (c)

    $ 35,958      $ 44,440      $ 80,398        0.25 %      0.25 % 
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

 

(a) Subset of column 1
(b) Subset of column 3
(c) Total Line for Columns 1 through 7 should equal 5H(1)m Columns 1 through 7 respectively and Total Line for Columns 8 through

 

51

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table shows the collateral received and reflected as assets within the financial statements as of December 31, 2016.

 

     1      2      3     4  
     Book Adjusted             % of BACV to Total        
     Carrying Value             Assets (Admitted     % of BACV to Total  

Collateral Assets

    ((BACV)      Fair Value      and Nonadmitted*)     Admited Assets **  

a. Cash

    $ 49,719      $ 49,719        0.55 %      0.55 % 

b. Schedule D, Part 1

      —          —          —         —    

c. Schedule D, Part 2, Section 1

      —          —          —         —    

d. Schedule D, Part 2, Section 2

      —          —          —         —    

e. Schedule B

      —          —          —         —    

f. Schedule A

      —          —          —         —    

g. Schedule BA, Part 1

      —          —          —         —    

h. Schedule DL, Part 1

      307,732        307,732        3.38 %      3.41 % 

i. Other

      12,736        12,736        0.14 %      0.14 % 
  

 

 

     

 

 

     

 

 

    

 

 

  

j. Total Collateral Assets

    $ 370,187      $ 370,187        4.07 %      4.10 % 

 

* Column 1 divided by Asset Page, Line 26 (Column 1)
** Column 1 divided by Asset Page, Line 26 (Column 3)

 

            12  
            % of Liability to  
     Amount      Total Liabilities*  

k. Recognized Obligation to

      

    Return Collateral Asset

      370,236        4.66 % 

 

* Column 1 divided by Liability Page, Line 26 (Column 1)

6. 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 earned reflect the following reinsurance amounts:

 

     Year Ended December 31  
     2016      2015      2014  

Direct premiums

    $ 5,786,774      $ 5,821,086      $ 5,452,910  

Reinsurance assumed—non affiliates

      529,283        510,492        550,438  

Reinsurance assumed—affiliates

      50        65        41  

Reinsurance ceded—non affiliates

      (341,356 )       (317,940 )       (357,388 ) 

Reinsurance ceded—affiliates

      (199,490 )       (200,709 )       (206,355 ) 
  

 

 

     

 

 

     

 

 

  

Net premiums earned

    $ 5,775,260      $ 5,812,994      $ 5,439,646  
  

 

 

     

 

 

     

 

 

  

 

52

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded to affiliates at December 31, 2016 and 2015 of $1,577,030 and $1,579,551, respectively.

The Company received reinsurance recoveries in the amounts of $430,476, $427,569 and $447,903 during 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $174,979 and $156,350, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2016 and 2015 of $2,281,757 and $2,079,702, respectively.

The Company did not enter into any new reinsurance agreements in which a reserve credit was taken during the years ended December 31, 2016, 2015 and 2014.

During 2016, 2015 and 2014, amortization of deferred gains associated with previously transacted reinsurance agreements was released into income in the amount of $93,916 ($61,046 after tax), $52,697 ($34,253 after tax) and $12,740 ($8,281 after tax), respectively.

The Company is reviewing historical treaty language of yearly renewable treaty agreements with the New York Department of Financial Service under an interpretation which would result in higher gross reserves. These reinsurance contracts are fully ceded and would not impact the capital and surplus of the Company.

7. Income Taxes

The net deferred income tax asset at December 31, 2016 and 2015 is comprised of the following components:

 

     December 31, 2016  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 109,009      $ 15,603      $ 124,612  

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      109,009        15,603        124,612  

Deferred Tax Assets Nonadmitted

      47,310        —          47,310  
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      61,699        15,603        77,302  

Deferred Tax Liabilities

      16,273        12,118        28,391  
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ 45,426      $ 3,485      $ 48,911  
  

 

 

     

 

 

     

 

 

  
     December 31, 2015  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 112,987      $ 18,660      $ 131,647  

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      112,987        18,660        131,647  

Deferred Tax Assets Nonadmitted

      43,588        —          43,588  
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      69,399        18,660        88,059  

Deferred Tax Liabilities

      18,158        15,443        33,601  
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ 51,241      $ 3,217      $ 54,458  
  

 

 

     

 

 

     

 

 

  

 

53

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

            Change         
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ (3,978 )     $ (3,057 )     $ (7,035 ) 

Statutory Valuation Allowance Adjustment

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Adjusted Gross Deferred Tax Assets

      (3,978 )       (3,057 )       (7,035 ) 

Deferred Tax Assets Nonadmitted

      3,722        —          3,722  
  

 

 

     

 

 

     

 

 

  

Subtotal (Net Deferred Tax Assets)

      (7,700 )       (3,057 )       (10,757 ) 

Deferred Tax Liabilities

      (1,885 )       (3,325 )       (5,210 ) 
  

 

 

     

 

 

     

 

 

  

Net Admitted Deferred Tax Assets

    $ (5,815 )     $ 268      $ (5,547 ) 
  

 

 

     

 

 

     

 

 

  

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

Deferred Tax Assets:

 

     Year Ended December 31         
     2016      2015      Change  

Ordinary

         

Discounting of unpaid losses

    $ 193      $ 120      $ 73  

Unearned premium reserve

      306        357        (51 ) 

Policyholder reserves

      61,796        63,369        (1,573 ) 

Investments

      2,320        3,200        (880 ) 

Deferred acquisition costs

      31,621        29,184        2,437  

Compensation and benefits accrual

      1,501        331        1,170  

Receivables—nonadmitted

      3,967        6,896        (2,929 ) 

Section 197 Intangible Amortization

      1,885        2,232        (347 ) 

Assumption Reinsurance

      2,895        3,722        (827 ) 

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

      2,525        3,576        (1,051 ) 
  

 

 

     

 

 

     

 

 

  

Subtotal

      109,009        112,987        (3,978 ) 

Statutory valuation allowance adjustment

      —          —          —    

Nonadmitted

      47,310        43,588        3,722  
  

 

 

     

 

 

     

 

 

  

Admitted ordinary deferred tax assets

      61,699        69,399        (7,700 ) 

Capital:

         

Investments

      15,603        18,660        (3,057 ) 

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

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Subtotal

      15,603        18,660        (3,057 ) 

Statutory valuation allowance adjustment

      —          —          —    

Nonadmitted

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Admitted capital deferred tax assets

      15,603        18,660        (3,057 ) 
  

 

 

     

 

 

     

 

 

  

Admitted deferred tax assets

    $ 77,302      $ 88,059      $ (10,757 ) 
  

 

 

     

 

 

     

 

 

  

 

54

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Year Ended December 31         
     2016      2015      Change  

Deferred Tax Liabilities:

         

Ordinary

         

Investments

    $ 1,461      $ 2,083      $ (622 ) 

§807(f) adjustment

      5,267        5,359        (92 ) 

Reinsurance Ceded

      9,545        10,716        (1,171 ) 

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

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Subtotal

      16,273        18,158        (1,885 ) 

Capital

         

Investments

      12,118        15,443        (3,325 ) 

Real estate

      —          —          —    

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

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Subtotal

      12,118        15,443        (3,325 ) 
  

 

 

     

 

 

     

 

 

  

Deferred tax liabilities

      28,391        33,601        (5,210 ) 
  

 

 

     

 

 

     

 

 

  

Net deferred tax assets/liabilities

    $ 48,911      $ 54,458      $ (5,547 ) 
  

 

 

     

 

 

     

 

 

  

The Company did not report a valuation allowance for deferred income tax assets as of December 31, 2016 or 2015.

 

55

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

As discussed in Note 1, for the years ended December 31, 2016 and 2015 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, 2016  
               Ordinary      Capital      Total  
Admission Calculation Components SSAP No. 101         
2(a)       Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks      $41,910        $7,001        $48,911  
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)      —          —          —    
   1.    Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date      —          —          —    
   2.    Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold      XXX        XXX        156,182  
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      19,789        8,602        28,391  
        

 

 

     

 

 

     

 

 

  
2(d)       Deferred Tax Assets Admitted as the result of application of SSAP No. 101      $61,699        $15,603        $77,302  
        

 

 

     

 

 

     

 

 

  
              

December 31, 2015

  
               Ordinary      Capital      Total  
Admission Calculation Components SSAP No. 101        
2(a)       Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks      $45,173        $9,285        $54,458  
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)      —          —          —    
   1.    Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date      —          —          —    
   2.    Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold      XXX        XXX        166,928  
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      24,226        9,375        33,601  
        

 

 

     

 

 

     

 

 

  
2(d)       Deferred Tax Assets Admitted as the result of application of SSAP No. 101      $69,399        $18,660        $88,059  
        

 

 

     

 

 

     

 

 

  

 

56

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

             Ordinary      Change
Capital		      Total  
Admission Calculation Components SSAP No. 101        
2(a)    

Federal Income Taxes Paid in Prior Years

Recoverable Through Loss Carrybacks

      $(3,263)        $(2,284)        $(5,547)  
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)      —          —          —    
  1.   Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date      —          —          —    
  2.   Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold      XXX        XXX        (10,746)  
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      (4,437)        (773)        (5,210)  
      

 

 

     

 

 

     

 

 

  
2(d)     Deferred Tax Assets Admitted as the result of application of SSAP No. 101      $(7,700)        $(3,057)        $(10,757)  
      

 

 

     

 

 

     

 

 

  

 

     December 31        
     2016     2015     Change  

Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount

      1188 %      1197 %      -9 % 
  

 

 

    

 

 

    

 

 

  

Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold Limitation in 2(b)2 above

    $ 1,043,379     $ 1,112,853     $ (69,474 ) 
  

 

 

    

 

 

    

 

 

  

The impact of tax planning strategies at December 31, 2016 and 2015 was as follows:

 

    

December 31, 2016

  
     Ordinary
Percent		     Capital
Percent		     Total Percent  

Impact of Tax Planning Strategies:

       

(% of Total Adjusted Gross DTAs)

      0 %      0 %      0 % 
  

 

 

    

 

 

    

 

 

  

(% of Total Net Admitted Adjusted Gross DTAs)

      0 %      0 %      0 % 
  

 

 

    

 

 

    

 

 

  

 

57

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31, 2015  
     Ordinary
Percent		     Capital
Percent		     Total
Percent		  

Impact of Tax Planning Strategies:

       

(% of Total Adjusted Gross DTAs)

      0 %      0 %      0 % 
  

 

 

    

 

 

    

 

 

  

(% of Total Net Admitted Adjusted Gross DTAs)

      0 %      0 %      0 % 
  

 

 

    

 

 

    

 

 

  

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         
     2015      2014      Change  

Current Income Tax

         

Federal

    $ 54,965      $ 73,027      $ (18,062 ) 

Foreign

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Subtotal

      54,965        73,027        (18,062 ) 
  

 

 

     

 

 

     

 

 

  

Federal income tax on net capital gains

      3,518        5,405        (1,887 ) 

Utilization of capital loss carry-forwards

      —          —          —    

Other

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Federal and foreign income taxes incurred

    $ 58,483      $ 78,432      $ (19,949 ) 
  

 

 

     

 

 

     

 

 

  
     Year Ended December 31         
     2016      2015      Change  

Current Income Tax

         

Federal

    $ 42,387      $ 54,965      $ (12,578 ) 

Foreign

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Subtotal

      42,387        54,965        (12,578 ) 
  

 

 

     

 

 

     

 

 

  

Federal income tax on net capital gains

      2,834        3,518        (684 ) 

Utilization of capital loss carry-forwards

      —          —          —    

Other

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Federal and foreign income taxes incurred

    $ 45,221      $ 58,483      $ (13,262 ) 
  

 

 

     

 

 

     

 

 

  

 

58

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income before tax as follows:

 

     Year Ended December 31  
     2016     2015     2014  

Current income taxes incurred

    $ 45,221     $ 58,483     $ 78,433  

Change in deferred income taxes

(without tax on unrealized gains and losses)

      (3,541 )      22,410       (42,820 ) 
  

 

 

    

 

 

    

 

 

  

Total income tax reported

    $ 41,680     $ 80,893     $ 35,613  
  

 

 

    

 

 

    

 

 

  

Income before taxes

    $ 276,716     $ 320,866     $ 105,979  
     35.00 %      35.00 %      35.00 % 
  

 

 

    

 

 

    

 

 

  

Expected income tax expense (benefit) at 35% statutory rate

    $ 96,851     $ 112,303     $ 37,093  

Increase (decrease) in actual tax reported resulting from:

       

Dividends received deduction

      (8,345 )      (5,707 )      (5,523 ) 

Tax credits

      (2,925 )      (2,188 )      (1,799 ) 

Tax adjustment for IMR

      (8,174 )      (10,462 )      (3,969 ) 

Surplus adjustment for in-force ceded

      (21,366 )      (11,988 )      (2,898 ) 

Nondeductible expenses

      35       295       29  

Deferred tax benefit on other items in surplus

      (7,243 )      179       12,956  

Provision to return

      (2,069 )      (803 )      14  

Dividends from certain foreign corporations

      137       141       80  

Audit Adjustment—Permanent

      (4,972 )      —         —    

Other

      (249 )      (877 )      (371 ) 
  

 

 

    

 

 

    

 

 

  

Total income tax reported

    $ 41,680     $ 80,893     $ 35,612  
  

 

 

    

 

 

    

 

 

  

The Company’s federal income tax return is consolidated with other included affiliated companies. 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 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 carry forward 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 2016.

As of December 31, 2016 and 2015, the Company had no operating loss, capital loss, or tax credit carryforwards available for tax purposes.

The Company incurred income taxes of $52,043, $58,874, and $80,961 during 2016, 2015, and 2014, respectively, which will be available for recoupment in the event of future net losses.

The amount of tax contingencies calculated for the Company as of December 31, 2016 and 2015 is $1,445 and $1,129, respectively. The total amount of the tax contingencies that if recognized, would affect the effective income tax rate is $1,445. The Company classifies interest and penalties related to income taxes

 

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

as income tax expense. The Company’s interest (benefit) expense related to income taxes for the years ending in December 31, 2016, 2015, and 2014 is $(36), $28, and $1, respectively. The total interest payable balance as of December 31, 2016 and 2015 is $241 and $29, respectively. The Company recorded no liability for penalties. It is not anticipated that the total amounts of unrecognized tax benefits will significantly increase within twelve months of the reporting date.

During 2016 the company modified its calculation of dividends that are eligible for the dividends received deduction. This resulted in recording a permanent tax benefit of $4,770 in the Company’s 2016 financial statements for years 2011 – 2015. This has been treated as a change in estimate, the impact on future years is not currently determinable.

The Company’s federal income tax returns have been examined by the Internal Revenue Service and closing agreements have been executed through 2008. We expect receivables and payables for 2005-2008 to be settled in early 2017. An examination is in progress for the year 2009 through 2013. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions.

8. Policy and Contract Attributes

Participating life insurance policies were issued by the Company 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.

For the years ended December 31, 2016, 2015 and 2014, there were no premiums for participating life insurance policies. The Company accounts for its policyholder dividends based on dividend scales and experience of the policies. The Company did not pay any dividends to policyholders during 2016, 2015 or 2014.

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 and deposit fund products. There may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on these products, by withdrawal characteristics, is summarized as follows:

 

     December 31 2016  
     General
Account		      Separate Account
with Guarantees		      Separate Account
Non-Guaranteed		      Total      Percent  

Subject to discretionary withdrawal

               

With fair value adjustment

    $ 761,466      $ 87,114      $ —        $ 848,580        3 % 

At book value less surrender charge of 5% or more

      825,747        35,845        —          861,592        3  

At fair value

      24,190        366,825        15,829,548        16,220,563        57  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total with adjustment or at fair value

      1,611,403        489,784        15,829,548        17,930,735        63  

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

      3,417,022        49,768        —          3,466,790        12  

Not subject to discretionary withdrawal provision

      834,018        5,007,072        1,266,558        7,107,648        25  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total annuity reserves and deposit liabilities

      5,862,443        5,546,624        17,096,106        28,505,173        100 % 
              

 

 

  

Less reinsurance ceded

      1,335        —          —          1,335     
  

 

 

     

 

 

     

 

 

     

 

 

     

Net annuity reserves and deposit liabilities

    $ 5,861,108      $ 5,546,624      $ 17,096,106      $ 28,503,838     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31
2015		  
     General
Account		      Separate Account with
Guarantees		      Separate Account Non-
Guaranteed		      Total      Percent  

Subject to discretionary withdrawal With fair value adjustment

    $ 752,535      $ 119,066      $ —        $ 871,601        3  % 

At book value less surrender charge of 5% or more

      848,188        40,199        —          888,387        3  

At fair value

      21,960        505,969        14,329,152        14,857,081        54  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total with adjustment or at fair value

      1,622,683        665,234        14,329,152        16,617,069        60  

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

      3,384,669        55,814        —          3,440,483        12  

Not subject to discretionary withdrawal provision

      858,069        5,369,673        1,438,647        7,666,389        28  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total annuity reserves and deposit liabilities

      5,865,421        6,090,721        15,767,799        27,723,941        100  % 
              

 

 

  

Less reinsurance ceded

      1,292        —          —          1,292     
  

 

 

     

 

 

     

 

 

     

 

 

     

Net annuity reserves and deposit liabilities

    $ 5,864,129      $ 6,090,721      $ 15,767,799      $ 27,722,649     
  

 

 

     

 

 

     

 

 

     

 

 

     

Separate account assets held by the Company represent contracts where the benefit is determined by the performance of the investments held in the separate account. Information regarding the separate accounts of the Company as of and for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

     Nonindexed
Guarantee Less
Than or Equal to 4%		      Nonguaranteed
Separate Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2016

    $ 1,396,422      $ 3,296,786      $ 4,693,208  
  

 

 

     

 

 

     

 

 

  

Reserves for separate acccounts as of December 31, 2016 with assets at:

    $ —        $ 17,329,112      $ 17,329,112  

Fair value

      5,546,624        —          5,546,624  
  

 

 

     

 

 

     

 

 

  

Amortized cost

    $ 5,546,624      $ 17,329,112      $ 22,875,736  
  

 

 

     

 

 

     

 

 

  

Total as of December 31, 2016

         

Reserves for separate accounts by withdrawal characteristics as of December 31, 2016:

         

Subject to discretionary withdrawal:

    $ 87,114      $ —        $ 87,114  

At book value without fair value adjustment and with current surrender charge of 5% or more

      35,845        —          35,845  

At fair value

      366,825        16,062,554        16,429,379  

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

      49,768        —          49,768  
  

 

 

     

 

 

     

 

 

  

Subtotal

      539,552        16,062,554        16,602,106  

Not subject to discretionary withdrawal

      5,007,072        1,266,558        6,273,630  
  

 

 

     

 

 

     

 

 

  

Total separate account reserves at December 31, 2016

    $ 5,546,624        17,329,112        22,875,736  
  

 

 

     

 

 

     

 

 

  

 

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2015

    $ 1,435,432      $ 3,513,187      $ 4,948,619  
  

 

 

     

 

 

     

 

 

  

Reserves for separate acccounts as of December 31, 2015 with assets at:

         

Fair value

    $ —        $ 16,002,134      $ 16,002,134  

Amortized cost

      6,090,721        —          6,090,721  
  

 

 

     

 

 

     

 

 

  

Total as of December 31, 2015

    $ 6,090,721      $ 16,002,134      $ 22,092,855  
  

 

 

     

 

 

     

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2015:

         

Subject to discretionary withdrawal:

    $ 119,066      $ —        $ 119,066  

At book value without fair value adjustment and with current surrender charge of 5% or more

      40,199        —          40,199  

At fair value

      505,969        14,563,487        15,069,456  

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

      55,814        —          55,814  
  

 

 

     

 

 

     

 

 

  

Subtotal

      721,048        14,563,487        15,284,535  

Not subject to discretionary withdrawal

      5,369,673        1,438,647        6,808,320  
  

 

 

     

 

 

     

 

 

  

Total separate account reserves at December 31, 2015

    $ 6,090,721      $ 16,002,134      $ 22,092,855  
  

 

 

     

 

 

     

 

 

  
     Nonindexed
Guarantee
Less Than
or Equal to 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2014

    $ 1,480,473      $ 3,207,516      $ 4,687,989  
  

 

 

     

 

 

     

 

 

  

Reserves for separate acccounts as of December 31, 2014 with assets at:

         

Fair value

    $ —        $ 15,369,859      $ 15,369,859  

Amortized cost

      6,222,709        —          6,222,709  
  

 

 

     

 

 

     

 

 

  

Total as of December 31, 2014

    $ 6,222,709      $ 15,369,859      $ 21,592,568  
  

 

 

     

 

 

     

 

 

  

Reserves for separate accounts by withdrawal characteristics as of December 31, 2014:

         

Subject to discretionary withdrawal:

         

With fair value adjustment

    $ 122,381      $ —        $ 122,381  

At book value without fair value adjustment and with current surrender charge of 5% or more

      43,081        —          43,081  

At fair value

      505,121        13,691,347        14,196,468  

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

      59,815        —          59,815  
  

 

 

     

 

 

     

 

 

  

Subtotal

      730,398        13,691,347        14,421,745  

Not subject to discretionary withdrawal

      5,492,311        1,678,512        7,170,823  
  

 

 

     

 

 

     

 

 

  

Total separate account reserves at December 31, 2014

    $ 6,222,709      $ 15,369,859      $ 21,592,568  
  

 

 

     

 

 

     

 

 

  

 

62

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Year Ended December 31  
     2016      2015      2014  

Transfer as reported in the summary of operations of the separate accounts statement:

         

Transfers to separate accounts

    $ 4,693,348      $ 4,948,847      $ 4,687,981  

Transfers from separate accounts

      (4,789,961 )       (4,181,143 )       (4,581,447 ) 
  

 

 

     

 

 

     

 

 

  

Net transfers to separate accounts

      (96,613 )       767,704        106,534  

Miscellaneous reconciling adjustments

      17,332        15,414        (4,971 ) 
  

 

 

     

 

 

     

 

 

  

Net transfers as reported in the statements of operations of the life, accident and health annual statement

    $ (79,281 )     $ 783,118      $ 101,563  
  

 

 

     

 

 

     

 

 

  

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, 2016 and 2015, the Company’s separate account statement included legally insulated assets of $23,243,008 and $22,337,000, respectively. The assets legally insulated from general account claims at December 31, 2016 and 2015 are attributed to the following products:

 

     2016      2015  

Variable life

    $ 240,308      $ 243,002  

Variable annuities

      4,346,782        4,063,670  

Group annuities

      9,767,338        8,398,062  

Registered Market value separate accounts

      731,645        765,582  

Non Registered Market value separate accounts

      851,068        854,588  

Par annuities

      1,539,214        1,865,861  

Annuity Product—SPL

      1,624        1,523  

Book value separate accounts

      5,765,029        6,144,712  
  

 

 

     

 

 

  

Total separate account assets

    $ 23,243,008      $ 22,337,000  
  

 

 

     

 

 

  

At December 31, 2016 and 2015, the Company held separate account assets not legally insulated from the general account in the amount of $27,898 and $32,067, 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. As of December 31, 2016 and 2015, the general account of the Company had a maximum guarantee for separate account liabilities of $87,241 and $116,723, respectively. To compensate the general account for the risk taken, the separate account paid risk charges of $46,668, $42,677, $40,314, $33,770, and $32,822 to the general account in 2016, 2015, 2014, 2013, and 2012, respectively. During the years ended December 31, 2016, 2015, 2014, 2013, and 2012 the general account of the Company had paid $1,627, $1,671, $530, $1,112, and $1,449 respectively, toward separate account guarantees.

 

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2016 and 2015, the Company reported guaranteed separate account assets at amortized cost in the amount of $5,764,436 and $6,144,712, respectively, based upon the prescribed practice by the State of New York as described in Note 2. These assets had a fair value of $5,740,987 and $6,113,061 at December 31, 2016 and 2015, respectively, which would have resulted in an unrealized (loss) of $(23,449) and $(31,651), respectively, had these assets been reported at fair value.

The Company participates in securities lending within the separate account. The Company follows the same policies and procedures as the general account for such transactions conducted from the separate account. See Note 10 for a discussion of securities lending policies and procedures. As of December 31, 2016 and 2015, securities with a book value of $0 and $0, respectively, were on loan under securities lending agreements, which represents less than one percent of total separate account assets. The Company does not obtain approval or otherwise provide notification to contract holders regarding securities lending transactions that occur with separate account assets. However, the Company requires that borrowers pledge collateral worth 102% of the value of the loaned securities. As of December 31, 2016, the Company did not have any collateral from securities lending transactions. This cash collateral is reinvested in a registered money market fund and is not available for general corporate purposes.

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with Actuarial Guideline XLIII (AG 43), which replaces Actuarial Guidelines 34 and 39. AG 43 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The AG 43 reserve calculation includes variable annuity products issued after January 1, 1981. 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 AG 43 is equal to the conditional tail expectation (CTE) amount, but not less than the standard scenario amount (SSA).

To determine the CTE amount, the Company used 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) produced in October 2005 and prudent estimate assumptions based on Company experience. The SSA was determined using the assumptions and methodology prescribed in AG 43 for determining the SSA.

At December 31, 2016 and 2015, the Company had variable annuities with minimum guaranteed benefits as follows:

 

Benefit and Type of Risk

    Subjected
Account
Value		      Gross Amount of
Reserve Held		      Reinsurance
Reserve
Credit		  

December 31, 2016

         

Minimum guaranteed death benefit

    $ 1,857,246      $ 5,025      $ 1,335  

Minimum guaranteed income benefit

         

Guaranteed premium accumulation fund

         

Minimum guaranteed withdrawal benefit

      5,142,999        39,891     

December 31, 2015

         

Minimum guaranteed death benefit

    $ 1,830,440      $ 5,315      $ 1,292  

Minimum guaranteed income benefit

      —          —          —    

Guaranteed premium accumulation fund

      —          —          —    

Minimum guaranteed withdrawal benefit

      5,182,141        46,981        —    

 

64

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Reserves on the Company’s traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policies’ paid-through date to the policy’s next anniversary date. At December 31, 2016 and 2015, the gross premium and loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:

 

     Gross      Loading      Net  

December 31, 2016

         

Life and annuity:

         

Ordinary direct first-year business

    $ 224      $ 193      $ 31  

Ordinary direct renewal business

      252,840        994        251,846  

Group life direct business

      422        84        338  

Credit direct business

      32        —          32  

Reinsurance ceded

      (247,291 )       —          (247,291 ) 
  

 

 

     

 

 

     

 

 

  
   $ 6,227      $ 1,271      $ 4,956  

Accident and health

      8,836        —          8,836  
  

 

 

     

 

 

     

 

 

  
   $ 15,063      $ 1,271      $ 13,792  
  

 

 

     

 

 

     

 

 

  
     Gross      Loading      Net  

December 31, 2015

         

Life and annuity:

         

Ordinary direct first-year business

    $ 178      $ 157      $ 21  

Ordinary direct renewal business

      132,775        1,362        131,413  

Group life direct business

      582        98        484  

Credit direct business

      254        —          254  

Reinsurance ceded

      (126,599 )       —          (126,599 ) 
  

 

 

     

 

 

     

 

 

  
   $ 7,190      $ 1,617      $ 5,573  

Accident and health

      10,888        —          10,888  
  

 

 

     

 

 

     

 

 

  
   $ 18,078      $ 1,617      $ 16,461  
  

 

 

     

 

 

     

 

 

  

The Company anticipates investment income as a factor in premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Health Contracts. As of December 31, 2016 and 2015, the Company had insurance in force aggregating $3,847,827 and $5,092,695, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the New York Department of Financial Services. The Company established policy reserves of $229,295 and $35,275 to cover these deficiencies as of December 31, 2016 and 2015, respectively.

The Company does not write any accident and health business that is subject to the Affordable Care Act risk sharing provisions. As of December 31, 2016 and 2015, the Company has recorded a liability of $8 and $15, respectively, for the amount it has been assessed to fund the transitional reinsurance program.

 

65

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

9. Capital and Surplus

At December 31, 2016 and 2015, the Company had 45,981 shares of 6% non-voting, non-cumulative preferred stock issued and outstanding. TA Corp owns 40,415 shares and TLIC owns 5,566 shares. Par value is $10 per share, and the liquidation value is $1,286.72 per share.

The preferred stock shareholders are entitled to receive non-cumulative dividends at the rate of 6% per year of an amount equal to the sum of (1) the par value plus (2) any additional paid-in capital for such preferred stock. Dividends are payable annually in December. The amount of dividends unpaid at December 31, 2016 and 2015 were $0 and $0, respectively. The preferred shares have preference as to dividends and upon dissolution or liquidation of the Company.

The Company is subject to limitations, imposed by the State of New York, on the payment of dividends to its stockholders. Generally, dividends during any year may not be paid, without prior regulatory approval, in excess of the lesser of (1) 10 percent of the Company’s statutory surplus as of the preceding December 31, or (2) the Company’s statutory gain from operations before net realized capital gains on investments for the preceding year. Subject to the availability of unassigned surplus at the time of such a dividend, the maximum payment which may be made in 2016, without prior approval of insurance regulatory authorities, is $109,230.

On December 22, 2016, the Company paid ordinary common stock dividends of $8,473 to Transamerica Life Insurance Company and $61,527 to Transamerica Corporation.

The Company did not pay any dividends in 2015.

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 and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2016, the Company meets the minimum RBC requirements.

On May 2, 2008, the Company received $150,000 from TA Corp in exchange for surplus notes due 20 years from the date of the issuance at an interest rate of 6.25%. The notes are subordinate and junior in the right of payment to all obligations and liabilities of the Company. On December 22, 2016 the Company repaid TA Corp the principal and accrued interest. The Company received approval from the Superintendent of Insurance of the New York Department of Financial Services prior to issuance and repayment of the surplus notes as well as prior to making annual interest payments.

Additional information related to the outstanding surplus notes at December 31, 2016 and 2015 is as follows:

 

For Year Ending

    Balance
Outstanding		      Interest Paid
Current Year		      Cumulative
Interest Paid		      Accrued
Interest		  

2016

    $ —        $ 9,167      $ 81,042      $ —    

2015

    $ 150,000      $ 9,375      $ 71,875      $ —    

The Company held special surplus funds in the amount of $9,509 and $8,653, as of December 31, 2016 and 2015, respectively, for annuitant mortality fluctuations as required under New York Regulation 47, Separate Account and Separate Account Annuities.

 

66

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

10. Securities Lending

The Company participates in an agent-managed securities lending program. The Company receives collateral equal to 102% of the fair value of the loaned 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 domestic securities. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105% of the fair value of the loaned security.

At December 31, 2016 and 2015, respectively, securities with a fair value of $301,914 and $419,588 were on loan under securities lending agreements. At December 31, 2016, the collateral the Company received from securities lending 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 $307,732 and $433,646 at December 31, 2016 and 2015, respectively.

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

 

     Fair Value  

Open

    $ 307,744  

30 days or less

      —    

31 to 60 days

      —    

61 to 90 days

      —    

Greater than 90 days

      —    
  

 

 

  

Total

      307,744  

Securities received

      —    
  

 

 

  

Total collateral received

    $ 307,744  
  

 

 

  

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:

 

     Amortized Cost      Fair Value  

Open

    $ 19,466      $ 19,466  

30 days or less

      180,863        180,863  

31 to 60 days

      33,358        33,358  

61 to 90 days

      24,783        24,783  

91 to 120 days

      12,750        12,750  

121 to 180 days

      36,512        36,512  
  

 

 

     

 

 

  

Total

      307,732        307,732  

Securities received

      —          —    
  

 

 

     

 

 

  

Total collateral reinvested

    $ 307,732      $ 307,732  
  

 

 

     

 

 

  

For securities lending, the Company’s sources of cash that it uses 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 $307,850 (fair value of $307,732) that are currently tradable securities that could be sold and used to pay for the $307,744 in collateral calls that could come due under a worst-case scenario.

 

67

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

11. Retirement and Compensation 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 requirement are participants of the plan. The Company has no legal obligation for the plan. The Company recognizes pension expense equal to its allocation from TA Corp. The pension expense 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. The benefits are based on years of service and the employee’s eligible annual compensation. Pension expenses were $1,414, $456 and $637 for the years ended December 31, 2016, 2015 and 2014, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974.

The Company’s employees also participate in a defined contribution plan sponsored by TA Corp which is qualified under Section 401(k) of the Internal Revenue Service Code. Employees of the Company who customarily work at least 1,000 hours during each calendar year and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to twenty-five percent of their salary to the plan. The Company will match an amount up to three percent of the participant’s salary. 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. The Company’s allocation of benefits expense for the years ended December 31, 2016, 2015 and 2014 was $714, $311, and $261 for each year, respectively.

TA Corp sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The plans are noncontributory, and benefits are based on years of service and the employee’s compensation level. The plans are unfunded and nonqualified under the Internal Revenue Service Code. In addition, TA Corp has established incentive 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, 2016, 2015 and 2014 was insignificant. TA Corp also sponsors an employee stock option plan/stock appreciation rights for employees of the Company and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued or funded as deemed appropriate by management of TA Corp and the Company.

In addition to pension benefits, the Company participates in plans sponsored by TA Corp that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The postretirement plan expenses are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company’s allocation of postretirement expenses was $257, $89 and $143 for the year end December 31, 2016, 2015 and 2014.

During December 2015, the Company offered select employees the opportunity to participate in the Transamerica Voluntary Separation Incentive Plan (VSIP). Eligible employees were given until January 18, 2016 to make a decision. Following SSAP No. 11, Postemployment Benefits and Compensated Absences, and SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets, an expense was accrued in 2015 for the post-employment benefit in the amount of $3,853.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

12. Related Party Transactions

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

In accordance with an agreement between TA Corp and the Company, TA Corp will ensure the maintenance of certain minimum tangible net worth, operating leverage and liquidity levels of the Company, as defined in the agreement, through the contribution of additional capital by TA Corp as needed.

The Company is party to a service agreement with TLIC, in which the Company receives services, including accounting, data processing and other professional services, in consideration of reimbursement of the actual costs of services rendered. The Company is party to a Management and Administrative and Advisory agreement with Aegon USA Realty Advisors, Inc. (Advisor) whereby Advisor serves as the administrator and advisor for the Company’s mortgage loan operations. The Company is party to a common cost allocation service agreement between TA Corp companies in 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. Aegon USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. During 2016, 2015 and 2014, the Company paid $30,662, $32,914 and $33,720, respectively, for these services, which approximates cost.

The Company has an administration service agreement with Transamerica Asset Management, Inc. to provide administrative services to the TA Corp/Transamerica Series Trust. The Company received $9,203, $8,320 and $6,843 for these services during 2016, 2015 and 2014, respectively.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $5,196, $5,485 and $11,760 for the years ended December 31, 2016, 2015 and 2014, respectively.

Payables to and receivables from affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. During 2016, 2015 and 2014, the Company paid (received) net interest of $47, $6 and $1, respectively, to (from) affiliates. At December 31, 2016 and 2015, the Company reported a net amount of $12,714 and $26,230 payable to affiliates, respectively. Terms of settlement require that these amounts are settled within 90 days.

At December 31, 2016, the Company had short-term intercompany notes receivable of $20,000 as shown below. In accordance with SSAP No. 25, Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties, these notes are reported in Schedule DA as short-term investments.

 

Receivable from    Amount      Due By      Interest Rate  

Transamerica Corporation

    $ 20,000        12/9/2017        0.47 % 

At December 31, 2015 the Company had short-term intercompany notes receivable of $175,000.

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

 

Real Estate Alternatives Portfolio 2, LLC (REAP 2)

    $ 2,687  

Real Estate Alternatives Portfolio 4 HR, LLC (REAP 4 HR)

    $ 7,257  

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, of SCA entities and/or non-SCA SSAP No. 48 entities owned by REAP 2 and REAP 4 HR and valued in accordance with the relevant paragraphs of

 

69

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Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

SSAP No. 97. All liabilities, commitments, contingencies, guarantees or obligations of REAP 2 and REAP 4 HR, 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 REAP 2 and REAP 4 HR, if not already recorded in the financial statements of REAP 2 and REAP 4 HR.

The aggregate balance sheet value for all subsidiary, controlled and affiliated (SCA) investments, except SCA insurance entities, are as follows:

 

SCA Description

    Gross
Amount		      Nonadmitted
Amount		      Admitted
Asset
Amount		      Date of
Filing to
NAIC		      Type of
NAIC
Filing		      NAIC
Response
Received		      NAIC
Valuation		      NAIC Disallowed
Entity’s Valuation
Method,
Resubmission
Required		  

Real Estate Alternatives Portfolio 3A Inc.

    $ 3,025      $ —        $ 3,025        12/21/2016        Sub-2        No      $ 3,025        No  

 

70

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 (except 8Bi entities) as of December 31, 2016:

 

SCA Entity

    Percentage of     Gross Amount      Admitted      Nonadmitted  

a. SSAP No. 97 8a Entities

           
     —   %    $ —        $ —        $ —    
     —         —          —          —    
     —         —          —          —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8a Entities

      —   %    $ —        $ —        $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

b. SSAP No. 97 8b(ii) Entities

           
     —   %    $ —        $ —        $ —    
     —         —          —          —    
     —         —          —          —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8b(ii) Entities

      —   %    $ —        $ —        $ —    

c. SSAP No. 97 8b(iii) Entities

           

REAL ESTATE ALTERN PORT 3A INC

      9.4 %    $ 3,025      $ 3,025      $ —    
     —         —          —          —    
     —         —          —          —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8b(iii) Entities

      9.4 %    $ 3,025      $ 3,025      $ —    

d. SSAP No. 97 8b(iv) Entities

           
     —   %    $ —        $ —        $ —    
     —         —          —          —    
     —         —          —          —    
  

 

 

    

 

 

     

 

 

     

 

 

  

Total SSAP No. 97 8b(iv) Entities

      —   %    $ —        $ —        $ —    

e. Total SSAP No. 97 8b Entities (except 8bi entities) (b+c+d+e)

      $ 3,025      $ 3,025      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

f. Aggregate Total (a+e)

      $ 3,025      $ 3,025      $ —    
  

 

 

    

 

 

     

 

 

     

 

 

  

 

SCA Entity

(Should be same entities as shown in M(1) above.)

   

Type

of

NAIC

Filing
*

     

Date of Filing

to the NAIC

     

NAIC

Valuation

Amount(1)

     

NAIC

Response
Received

Y/N

     

NAIC
Disallowed
Entities
Valuation
Method,

Submission
Required

Y/N

      Code**  

a. SSAP No. 97 8a Entities

                  
         $ —             
           —             
           —             
        

 

 

           

Total SSAP No. 97 8a Entities

          $ —             
        

 

 

           

b. SSAP No. 97 8b(ii) Entities

                  
         $ —             
           —             
           —             
        

 

 

           

Total SSAP No. 97 8b(ii) Entities

          $ —             

c. SSAP No. 97 8b(iii) Entities

                  

REAL ESTATE ALTERN PORT 3A INC

      S2        12/21/2016      $ 3,611        Y        N        I  
           —             
           —             
        

 

 

           

Total SSAP No. 97 8b(iii) Entities

          $ 3,611           

d. SSAP No. 97 8b(iv) Entities

                  
         $ —             
           —             
           —             
        

 

 

           

Total SSAP No. 97 8b(iv) Entities

          $ —             
        

 

 

           

e. Total SSAP No. 97 8b Entities (except 8bi entities) (b+c+d+e)

          $ 3,611           
        

 

 

           

f Aggregate Total (a+e)

          $ 3,611           
        

 

 

           

 

* 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

 

71

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

13. Managing General Agents

The Company utilizes managing general agents and third-party administrators in its operations. Information regarding these entities is as follows:

 

Name and Address of MGA/TPA

    FEIN #      Exclusive
Contract		      Type of Business
Written		    Type of
Authority
Granted		      Total Direct
Premiums
Written/Produced		  

The Vanguard Group, Inc.

100 Vanguard Blvd

Malvem, PA 19355

      23-1945930        No      Deferred and
Incom Annuities		      C, B, P, U      $ 35,397,127  

C - Claims Payment

B - Binding Authority

P - Premium Collection

U - Underwriting

For years ended December 31, 2016, 2015 and 2014, the Company had $35,397, $48,811 and $38,824, respectively, of direct premiums written by The Vanguard Group, Inc.

For years ended December 31, 2016, 2015 and 2014 the Company had $0, $16,899 and $0, respectively, of direct premiums written by Affinion Group.

14. Commitments and Contingencies

At December 31, 2016 and 2015, the Company has mortgage loan commitments of $17,177 and $9,735, respectively.

The Company has contingent commitments of $160,415 and $13,781, at December 31, 2016 and 2015, respectively, to provide additional funding for joint ventures, partnerships and limited liability companies. There are no LIHTC commitments as of December 31, 2016 and 2015, respectively.

Private placement commitments outstanding as of December 31, 2016 and 2015 were $18,000 and $15,000, respectively.

Securities acquired on a “to be announced” (TBA) basis at December 31, 2016 and 2015 were $0 and $79,280, respectively.

The Company may pledge assets as collateral for derivative transactions. At December 31, 2016 and 2015, the Company has pledged invested assets with a carrying value of $80,398 and $35,958, respectively, and fair value of $88,703 and $37,331, respectively, in conjunction with these transactions.

 

72

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Cash collateral received from derivative counterparties as well as the obligation to return the collateral is recorded on the Company’s balance sheet. The amount of cash collateral posted to the Company as of December 31, 2016 and 2015, respectively, was $42,500 and $28,953. In addition, securities in the amount of $0 and $20,971 were also posted to the Company as of December 31, 2016 and 2015, respectively, which were not included in the financials of the Company. Noncash collateral is not to be recognized by the recipient unless that collateral is sold or repledged or the counterparty defaults.

The Company is a party to legal proceedings involving a variety of issues incidental to its business. Lawsuits may be brought in nearly 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 its complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

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 sheet. 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 Association. 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 $391 and $191 at December 31, 2016 and 2015, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The Company had an offsetting premium tax benefit of $19 and $19 at December 31, 2016 and 2015, respectively. The guaranty fund (benefit) expense was $(315), $(210) and $3,865 for the years ended December 31, 2016, 2015 and 2014, respectively.

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

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. As of December 31, 2016 and 2015, the Company had dollar repurchase agreements outstanding in the amount of $20,325 and $31,307, respectively. The Company had an outstanding liability for borrowed money in the amount $20,005 and $31,526 at December 31, 2016 and 2015, respectively due to participation in dollar repurchase agreements which includes accrued interest.

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

Dollar repurchase Agreement

 

     Fair Value  

Open

    $ 19,955  

30 days or less

      —    

31 to 60 days

      —    

61 to 90 days

      —    

Greater than 90 days

      —    

Total

      19,955  
  

 

 

  

Securities received

      —    
  

 

 

  

Total collateral received

    $ 19,955  
  

 

 

  

 

73

Table of Contents

Transamerica Financial Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. During 2016 there were no securities sold and reacquired within 30 days of the sale date.

16. Subsequent Event

The financial statements are adjusted to reflect events that occurred between the balance sheet date and the date when the financial statements are issued, provided they give evidence of conditions that existed at the balance sheet date (Type I). Events that are indicative of conditions that arose after the balance sheet date are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). The Company has not identified any Type I or Type II subsequent events for the year ended December 31, 2016 through April 21, 2017.

 

74

Table of Contents

Transamerica Financial Life Insurance Company

Appendix A – Listing of Affiliated Companies

 

Transamerica Corporation

   

EIN: 42-1484983

   

AFFILIATIONS SCHEDULE

   

YEAR ENDED DECEMBER 31, 2016

   

Attachment to Note 7

   
Entity Name    FEIN  

Transamerica Corporation

      42-1484983  

AEGON Alliances Inc

      56-1358257  

AEGON Asset Management Services Inc

      39-1884868  

AEGON Assignment Corp (Illinois)

      42-1477359  

AEGON Assignment Corp of Kentucky

      61-1314968  

AEGON Direct Marketing Services Inc

      42-1470697  

AEGON Direct Marketing Services International Inc

      52-1291367  

AEGON Financial Services Group Inc

      41-1479568  

AEGON Institutional Markets Inc

      61-1085329  

AEGON Management Company

      35-1113520  

AEGON Structured Settlements Inc

      61-1068209  

AEGON USA Real Estate Services Inc

      61-1098396  

AEGON USA Realty Advisors of CA FKA Pensaprima Inc

      20-5023693  

AFSG Securities Corporation

      23-2421076  

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  

Firebird Reinsurance Corporation

      47-3331975  

Garnet Assurance Corporation

      11-3674132  

Garnet Assurance Corporation II

      14-1893533  

Garnet Assurance Corporation III

      01-0947856  

Global Preferred RE LTD

      98-0164807  

Intersecurities Ins Agency

      42-1517005  

Investors Warranty of America Inc

      42-1154276  

LIICA RE I

      20-5984601  

LIICA RE II

      20-5927773  

 

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Table of Contents

Transamerica Financial Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

EIN: 42-1484983

AFFILIATIONS SCHEDULE

YEAR ENDED DECEMBER 31, 2016

Attachment to Note 7

 

Entity Name

    FEIN  

Massachusetts Fidelity Trust

      42-0947998  

MLIC RE I Inc

      01-0930908  

Money Services Inc

      42-1079580  

Monumental General Administrators Inc

      52-1243288  

Pearl Holdings Inc I

      20-1063558  

Pearl Holdings Inc II

      20-1063571  

Pine Falls Re Inc

      26-1552330  

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  

Stonebridge Reinsurance Company

      61-1497252  

TCF Asset Management Corp

      84-0642550  

TCFC Air Holdings Inc

      32-0092333  

TCFC Asset Holdings Inc

      32-0092334  

TLIC Oakbrook Reinsurance Inc.

      47-1026613  

TLIC Riverwood Reinsurance Inc

      45-3193055  

TLIC Watertree Reinsurance Inc

      81-3715574  

Transamerica Advisors Life Insurance Company (FKA MLLIC)

      91-1325756  

Transamerica Accounts Holding Corp

      36-4162154  

Transamerica Affinity Services Inc

      42-1523438  

Transamerica Affordable Housing Inc

      94-3252196  

Transamerica Agency Network Inc (FKA: Life Inv Fin Group)

      61-1513662  

Transamerica Annuity Service Corporation

      85-0325648  

Transamerica Asset Management (fka Transamerica Fund Adviso)

      59-3403585  

Transamerica Capital Inc

      95-3141953  

Transamerica Casualty Insurance Company

      31-4423946  

Transamerica Commercial Finance Corp I

      94-3054228  

Transamerica Consumer Finance Holding Company

      95-4631538  

Transamerica Corporation (OREGON)

      98-6021219  

Transamerica Distribution Finance Overseas Inc

      36-4254366  

Transamerica Finance Corporation

      95-1077235  

 

76

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Transamerica Financial Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

EIN: 42-1484983

AFFILIATIONS SCHEDULE

YEAR ENDED DECEMBER 31, 2016

Attachment to Note 7

 

Entity Name

    FEIN  

Transamerica Financial Advisors FKA InterSecurities

      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 Leasing Holdings Inc

      13-3452993  

Transamerica Life Insurance Company

      39-0989781  

Transamerica Pacific Insurance Co Ltd

      94-3304740  

Transamerica Premier Life Insurance Company

      52-0419790  

Transamerica Resources Inc (FKA: Nat Assoc Mgmt)

      52-1525601  

Transamerica Small Business Capital Inc

      36-4251204  

Transamerica Stable Value Solutions Inc

      27-0648897  

Transamerica Vendor Financial Services Corporation

      36-4134790  

United Financial Services Inc

      52-1263786  

WFG China Holdings Inc

      20-2541057  

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  

 

77

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Statutory-Basis

Financial Statement Schedule

 

78

Table of Contents

Transamerica Financial Life Insurance Company

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Thousands)

December 31, 2016

SCHEDULE I

 

                   Amount at  
                   Which Shown  
            Fair      in the  

Type of Investment

    Cost (1)      Value      Balance Sheet (2)  

Fixed maturities

         

Bonds:

         

United States Government and government agencies and authorities

    $ 487,049      $ 564,725      $ 492,352  

States, municipalities and political subdivisions

      46,689        47,780        46,689  

Foreign governments

      93,123        100,641        93,123  

Hybrid securities

      117,258        109,305        117,258  

All other corporate bonds

      5,652,935        5,892,342        5,652,552  

Preferred stocks

      4,552        4,498        4,552  
  

 

 

     

 

 

     

 

 

  

Total fixed maturities

      6,401,606        6,719,291        6,406,526  

Equity securities

         

Common stocks:

         

Industrial, miscellaneous and all other

      —          —          —    
  

 

 

     

 

 

     

 

 

  

Total common stocks

      —          —          —    

Mortgage loans on real estate

      1,243,156           1,243,156  

Real estate

      3,600           3,600  

Policy loans

      122,026           122,026  

Other long-term investments

      61,323           61,323  

Receivable for securities

      927           927  

Securities lending reinvested collateral assets

      307,732           307,732  

Cash, cash equivalents and short-term investments

      400,915           400,915  
  

 

 

        

 

 

  

Total investments

    $ 8,541,285         $ 8,546,206  
  

 

 

        

 

 

  

 

(1) Original cost of equity securities and, as to fixed maturities, original cost reduce by repayments and adjusted for amortization of premiums or accrual of discounts.
(2) United States government and corporate bonds of $1,499 are held at fair value rather than amortized cost due to having NAIC 6 rating.

 

79

Table of Contents

Transamerica Financial Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

SCHEDULE III

 

                                  Benefits,        
                                  Claims        
    Future Policy           Policy and           Net     Losses and     Other  
    Benefits and
Expenses		     Unearned
Contract		     Premiums
Liabilities		     Premium
Revenue		     Investment
Income*		     Settlement
Expenses		     Operating
Expenses		  

Year ended December 31, 2016

              

Individual life

   $ 1,148,823     $ —       $ 18,281     $ 163,774     $ 55,259     $ 191,636     $ 76,179  

Individual health

     43,800       5,321       11,729       62,058       3,382       19,448       17,692  

Group life and health

     162,148       2,811       11,317       80,133       8,421       55,385       32,104  

Annuity

     5,775,761       —         686       5,469,296       285,513       5,742,186       113,522  

Other

     —         —         —         —         42,953       —         —    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 7,130,532     $ 8,132     $ 42,013     $ 5,775,261     $ 395,528     $ 6,008,655     $ 239,497  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Year ended December 31, 2015

              

Individual life

   $ 1,062,083     $ —       $ 15,641     $ 148,823     $ 53,379     $ 169,044     $ 81,612  

Individual health

     59,122       5,842       12,239       58,286       3,103       53,426       22,486  

Group life and health

     140,745       1,914       22,065       81,840       7,680       47,903       27,820  

Annuity

     5,775,613       —         938       5,524,044       283,722       4,829,378       1,003,826  

Other

     —         —         —         —         53,200       —         —    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 7,037,563     $ 7,756     $ 50,883     $ 5,812,993     $ 401,084     $ 5,099,751     $ 1,135,744  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Year ended December 31, 2014

              

Individual life

   $ 1,105,341     $ —       $ 13,237     $ 131,835     $ 62,331     $ 390,722     $ 77,976  

Individual health

     39,895       5,953       6,227       53,360       2,760       33,441       20,718  

Group life and health

     136,947       1,821       15,498       74,435       8,137       41,910       26,037  

Annuity

     5,953,030       —         568       5,180,015       337,122       5,108,620       329,343  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 7,235,213     $ 7,774     $ 35,530     $ 5,439,645     $ 410,350     $ 5,574,693     $ 454,074  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* 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.

 

80

Table of Contents

Transamerica Financial Life Insurance Company

Reinsurance

(Dollars in Thousands)

SCHEDULE IV

 

                   Assumed             Percentage  
            Ceded to      From             of Amount  
     Gross      Other      Other      Net      Assumed  
     Amount      Companies      Companies      Amount      to Net  

Year ended December 31, 2016

               

Life insurance in force

    $ 25,466,212      $ 172,845,130      $ 170,252,105      $ 22,873,187        744 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Premiums:

               

Individual life

      179,182        536,674        521,267        163,775        318 % 

Individual health

      62,606        604        56        62,058        0 % 

Group life and health

      81,420        3,235        1,948        80,133        2 % 

Annuity

      5,463,567        333        6,062        5,469,296        0 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 5,786,775      $ 540,846      $ 529,333      $ 5,775,262        9 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Year ended December 31, 2015

               

Life insurance in force

    $ 24,382,596      $ 180,500,389      $ 177,774,290      $ 21,656,497        895 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Premiums:

               

Individual life

      163,471        515,667        501,018        148,822        337 % 

Individual health

      59,062        822        46        58,286        0 % 

Group life and health

      81,321        1,766        2,284        81,839        3 % 

Annuity

      5,517,232        395        7,208        5,524,045        0 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 5,821,086      $ 518,650      $ 510,556      $ 5,812,992        9 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Year ended December 31, 2014

               

Life insurance in force

    $ 22,754,916      $ 193,135,172      $ 190,242,263      $ 19,862,007        958 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Premiums:

               

Individual life

      148,145        556,231        539,921        131,835        410 % 

Individual health

      54,133        857        86        53,362        0 % 

Group life and health

      78,089        6,239        2,584        74,434        3 % 

Annuity

      5,172,542        415        7,889        5,180,015        0 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 5,452,909      $ 563,742      $ 550,480      $ 5,439,646        10 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

81

Table of Contents

FINANCIAL STATEMENTS

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Years Ended December 31, 2016 and 2015

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Financial Statements

Years Ended December 31, 2016 and 2015

Contents

 

Report of Independent Registered Public Accounting Firm

      1  

Financial Statements

   

Statements of Assets and Liabilities

      2  

Statements of Operations and Changes in Net Assets

      5  

Notes to Financial Statements

      29  

 

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Contract Owners of

Subaccounts of Separate Account VA BNY and

Board of Directors of

Transamerica Financial Life Insurance Company

In our opinion, for each of the subaccounts of Separate Account VA BNY indicated in the table below, the accompanying statements of assets and liabilities, and the related statement of operations and change in net assets present fairly, in all material respects, the financial position of each of the subaccounts of Separate Account VA BNY as of the date indicated in the table, and the results of each of their operations and changes in each of their net assets for each of the periods indicated in the table, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the management of Transamerica Financial Life Insurance Company. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of December 31, 2016 by correspondence with the transfer agents of the investee mutual funds, provide a reasonable basis for our opinions.

 

AB Balanced Wealth Strategy Class B Shares (1)    TA BlackRock Tactical Allocation Service Class (1)
AB Growth and Income Class B Shares (1)    TA Clarion Global Real Estate Securities Initial Class (1)
AB Large Cap Growth Class B Shares (1)    TA Clarion Global Real Estate Securities Service Class (1)
American Funds - Asset Allocation Class 2 Shares (1)    TA International Moderate Growth Service Class (1)
American Funds - Bond Class 2 Shares (1)    TA Janus Balanced Service Class (1)
American Funds - Growth Class 2 Shares (1)    TA Janus Mid-Cap Growth Initial Class (1)
American Funds - Growth-Income Class 2 Shares (1)    TA Janus Mid-Cap Growth Service Class (1)
American Funds - International Class 2 Shares (1)    TA Jennison Growth Initial Class (1)
Fidelity® VIP Balanced Service Class 2 (1)    TA Jennison Growth Service Class (1)
Fidelity® VIP Contrafund® Initial Class (1)    TA JPMorgan Core Bond Service Class (1)
Fidelity® VIP Contrafund® Service Class 2 (1)    TA JPMorgan Enhanced Index Initial Class (1)
Fidelity® VIP Equity-Income Service Class 2 (1)    TA JPMorgan Enhanced Index Service Class (1)
Fidelity® VIP Growth Service Class 2 (1)    TA JPMorgan Mid Cap Value Service Class (1)
Fidelity® VIP Growth Opportunities Service Class 2 (1)    TA JPMorgan Tactical Allocation Service Class (1)
Fidelity® VIP Mid Cap Initial Class (1)   

TA Legg Mason Dynamic Allocation - Balanced Service

Class (1)

Fidelity® VIP Mid Cap Service Class 2 (1)    TA Legg Mason Dynamic Allocation - Growth Service Class (1)
Fidelity® VIP Value Strategies Initial Class (1)    TA Managed Risk - Balanced ETF Service Class (1)
Fidelity® VIP Value Strategies Service Class 2 (1)    TA Managed Risk - Conservative ETF Service Class (1)
Franklin Founding Funds Allocation Class 4 Shares (1)    TA Managed Risk - Growth ETF Service Class (1)
Franklin Income Class 2 Shares (1)    TA Market Participation Strategy Service Class (1)
Franklin Mutual Shares Class 2 Shares (1)    TA MFS International Equity Initial Class (1)
Franklin Templeton Foreign Class 2 Shares (1)    TA MFS International Equity Service Class (1)
Invesco V.I. American Franchise Series II Shares (1)    TA Morgan Stanley Capital Growth Initial Class (1)
Invesco V.I. Value Opportunities Series II Shares (1)    TA Morgan Stanley Capital Growth Service Class (1)
Janus Aspen - Enterprise Service Shares (1)    TA Multi-Managed Balanced Initial Class (1)
Janus Aspen - Global Research Service Shares (1)    TA Multi-Managed Balanced Service Class (1)
Janus Aspen - Perkins Mid Cap Value Service Shares (1)    TA Multi-Manager Alternative Strategies Service Class (1)
JPMorgan Insurance Trust Core Bond Class 1 Shares (1)    TA PIMCO Tactical - Balanced Service Class (1)
JPMorgan Insurance Trust Mid Cap Value Class 1 Shares (1)    TA PIMCO Tactical - Conservative Service Class (1)
JPMorgan Insurance Trust Small Cap Core Class 1 Shares (1)    TA PIMCO Tactical - Growth Service Class (1)
JPMorgan Insurance Trust U.S. Equity Class 1 Shares (1)    TA PIMCO Total Return Initial Class (1)
MFS® New Discovery Service Class (1)    TA PIMCO Total Return Service Class (1)
MFS® Total Return Service Class (1)    TA PineBridge Inflation Opportunities Service Class (1)
State Street Total Return V.I.S. Class 3 Shares (1)    TA ProFunds UltraBear Service Class (OAM) (1)
TA AB Dynamic Allocation Initial Class (1)    TA QS Investors Active Asset Allocation - Conservative Service Class (1)
TA AB Dynamic Allocation Service Class (1)    TA QS Investors Active Asset Allocation - Moderate Service Class (1)
TA Aegon Government Money Market Initial Class (1)    TA QS Investors Active Asset Allocation - Moderate Growth Service Class (1)
TA Aegon Government Money Market Service Class (1)    TA Small/Mid Cap Value Initial Class (1)
TA Aegon High Yield Bond Initial Class (1)    TA Small/Mid Cap Value Service Class (1)
TA Aegon High Yield Bond Service Class (1)    TA T. Rowe Price Small Cap Initial Class (1)
TA Aegon U.S. Government Securities Initial Class (1)    TA T. Rowe Price Small Cap Service Class (1)
TA Aegon U.S. Government Securities Service Class (1)    TA Torray Concentrated Growth Initial Class (1)
TA American Funds Managed Risk - Balanced Service Class (2)    TA Torray Concentrated Growth Service Class (1)
TA Asset Allocation - Conservative Initial Class (1)    TA TS&W International Equity Initial Class (1)
TA Asset Allocation - Conservative Service Class (1)    TA TS&W International Equity Service Class (1)
TA Asset Allocation - Growth Initial Class (1)    TA WMC US Growth Initial Class (1)
TA Asset Allocation - Growth Service Class (1)    TA WMC US Growth Service Class (1)
TA Asset Allocation - Moderate Initial Class (1)    Vanguard® Equity Index (1)
TA Asset Allocation - Moderate Service Class (1)    Vanguard® International (1)
TA Asset Allocation - Moderate Growth Initial Class (1)    Vanguard® Mid-Cap Index (1)
TA Asset Allocation - Moderate Growth Service Class (1)    Vanguard® REIT Index (1)
TA Barrow Hanley Dividend Focused Initial Class (1)    Vanguard® Short-Term Investment Grade (1)
TA Barrow Hanley Dividend Focused Service Class (1)    Vanguard® Total Bond Market Index (1)
TA BlackRock Equity Smart Beta 100 Service Class (3)    Voya Global Perspectives Class S Shares (2)
TA BlackRock Global Allocation Service Class (1)    Voya Large Cap Value Class S Shares (2)
TA BlackRock Global Allocation Managed Risk - Balanced Service Class (2)    Voya Strategic Allocation Conservative Class S Shares (2)
TA BlackRock Global Allocation Managed Risk - Growth Service Class (2)    Voya Strategic Allocation Moderate Class S Shares (2)
TA BlackRock Smart Beta 50 Service Class (3)    Wanger International (1)
TA BlackRock Smart Beta 75 Service Class (3)    Wanger USA (1)

 

(1) Statement of assets and liabilities as of December 31, 2016, and statement of operations and change in net assets for the years ended December 31, 2016 and 2015
(2) Statement of assets and liabilities as of December 31, 2016 and statement of operations and change in net assets for the year ended December 31, 2016 and the period May 1, 2015 (commencement of operations) through December 31, 2015
(3) Statement of assets and liabilities as of December 31, 2016 and statement of operations and change in net assets for the period March 21, 2016 (commencement of operations) through December 31, 2016

/s/PricewaterhouseCoopers LLP

Chicago, Illinois

April 24, 2017

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market
Value		     Due (to)
/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

AB Balanced Wealth Strategy Class B Shares

     404,598.627     $ 4,648,367     $ 4,215,918     $ 11     $ 4,215,929       2,023,694     $ 1.697499     $ 12.014964  

AB Growth and Income Class B Shares

     578,852.197       15,137,920       17,846,013       40       17,846,053       5,510,413       1.567672       14.432762  

AB Large Cap Growth Class B Shares

     10,323.152       312,260       447,199       —         447,199       217,408       1.464243       2.399864  

American Funds - Asset Allocation Class 2 Shares

     2,128,703.553       43,377,961       45,745,839       (17 )      45,745,822       17,001,645       1.651413       12.875039  

American Funds - Bond Class 2 Shares

     1,475,614.284       16,170,422       15,744,804       (36 )      15,744,768       5,550,075       1.075733       10.243697  

American Funds - Growth Class 2 Shares

     459,875.535       31,392,654       30,774,871       (1 )      30,774,870       5,791,039       1.897813       14.768988  

American Funds - Growth-Income Class 2 Shares

     545,924.618       25,191,220       24,020,683       29       24,020,712       6,196,880       1.852328       14.686895  

American Funds - International Class 2 Shares

     684,716.038       12,948,788       11,475,841       8       11,475,849       4,168,809       1.067769       10.655038  

Fidelity® VIP Balanced Service Class 2

     1,287,713.852       20,683,390       21,131,384       (2 )      21,131,382       9,610,359       1.441117       13.018170  

Fidelity® VIP Contrafund® Initial Class

     —         —         —         —         —         —         14.171822       14.354772  

Fidelity® VIP Contrafund® Service Class 2

     1,063,201.042       34,438,072       34,500,874       8       34,500,882       6,870,488       1.564611       14.088132  

Fidelity® VIP Equity-Income Service Class 2

     39,582.801       785,628       849,447       (6 )      849,441       441,460       1.509040       2.282670  

Fidelity® VIP Growth Service Class 2

     13,435.036       544,018       785,144       11       785,155       408,897       1.447550       2.348192  

Fidelity® VIP Growth Opportunities Service Class 2

     58.237       1,115       1,788       4       1,792       1,283       1.362885       1.827021  

Fidelity® VIP Mid Cap Initial Class

     —         —         —         —         —         —         14.181532       14.364630  

Fidelity® VIP Mid Cap Service Class 2

     847,115.768       28,097,845       27,980,234       (18 )      27,980,216       5,297,560       1.685554       14.094151  

Fidelity® VIP Value Strategies Initial Class

     1,445.323       19,916       22,793       —         22,793       1,731       13.000140       13.167998  

Fidelity® VIP Value Strategies Service Class 2

     682,469.866       10,268,966       10,823,972       (20 )      10,823,952       2,168,759       1.623319       12.914970  

Franklin Founding Funds Allocation Class 4 Shares

     512,380.616       3,795,317       3,694,264       (5 )      3,694,259       1,941,404       1.831087       1.952137  

Franklin Income Class 2 Shares

     226,110.845       3,354,370       3,477,585       (17 )      3,477,568       2,549,956       1.272407       1.437778  

Franklin Mutual Shares Class 2 Shares

     38,626.201       652,310       775,614       13       775,627       582,908       1.219933       1.450844  

Franklin Templeton Foreign Class 2 Shares

     123,665.364       1,690,738       1,683,086       (3 )      1,683,083       1,725,317       0.917521       1.003768  

Invesco V.I. American Franchise Series II Shares

     3,540.807       134,873       183,980       5       183,985       125,436       1.436782       1.490702  

Invesco V.I. Value Opportunities Series II Shares

     58,285.193       360,891       375,939       6       375,945       270,675       1.226279       1.808749  

Janus Aspen - Enterprise Service Shares

     5,174.093       218,197       290,888       5       290,893       97,516       1.186408       4.031762  

Janus Aspen - Global Research Service Shares

     9,921.411       282,799       395,567       (6 )      395,561       289,631       0.863806       1.717125  

Janus Aspen - Perkins Mid Cap Value Service Shares

     146.449       2,181       2,358       (2 )      2,356       1,004       2.291991       2.411849  

JPMorgan Insurance Trust Core Bond Class 1 Shares

     48,434.718       553,741       525,032       (6 )      525,026       417,140       1.209147       1.274939  

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

     14,733.003       82,990       161,768       (3 )      161,765       52,138       2.951109       3.111631  

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

     355.817       4,634       8,002       5       8,007       2,590       2.962094       3.122963  

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

     2,657.516       43,781       71,806       2       71,808       25,556       2.677332       2.822986  

MFS® New Discovery Service Class

     113,193.516       1,737,578       1,699,035       (6 )      1,699,029       728,669       1.968123       2.766987  

MFS® Total Return Service Class

     79,975.791       1,528,246       1,824,248       (10 )      1,824,238       1,048,659       1.408863       1.929865  

State Street Total Return V.I.S. Class 3 Shares

     128,336.833       2,262,330       2,313,913       6       2,313,919       1,363,223       1.296435       11.592712  

TA AB Dynamic Allocation Initial Class

     6,211.304       52,538       58,883       1       58,884       35,803       1.349470       1.721818  

TA AB Dynamic Allocation Service Class

     2,368,682.337       21,420,370       22,289,301       (19 )      22,289,282       8,614,962       1.040643       10.784372  

TA Aegon Government Money Market Initial Class

     78,242.450       78,242       78,242       7       78,249       58,892       0.921568       1.328679  

TA Aegon Government Money Market Service Class

     36,408,115.878       36,408,115       36,408,116       63       36,408,179       12,254,624       0.885046       9.838155  

TA Aegon High Yield Bond Initial Class

     12,549.802       98,587       98,516       1       98,517       36,425       1.342934       11.429710  

TA Aegon High Yield Bond Service Class

     834,313.485       6,674,429       6,641,135       —         6,641,135       2,268,819       1.589960       11.146563  

TA Aegon U.S. Government Securities Initial Class

     21,336.326       260,596       251,982       (3 )      251,979       127,683       1.247539       1.973476  

TA Aegon U.S. Government Securities Service Class

     5,983,273.679       74,384,605       72,397,612       (34 )      72,397,578       19,883,084       1.026506       9.902034  

 

See accompanying notes.

 

2

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market
Value		     Due (to)
/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA American Funds Managed Risk - Balanced Service Class

     2,631,551.024     $ 25,733,298     $ 26,789,189     $ 7     $ 26,789,196       2,676,423     $ 9.900717     $ 10.236549  

TA Asset Allocation - Conservative Initial Class

     1,575.892       16,640       16,043       (1 )      16,042       9,676       1.420316       1.789243  

TA Asset Allocation - Conservative Service Class

     6,014,453.843       63,146,439       60,565,550       (148 )      60,565,402       23,849,251       1.152175       10.828489  

TA Asset Allocation - Growth Initial Class

     4,878.006       48,289       55,365       1       55,366       30,761       1.608392       2.129351  

TA Asset Allocation - Growth Service Class

     670,084.064       6,877,030       7,545,147       —         7,545,147       2,822,565       1.214480       12.147169  

TA Asset Allocation - Moderate Initial Class

     79,971.901       859,325       903,682       (3 )      903,679       513,502       1.528405       1.951460  

TA Asset Allocation - Moderate Service Class

     25,248,069.767       283,221,226       281,768,459       (5 )      281,768,454       104,593,983       1.219283       11.173763  

TA Asset Allocation - Moderate Growth Initial Class

     32,756.390       369,909       387,181       (2 )      387,179       211,341       1.594537       2.067039  

TA Asset Allocation - Moderate Growth Service Class

     13,912,324.221       157,195,448       162,356,824       105       162,356,929       57,499,076       1.244556       11.659963  

TA Barrow Hanley Dividend Focused Initial Class

     134,307.524       1,945,831       3,032,664       13       3,032,677       1,213,323       1.661585       14.358328  

TA Barrow Hanley Dividend Focused Service Class

     866,017.886       17,546,170       19,563,344       (4 )      19,563,340       5,972,559       1.443977       13.981645  

TA BlackRock Equity Smart Beta 100 Service Class

     106,369.019       1,109,759       1,126,448       —         1,126,448       107,409       10.425324       10.590000  

TA BlackRock Global Allocation Service Class

     4,672,843.632       61,838,898       62,055,363       156       62,055,519       29,085,578       1.214932       11.166514  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

     814,866.269       7,667,743       7,203,418       1       7,203,419       770,157       9.221302       9.625613  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

     845,744.107       7,865,166       7,315,687       (5 )      7,315,682       802,785       8.978574       9.372265  

TA BlackRock Smart Beta 50 Service Class

     342,434.953       3,530,611       3,516,807       (1 )      3,516,806       345,827       10.110246       10.270000  

TA BlackRock Smart Beta 75 Service Class

     80,640.802       828,027       833,826       —         833,826       81,476       10.179177       10.340000  

TA BlackRock Tactical Allocation Service Class

     6,753,343.550       102,947,348       100,557,285       130       100,557,415       32,609,979       1.269364       11.553302  

TA Clarion Global Real Estate Securities Initial Class

     1,797.773       25,434       22,041       (4 )      22,037       8,553       1.322655       10.372372  

TA Clarion Global Real Estate Securities Service Class

     446,639.914       5,810,067       5,721,457       (3 )      5,721,454       1,703,876       1.148187       10.111068  

TA International Moderate Growth Service Class

     4,505,882.766       42,542,596       41,499,180       24       41,499,204       19,645,357       0.960328       10.320954  

TA Janus Balanced Service Class

     5,013,840.287       64,961,023       66,684,076       (83 )      66,683,993       17,165,988       1.191270       12.248668  

TA Janus Mid-Cap Growth Initial Class

     1,897.795       52,861       47,881       (1 )      47,880       32,509       1.262806       11.397285  

TA Janus Mid-Cap Growth Service Class

     146,771.274       4,225,284       3,562,139       12       3,562,151       1,076,773       1.462551       11.101466  

TA Jennison Growth Initial Class

     161,621.811       1,443,532       1,422,272       (2 )      1,422,270       840,949       1.641377       15.068576  

TA Jennison Growth Service Class

     1,911,931.474       18,246,854       16,155,821       8       16,155,829       4,656,507       1.788347       14.683544  

TA JPMorgan Core Bond Service Class

     2,021,271.812       28,141,392       27,671,211       (16 )      27,671,195       9,984,860       1.042771       10.266455  

TA JPMorgan Enhanced Index Initial Class

     33,253.110       523,812       610,860       (1 )      610,859       206,326       1.799103       14.849813  

TA JPMorgan Enhanced Index Service Class

     240,998.214       4,292,086       4,419,907       (2 )      4,419,905       466,902       1.719043       14.480829  

TA JPMorgan Mid Cap Value Service Class

     1,370,306.908       27,375,536       26,255,080       (12 )      26,255,068       5,651,589       1.855889       14.745935  

TA JPMorgan Tactical Allocation Service Class

     5,633,416.520       80,807,732       83,825,238       (57 )      83,825,181       22,814,234       1.124226       11.050062  

TA Legg Mason Dynamic Allocation - Balanced Service Class

     8,615,428.848       100,501,091       96,492,803       89       96,492,892       22,101,622       1.074682       10.790923  

TA Legg Mason Dynamic Allocation - Growth Service Class

     5,365,101.544       65,087,987       62,664,386       (94 )      62,664,292       15,446,885       1.113574       11.067720  

TA Managed Risk - Balanced ETF Service Class

     39,450,627.944       449,860,780       438,296,476       (4 )      438,296,472       127,929,980       1.176865       11.092061  

TA Managed Risk - Conservative ETF Service Class

     7,559,149.597       90,156,838       88,366,459       29       88,366,488       33,427,887       1.185899       11.054517  

TA Managed Risk - Growth ETF Service Class

     37,104,977.112       376,475,988       354,352,531       (64 )      354,352,467       122,841,558       1.180669       11.432595  

TA Market Participation Strategy Service Class

     2,945,665.951       33,830,476       34,140,268       12       34,140,280       8,820,580       1.138890       11.768654  

TA MFS International Equity Initial Class

     7,837.677       59,303       61,839       (3 )      61,836       46,174       1.233207       10.484602  

TA MFS International Equity Service Class

     1,721,991.612       13,792,986       13,345,435       (35 )      13,345,400       5,268,104       1.089131       10.219366  

TA Morgan Stanley Capital Growth Initial Class

     4,736.253       75,422       63,703       (4 )      63,699       28,129       2.048127       2.726828  

TA Morgan Stanley Capital Growth Service Class

     281,466.282       4,001,308       3,709,726       (1 )      3,709,725       641,141       1.773151       15.303842  

 

See accompanying notes.

 

3

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Assets and Liabilities

December 31, 2016

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market
Value		     Due (to)
/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA Multi-Managed Balanced Initial Class

     2,048.891     $ 27,147     $ 27,783     $ (8 )    $ 27,775       12,065     $ 2.059810     $ 2.390155  

TA Multi-Managed Balanced Service Class

     6,266,390.533       82,348,458       83,405,658       (15 )      83,405,643       12,471,373       1.468810       12.822377  

TA Multi-Manager Alternative Strategies Service Class

     21,884.306       219,884       212,059       —         212,059       21,576       9.636402       10.008076  

TA PIMCO Tactical - Balanced Service Class

     3,187,661.490       36,627,688       37,518,776       (12 )      37,518,764       11,684,566       1.039395       11.484122  

TA PIMCO Tactical - Conservative Service Class

     2,104,351.466       23,915,960       24,094,824       —         24,094,824       7,056,786       0.992341       11.288971  

TA PIMCO Tactical - Growth Service Class

     2,676,360.528       29,972,032       30,537,274       3       30,537,277       7,608,963       0.991475       11.552115  

TA PIMCO Total Return Initial Class

     25,133.185       290,111       279,732       3       279,735       173,971       1.393254       1.643290  

TA PIMCO Total Return Service Class

     6,950,247.027       80,515,749       76,869,732       93       76,869,825       33,634,576       1.074326       10.135749  

TA PineBridge Inflation Opportunities Service Class

     1,464,500.908       15,392,991       14,601,074       47       14,601,121       9,361,263       0.955390       9.208316  

TA ProFunds UltraBear Service Class (OAM)

     1,675,224.542       1,514,766       1,139,153       14       1,139,167       18,800,019       0.058644       0.062991  

TA QS Investors Active Asset Allocation - Conservative Service Class

     2,451,298.060       25,947,475       25,125,805       (36 )      25,125,769       9,783,495       1.053500       10.495530  

TA QS Investors Active Asset Allocation - Moderate Service Class

     8,403,533.854       94,501,430       89,329,565       13       89,329,578       28,275,068       1.060382       10.496305  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

     5,202,331.744       58,606,610       53,011,760       33       53,011,793       15,556,628       1.058957       10.523814  

TA Small/Mid Cap Value Initial Class

     154,599.951       2,929,749       3,209,495       5       3,209,500       320,871       1.770249       15.018692  

TA Small/Mid Cap Value Service Class

     509,442.695       10,324,134       10,341,687       16       10,341,703       3,406,282       1.983251       14.632240  

TA T. Rowe Price Small Cap Initial Class

     19,529.131       249,393       265,401       (2 )      265,399       65,922       1.789628       15.530319  

TA T. Rowe Price Small Cap Service Class

     2,297,745.974       29,577,530       29,755,810       (30 )      29,755,780       5,742,239       2.318467       15.141733  

TA Torray Concentrated Growth Initial Class

     77,546.462       1,304,445       1,386,531       —         1,386,531       240,921       1.628221       13.702517  

TA Torray Concentrated Growth Service Class

     142,523.238       2,601,828       2,608,175       9       2,608,184       854,672       1.650002       13.349697  

TA TS&W International Equity Initial Class

     56,028.532       658,060       672,342       10       672,352       316,110       1.286393       10.863282  

TA TS&W International Equity Service Class

     210,507.768       2,640,945       2,505,042       2       2,505,044       695,271       0.945899       10.577180  

TA WMC US Growth Initial Class

     107,588.160       2,611,386       2,506,804       18       2,506,822       1,806,388       1.346805       14.521443  

TA WMC US Growth Service Class

     707,678.104       16,836,883       16,149,214       28       16,149,242       4,989,273       1.379395       14.149385  

Vanguard® Equity Index

     22,526.240       759,407       802,610       —         802,610       54,305       14.671736       14.861114  

Vanguard® International

     23,403.382       485,226       457,068       1       457,069       42,274       10.730311       10.868870  

Vanguard® Mid-Cap Index

     —         —         —         —         —         —         14.258431       14.442511  

Vanguard® REIT Index

     —         —         —         —         —         —         12.427243       12.587633  

Vanguard® Short-Term Investment Grade

     —         —         —         —         —         —         10.208320       10.340130  

Vanguard® Total Bond Market Index

     29,754.648       366,344       350,212       —         350,212       34,255       10.149050       10.280120  

Voya Global Perspectives Class S Shares

     —         —         —         —         —         —         9.543355       9.889978  

Voya Large Cap Value Class S Shares

     —         —         —         —         —         —         10.258396       10.630966  

Voya Strategic Allocation Conservative Class S Shares

     —         —         —         —         —         —         9.861563       10.219710  

Voya Strategic Allocation Moderate Class S Shares

     —         —         —         —         —         —         9.837219       10.194506  

Wanger International

     —         —         —         —         —         —         10.164500       10.295749  

Wanger USA

     —         —         —         —         —         —         14.165017       14.347877  

See accompanying notes.

 

4

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     AB Balanced
Wealth
Strategy
Class B Shares
Subaccount		     AB Growth
and Income
Class B Shares
Subaccount		     AB Large Cap
Growth
Class B Shares
Subaccount		     American
Funds - Asset
Allocation
Class 2 Shares
Subaccount		     American
Funds - Bond
Class 2 Shares
Subaccount		  

Net Assets as of December 31, 2014:

    $ 4,312,479     $ 12,486,991     $ 465,125     $ 30,134,635     $ 10,292,485  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      91,551       171,389       —         528,387       211,559  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      75,053       204,831       6,328       557,655       202,896  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      16,498       (33,442 )      (6,328 )      (29,268 )      8,663  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      418,087       —         42,232       2,253,937       232,090  

Realized Gain (Loss) on Investments

      (26,851 )      300,576       23,587       185,368       (15,359 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      391,236       300,576       65,819       2,439,305       216,731  

Net Change in Unrealized Appreciation (Depreciation)

      (434,049 )      (309,224 )      (17,278 )      (2,667,334 )      (411,964 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (42,813 )      (8,648 )      48,541       (228,029 )      (195,233 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (26,315 )      (42,090 )      42,213       (257,297 )      (186,570 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      270,860       1,945,441       (39,057 )      2,463,124       2,471,115  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      244,545       1,903,351       3,156       2,205,827       2,284,545  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 4,557,024     $ 14,390,342     $ 468,281     $ 32,340,462     $ 12,577,030  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      81,888       133,548       —         669,159       258,123  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      73,549       227,585       6,107       628,639       255,654  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      8,339       (94,037 )      (6,107 )      40,520       2,469  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      303,137       991,682       53,540       837,432       52,258  

Realized Gain (Loss) on Investments

      (183,882 )      291,931       13,718       147,690       (35,300 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      119,255       1,283,613       67,258       985,122       16,958  

Net Change in Unrealized Appreciation (Depreciation)

      (9,006 )      316,227       (56,566 )      1,595,206       46,242  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      110,249       1,599,840       10,692       2,580,328       63,200  

Net Increase (Decrease) in Net Assets Resulting from Operations

      118,588       1,505,803       4,585       2,620,848       65,669  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (459,683 )      1,949,908       (25,667 )      10,784,512       3,102,069  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (341,095 )      3,455,711       (21,082 )      13,405,360       3,167,738  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 4,215,929     $ 17,846,053     $ 447,199     $ 45,745,822     $ 15,744,768  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

 

See Accompanying Notes.

 

(1) See Footnote 1

 

5

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     American
Funds - Growth
Class 2 Shares
Subaccount		     American
Funds - Growth-
Income
Class 2 Shares
Subaccount		     American
Funds - International
Class 2 Shares
Subaccount		    

Fidelity® VIP
Balanced Service
Class 2

Subaccount

    

Fidelity® VIP
Contrafund®

Initial

Class
Subaccount

  

Net Assets as of December 31, 2014:

    $ 20,881,031     $ 16,812,248     $ 15,825,063     $ 18,248,581     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      149,544       257,826       187,548       283,334       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      435,352       349,911       309,049       299,055       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (285,808 )      (92,085 )      (121,501 )      (15,721 )      —    

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      4,649,731       2,721,213       1,013,450       590,667       —    

Realized Gain (Loss) on Investments

      (147,904 )      (179,876 )      106,067       122,294       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,501,827       2,541,337       1,119,517       712,961       —    

Net Change in Unrealized Appreciation (Depreciation)

      (3,264,869 )      (2,692,855 )      (2,063,680 )      (993,867 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      1,236,958       (151,518 )      (944,163 )      (280,906 )      —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      951,150       (243,603 )      (1,065,664 )      (296,627 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      3,380,709       2,965,484       (4,466,615 )      2,990,268       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      4,331,859       2,721,881       (5,532,279 )      2,693,641       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 25,212,890     $ 19,534,129     $ 10,292,784     $ 20,942,222     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      220,171       326,232       156,445       246,099       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      473,983       373,392       190,824       313,685       90  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (253,812 )      (47,160 )      (34,379 )      (67,586 )      (90 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,322,031       2,233,564       902,376       520,107       —    

Realized Gain (Loss) on Investments

      (1,450,959 )      (738,417 )      (490,412 )      90,994       1,249  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      871,072       1,495,147       411,964       611,101       1,249  

Net Change in Unrealized Appreciation (Depreciation)

      1,070,821       300,772       (274,575 )      626,934       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      1,941,893       1,795,919       137,389       1,238,035       1,249  

Net Increase (Decrease) in Net Assets Resulting from Operations

      1,688,081       1,748,759       103,010       1,170,449       1,159  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      3,873,899       2,737,824       1,080,055       (981,289 )      (1,159 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      5,561,980       4,486,583       1,183,065       189,160       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 30,774,870     $ 24,020,712     $ 11,475,849     $ 21,131,382     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

6

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Fidelity® VIP
Contrafund®
Service Class 2
Subaccount		     Fidelity® VIP
Equity-Income
Service Class 2
Subaccount		     Fidelity® VIP
Growth
Service Class 2
Subaccount		     Fidelity® VIP
Growth
Opportunities
Service Class 2
Subaccount		    

Fidelity® VIP
Mid Cap
Initial Class

Subaccount

  

Net Assets as of December 31, 2014:

    $ 34,518,197     $ 1,054,722     $ 830,866     $ 1,872     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      251,549       27,675       269       —         —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      593,480       14,098       12,012       26       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (341,931 )      13,577       (11,743 )      (26 )      —    

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,353,034       96,257       26,045       189       —    

Realized Gain (Loss) on Investments

      2,118,899       20,175       21,627       41       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      5,471,933       116,432       47,672       230       —    

Net Change in Unrealized Appreciation (Depreciation)

      (5,732,869 )      (180,400 )      8,383       (133 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (260,936 )      (63,968 )      56,055       97       —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      (602,867 )      (50,391 )      44,312       71       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,272,975 )      (122,486 )      (42,353 )      (63 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (3,875,842 )      (172,877 )      1,959       8       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 30,642,355     $ 881,845     $ 832,825     $ 1,880     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      206,444       17,024       —         1       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      455,980       11,749       11,179       24       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (249,536 )      5,275       (11,179 )      (23 )      —    

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,327,767       57,662       77,139       35       —    

Realized Gain (Loss) on Investments

      (875,065 )      1,009       16,889       37       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      1,452,702       58,671       94,028       72       —    

Net Change in Unrealized Appreciation (Depreciation)

      540,382       60,189       (91,012 )      (72 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      1,993,084       118,860       3,016       —         —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      1,743,548       124,135       (8,163 )      (23 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      2,114,979       (156,539 )      (39,507 )      (65 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,858,527       (32,404 )      (47,670 )      (88 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 34,500,882     $ 849,441     $ 785,155     $ 1,792     $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

7

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Fidelity® VIP
Mid Cap
Service Class 2
Subaccount		     Fidelity® VIP
Value
Strategies
Initial Class
Subaccount		     Fidelity® VIP
Value
Strategies
Service Class 2
Subaccount		     Franklin
Founding
Funds
Allocation
Class 4 Shares
Subaccount		     Franklin
Income
Class 2 Shares
Subaccount		  

Net Assets as of December 31, 2014:

    $ 16,020,401     $ 21,720     $ 15,028,804     $ 4,770,440     $ 8,687,407  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      65,716       259       89,649       117,369       187,774  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      376,058       144       156,324       68,079       64,054  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (310,342 )      115       (66,675 )      49,290       123,720  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,771,085       17       7,242       6,739       —    

Realized Gain (Loss) on Investments

      (205,874 )      17       1,337,316       5,257       444,910  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,565,211       34       1,344,558       11,996       444,910  

Net Change in Unrealized Appreciation (Depreciation)

      (3,184,648 )      (934 )      (1,848,234 )      (365,945 )      (893,291 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (619,437 )      (900 )      (503,676 )      (353,949 )      (448,381 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (929,779 )      (785 )      (570,351 )      (304,659 )      (324,661 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      9,533,982       (4 )      (4,889,319 )      (802,596 )      (4,725,226 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      8,604,203       (789 )      (5,459,670 )      (1,107,255 )      (5,049,887 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 24,624,604     $ 20,931     $ 9,569,134     $ 3,663,185     $ 3,637,520  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      83,431       245       93,150       133,347       172,814  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      371,541       136       143,369       57,525       51,432  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (288,110 )      109       (50,219 )      75,822       121,382  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,455,258       —         —         117,360       —    

Realized Gain (Loss) on Investments

      (1,149,146 )      9       (152,488 )      (46,728 )      (3,644 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      306,112       9       (152,488 )      70,632       (3,644 ) 

Net Change in Unrealized Appreciation (Depreciation)

      2,238,074       1,748       757,052       234,165       287,830  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      2,544,186       1,757       604,564       304,797       284,186  

Net Increase (Decrease) in Net Assets Resulting from Operations

      2,256,076       1,866       554,345       380,619       405,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,099,536       (4 )      700,473       (349,545 )      (565,520 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,355,612       1,862       1,254,818       31,074       (159,952 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 27,980,216     $ 22,793     $ 10,823,952     $ 3,694,259     $ 3,477,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

8

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Franklin
Mutual Shares
Class 2 Shares
Subaccount		     Franklin
Templeton
Foreign
Class 2 Shares
Subaccount		     Invesco V.I.
American
Franchise
Series II Shares
Subaccount		     Invesco V.I.
Value
Opportunities
Series II Shares
Subaccount		     Janus
Aspen - Enterprise
Service Shares
Subaccount		  

Net Assets as of December 31, 2014:

    $ 882,965     $ 2,186,589     $ 181,411     $ 407,212     $ 294,150  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      26,382       63,669       —         8,675       2,200  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      12,889       28,880       2,738       5,738       4,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      13,493       34,789       (2,738 )      2,937       (1,825 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      58,209       65,030       1,010       28,505       31,538  

Realized Gain (Loss) on Investments

      15,645       47,847       1,816       8,585       10,103  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      73,854       112,877       2,826       37,090       41,641  

Net Change in Unrealized Appreciation (Depreciation)

      (140,795 )      (280,565 )      5,696       (87,018 )      (32,907 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (66,941 )      (167,688 )      8,522       (49,928 )      8,734  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (53,448 )      (132,899 )      5,784       (46,991 )      6,909  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (34,175 )      (326,377 )      (2,648 )      (18,706 )      (25,259 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (87,623 )      (459,276 )      3,136       (65,697 )      (18,350 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 795,342     $ 1,727,313     $ 184,547     $ 341,515     $ 275,800  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      14,463       32,806       —         257       2,019  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      11,323       23,966       2,643       5,048       3,903  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      3,140       8,840       (2,643 )      (4,791 )      (1,884 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      59,581       29,383       16,626       100,992       21,640  

Realized Gain (Loss) on Investments

      26,319       (5,345 )      1,282       3,679       5,632  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      85,900       24,038       17,908       104,671       27,272  

Net Change in Unrealized Appreciation (Depreciation)

      12,513       57,724       (14,371 )      (47,626 )      3,390  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      98,413       81,762       3,537       57,045       30,662  

Net Increase (Decrease) in Net Assets Resulting from Operations

      101,553       90,602       894       52,254       28,778  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (121,268 )      (134,832 )      (1,456 )      (17,824 )      (13,685 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (19,715 )      (44,230 )      (562 )      34,430       15,093  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 775,627     $ 1,683,083     $ 183,985     $ 375,945     $ 290,893  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

9

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Janus Aspen -
Global
Research
Service Shares
Subaccount		     Janus Aspen -
Perkins Mid
Cap Value
Service Shares
Subaccount		     JPMorgan
Insurance
Trust Core Bond
Class 1 Shares
Subaccount		     JPMorgan
Insurance
Trust Mid
Cap Value
Class 1 Shares
Subaccount		     JPMorgan
Insurance
Trust Small
Cap Core
Class 1 Shares
Subaccount		  

Net Assets as of December 31, 2014:

    $ 436,369     $ 2,268     $ 681,481     $ 148,638     $ 7,500  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,305       22       24,345       1,464       11  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,607       30       9,494       1,901       102  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (4,302 )      (8 )      14,851       (437 )      (91 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         210       —         11,185       744  

Realized Gain (Loss) on Investments

      7,543       22       (4,080 )      1,118       131  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      7,543       232       (4,080 )      12,303       875  

Net Change in Unrealized Appreciation (Depreciation)

      (19,669 )      (335 )      (12,605 )      (17,653 )      (1,267 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (12,126 )      (103 )      (16,685 )      (5,350 )      (392 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (16,428 )      (111 )      (1,834 )      (5,787 )      (483 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (13,125 )      (74 )      (55,618 )      —         (140 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (29,553 )      (185 )      (57,452 )      (5,787 )      (623 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 406,816     $ 2,083     $ 624,029     $ 142,851     $ 6,877  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,699       19       15,180       1,288       36  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,838       29       8,121       1,912       95  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,139 )      (10 )      7,059       (624 )      (59 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         289       —         7,708       564  

Realized Gain (Loss) on Investments

      4,630       8       (3,880 )      1,086       118  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,630       297       (3,880 )      8,794       682  

Net Change in Unrealized Appreciation (Depreciation)

      (2,078 )      56       2,863       10,746       645  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      2,552       353       (1,017 )      19,540       1,327  

Net Increase (Decrease) in Net Assets Resulting from Operations

      413       343       6,042       18,916       1,268  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (11,668 )      (70 )      (105,045 )      (2 )      (138 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (11,255 )      273       (99,003 )      18,914       1,130  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 395,561     $ 2,356     $ 525,026     $ 161,765     $ 8,007  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

10

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

    

JPMorgan
Insurance
Trust U.S.
Equity

Class 1 Shares

Subaccount

     MFS® New
Discovery
Service Class
Subaccount		     MFS® Total
Return
Service Class
Subaccount		     State Street
Total Return
V.I.S.
Class 3 Shares
Subaccount		     TA AB
Dynamic
Allocation
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 67,588     $ 2,228,226     $ 1,913,348     $ 2,041,207     $ 67,420  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      758       —         44,168       29,359       862  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      881       29,862       25,741       31,540       941  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (123 )      (29,862 )      18,427       (2,181 )      (79 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,061       65,551       69,876       60,161       —    

Realized Gain (Loss) on Investments

      708       4,149       27,372       35,171       239  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,769       69,700       97,248       95,332       239  

Net Change in Unrealized Appreciation (Depreciation)

      (3,938 )      (102,613 )      (150,921 )      (151,425 )      (1,149 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (169 )      (32,913 )      (53,673 )      (56,093 )      (910 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (292 )      (62,775 )      (35,246 )      (58,274 )      (989 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (848 )      (346,005 )      (83,315 )      (133,821 )      (586 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (1,140 )      (408,780 )      (118,561 )      (192,095 )      (1,575 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 66,448     $ 1,819,446     $ 1,794,787     $ 1,849,112     $ 65,845  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      656       —         48,747       36,883       978  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      865       24,230       25,080       33,014       904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (209 )      (24,230 )      23,667       3,869       74  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,328       78,224       60,179       42,758       —    

Realized Gain (Loss) on Investments

      694       (15,935 )      24,690       17,022       935  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,022       62,289       84,869       59,780       935  

Net Change in Unrealized Appreciation (Depreciation)

      3,444       78,147       20,500       28,944       (542 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      6,466       140,436       105,369       88,724       393  

Net Increase (Decrease) in Net Assets Resulting from Operations

      6,257       116,206       129,036       92,593       467  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (897 )      (236,623 )      (99,585 )      372,214       (7,428 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      5,360       (120,417 )      29,451       464,807       (6,961 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 71,808     $ 1,699,029     $ 1,824,238     $ 2,313,919     $ 58,884  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

11

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA AB
Dynamic
Allocation
Service Class
Subaccount		     TA Aegon
Government
Money
Market
Initial Class
Subaccount		     TA Aegon
Government
Money
Market
Service Class
Subaccount		     TA Aegon
High Yield
Bond
Initial Class
Subaccount		     TA Aegon
High Yield
Bond
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 20,046,123     $ 172,527     $ 63,067,404     $ 155,404     $ 5,933,436  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      222,696       8       2,812       8,521       379,800  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      311,296       2,291       713,284       1,696       88,931  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (88,600 )      (2,283 )      (710,472 )      6,825       290,869  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      325,101       —         —         2,488       (38,459 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      325,101       —         —         2,488       (38,459 ) 

Net Change in Unrealized Appreciation (Depreciation)

      (665,944 )      —         —         (15,750 )      (608,659 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (340,843 )      —         —         (13,262 )      (647,118 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (429,443 )      (2,283 )      (710,472 )      (6,437 )      (356,249 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,448,269       (26,707 )      (14,794,488 )      (28,890 )      327,552  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      1,018,826       (28,990 )      (15,504,960 )      (35,327 )      (28,697 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 21,064,949     $ 143,537     $ 47,562,444     $ 120,077     $ 5,904,739  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      265,263       9       2,299       6,073       333,989  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      304,121       2,162       605,563       1,209       83,077  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (38,858 )      (2,153 )      (603,264 )      4,864       250,912  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      256,565       —         —         (1,072 )      (173,616 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      256,565       —         —         (1,072 )      (173,616 ) 

Net Change in Unrealized Appreciation (Depreciation)

      (132,762 )      —         —         9,136       626,208  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      123,803       —         —         8,064       452,592  

Net Increase (Decrease) in Net Assets Resulting from Operations

      84,945       (2,153 )      (603,264 )      12,928       703,504  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,139,388       (63,135 )      (10,551,001 )      (34,488 )      32,892  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      1,224,333       (65,288 )      (11,154,265 )      (21,560 )      736,396  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 22,289,282     $ 78,249     $ 36,408,179     $ 98,517     $ 6,641,135  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

12

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Aegon
U.S.
Government
Securities
Initial Class
Subaccount		     TA Aegon
U.S.
Government
Securities
Service Class
Subaccount		     TA American
Funds
Managed
Risk - Balanced
Service Class
Subaccount(1) 		   

TA Asset

Allocation -

Conservative
Initial Class
Subaccount

    

TA Asset

Allocation -
Conservative
Service Class
Subaccount

  

Net Assets as of December 31, 2014:

    $ 371,973     $ 32,526,271     $ —       $ 59,352     $ 61,576,298  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      7,797       622,100       —         1,326       1,298,658  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      4,887       626,485       38,397       696       882,150  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,910       (4,385 )      (38,397 )      630       416,508  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,818       166,344       —         2,354       2,605,565  

Realized Gain (Loss) on Investments

      (1,060 )      (319,256 )      (9,098 )      (1,407 )      158,894  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      758       (152,912 )      (9,098 )      947       2,764,459  

Net Change in Unrealized Appreciation (Depreciation)

      (7,798 )      (864,897 )      (38,943 )      (3,042 )      (5,507,058 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (7,040 )      (1,017,809 )      (48,041 )      (2,095 )      (2,742,599 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (4,130 )      (1,022,194 )      (86,438 )      (1,465 )      (2,326,091 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (60,625 )      39,275,442       9,405,678       (42,340 )      5,174,555  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (64,755 )      38,253,248       9,319,240       (43,805 )      2,848,464  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 307,218     $ 70,779,519     $ 9,319,240     $ 15,547     $ 64,424,762  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,845       360,017       106,786       321       1,109,879  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      4,486       1,190,019       234,222       219       845,039  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,641 )      (830,002 )      (127,436 )      102       264,840  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         350       1,386,297  

Realized Gain (Loss) on Investments

      (5,344 )      500,995       43,016       (8 )      (778,203 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (5,344 )      500,995       43,016       342       608,094  

Net Change in Unrealized Appreciation (Depreciation)

      (629 )      (443,504 )      1,094,835       50       880,028  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (5,973 )      57,491       1,137,851       392       1,488,122  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (7,614 )      (772,511 )      1,010,415       494       1,752,962  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (47,625 )      2,390,570       16,459,541       1       (5,612,322 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (55,239 )      1,618,059       17,469,956       495       (3,859,360 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 251,979     $ 72,397,578     $ 26,789,196     $ 16,042     $ 60,565,402  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

13

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Asset
Allocation
- Growth
Initial Class
Subaccount		     TA Asset
Allocation -
Growth
Service Class
Subaccount		     TA Asset
Allocation -
Moderate
Initial Class
Subaccount		     TA Asset
Allocation -
Moderate
Service Class
Subaccount		     TA Asset
Allocation -
Moderate
Growth
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 147,420     $ 6,835,481     $ 892,285     $ 289,657,459     $ 337,554  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,465       101,820       17,755       5,358,441       6,062  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,074       98,250       12,120       4,005,992       3,529  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      391       3,570       5,635       1,352,449       2,533  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         30,026       10,168,098       4,523  

Realized Gain (Loss) on Investments

      481       219,548       6,914       3,049,283       6,401  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      481       219,548       36,940       13,217,381       10,924  

Net Change in Unrealized Appreciation (Depreciation)

      (5,677 )      (519,081 )      (73,259 )      (25,805,067 )      (23,222 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (5,196 )      (299,533 )      (36,319 )      (12,587,686 )      (12,298 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (4,805 )      (295,963 )      (30,684 )      (11,235,237 )      (9,765 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,158 )      248,295       (54,588 )      1,176,969       (65,800 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (5,963 )      (47,668 )      (85,272 )      (10,058,268 )      (75,565 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 141,457     $ 6,787,813     $ 807,013     $ 279,599,191     $ 261,989  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,190       133,450       19,510       5,408,591       7,619  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,307       94,824       11,632       3,789,249       4,686  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (117 )      38,626       7,878       1,619,342       2,933  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         22,232       7,018,580       20,492  

Realized Gain (Loss) on Investments

      12,019       86,077       1,311       752,718       14  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      12,019       86,077       23,543       7,771,298       20,506  

Net Change in Unrealized Appreciation (Depreciation)

      (7,958 )      101,098       1,356       989,617       3,429  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      4,061       187,175       24,899       8,760,915       23,935  

Net Increase (Decrease) in Net Assets Resulting from Operations

      3,944       225,801       32,777       10,380,257       26,868  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (90,035 )      531,533       63,889       (8,210,994 )      98,322  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (86,091 )      757,334       96,666       2,169,263       125,190  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 55,366     $ 7,545,147     $ 903,679     $ 281,768,454     $ 387,179  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

14

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Asset
Allocation -
Moderate
Growth
Service Class
Subaccount		     TA Barrow
Hanley
Dividend
Focused
Initial Class
Subaccount		     TA Barrow
Hanley
Dividend
Focused
Service Class
Subaccount		    

TA

BlackRock

Equity Smart

Beta 100

Service Class

Subaccount(1)

     TA
BlackRock
Global
Allocation
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 151,210,658     $ 3,844,650     $ 6,012,268     $ —       $ 56,800,395  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,125,731       66,656       117,973       —         987,881  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,245,913       48,083       111,423       —         804,374  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      879,818       18,573       6,550       —         183,507  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,633,946       —         —         —         5,079,584  

Realized Gain (Loss) on Investments

      3,694,017       162,592       162,416       —         26,781  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      6,327,963       162,592       162,416       —         5,106,365  

Net Change in Unrealized Appreciation (Depreciation)

      (13,540,534 )      (356,685 )      (653,357 )      —         (6,852,441 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (7,212,571 )      (194,093 )      (490,941 )      —         (1,746,076 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (6,332,753 )      (175,520 )      (484,391 )      —         (1,562,569 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      8,526,000       (399,062 )      6,953,163       —         1,143,502  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      2,193,247       (574,582 )      6,468,772       —         (419,067 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 153,403,905     $ 3,270,068     $ 12,481,040     $ —       $ 56,381,328  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,768,033       61,862       327,465       —         224,629  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,204,955       40,951       219,242       2,810       817,031  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      563,078       20,911       108,223       (2,810 )      (592,402 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      8,580,519       —         —         —         347,991  

Realized Gain (Loss) on Investments

      1,729,850       228,128       249,583       (248 )      (606,240 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      10,310,369       228,128       249,583       (248 )      (258,249 ) 

Net Change in Unrealized Appreciation (Depreciation)

      (3,625,948 )      126,672       1,509,558       16,689       2,756,356  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      6,684,421       354,800       1,759,141       16,441       2,498,107  

Net Increase (Decrease) in Net Assets Resulting from Operations

      7,247,499       375,711       1,867,364       13,631       1,905,705  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,705,525       (613,102 )      5,214,936       1,112,817       3,768,486  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      8,953,024       (237,391 )      7,082,300       1,126,448       5,674,191  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 162,356,929     $ 3,032,677     $ 19,563,340     $ 1,126,448     $ 62,055,519  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

15

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA BlackRock
Global Allocation
Managed Risk -
Balanced
Service Class
Subaccount(1) 		    TA BlackRock
Global Allocation
Managed Risk -
Growth Service
Class
Subaccount(1) 		    TA
BlackRock
Smart Beta 50
Service Class
Subaccount(1) 		    TA
BlackRock
Smart Beta 75
Service Class
Subaccount(1)		     TA
BlackRock
Tactical
Allocation
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ —       $ —       $ —       $ —       $ 87,586,850  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      —         —         —         —         1,659,445  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      15,832       22,772       —         —         1,319,899  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (15,832 )      (22,772 )      —         —         339,546  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         4,710,084  

Realized Gain (Loss) on Investments

      (8,185 )      (6,479 )      —         —         638,820  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (8,185 )      (6,479 )      —         —         5,348,904  

Net Change in Unrealized Appreciation (Depreciation)

      (108,655 )      (207,978 )      —         —         (7,295,947 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (116,840 )      (214,457 )      —         —         (1,947,043 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (132,672 )      (237,229 )      —         —         (1,607,497 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      3,426,770       4,782,538       —         —         8,404,231  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,294,098       4,545,309       —         —         6,796,734  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 3,294,098     $ 4,545,309     $ —       $ —       $ 94,383,584  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      123,821       140,635       —         —         2,269,074  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      83,706       81,493       10,512       6,230       1,371,126  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      40,115       59,142       (10,512 )      (6,230 )      897,948  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      412,737       394,030       —         —         3,301,868  

Realized Gain (Loss) on Investments

      (94,426 )      (152,193 )      (927 )      31       112,430  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      318,311       241,837       (927 )      31       3,414,298  

Net Change in Unrealized Appreciation (Depreciation)

      (355,670 )      (341,501 )      (13,804 )      5,799       (964,853 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (37,359 )      (99,664 )      (14,731 )      5,830       2,449,445  

Net Increase (Decrease) in Net Assets Resulting from Operations

      2,756       (40,522 )      (25,243 )      (400 )      3,347,393  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      3,906,565       2,810,895       3,542,049       834,226       2,826,438  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,909,321       2,770,373       3,516,806       833,826       6,173,831  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 7,203,419     $ 7,315,682     $ 3,516,806     $ 833,826     $ 100,557,415  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

16

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Clarion
Global
Real Estate
Securities
Initial Class
Subaccount		     TA Clarion
Global Real
Estate
Securities
Service Class
Subaccount		     TA International
Moderate
Growth
Service Class
Subaccount		     TA Janus
Balanced
Service Class
Subaccount		     TA Janus
Mid-Cap
Growth
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 38,903     $ 5,463,539     $ 35,391,209     $ 35,378,527     $ 41,630  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,059       249,927       756,047       362,586       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      431       91,559       604,194       622,207       601  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      628       158,368       151,853       (259,621 )      (601 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         1,108,051       7,107  

Realized Gain (Loss) on Investments

      (1,905 )      116,885       440,491       541,617       1,728  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (1,905 )      116,885       440,491       1,649,668       8,835  

Net Change in Unrealized Appreciation (Depreciation)

      709       (467,508 )      (2,350,691 )      (2,054,308 )      (11,330 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,196 )      (350,623 )      (1,910,200 )      (404,640 )      (2,495 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (568 )      (192,255 )      (1,758,347 )      (664,261 )      (3,096 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (15,002 )      557,911       9,461,489       16,002,515       (5,089 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (15,570 )      365,656       7,703,142       15,338,254       (8,185 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 23,333     $ 5,829,195     $ 43,094,351     $ 50,716,781     $ 33,445  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      418       83,047       800,130       631,535       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      328       88,308       610,021       817,992       573  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      90       (5,261 )      190,109       (186,457 )      (573 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         524,526       3,921  

Realized Gain (Loss) on Investments

      (267 )      (64 )      (67,381 )      621,735       20  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (267 )      (64 )      (67,381 )      1,146,261       3,941  

Net Change in Unrealized Appreciation (Depreciation)

      (19 )      (104,434 )      (267,183 )      836,656       (4,655 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (286 )      (104,498 )      (334,564 )      1,982,917       (714 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (196 )      (109,759 )      (144,455 )      1,796,460       (1,287 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,100 )      2,018       (1,450,692 )      14,170,752       15,722  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (1,296 )      (107,741 )      (1,595,147 )      15,967,212       14,435  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 22,037     $ 5,721,454     $ 41,499,204     $ 66,683,993     $ 47,880  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

17

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Janus
Mid-Cap
Growth
Service Class
Subaccount		     TA Jennison
Growth
Initial Class
Subaccount		     TA Jennison
Growth
Service Class
Subaccount		     TA JPMorgan
Core Bond
Service Class
Subaccount		     TA JPMorgan
Enhanced
Index
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 4,158,692     $ 2,074,564     $ 12,818,115     $ 15,198,187     $ 655,455  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      —         —         —         345,165       6,256  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      60,885       28,346       220,779       267,775       8,538  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (60,885 )      (28,346 )      (220,779 )      77,390       (2,282 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      641,643       156,944       1,131,981       —         46,368  

Realized Gain (Loss) on Investments

      (84,275 )      109,625       273,093       2,690       27,292  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      557,368       266,569       1,405,074       2,690       73,660  

Net Change in Unrealized Appreciation (Depreciation)

      (779,835 )      (46,998 )      4,960       (323,994 )      (79,783 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (222,467 )      219,571       1,410,034       (321,304 )      (6,123 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (283,352 )      191,225       1,189,255       (243,914 )      (8,405 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (53,433 )      (264,192 )      4,655,615       5,158,300       (13,001 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (336,785 )      (72,967 )      5,844,870       4,914,386       (21,406 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 3,821,907     $ 2,001,597     $ 18,662,985     $ 20,112,573     $ 634,049  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      —         —         —         472,747       2,424  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      50,185       22,059       242,561       356,405       7,906  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (50,185 )      (22,059 )      (242,561 )      116,342       (5,482 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      333,048       257,979       2,645,528       —         13,251  

Realized Gain (Loss) on Investments

      (282,403 )      124,710       238,186       58,434       29,316  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      50,645       382,689       2,883,714       58,434       42,567  

Net Change in Unrealized Appreciation (Depreciation)

      (149,818 )      (447,554 )      (3,346,286 )      (225,767 )      23,374  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (99,173 )      (64,865 )      (462,572 )      (167,333 )      65,941  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (149,358 )      (86,924 )      (705,133 )      (50,991 )      60,459  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (110,398 )      (492,403 )      (1,802,023 )      7,609,613       (83,649 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (259,756 )      (579,327 )      (2,507,156 )      7,558,622       (23,190 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 3,562,151     $ 1,422,270     $ 16,155,829     $ 27,671,195     $ 610,859  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

18

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA JPMorgan
Enhanced
Index
Service Class
Subaccount		     TA JPMorgan
Mid Cap Value
Service Class
Subaccount		     TA
JPMorgan
Tactical
Allocation
Service Class
Subaccount		     TA Legg
Mason
Dynamic
Allocation -
Balanced
Service Class
Subaccount		    

TA Legg
Mason
Dynamic
Allocation -
Growth

Service Class
Subaccount

  

Net Assets as of December 31, 2014:

    $ 2,099,233     $ 20,447,452     $ 51,151,249     $ 57,286,673     $ 41,526,468  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      16,741       158,916       704,189       703,135       402,151  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      34,674       329,397       856,170       1,028,431       810,857  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (17,933 )      (170,481 )      (151,981 )      (325,296 )      (408,706 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      148,773       1,424,195       —         —         —    

Realized Gain (Loss) on Investments

      37,560       410,750       375,437       548,329       494,733  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      186,333       1,834,945       375,437       548,329       494,733  

Net Change in Unrealized Appreciation (Depreciation)

      (209,675 )      (2,743,920 )      (1,498,341 )      (3,269,466 )      (3,082,378 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (23,342 )      (908,975 )      (1,122,904 )      (2,721,137 )      (2,587,645 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (41,275 )      (1,079,456 )      (1,274,885 )      (3,046,433 )      (2,996,351 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (79,190 )      1,435,904       20,590,178       39,248,630       28,039,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (120,465 )      356,448       19,315,293       36,202,197       25,043,217  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 1,978,768     $ 20,803,900     $ 70,466,542     $ 93,488,870     $ 66,569,685  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,275       413,614       907,207       1,092,043       657,965  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      32,417       336,001       1,055,680       1,323,962       917,345  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (29,142 )      77,613       (148,473 )      (231,919 )      (259,380 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      41,134       3,459,483       —         2,143,253       1,208,606  

Realized Gain (Loss) on Investments

      (61,974 )      (11,832 )      607,905       780,360       180,464  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (20,840 )      3,447,651       607,905       2,923,613       1,389,070  

Net Change in Unrealized Appreciation (Depreciation)

      208,563       (1,084,278 )      1,526,683       (4,675,958 )      (2,634,950 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      187,723       2,363,373       2,134,588       (1,752,345 )      (1,245,880 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      158,581       2,440,986       1,986,115       (1,984,264 )      (1,505,260 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      2,282,556       3,010,182       11,372,524       4,988,286       (2,400,133 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      2,441,137       5,451,168       13,358,639       3,004,022       (3,905,393 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 4,419,905     $ 26,255,068     $ 83,825,181     $ 96,492,892     $ 62,664,292  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

19

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Managed
Risk -
Balanced ETF
Service Class
Subaccount		     TA Managed
Risk -
Conservative ETF
Service Class
Subaccount		     TA Managed
Risk -
Growth ETF
Service Class
Subaccount		     TA Market
Participation
Strategy
Service Class
Subaccount		     TA MFS
International
Equity
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 342,152,293     $ 77,921,336     $ 326,832,308     $ 27,861,249     $ 67,563  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      5,242,969       1,246,724       5,073,662       —         1,202  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,405,020       1,108,435       4,752,037       429,582       1,043  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (162,051 )      138,289       321,625       (429,582 )      159  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      16,508,025       3,644,996       29,622,051       1,125,205       —    

Realized Gain (Loss) on Investments

      1,181,642       354,232       (1,285,033 )      219,996       426  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      17,689,667       3,999,228       28,337,018       1,345,201       426  

Net Change in Unrealized Appreciation (Depreciation)

      (31,326,611 )      (5,916,693 )      (46,304,125 )      (2,382,994 )      (1,785 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (13,636,944 )      (1,917,465 )      (17,967,107 )      (1,037,793 )      (1,359 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (13,798,995 )      (1,779,176 )      (17,645,482 )      (1,467,375 )      (1,200 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      103,681,501       9,958,437       30,033,950       4,870,338       6,419  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      89,882,506       8,179,261       12,388,468       3,402,963       5,219  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 432,034,799     $ 86,100,597     $ 339,220,776     $ 31,264,212     $ 72,782  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      7,211,461       1,460,997       5,762,053       53,545       987  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,792,729       1,197,305       4,738,438       455,775       890  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,418,732       263,692       1,023,615       (402,230 )      97  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,538,812       817,693       —         486,666       494  

Realized Gain (Loss) on Investments

      (879,475 )      (288,710 )      (6,911,530 )      327,435       874  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,659,337       528,983       (6,911,530 )      814,101       1,368  

Net Change in Unrealized Appreciation (Depreciation)

      6,123,019       1,498,255       17,091,208       418,432       (2,376 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      8,782,356       2,027,238       10,179,678       1,232,533       (1,008 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      10,201,088       2,290,930       11,203,293       830,303       (911 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,939,415 )      (25,039 )      3,928,398       2,045,765       (10,035 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      6,261,673       2,265,891       15,131,691       2,876,068       (10,946 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 438,296,472     $ 88,366,488     $ 354,352,467     $ 34,140,280     $ 61,836  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

20

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA MFS
International
Equity
Service Class
Subaccount		     TA Morgan
Stanley
Capital
Growth
Initial Class
Subaccount		     TA Morgan
Stanley
Capital
Growth
Service Class
Subaccount		     TA Multi-
Managed
Balanced
Initial Class
Subaccount		     TA Multi-
Managed
Balanced
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 3,695,090     $ 70,381     $ 1,461,885     $ 50,777     $ 10,150,180  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      70,908       —         —         698       133,023  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      84,190       1,102       29,065       706       153,348  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (13,282 )      (1,102 )      (29,065 )      (8 )      (20,325 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         6,473       185,828       2,438       540,316  

Realized Gain (Loss) on Investments

      20,254       11,108       121,802       86       90,446  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      20,254       17,581       307,630       2,524       630,762  

Net Change in Unrealized Appreciation (Depreciation)

      (388,580 )      (9,338 )      (154,884 )      (3,110 )      (803,048 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (368,326 )      8,243       152,746       (586 )      (172,286 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (381,608 )      7,141       123,681       (594 )      (192,611 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      9,075,134       3,523       594,807       1       3,638,762  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      8,693,526       10,664       718,488       (593 )      3,446,151  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 12,388,616     $ 81,045     $ 2,180,373     $ 50,184     $ 13,596,331  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      168,827       —         —         756       401,542  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      187,110       975       32,390       886       531,979  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (18,283 )      (975 )      (32,390 )      (130 )      (130,437 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      98,441       9,580       330,356       2,561       1,562,177  

Realized Gain (Loss) on Investments

      (224,369 )      4,833       (67,197 )      4,277       30,169  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (125,928 )      14,413       263,159       6,838       1,592,346  

Net Change in Unrealized Appreciation (Depreciation)

      (74,650 )      (17,533 )      (359,825 )      (2,860 )      1,158,320  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (200,578 )      (3,120 )      (96,666 )      3,978       2,750,666  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (218,861 )      (4,095 )      (129,056 )      3,848       2,620,229  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,175,645       (13,251 )      1,658,408       (26,257 )      67,189,083  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      956,784       (17,346 )      1,529,352       (22,409 )      69,809,312  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 13,345,400     $ 63,699     $ 3,709,725     $ 27,775     $ 83,405,643  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

21

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA Multi-
Manager
Alternative
Strategies
Service Class
Subaccount		     TA PIMCO
Tactical -
Balanced
Service Class
Subaccount		     TA PIMCO
Tactical -
Conservative
Service Class
Subaccount		     TA PIMCO
Tactical -
Growth
Service Class
Subaccount		     TA PIMCO
Total
Return
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 30,031     $ 30,107,695     $ 10,002,783     $ 15,981,612     $ 390,765  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      288       —         47,589       —         8,480  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      761       443,100       209,552       300,406       4,413  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (473 )      (443,100 )      (161,963 )      (300,406 )      4,067  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      651       1,109,594       380,861       517,123       8,040  

Realized Gain (Loss) on Investments

      30       140,862       34,919       146,428       1,860  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      681       1,250,456       415,780       663,551       9,900  

Net Change in Unrealized Appreciation (Depreciation)

      (7,298 )      (2,142,538 )      (910,472 )      (1,625,569 )      (14,905 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (6,617 )      (892,082 )      (494,692 )      (962,018 )      (5,005 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (7,090 )      (1,335,182 )      (656,655 )      (1,262,424 )      (938 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      113,473       3,608,785       7,144,462       13,767,540       (97,419 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      106,383       2,273,603       6,487,807       12,505,116       (98,357 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 136,414     $ 32,381,298     $ 16,490,590     $ 28,486,728     $ 292,408  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      4,882       101,856       88,757       —         11,550  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,848       481,795       271,697       399,321       4,909  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      3,034       (379,939 )      (182,940 )      (399,321 )      6,641  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         383  

Realized Gain (Loss) on Investments

      (380 )      220,864       115,584       (6,331 )      (9,219 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (380 )      220,864       115,584       (6,331 )      (8,836 ) 

Net Change in Unrealized Appreciation (Depreciation)

      (869 )      1,522,052       617,626       1,482,806       2,041  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,249 )      1,742,916       733,210       1,476,475       (6,795 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      1,785       1,362,977       550,270       1,077,154       (154 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      73,860       3,774,489       7,053,964       973,395       (12,519 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      75,645       5,137,466       7,604,234       2,050,549       (12,673 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 212,059     $ 37,518,764     $ 24,094,824     $ 30,537,277     $ 279,735  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

22

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA PIMCO
Total Return
Service Class
Subaccount		     TA PineBridge
Inflation
Opportunities
Service Class
Subaccount		     TA ProFunds
UltraBear
Service Class
(OAM)
Subaccount		    

TA QS Investors

Active Asset
Allocation -
Conservative
Service Class
Subaccount

  

Net Assets as of December 31, 2014:

    $ 68,015,822     $ 14,671,181     $ 390,086     $ 24,423,931  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      1,871,781       186,170       —         262,200  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,019,279       214,568       9,282       349,065  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      852,502       (28,398 )      (9,282 )      (86,865 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      1,953,000       —         —         759,205  

Realized Gain (Loss) on Investments

      (315,564 )      (224,681 )      (138,423 )      18,240  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      1,637,436       (224,681 )      (138,423 )      777,445  

Net Change in Unrealized Appreciation (Depreciation)

      (3,216,589 )      (391,511 )      (32,361 )      (1,694,777 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,579,153 )      (616,192 )      (170,784 )      (917,332 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (726,651 )      (644,590 )      (180,066 )      (1,004,197 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      4,139,297       33,602       912,242       3,190,370  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,412,646       (610,988 )      732,176       2,186,173  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 71,428,468     $ 14,060,193     $ 1,122,262     $ 26,610,104  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      1,645,596       86,131       —         331,133  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,048,236       207,241       21,978       342,821  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      597,360       (121,110 )      (21,978 )      (11,688 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      60,752       —         —         —    

Realized Gain (Loss) on Investments

      (500,165 )      (193,944 )      (400,055 )      (229,674 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (439,413 )      (193,944 )      (400,055 )      (229,674 ) 

Net Change in Unrealized Appreciation (Depreciation)

      498,413       633,805       (199,203 )      558,788  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      59,000       439,861       (599,258 )      329,114  

Net Increase (Decrease) in Net Assets Resulting from Operations

      656,360       318,751       (621,236 )      317,426  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      4,784,997       222,177       638,141       (1,801,761 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      5,441,357       540,928       16,905       (1,484,335 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 76,869,825     $ 14,601,121     $ 1,139,167     $ 25,125,769  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

23

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA QS
Investors
Active Asset
Allocation -
Moderate
Service Class
Subaccount		     TA QS
Investors
Active Asset
Allocation -
Moderate
Growth
Service Class
Subaccount		     TA Small/Mid
Cap Value Initial
Class Subaccount		     TA Small/
Mid Cap
Value
Service Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 95,420,430     $ 55,073,814     $ 3,330,797     $ 7,605,510  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      963,792       604,444       34,066       68,366  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,323,822       821,203       44,361       125,297  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (360,030 )      (216,759 )      (10,295 )      (56,931 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      3,995,594       3,512,625       388,756       1,026,065  

Realized Gain (Loss) on Investments

      180,982       (28,979 )      52,290       (9,861 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,176,576       3,483,646       441,046       1,016,204  

Net Change in Unrealized Appreciation (Depreciation)

      (9,502,327 )      (8,264,566 )      (552,808 )      (1,336,696 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (5,325,751 )      (4,780,920 )      (111,762 )      (320,492 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (5,685,781 )      (4,997,679 )      (122,057 )      (377,423 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      5,672,293       8,548,338       (142,395 )      922,540  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (13,488 )      3,550,659       (264,452 )      545,117  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 95,406,942     $ 58,624,473     $ 3,066,345     $ 8,150,627  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      1,123,193       589,802       22,283       47,538  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      1,231,852       771,126       38,764       127,944  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (108,659 )      (181,324 )      (16,481 )      (80,406 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         287,276       916,696  

Realized Gain (Loss) on Investments

      (507,757 )      (1,083,059 )      37,215       (132,052 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (507,757 )      (1,083,059 )      324,491       784,644  

Net Change in Unrealized Appreciation (Depreciation)

      1,428,343       1,559,006       229,133       904,386  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      920,586       475,947       553,624       1,689,030  

Net Increase (Decrease) in Net Assets Resulting from Operations

      811,927       294,623       537,143       1,608,624  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (6,889,291 )      (5,907,303 )      (393,988 )      582,452  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (6,077,364 )      (5,612,680 )      143,155       2,191,076  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 89,329,578     $ 53,011,793     $ 3,209,500     $ 10,341,703  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

24

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA T.
Rowe Price
Small Cap
Initial Class
Subaccount		     TA T. Rowe
Price Small
Cap
Service Class
Subaccount		     TA Torray
Concentrated
Growth
Initial Class
Subaccount		     TA Torray
Concentrated
Growth
Service Class
Subaccount		     TA TS&W
International
Equity
Initial Class
Subaccount		  

Net Assets as of December 31, 2014:

    $ 295,834     $ 22,421,531     $ 1,765,697     $ 9,918,986     $ 886,720  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      —         —         9,558       32,967       25,695  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,955       381,615       24,397       143,513       11,996  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,955 )      (381,615 )      (14,839 )      (110,546 )      13,699  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      20,734       2,059,022       331,707       1,986,456       —    

Realized Gain (Loss) on Investments

      86,107       564,748       19,966       (682,330 )      14,572  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      106,841       2,623,770       351,673       1,304,126       14,572  

Net Change in Unrealized Appreciation (Depreciation)

      (92,386 )      (2,341,892 )      (386,371 )      (1,370,305 )      (23,798 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      14,455       281,878       (34,698 )      (66,179 )      (9,226 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      11,500       (99,737 )      (49,537 )      (176,725 )      4,473  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (45,833 )      2,523,075       (69,038 )      (7,201,223 )      (113,256 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (34,333 )      2,423,338       (118,575 )      (7,377,948 )      (108,783 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 261,501     $ 24,844,869     $ 1,647,122     $ 2,541,038     $ 777,937  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      —         —         6,633       3,373       18,220  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,443       376,774       19,844       36,767       9,494  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,443 )      (376,774 )      (13,211 )      (33,394 )      8,726  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      30,403       3,213,477       —         —         —    

Realized Gain (Loss) on Investments

      10,683       (47,350 )      21,734       (62,187 )      1,910  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      41,086       3,166,127       21,734       (62,187 )      1,910  

Net Change in Unrealized Appreciation (Depreciation)

      (14,696 )      (711,060 )      48,049       202,301       (16,702 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      26,390       2,455,067       69,783       140,114       (14,792 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      23,947       2,078,293       56,572       106,720       (6,066 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (20,049 )      2,832,618       (317,163 )      (39,574 )      (99,519 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      3,898       4,910,911       (260,591 )      67,146       (105,585 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 265,399     $ 29,755,780     $ 1,386,531     $ 2,608,184     $ 672,352  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

25

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     TA TS&W
International
Equity
Service Class
Subaccount		     TA WMC
US Growth
Initial Class
Subaccount		     TA WMC
US Growth
Service Class
Subaccount		     Vanguard®
Equity
Index Subaccount		     Vanguard®
International
Subaccount		  

Net Assets as of December 31, 2014:

    $ 1,710,204     $ 3,041,752     $ 2,909,622     $ —       $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      77,075       21,298       22,030       11,878       8,285  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      37,627       41,476       76,783       5,288       3,284  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      39,448       (20,178 )      (54,753 )      6,590       5,001  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         934,412       1,389,040       21,752       6,805  

Realized Gain (Loss) on Investments

      6,672       109,223       (116,223 )      (52 )      (15 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      6,672       1,043,635       1,272,817       21,700       6,790  

Net Change in Unrealized Appreciation (Depreciation)

      (129,310 )      (857,486 )      (1,246,748 )      (11,920 )      (23,787 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (122,638 )      186,149       26,069       9,780       (16,997 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (83,190 )      165,971       (28,684 )      16,370       (11,996 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      832,637       (392,785 )      11,471,852       707,208       442,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      749,447       (226,814 )      11,443,168       723,578       430,009  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ 2,459,651     $ 2,814,938     $ 14,352,790     $ 723,578     $ 430,009  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      59,099       10,349       25,803       16,490       6,071  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      35,241       36,025       220,998       5,950       3,423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      23,858       (25,676 )      (195,195 )      10,540       2,648  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         106,934       629,873       13,470       7,068  

Realized Gain (Loss) on Investments

      (36,253 )      (26,895 )      (324,314 )      (102 )      (287 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (36,253 )      80,039       305,559       13,368       6,781  

Net Change in Unrealized Appreciation (Depreciation)

      (22,227 )      (27,337 )      82,834       55,124       (4,371 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (58,480 )      52,702       388,393       68,492       2,410  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (34,622 )      27,026       193,198       79,032       5,058  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      80,015       (335,142 )      1,603,254       —         22,002  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      45,393       (308,116 )      1,796,452       79,032       27,060  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 2,505,044     $ 2,506,822     $ 16,149,242     $ 802,610     $ 457,069  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

26

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Vanguard®
Mid-Cap
Index
Subaccount		      Vanguard®
REIT
Index
Subaccount		      Vanguard®
Short-Term
Investment
Grade
Subaccount		      Vanguard®
Total Bond
Market
Index
Subaccount		    

Voya Global

Perspectives

Class S Shares

Subaccount(1)

  

Net Assets as of December 31, 2014:

    $ —        $ —        $ —        $ —       $ —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Investment Income:

              

Reinvested Dividends

      —          —          —          7,785       —    

Investment Expense:

              

Mortality and Expense Risk and Administrative Charges

      —          —          —          2,524       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Investment Income (Loss)

      —          —          —          5,261       —    

Increase (Decrease) in Net Assets from Operations:

              

Capital Gain Distributions

      —          —          —          1,460       —    

Realized Gain (Loss) on Investments

      —          —          —          (99 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —          —          —          1,361       —    

Net Change in Unrealized Appreciation (Depreciation)

      —          —          —          (15,721 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —          —          —          (14,360 )      —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      —          —          —          (9,099 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      —          —          —          353,604       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      —          —          —          344,505       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Assets as of December 31, 2015:

    $ —        $ —        $ —        $ 344,505     $ —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Investment Income:

              

Reinvested Dividends

      —          —          —          8,081       —    

Investment Expense:

              

Mortality and Expense Risk and Administrative Charges

      —          —          —          2,838       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Investment Income (Loss)

      —          —          —          5,243       —    

Increase (Decrease) in Net Assets from Operations:

              

Capital Gain Distributions

      —          —          —          963       —    

Realized Gain (Loss) on Investments

      —          —          —          (87 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —          —          —          876       —    

Net Change in Unrealized Appreciation (Depreciation)

      —          —          —          (411 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —          —          —          465       —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      —          —          —          5,708       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      —          —          —          (1 )      —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      —          —          —          5,707       —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ —        $ —        $ —        $ 350,212     $ —    
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1) See Footnote 1

 

27

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Statements of Operations and Change in Net Assets

Years Ended December 31, 2015 and 2016, Except as Noted

 

     Voya Large
Cap Value
Class S Shares
Subaccount(1)		      Voya
Strategic
Allocation
Conservative
Class S Shares
Subaccount(1)		      Voya
Strategic
Allocation
Moderate
Class S Shares
Subaccount(1)		      Wanger
International
Subaccount		      Wanger USA
Subaccount		  

Net Assets as of December 31, 2014:

    $ —        $ —        $ —        $ —        $ —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investment Income:

               

Reinvested Dividends

      —          —          —          —          —    

Investment Expense:

               

Mortality and Expense Risk and Administrative Charges

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      —          —          —          —          —    

Increase (Decrease) in Net Assets from Operations:

               

Capital Gain Distributions

      —          —          —          —          —    

Realized Gain (Loss) on Investments

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —          —          —          —          —    

Net Change in Unrealized Appreciation (Depreciation)

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      —          —          —          —          —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2015:

    $ —        $ —        $ —        $ —        $ —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Investment Income:

               

Reinvested Dividends

      —          —          —          —          —    

Investment Expense:

               

Mortality and Expense Risk and Administrative Charges

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      —          —          —          —          —    

Increase (Decrease) in Net Assets from Operations:

               

Capital Gain Distributions

      —          —          —          —          —    

Realized Gain (Loss) on Investments

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —          —          —          —          —    

Net Change in Unrealized Appreciation (Depreciation)

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      —          —          —          —          —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      —          —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2016:

    $ —        $ —        $ —        $ —        $ —    
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

See Accompanying Notes.

 

(1) See Footnote 1

 

28

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

1. Organization

Separate Accont VA BNY (the Separate Account) is a segregated investment account of Transamerica Financial Life Insurance Company (TFLIC), an indirect wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.

The Separate Account is registered with the Securities and Exchange Commission as a Unit Investment Trust pursuant to provisions of the Investment Company Act of 1940. TFLIC and the Separate Account are regulated by the Securities and Exchange Commission. The assets and liabilities of the Separate Account are clearly identified and distinguished from TFLIC other assets and liabilities. The Separate Account consists of multiple investment subaccounts. Each subaccount invests exclusively in the corresponding portfolio of a Mutual Fund. Each Mutual Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. Activity in these specified investment subaccounts is available to contract owners of Transamerica Landmark NY Variable Annuity, Transamerica Variable Annuity Series, Partners Variable Annuity Series, Transamerica LandmarkSM NY Variable Annuity, Transamerica AxiomSM II, Transamerica PrincipiumSM III, Transamerica Retirement Income Plus, Transamerica Income EliteSM II, Transamerica Advisor Elite II, Transamerica Variable Annuity O-Share, Transamerica LibertySM NY Variable Annuity, Transamerica AxiomSM NY Variable Annuity, Transamerica PrincipiumSM II Variable Annuity, Income EliteSM Variable Annuity.

The TA Profunds UltraBear-Open Allocation Method-Service Class (OAM) is included in the subaccount listing only to facilitate a contract owner purchase option.

Subaccount Investment by Mutual Fund:

 

Subaccount

  

Mutual Fund

AB Variable Products Series Fund, Inc.

  

AB Variable Products Series Fund, Inc.

AB Balanced Wealth Strategy Class B Shares

  

AB Balanced Wealth Strategy Portfolio Class B Shares

AB Growth and Income Class B Shares

  

AB Growth and Income Portfolio Class B Shares

AB Large Cap Growth Class B Shares

  

AB Large Cap Growth Portfolio Class B Shares

American Funds Insurance Series®

  

American Funds Insurance Series®

American Funds - Asset Allocation Class 2 Shares

  

American Funds - Asset Allocation Fund Class 2 Shares

American Funds - Bond Class 2 Shares

  

American Funds - Bond Fund Class 2 Shares

American Funds - Growth Class 2 Shares

  

American Funds - Growth Fund Class 2 Shares

American Funds - Growth-Income Class 2 Shares

  

American Funds - Growth-Income Fund Class 2 Shares

American Funds - International Class 2 Shares

  

American Funds - International Fund Class 2 Shares

Fidelity® Variable Insurance Products Fund

  

Fidelity® Variable Insurance Products Fund

Fidelity® VIP Balanced Service Class 2

  

Fidelity® VIP Balanced Service Portfolio Class 2

Fidelity® VIP Contrafund® Initial Class

  

Fidelity® VIP Contrafund® Portfolio Initial Class

Fidelity® VIP Contrafund® Service Class 2

  

Fidelity® VIP Contrafund® Portfolio Service Class 2

Fidelity® VIP Equity-Income Service Class 2

  

Fidelity® VIP Equity-Income Portfolio Service Class 2

Fidelity® VIP Growth Service Class 2

  

Fidelity® VIP Growth Portfolio Service Class 2

Fidelity® VIP Growth Opportunities Service Class 2

  

Fidelity® VIP Growth Opportunities Portfolio Service Class 2

Fidelity® VIP Mid Cap Initial Class

  

Fidelity® VIP Mid Cap Portfolio Initial Class

Fidelity® Variable Insurance Products Fund

  

Fidelity® Variable Insurance Products Fund

Fidelity® VIP Mid Cap Service Class 2

  

Fidelity® VIP Mid Cap Portfolio Service Class 2

Fidelity® VIP Value Strategies Initial Class

  

Fidelity® VIP Value Strategies Portfolio Initial Class

Fidelity® VIP Value Strategies Service Class 2

  

Fidelity® VIP Value Strategies Portfolio Service Class 2

Franklin Templeton Variable Insurance Products Trust

  

Franklin Templeton Variable Insurance Products Trust

Franklin Founding Funds Allocation Class 4 Shares

  

Franklin Founding Funds Allocation Fund Class 4 Shares

Franklin Income Class 2 Shares

  

Franklin Income Fund Class 2 Shares

Franklin Mutual Shares Class 2 Shares

  

Franklin Mutual Shares Fund Class 2 Shares

Franklin Templeton Foreign Class 2 Shares

  

Franklin Templeton Foreign Fund Class 2 Shares

 

29

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

  

Mutual Fund

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

  

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

Invesco V.I. American Franchise Series II Shares

  

Invesco V.I. American Franchise Fund Series II Shares

Invesco V.I. Value Opportunities Series II Shares

  

Invesco V.I. Value Opportunities Fund Series II Shares

Janus Aspen Series

  

Janus Aspen Series

Janus Aspen - Enterprise Service Shares

  

Janus Aspen - Enterprise Portfolio Service Shares

Janus Aspen - Global Research Service Shares

  

Janus Aspen - Global Research Portfolio Service Shares

Janus Aspen - Perkins Mid Cap Value Service Shares

  

Janus Aspen - Perkins Mid Cap Value Portfolio Service Shares

JPMorgan Insurance Trust

  

JPMorgan Insurance Trust

JPMorgan Insurance Trust Core Bond Class 1 Shares

  

JPMorgan Insurance Trust Core Bond Class 1 Shares

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

  

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

  

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

  

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

MFS® Variable Insurance Trust

  

MFS® Variable Insurance Trust

MFS® New Discovery Service Class

  

MFS® New Discovery Series Service Class

MFS® Total Return Service Class

  

MFS® Total Return Series Service Class

State Street Variable Insurance Series Funds, Inc.

  

State Street Variable Insurance Series Funds, Inc.

State Street Total Return V.I.S. Class 3 Shares

  

State Street Total Return V.I.S. Fund Class 3 Shares

Transamerica Series Trust

  

Transamerica Series Trust

TA AB Dynamic Allocation Initial Class

  

Transamerica AB Dynamic Allocation VP Initial Class

TA AB Dynamic Allocation Service Class

  

Transamerica AB Dynamic Allocation VP Service Class

TA Aegon Government Money Market Initial Class

  

Transamerica Aegon Government Money Market VP Initial Class

TA Aegon Government Money Market Service Class

  

Transamerica Aegon Money Market VP Service Class

TA Aegon High Yield Bond Initial Class

  

Transamerica Aegon High Yield Bond VP Initial Class

TA Aegon High Yield Bond Service Class

  

Transamerica Aegon High Yield Bond VP Service Class

TA Aegon U.S. Government Securities Initial Class

  

Transamerica Aegon U.S. Government Securities VP Initial Class

TA Aegon U.S. Government Securities Service Class

  

Transamerica Aegon U.S. Government Securities VP Service Class

TA American Funds Managed Risk - Balanced Service Class

  

Transamerica American Funds Managed Risk - Balanced VP Service Class

TA Asset Allocation - Conservative Initial Class

  

Transamerica Asset Allocation - Conservative VP Initial Class

TA Asset Allocation - Conservative Service Class

  

Transamerica Asset Allocation - Conservative VP Service Class

TA Asset Allocation - Growth Initial Class

  

Transamerica Asset Allocation - Growth VP Initial Class

TA Asset Allocation - Growth Service Class

  

Transamerica Asset Allocation - Growth VP Service Class

TA Asset Allocation - Moderate Initial Class

  

Transamerica Asset Allocation - Moderate VP Initial Class

TA Asset Allocation - Moderate Service Class

  

Transamerica Asset Allocation - Moderate VP Service Class

TA Asset Allocation - Moderate Growth Initial Class

  

Transamerica Asset Allocation - Moderate Growth VP Initial Class

TA Asset Allocation - Moderate Growth Service Class

  

Transamerica Asset Allocation - Moderate Growth VP Service Class

TA Barrow Hanley Dividend Focused Initial Class

  

Transamerica Barrow Hanley Dividend Focused VP Initial Class

TA Barrow Hanley Dividend Focused Service Class

  

Transamerica Barrow Hanley Dividend Focused VP Service Class

TA BlackRock Equity Smart Beta 100 Service Class

  

Transamerica BlackRock Equity Smart Beta 100 VP Service Class

TA BlackRock Global Allocation Service Class

  

Transamerica BlackRock Global Allocation VP Service Class

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

  

Transamerica BlackRock Global Allocation Managed Risk - Balanced VP Service Class

TA BlackRock Global Allocation Managed Risk - Growth Service Class

  

Transamerica BlackRock Global Allocation Managed Risk - Growth VP Service Class

TA BlackRock Smart Beta 50 Service Class

  

Transamerica BlackRock Smart Beta 50 VP Service Class

TA BlackRock Smart Beta 75 Service Class

  

Transamerica BlackRock Smart Beta 75 VP Service Class

TA BlackRock Tactical Allocation Service Class

  

Transamerica BlackRock Tactical Allocation VP Service Class

 

30

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

  

Mutual Fund

Transamerica Series Trust

  

Transamerica Series Trust

TA Clarion Global Real Estate Securities Initial Class

  

Transamerica Clarion Global Real Estate Securities VP Initial Class

TA Clarion Global Real Estate Securities Service Class

  

Transamerica Clarion Global Real Estate Securities VP Service Class

TA International Moderate Growth Service Class

  

Transamerica International Moderate Growth VP Service Class

TA Janus Balanced Service Class

  

Transamerica Janus Balanced VP Service Class

TA Janus Mid-Cap Growth Initial Class

  

Transamerica Janus Mid-Cap Growth VP Initial Class

TA Janus Mid-Cap Growth Service Class

  

Transamerica Janus Mid-Cap Growth VP Service Class

TA Jennison Growth Initial Class

  

Transamerica Jennison Growth VP Initial Class

TA Jennison Growth Service Class

  

Transamerica Jennison Growth VP Service Class

TA JPMorgan Core Bond Service Class

  

Transamerica JPMorgan Core Bond VP Service Class

TA JPMorgan Enhanced Index Initial Class

  

Transamerica JPMorgan Enhanced Index VP Initial Class

TA JPMorgan Enhanced Index Service Class

  

Transamerica JPMorgan Enhanced Index VP Service Class

TA JPMorgan Mid Cap Value Service Class

  

Transamerica JPMorgan Mid Cap Value VP Service Class

TA JPMorgan Tactical Allocation Service Class

  

Transamerica JPMorgan Tactical Allocation VP Service Class

TA Legg Mason Dynamic Allocation - Balanced Service Class

  

Transamerica Legg Mason Dynamic Allocation - Balanced VP Service Class

TA Legg Mason Dynamic Allocation - Growth Service Class

  

Transamerica Legg Mason Dynamic Allocation - Growth VP Service Class

TA Managed Risk - Balanced ETF Service Class

  

Transamerica Managed Risk - Balanced ETF VP Service Class

TA Managed Risk - Conservative ETF Service Class

  

Transamerica Managed Risk - Conservative ETF VP Service Class

TA Managed Risk - Growth ETF Service Class

  

Transamerica Managed Risk - Growth ETF VP Service Class

TA Market Participation Strategy Service Class

  

Transamerica Market Participation Strategy VP Service Class

TA MFS International Equity Initial Class

  

Transamerica MFS International Equity VP Initial Class

TA MFS International Equity Service Class

  

Transamerica MFS International Equity VP Service Class

TA Morgan Stanley Capital Growth Initial Class

  

Transamerica Morgan Stanley Capital Growth VP Initial Class

TA Morgan Stanley Capital Growth Service Class

  

Transamerica Morgan Stanley Capital Growth VP Service Class

TA Multi-Managed Balanced Initial Class

  

Transamerica Multi-Managed Balanced VP Initial Class

TA Multi-Managed Balanced Service Class

  

Transamerica Multi-Managed Balanced VP Service Class

TA Multi-Manager Alternative Strategies Service Class

  

Transamerica Multi-Manager Alt Strategies VP Service Class

TA PIMCO Tactical - Balanced Service Class

  

Transamerica PIMCO Tactical - Balanced VP Service Class

TA PIMCO Tactical - Conservative Service Class

  

Transamerica PIMCO Tactical - Conservative VP Service Class

TA PIMCO Tactical - Growth Service Class

  

Transamerica PIMCO Tactical - Growth VP Service Class

TA PIMCO Total Return Initial Class

  

Transamerica PIMCO Total Return VP Initial Class

TA PIMCO Total Return Service Class

  

Transamerica PIMCO Total Return VP Service Class

TA PineBridge Inflation Opportunities Service Class

  

Transamerica PineBridge Inflation Opportunities VP Service Class

TA ProFunds UltraBear Service Class (OAM)

  

Transamerica ProFunds UltraBear VP Service Class (OAM)

TA QS Investors Active Asset Allocation - Conservative Service Class

  

Transamerica QS Investors Active Asset Allocation - Conservative VP Service Class

TA QS Investors Active Asset Allocation - Moderate Service Class

  

Transamerica QS Investors Active Asset Allocation - Moderate VP Service Class

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

  

Transamerica QS Investors Active Asset Allocation - Moderate Growth VP Service Class

TA Small/Mid Cap Value Initial Class

  

Transamerica Small/Mid Cap Value VP Initial Class

TA Small/Mid Cap Value Service Class

  

Transamerica Small/Mid Cap Value VP Service Class

TA T. Rowe Price Small Cap Initial Class

  

Transamerica T. Rowe Price Small Cap VP Initial Class

TA T. Rowe Price Small Cap Service Class

  

Transamerica T. Rowe Price Small Cap VP Service Class

 

31

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

 

Subaccount

  

Mutual Fund

Transamerica Series Trust

  

Transamerica Series Trust

TA Torray Concentrated Growth Initial Class

  

Transamerica Torray Concentrated Growth VP Initial Class

TA Torray Concentrated Growth Service Class

  

Transamerica Torray Concentrated Growth VP Service Class

TA TS&W International Equity Initial Class

  

Transamerica TS&W International Equity VP Initial Class

TA TS&W International Equity Service Class

  

Transamerica TS&W International Equity VP Service Class

TA WMC US Growth Initial Class

  

Transamerica WMC US Growth VP Initial Class

TA WMC US Growth Service Class

  

Transamerica WMC US Growth VP Service Class

Vanguard® Variable Insurance Fund

  

Vanguard® Variable Insurance Fund

Vanguard® Equity Index

  

Vanguard® Equity Index Portfolio

Vanguard® International

  

Vanguard® International Portfolio

Vanguard® Mid-Cap Index

  

Vanguard® Mid-Cap Index Portfolio

Vanguard® REIT Index

  

Vanguard® REIT Index Portfolio

Vanguard® Short-Term Investment Grade

  

Vanguard® Short-Term Investment Grade Portfolio

Vanguard® Total Bond Market Index

  

Vanguard® Total Bond Market Index Portfolio

Voya Investors Trust

  

Voya Investors Trust

Voya Global Perspectives Class S Shares

  

Voya Global Perspectives Portfolio Class S Shares

Voya Large Cap Value Class S Shares

  

Voya Large Cap Value Portfolio Class S Shares

Voya Strategic Allocation Portfolios, Inc.

  

Voya Strategic Allocation Portfolios, Inc.

Voya Strategic Allocation Conservative Class S Shares

  

Voya Strategic Allocation Conservative Portfolio Class S Shares

Voya Strategic Allocation Moderate Class S Shares

  

Voya Strategic Allocation Moderate Portfolio Class S Shares

Wanger Advisors Trust

  

Wanger Advisors Trust

Wanger International

  

Wanger International

Wanger USA

  

Wanger USA

Each period reported on reflects a full twelve month period except as follows:

 

Subaccount

  

Inception Date

TA BlackRock Equity Smart Beta 100 Service Class

  

March 21, 2016

TA BlackRock Smart Beta 50 Service Class

  

March 21, 2016

TA BlackRock Smart Beta 75 Service Class

  

March 21, 2016

TA American Funds Managed Risk - Balanced Service Class

  

May 1, 2015

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

  

May 1, 2015

TA BlackRock Global Allocation Managed Risk - Growth Service Class

  

May 1, 2015

Voya Global Perspectives Class S Shares

  

May 1, 2015

Voya Large Cap Value Class S Shares

  

May 1, 2015

Voya Strategic Allocation Conservative Class S Shares

  

May 1, 2015

Voya Strategic Allocation Moderate Class S Shares

  

May 1, 2015

TA Multi-Manager Alternative Strategies Service Class

  

November 4, 2013

Fidelity® VIP Contrafund® Initial Class

  

May 1, 2013

Fidelity® VIP Mid Cap Initial Class

  

May 1, 2013

Fidelity® VIP Value Strategies Initial Class

  

May 1, 2013

Vanguard® Equity Index

  

May 1, 2013

Vanguard® International

  

May 1, 2013

Vanguard® Mid-Cap Index

  

May 1, 2013

 

32

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

1. Organization (continued)

 

Subaccount

  

Inception Date

Vanguard® REIT Index

  

May 1, 2013

Vanguard® Short-Term Investment Grade

  

May 1, 2013

Vanguard® Total Bond Market Index

  

May 1, 2013

Wanger International

  

May 1, 2013

Wanger USA

  

May 1, 2013

TA Market Participation Strategy Service Class

  

September 17, 2012

TA Legg Mason Dynamic Allocation - Balanced Service Class

  

May 1, 2012

TA Legg Mason Dynamic Allocation - Growth Service Class

  

May 1, 2012

Invesco V.I. American Franchise Series II Shares

  

April 27, 2012

The following subaccount name changes were made effective during the fiscal year ended December 31, 2016:

 

Subaccount

  

Formerly

State Street Total Return V.I.S. Class 3 Shares

  

GE Investments Total Return Class 3 Shares

TA Aegon Government Money Market Initial Class

  

TA Aegon Money Market Initial Class

TA Aegon Government Money Market Service Class

  

TA Aegon Money Market Service Class

TA Janus Mid-Cap Growth Initial Class

  

TA Morgan Stanley Mid-Cap Growth Initial Class

TA Janus Mid-Cap Growth Service Class

  

TA Morgan Stanley Mid-Cap Growth Service Class

TA Small/Mid Cap Value Initial Class

  

TA Systematic Small/Mid Cap Value Initial Class

TA Small/Mid Cap Value Service Class

  

TA Systematic Small/Mid Cap Value Service Class

During the current year the following subaccounts were liquidated and subsequently reinvested:

 

Reinvested Subaccount

  

Liquidated Subaccount

TA Janus Mid-Cap Growth Initial Class

  

TA Voya Mid Cap Opportunities Service Class

TA JPMorgan Core Bond Service Class

  

TA Voya Limited Maturity Bond Service Class

 

33

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

2. Summary of Significant Accounting Policies

The financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for variable annuity separate accounts registered as unit investment trusts. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions regarding matters that affect the reported amount of assets and liabilities. Actual results could differ from those estimates.

Investments

Net purchase payments received by the Separate Account are invested in the portfolios of the Mutual Funds as selected by the contract owner. Investments are stated at the closing net asset values per share on December 31, 2016.

Realized capital gains and losses from sales of shares in the Separate Account are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the Mutual Funds are included in the Statements of Operations and Changes in Net Assets.

Dividend Income

Dividends received from the Mutual Fund investments are reinvested to purchase additional mutual fund shares.

Fair Value Measurements and Fair Value Hierarchy

The Accounting Standards Codification™ (ASC) 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the nature of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

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

Financial assets and liabilities recorded at fair value on the Statements of Assets and Liabilities are categorized as follows:

Level 1. Unadjusted quoted prices for identical assets or liabilities in an active market.

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 management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

All investments in the Mutual Funds included in the Statements of Assets and Liabilities are stated at fair value and are based upon published closing NAV per share and therefore are considered Level 1.

There were no transfers between Level 1, Level 2 and Level 3 during the year ended December 31, 2016.

 

34

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

3. Investments

The aggregate cost of purchases and proceeds from sales of investments for the period ended December 31, 2016 were as follows:

 

Subaccount

    Purchases      Sales  

AB Balanced Wealth Strategy Class B Shares

    $ 1,043,558      $ 1,191,761  

AB Growth and Income Class B Shares

      4,332,990        1,485,432  

AB Large Cap Growth Class B Shares

      53,540        31,773  

American Funds - Asset Allocation Class 2 Shares

      15,292,253        3,629,797  

American Funds - Bond Class 2 Shares

      6,488,499        3,331,707  

American Funds - Growth Class 2 Shares

      12,727,100        6,784,985  

American Funds - Growth-Income Class 2 Shares

      8,979,875        4,055,655  

American Funds - International Class 2 Shares

      4,147,359        2,199,319  

Fidelity® VIP Balanced Service Class 2

      4,933,424        5,462,190  

Fidelity® VIP Contrafund® Initial Class

      21,319        22,568  

Fidelity® VIP Contrafund® Service Class 2

      11,500,625        7,307,421  

Fidelity® VIP Equity-Income Service Class 2

      74,686        168,286  

Fidelity® VIP Growth Service Class 2

      77,139        50,687  

Fidelity® VIP Growth Opportunities Service Class 2

      36        88  

Fidelity® VIP Mid Cap Initial Class

      —          —    

Fidelity® VIP Mid Cap Service Class 2

      7,817,464        5,550,772  

Fidelity® VIP Value Strategies Initial Class

      245        141  

Fidelity® VIP Value Strategies Service Class 2

      3,496,451        2,846,192  

Franklin Founding Funds Allocation Class 4 Shares

      346,196        502,561  

Franklin Income Class 2 Shares

      189,315        633,446  

Franklin Mutual Shares Class 2 Shares

      74,045        132,594  

Franklin Templeton Foreign Class 2 Shares

      62,311        158,919  

Invesco V.I. American Franchise Series II Shares

      16,626        4,099  

Invesco V.I. Value Opportunities Series II Shares

      101,249        22,875  

Janus Aspen - Enterprise Service Shares

      23,659        17,586  

Janus Aspen - Global Research Service Shares

      3,699        17,506  

Janus Aspen - Perkins Mid Cap Value Service Shares

      308        99  

JPMorgan Insurance Trust Core Bond Class 1 Shares

      15,180        113,165  

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

      8,995        1,912  

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

      601        234  

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

      2,984        1,763  

MFS® New Discovery Service Class

      111,107        293,736  

MFS® Total Return Service Class

      111,858        127,590  

State Street Total Return V.I.S. Class 3 Shares

      755,250        336,411  

TA AB Dynamic Allocation Initial Class

      1,289        8,643  

TA AB Dynamic Allocation Service Class

      4,947,773        3,847,232  

 

35

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA Aegon Government Money Market Initial Class

    $ 207,881      $ 273,169  

TA Aegon Government Money Market Service Class

      63,348,239        74,502,494  

TA Aegon High Yield Bond Initial Class

      6,113        35,736  

TA Aegon High Yield Bond Service Class

      1,999,747        1,715,942  

TA Aegon U.S. Government Securities Initial Class

      235,276        284,542  

TA Aegon U.S. Government Securities Service Class

      60,828,126        59,267,570  

TA American Funds Managed Risk - Balanced Service Class

      19,789,791        3,457,692  

TA Asset Allocation - Conservative Initial Class

      672        219  

TA Asset Allocation - Conservative Service Class

      10,474,006        14,435,158  

TA Asset Allocation - Growth Initial Class

      1,190        91,342  

TA Asset Allocation - Growth Service Class

      1,944,185        1,374,025  

TA Asset Allocation - Moderate Initial Class

      130,638        36,638  

TA Asset Allocation - Moderate Service Class

      32,871,251        32,444,244  

TA Asset Allocation - Moderate Growth Initial Class

      126,888        5,140  

TA Asset Allocation - Moderate Growth Service Class

      31,035,031        20,185,970  

TA Barrow Hanley Dividend Focused Initial Class

      73,150        665,353  

TA Barrow Hanley Dividend Focused Service Class

      7,468,503        2,145,347  

TA BlackRock Equity Smart Beta 100 Service Class

      1,136,517        26,510  

TA BlackRock Global Allocation Service Class

      15,015,954        11,491,950  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      6,797,949        2,438,532  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      4,260,980        996,908  

TA BlackRock Smart Beta 50 Service Class

      3,659,688        128,150  

TA BlackRock Smart Beta 75 Service Class

      835,427        7,431  

TA BlackRock Tactical Allocation Service Class

      16,481,659        9,455,467  

TA Clarion Global Real Estate Securities Initial Class

      418        1,429  

TA Clarion Global Real Estate Securities Service Class

      1,218,539        1,221,781  

TA International Moderate Growth Service Class

      6,030,572        7,291,113  

TA Janus Balanced Service Class

      24,101,718        9,592,835  

TA Janus Mid-Cap Growth Initial Class

      21,614        2,544  

TA Janus Mid-Cap Growth Service Class

      1,255,876        1,083,409  

TA Jennison Growth Initial Class

      303,417        559,903  

TA Jennison Growth Service Class

      6,845,082        6,244,141  

TA JPMorgan Core Bond Service Class

      11,371,400        3,645,432  

TA JPMorgan Enhanced Index Initial Class

      35,677        111,557  

TA JPMorgan Enhanced Index Service Class

      3,030,204        735,656  

TA JPMorgan Mid Cap Value Service Class

      11,673,862        5,126,590  

 

36

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA JPMorgan Tactical Allocation Service Class

    $ 18,374,568      $ 7,150,509  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      21,316,256        14,416,652  

TA Legg Mason Dynamic Allocation - Growth Service Class

      12,001,579        13,452,471  

TA Managed Risk - Balanced ETF Service Class

      52,615,765        51,597,363  

TA Managed Risk - Conservative ETF Service Class

      19,885,506        18,829,174  

TA Managed Risk - Growth ETF Service Class

      54,471,523        49,519,364  

TA Market Participation Strategy Service Class

      7,210,970        5,080,785  

TA MFS International Equity Initial Class

      6,962        16,405  

TA MFS International Equity Service Class

      3,603,527        2,347,699  

TA Morgan Stanley Capital Growth Initial Class

      31,230        35,876  

TA Morgan Stanley Capital Growth Service Class

      2,918,611        962,238  

TA Multi-Managed Balanced Initial Class

      29,565        53,391  

TA Multi-Managed Balanced Service Class

      72,357,200        3,736,377  

TA Multi-Manager Alternative Strategies Service Class

      84,618        7,725  

TA PIMCO Tactical - Balanced Service Class

      7,433,078        4,038,499  

TA PIMCO Tactical - Conservative Service Class

      10,632,596        3,761,575  

TA PIMCO Tactical - Growth Service Class

      7,414,380        6,840,310  

TA PIMCO Total Return Initial Class

      220,382        225,878  

TA PIMCO Total Return Service Class

      16,732,279        11,289,156  

TA PineBridge Inflation Opportunities Service Class

      2,306,361        2,205,300  

TA ProFunds UltraBear Service Class (OAM)

      2,435,126        1,818,991  

TA QS Investors Active Asset Allocation - Conservative Service Class

      3,658,238        5,471,683  

TA QS Investors Active Asset Allocation - Moderate Service Class

      6,583,871        13,581,789  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      3,604,071        9,692,701  

TA Small/Mid Cap Value Initial Class

      321,589        444,782  

TA Small/Mid Cap Value Service Class

      2,934,359        1,515,624  

TA T. Rowe Price Small Cap Initial Class

      37,190        29,281  

TA T. Rowe Price Small Cap Service Class

      10,900,176        5,230,847  

TA Torray Concentrated Growth Initial Class

      43,050        373,425  

TA Torray Concentrated Growth Service Class

      480,357        553,323  

TA TS&W International Equity Initial Class

      43,342        134,135  

TA TS&W International Equity Service Class

      433,890        330,016  

TA WMC US Growth Initial Class

      119,906        373,791  

TA WMC US Growth Service Class

      4,182,760        2,144,853  

Vanguard® Equity Index

      29,960        5,950  

Vanguard® International

      35,140        3,423  

 

37

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

Vanguard® Mid-Cap Index

    $ —        $ —    

Vanguard® REIT Index

      —          —    

Vanguard® Short-Term Investment Grade

      —          —    

Vanguard® Total Bond Market Index

      9,043        2,838  

Voya Global Perspectives Class S Shares

      —          —    

Voya Large Cap Value Class S Shares

      —          —    

Voya Strategic Allocation Conservative Class S Shares

      —          —    

Voya Strategic Allocation Moderate Class S Shares

      —          —    

Wanger International

      —          —    

Wanger USA

      —          —    

 

38

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Units

The change in units outstanding were as follows:

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

      276,728        (594,196 )      (317,468 )      207,730        (171,068 )      36,662  

AB Growth and Income Class B Shares

      724,452        (432,032 )      292,420       574,482        (420,925 )      153,557  

AB Large Cap Growth Class B Shares

      —          (12,478 )      (12,478 )      2,163        (23,591 )      (21,428 ) 

American Funds - Asset Allocation Class 2 Shares

      2,401,188        (1,309,070 )      1,092,118       1,027,608        (1,479,337 )      (451,729 ) 

American Funds - Bond Class 2 Shares

      1,144,800        (1,057,082 )      87,718       833,522        (817,354 )      16,168  

American Funds - Growth Class 2 Shares

      1,046,903        (1,101,971 )      (55,068 )      769,205        (730,512 )      38,693  

American Funds - Growth-Income Class 2 Shares

      698,037        (579,904 )      118,133       825,076        (415,933 )      409,143  

American Funds - International Class 2 Shares

      596,839        (618,045 )      (21,206 )      1,478,153        (6,577,414 )      (5,099,261 ) 

Fidelity® VIP Balanced Service Class 2

      1,007,093        (2,048,965 )      (1,041,872 )      1,792,739        (1,514,762 )      277,977  

Fidelity® VIP Contrafund® Initial Class

      1,598        (1,598 )      —         —          —         —    

Fidelity® VIP Contrafund® Service Class 2

      1,029,659        (1,410,194 )      (380,535 )      2,119,663        (4,976,354 )      (2,856,691 ) 

Fidelity® VIP Equity-Income Service Class 2

      —          (81,460 )      (81,460 )      8,165        (74,857 )      (66,692 ) 

Fidelity® VIP Growth Service Class 2

      —          (19,042 )      (19,042 )      —          (23,340 )      (23,340 ) 

Fidelity® VIP Growth Opportunities Service Class 2

      —          (45 )      (45 )      —          (46 )      (46 ) 

Fidelity® VIP Mid Cap Initial Class

      —          —         —         —          —         —    

Fidelity® VIP Mid Cap Service Class 2

      701,282        (925,436 )      (224,154 )      2,594,120        (616,900 )      1,977,220  

Fidelity® VIP Value Strategies Initial Class

      —          —         —         —          (1 )      (1 ) 

Fidelity® VIP Value Strategies Service Class 2

      472,616        (513,211 )      (40,595 )      499,391        (2,653,378 )      (2,153,987 ) 

Franklin Founding Funds Allocation Class 4 Shares

      54,352        (252,495 )      (198,143 )      58,157        (489,552 )      (431,395 ) 

Franklin Income Class 2 Shares

      13,418        (458,694 )      (445,276 )      50,305        (3,705,638 )      (3,655,333 ) 

Franklin Mutual Shares Class 2 Shares

      —          (103,366 )      (103,366 )      4,360        (32,043 )      (27,683 ) 

Franklin Templeton Foreign Class 2 Shares

      146        (146,217 )      (146,071 )      18,128        (329,105 )      (310,977 ) 

Invesco V.I. American Franchise Series II Shares

      —          (1,034 )      (1,034 )      —          (1,831 )      (1,831 ) 

Invesco V.I. Value Opportunities Series II Shares

      —          (13,685 )      (13,685 )      —          (13,426 )      (13,426 ) 

Janus Aspen - Enterprise Service Shares

      —          (4,101 )      (4,101 )      —          (15,323 )      (15,323 ) 

Janus Aspen - Global Research Service Shares

      —          (10,011 )      (10,011 )      2,242        (11,104 )      (8,862 ) 

Janus Aspen - Perkins Mid Cap Value Service Shares

      —          (35 )      (35 )      —          (36 )      (36 ) 

 

39

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		  

JPMorgan Insurance Trust Core Bond Class 1 Shares

      —          (82,892 )      (82,892 )      18,828        (63,518 )      (44,690 ) 

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

      —          —         —         —          —         —    

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

      —          (47 )      (47 )      —          (50 )      (50 ) 

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

      —          (341 )      (341 )      —          (328 )      (328 ) 

MFS® New Discovery Service Class

      16,394        (128,700 )      (112,306 )      11,532        (156,779 )      (145,247 ) 

MFS® Total Return Service Class

      1,530        (60,552 )      (59,022 )      5,232        (53,424 )      (48,192 ) 

State Street Total Return V.I.S. Class 3 Shares

      289,461        (193,016 )      96,445       68,036        (250,901 )      (182,865 ) 

TA AB Dynamic Allocation Initial Class

      191        (4,750 )      (4,559 )      346        (710 )      (364 ) 

TA AB Dynamic Allocation Service Class

      674,352        (1,466,122 )      (791,770 )      736,792        (1,708,074 )      (971,282 ) 

TA Aegon Government Money Market Initial Class

      155,628        (203,283 )      (47,655 )      95,523        (115,281 )      (19,758 ) 

TA Aegon Government Money Market Service Class

      19,286,024        (17,421,976 )      1,864,048       16,010,379        (18,807,174 )      (2,796,795 ) 

TA Aegon High Yield Bond Initial Class

      19        (17,380 )      (17,361 )      4,930        (18,805 )      (13,875 ) 

TA Aegon High Yield Bond Service Class

      355,566        (654,932 )      (299,366 )      290,466        (386,324 )      (95,858 ) 

TA Aegon U.S. Government Securities Initial Class

      113,714        (140,022 )      (26,308 )      —          (30,065 )      (30,065 ) 

TA Aegon U.S. Government Securities Service Class

      10,183,651        (10,094,832 )      88,819       10,934,877        (5,238,904 )      5,695,973  

TA American Funds Managed Risk - Balanced Service Class

      2,037,872        (339,071 )      1,698,801       994,103        (16,481 )      977,622  

TA Asset Allocation - Conservative Initial Class

      —          —         —         —          (26,040 )      (26,040 ) 

TA Asset Allocation - Conservative Service Class

      1,240,713        (6,672,601 )      (5,431,888 )      2,471,491        (4,867,456 )      (2,395,965 ) 

TA Asset Allocation - Growth Initial Class

      —          (51,458 )      (51,458 )      —          (652 )      (652 ) 

TA Asset Allocation - Growth Service Class

      373,642        (556,376 )      (182,734 )      188,591        (655,165 )      (466,574 ) 

TA Asset Allocation - Moderate Initial Class

      51,490        (15,411 )      36,079       —          (31,562 )      (31,562 ) 

TA Asset Allocation - Moderate Service Class

      5,267,348        (12,654,206 )      (7,386,858 )      5,472,952        (13,304,502 )      (7,831,550 ) 

TA Asset Allocation - Moderate Growth Initial Class

      61,927        (258 )      61,669       —          (37,059 )      (37,059 ) 

TA Asset Allocation - Moderate Growth Service Class

      3,451,104        (7,832,991 )      (4,381,887 )      4,121,881        (8,751,769 )      (4,629,888 ) 

TA Barrow Hanley Dividend Focused Initial Class

      5,664        (279,233 )      (273,569 )      11,219        (189,101 )      (177,882 ) 

TA Barrow Hanley Dividend Focused Service Class

      2,006,264        (614,928 )      1,391,336       2,631,064        (277,546 )      2,353,518  

TA BlackRock Equity Smart Beta 100 Service Class

      109,689        (2,280 )      107,409       —          —         —    

 

40

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		  

TA BlackRock Global Allocation Service Class

      1,954,165        (4,935,080 )      (2,980,915 )      1,582,885        (3,465,502 )      (1,882,617 ) 

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      677,936        (256,412 )      421,524       361,999        (13,366 )      348,633  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      414,558        (103,349 )      311,209       497,588        (6,012 )      491,576  

TA BlackRock Smart Beta 50 Service Class

      357,465        (11,638 )      345,827       —          —         —    

TA BlackRock Smart Beta 75 Service Class

      81,586        (110 )      81,476       —          —         —    

TA BlackRock Tactical Allocation Service Class

      1,869,304        (2,984,576 )      (1,115,272 )      2,267,011        (3,509,868 )      (1,242,857 ) 

TA Clarion Global Real Estate Securities Initial Class

      —          (434 )      (434 )      1,651        (7,337 )      (5,686 ) 

TA Clarion Global Real Estate Securities Service Class

      184,484        (369,714 )      (185,230 )      272,076        (466,535 )      (194,459 ) 

TA International Moderate Growth Service Class

      1,362,508        (3,608,634 )      (2,246,126 )      3,559,758        (3,514,035 )      45,723  

TA Janus Balanced Service Class

      5,455,330        (2,429,995 )      3,025,335       3,868,013        (1,555,840 )      2,312,173  

TA Janus Mid-Cap Growth Initial Class

      9,723        (1,553 )      8,170       5,372        (9,418 )      (4,046 ) 

TA Janus Mid-Cap Growth Service Class

      165,255        (371,775 )      (206,520 )      211,193        (332,902 )      (121,709 ) 

TA Jennison Growth Initial Class

      28,317        (335,632 )      (307,315 )      43,501        (202,895 )      (159,394 ) 

TA Jennison Growth Service Class

      562,059        (1,784,204 )      (1,222,145 )      1,723,825        (592,279 )      1,131,546  

TA JPMorgan Core Bond Service Class

      1,754,678        (1,254,848 )      499,830       1,992,568        (998,287 )      994,281  

TA JPMorgan Enhanced Index Initial Class

      7,825        (37,924 )      (30,099 )      4,968        (30,067 )      (25,099 ) 

TA JPMorgan Enhanced Index Service Class

      228,699        (140,407 )      88,292       63,113        (132,320 )      (69,207 ) 

TA JPMorgan Mid Cap Value Service Class

      897,940        (979,356 )      (81,416 )      880,698        (871,596 )      9,102  

TA JPMorgan Tactical Allocation Service Class

      2,549,487        (2,475,232 )      74,255       3,805,037        (1,741,837 )      2,063,200  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      2,402,406        (4,416,484 )      (2,014,078 )      8,462,929        (1,328,997 )      7,133,932  

TA Legg Mason Dynamic Allocation - Growth Service Class

      1,578,134        (2,177,746 )      (599,612 )      4,590,502        (996,819 )      3,593,683  

TA Managed Risk - Balanced ETF Service Class

      6,578,064        (18,762,358 )      (12,184,294 )      15,645,587        (12,411,003 )      3,234,584  

TA Managed Risk - Conservative ETF Service Class

      4,277,021        (8,530,376 )      (4,253,355 )      3,615,391        (5,947,354 )      (2,331,963 ) 

TA Managed Risk - Growth ETF Service Class

      6,914,452        (14,352,667 )      (7,438,215 )      10,225,626        (19,201,094 )      (8,975,468 ) 

TA Market Participation Strategy Service Class

      2,519,163        (1,764,467 )      754,696       2,132,007        (568,393 )      1,563,614  

TA MFS International Equity Initial Class

      4,360        (11,828 )      (7,468 )      6,995        (2,498 )      4,497  

TA MFS International Equity Service Class

      817,733        (610,683 )      207,050       4,053,206        (232,159 )      3,821,047  

 

41

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net Increase
(Decrease)		  

TA Morgan Stanley Capital Growth Initial Class

      9,440        (15,808 )      (6,368 )      12,814        (11,344 )      1,470  

TA Morgan Stanley Capital Growth Service Class

      319,503        (209,144 )      110,359       228,979        (185,771 )      43,208  

TA Multi-Managed Balanced Initial Class

      12,065        (23,192 )      (11,127 )      —          —         —    

TA Multi-Managed Balanced Service Class

      9,088,965        (959,704 )      8,129,261       701,245        (500,735 )      200,510  

TA Multi-Manager Alternative Strategies Service Class

      8,205        (607 )      7,598       11,271        (179 )      11,092  

TA PIMCO Tactical - Balanced Service Class

      1,685,178        (1,442,246 )      242,932       1,217,926        (813,932 )      403,994  

TA PIMCO Tactical - Conservative Service Class

      2,938,785        (2,009,328 )      929,457       1,435,839        (610,891 )      824,948  

TA PIMCO Tactical - Growth Service Class

      1,094,784        (1,183,510 )      (88,726 )      2,263,491        (735,934 )      1,527,557  

TA PIMCO Total Return Initial Class

      126,957        (137,198 )      (10,241 )      8,036        (68,275 )      (60,239 ) 

TA PIMCO Total Return Service Class

      2,560,414        (4,827,268 )      (2,266,854 )      3,113,907        (5,515,775 )      (2,401,868 ) 

TA PineBridge Inflation Opportunities Service Class

      660,423        (1,541,623 )      (881,200 )      724,978        (1,742,945 )      (1,017,967 ) 

TA ProFunds UltraBear Service Class (OAM)

      28,778,601        (23,918,571 )      4,860,030       14,311,365        (4,796,934 )      9,514,431  

TA QS Investors Active Asset Allocation - Conservative Service Class

      641,978        (2,328,835 )      (1,686,857 )      963,073        (2,044,012 )      (1,080,939 ) 

TA QS Investors Active Asset Allocation - Moderate Service Class

      883,778        (5,350,747 )      (4,466,969 )      2,179,317        (3,380,845 )      (1,201,528 ) 

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      498,616        (3,350,240 )      (2,851,624 )      2,188,996        (2,925,237 )      (736,241 ) 

TA Small/Mid Cap Value Initial Class

      875        (38,223 )      (37,348 )      14,331        (34,425 )      (20,094 ) 

TA Small/Mid Cap Value Service Class

      385,856        (476,930 )      (91,074 )      538,823        (383,157 )      155,666  

TA T. Rowe Price Small Cap Initial Class

      1,196        (13,909 )      (12,713 )      17,109        (91,842 )      (74,733 ) 

TA T. Rowe Price Small Cap Service Class

      775,414        (895,581 )      (120,167 )      793,477        (678,016 )      115,461  

TA Torray Concentrated Growth Initial Class

      6,317        (66,163 )      (59,846 )      —          (12,115 )      (12,115 ) 

TA Torray Concentrated Growth Service Class

      76,214        (160,406 )      (84,192 )      402,833        (3,366,142 )      (2,963,309 ) 

TA TS&W International Equity Initial Class

      3,613        (61,777 )      (58,164 )      7,160        (58,783 )      (51,623 ) 

TA TS&W International Equity Service Class

      109,742        (73,980 )      35,762       166,704        (105,070 )      61,634  

TA WMC US Growth Initial Class

      2,508        (253,989 )      (251,481 )      37,565        (324,052 )      (286,487 ) 

TA WMC US Growth Service Class

      497,992        (680,137 )      (182,145 )      4,341,572        (208,473 )      4,133,099  

 

42

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2016      Year Ended December 31, 2015  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		      Net Increase
(Decrease)		      Units
Purchased		      Units Redeemed
and Transferred
to/from		      Net Increase
(Decrease)		  

Vanguard® Equity Index

      —          —          —          54,305        —          54,305  

Vanguard® International

      2,068        —          2,068        40,206        —          40,206  

Vanguard® Mid-Cap Index

      —          —          —          —          —          —    

Vanguard® REIT Index

      —          —          —          —          —          —    

Vanguard® Short-Term Investment Grade

      —          —          —          —          —          —    

Vanguard® Total Bond Market Index

      —          —          —          34,255        —          34,255  

Voya Global Perspectives Class S Shares

      —          —          —          —          —          —    

Voya Large Cap Value Class S Shares

      —          —          —          —          —          —    

Voya Strategic Allocation Conservative Class S Shares

      —          —          —          —          —          —    

Voya Strategic Allocation Moderate Class S Shares

      —          —          —          —          —          —    

Wanger International

      —          —          —          —          —          —    

Wanger USA

      —          —          —          —          —          —    

 

43

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		     Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

    $ 663,094      $ (1,122,777 )    $ (459,683 )    $ 672,013      $ (401,153 )    $ 270,860  

AB Growth and Income Class B Shares

      3,235,771        (1,285,863 )      1,949,908       3,273,618        (1,328,177 )      1,945,441  

AB Large Cap Growth Class B Shares

      —          (25,667 )      (25,667 )      4,227        (43,284 )      (39,057 ) 

American Funds - Asset Allocation Class 2 Shares

      13,823,457        (3,038,945 )      10,784,512       6,178,985        (3,715,861 )      2,463,124  

American Funds - Bond Class 2 Shares

      6,230,611        (3,128,542 )      3,102,069       3,853,350        (1,382,235 )      2,471,115  

American Funds - Growth Class 2 Shares

      10,287,342        (6,413,443 )      3,873,899       7,379,890        (3,999,181 )      3,380,709  

American Funds - Growth-Income Class 2 Shares

      6,463,314        (3,725,490 )      2,737,824       5,528,780        (2,563,296 )      2,965,484  

American Funds - International Class 2 Shares

      3,118,293        (2,038,238 )      1,080,055       4,797,738        (9,264,353 )      (4,466,615 ) 

Fidelity® VIP Balanced Service Class 2

      4,198,887        (5,180,176 )      (981,289 )      5,797,208        (2,806,940 )      2,990,268  

Fidelity® VIP Contrafund® Initial Class

      21,319        (22,478 )      (1,159 )      —          —         —    

Fidelity® VIP Contrafund® Service Class 2

      9,073,128        (6,958,149 )      2,114,979       13,399,906        (16,672,881 )      (3,272,975 ) 

Fidelity® VIP Equity-Income Service Class 2

      —          (156,539 )      (156,539 )      15,771        (138,257 )      (122,486 ) 

Fidelity® VIP Growth Service Class 2

      —          (39,507 )      (39,507 )      —          (42,353 )      (42,353 ) 

Fidelity® VIP Growth Opportunities Service Class 2

      —          (65 )      (65 )      —          (63 )      (63 ) 

Fidelity® VIP Mid Cap Initial Class

      —          —         —         —          —         —    

Fidelity® VIP Mid Cap Service Class 2

      6,341,181        (5,241,645 )      1,099,536       13,091,094        (3,557,112 )      9,533,982  

Fidelity® VIP Value Strategies Initial Class

      —          (4 )      (4 )      —          (4 )      (4 ) 

Fidelity® VIP Value Strategies Service Class 2

      3,422,440        (2,721,967 )      700,473       2,999,865        (7,889,184 )      (4,889,319 ) 

Franklin Founding Funds Allocation Class 4 Shares

      95,690        (445,235 )      (349,545 )      106,742        (909,338 )      (802,596 ) 

Franklin Income Class 2 Shares

      16,638        (582,158 )      (565,520 )      63,222        (4,788,448 )      (4,725,226 ) 

Franklin Mutual Shares Class 2 Shares

      —          (121,268 )      (121,268 )      5,487        (39,662 )      (34,175 ) 

Franklin Templeton Foreign Class 2 Shares

      137        (134,969 )      (134,832 )      19,495        (345,872 )      (326,377 ) 

Invesco V.I. American Franchise Series II Shares

      —          (1,456 )      (1,456 )      —          (2,648 )      (2,648 ) 

Invesco V.I. Value Opportunities Series II Shares

      —          (17,824 )      (17,824 )      —          (18,706 )      (18,706 ) 

Janus Aspen - Enterprise Service Shares

      —          (13,685 )      (13,685 )      —          (25,259 )      (25,259 ) 

Janus Aspen - Global Research Service Shares

      —          (11,668 )      (11,668 )      3,239        (16,364 )      (13,125 ) 

Janus Aspen - Perkins Mid Cap Value Service Shares

      —          (70 )      (70 )      —          (74 )      (74 ) 

 

44

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		     Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		  

JPMorgan Insurance Trust Core Bond Class 1 Shares

    $ —        $ (105,045 )    $ (105,045 )    $ 23,474      $ (79,092 )    $ (55,618 ) 

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

      —          (2 )      (2 )      —          —         —    

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

      —          (138 )      (138 )      —          (140 )      (140 ) 

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

      —          (897 )      (897 )      —          (848 )      (848 ) 

MFS® New Discovery Service Class

      32,930        (269,553 )      (236,623 )      31,587        (377,592 )      (346,005 ) 

MFS® Total Return Service Class

      2,943        (102,528 )      (99,585 )      9,266        (92,581 )      (83,315 ) 

State Street Total Return V.I.S. Class 3 Shares

      677,481        (305,267 )      372,214       224,958        (358,779 )      (133,821 ) 

TA AB Dynamic Allocation Initial Class

      316        (7,744 )      (7,428 )      568        (1,154 )      (586 ) 

TA AB Dynamic Allocation Service Class

      4,724,624        (3,585,236 )      1,139,388       4,118,979        (2,670,710 )      1,448,269  

TA Aegon Government Money Market Initial Class

      207,910        (271,045 )      (63,135 )      129,424        (156,131 )      (26,707 ) 

TA Aegon Government Money Market Service Class

      63,422,657        (73,973,658 )      (10,551,001 )      63,775,617        (78,570,105 )      (14,794,488 ) 

TA Aegon High Yield Bond Initial Class

      43        (34,531 )      (34,488 )      10,135        (39,025 )      (28,890 ) 

TA Aegon High Yield Bond Service Class

      1,675,467        (1,642,575 )      32,892       1,310,297        (982,745 )      327,552  

TA Aegon U.S. Government Securities Initial Class

      232,518        (280,143 )      (47,625 )      —          (60,625 )      (60,625 ) 

TA Aegon U.S. Government Securities Service Class

      60,580,449        (58,189,879 )      2,390,570       76,669,085        (37,393,643 )      39,275,442  

TA American Funds Managed Risk - Balanced Service Class

      19,771,350        (3,311,809 )      16,459,541       9,560,249        (154,571 )      9,405,678  

TA Asset Allocation - Conservative Initial Class

      —          1       1       —          (42,340 )      (42,340 ) 

TA Asset Allocation - Conservative Service Class

      8,071,863        (13,684,185 )      (5,612,322 )      13,926,962        (8,752,407 )      5,174,555  

TA Asset Allocation - Growth Initial Class

      —          (90,035 )      (90,035 )      —          (1,158 )      (1,158 ) 

TA Asset Allocation - Growth Service Class

      1,816,498        (1,284,965 )      531,533       1,682,035        (1,433,740 )      248,295  

TA Asset Allocation - Moderate Initial Class

      88,926        (25,037 )      63,889       —          (54,588 )      (54,588 ) 

TA Asset Allocation - Moderate Service Class

      21,024,000        (29,234,994 )      (8,210,994 )      28,839,972        (27,663,003 )      1,176,969  

TA Asset Allocation - Moderate Growth Initial Class

      98,778        (456 )      98,322       —          (65,800 )      (65,800 ) 

TA Asset Allocation - Moderate Growth Service Class

      20,014,929        (18,309,404 )      1,705,525       27,430,690        (18,904,690 )      8,526,000  

TA Barrow Hanley Dividend Focused Initial Class

      11,866        (624,968 )      (613,102 )      24,823        (423,885 )      (399,062 ) 

TA Barrow Hanley Dividend Focused Service Class

      7,165,446        (1,950,510 )      5,214,936       8,014,494        (1,061,331 )      6,953,163  

TA BlackRock Equity Smart Beta 100 Service Class

      1,136,496        (23,679 )      1,112,817       —          —         —    

 

45

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		     Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		  

TA BlackRock Global Allocation Service Class

    $ 14,561,528      $ (10,793,042 )    $ 3,768,486     $ 8,502,446      $ (7,358,944 )    $ 1,143,502  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      6,286,807        (2,380,242 )      3,906,565       3,555,309        (128,539 )      3,426,770  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      3,743,586        (932,691 )      2,810,895       4,838,720        (56,182 )      4,782,538  

TA BlackRock Smart Beta 50 Service Class

      3,660,467        (118,418 )      3,542,049       —          —         —    

TA BlackRock Smart Beta 75 Service Class

      835,365        (1,139 )      834,226       —          —         —    

TA BlackRock Tactical Allocation Service Class

      11,186,337        (8,359,899 )      2,826,438       16,166,252        (7,762,021 )      8,404,231  

TA Clarion Global Real Estate Securities Initial Class

      —          (1,100 )      (1,100 )      4,573        (19,575 )      (15,002 ) 

TA Clarion Global Real Estate Securities Service Class

      1,149,805        (1,147,787 )      2,018       1,726,605        (1,168,694 )      557,911  

TA International Moderate Growth Service Class

      5,376,515        (6,827,207 )      (1,450,692 )      14,476,342        (5,014,853 )      9,461,489  

TA Janus Balanced Service Class

      23,201,972        (9,031,220 )      14,170,752       19,500,217        (3,497,702 )      16,002,515  

TA Janus Mid-Cap Growth Initial Class

      17,694        (1,972 )      15,722       7,871        (12,960 )      (5,089 ) 

TA Janus Mid-Cap Growth Service Class

      927,983        (1,038,381 )      (110,398 )      1,079,453        (1,132,886 )      (53,433 ) 

TA Jennison Growth Initial Class

      45,868        (538,271 )      (492,403 )      74,264        (338,456 )      (264,192 ) 

TA Jennison Growth Service Class

      4,228,337        (6,030,360 )      (1,802,023 )      6,526,674        (1,871,059 )      4,655,615  

TA JPMorgan Core Bond Service Class

      11,003,531        (3,393,918 )      7,609,613       7,107,637        (1,949,337 )      5,158,300  

TA JPMorgan Enhanced Index Initial Class

      20,022        (103,671 )      (83,649 )      66,529        (79,530 )      (13,001 ) 

TA JPMorgan Enhanced Index Service Class

      2,987,674        (705,118 )      2,282,556       432,964        (512,154 )      (79,190 ) 

TA JPMorgan Mid Cap Value Service Class

      7,850,004        (4,839,822 )      3,010,182       4,973,926        (3,538,022 )      1,435,904  

TA JPMorgan Tactical Allocation Service Class

      17,761,184        (6,388,660 )      11,372,524       24,463,531        (3,873,353 )      20,590,178  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      18,520,942        (13,532,656 )      4,988,286       44,448,252        (5,199,622 )      39,248,630  

TA Legg Mason Dynamic Allocation - Growth Service Class

      10,419,861        (12,819,994 )      (2,400,133 )      32,345,606        (4,306,038 )      28,039,568  

TA Managed Risk - Balanced ETF Service Class

      43,292,920        (47,232,335 )      (3,939,415 )      128,775,608        (25,094,107 )      103,681,501  

TA Managed Risk - Conservative ETF Service Class

      17,758,530        (17,783,569 )      (25,039 )      23,020,243        (13,061,806 )      9,958,437  

TA Managed Risk - Growth ETF Service Class

      49,705,298        (45,776,900 )      3,928,398       78,008,631        (47,974,681 )      30,033,950  

TA Market Participation Strategy Service Class

      6,765,167        (4,719,402 )      2,045,765       7,537,155        (2,666,817 )      4,870,338  

TA MFS International Equity Initial Class

      5,487        (15,522 )      (10,035 )      9,794        (3,375 )      6,419  

 

46

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		     Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		  

TA MFS International Equity Service Class

    $ 3,365,585      $ (2,189,940 )    $ 1,175,645     $ 9,987,411      $ (912,277 )    $ 9,075,134  

TA Morgan Stanley Capital Growth Initial Class

      21,655        (34,906 )      (13,251 )      29,675        (26,152 )      3,523  

TA Morgan Stanley Capital Growth Service Class

      2,592,048        (933,640 )      1,658,408       1,265,945        (671,138 )      594,807  

TA Multi-Managed Balanced Initial Class

      26,250        (52,507 )      (26,257 )      —          1       1  

TA Multi-Managed Balanced Service Class

      70,565,035        (3,375,952 )      67,189,083       4,892,827        (1,254,065 )      3,638,762  

TA Multi-Manager Alternative Strategies Service Class

      79,775        (5,915 )      73,860       115,296        (1,823 )      113,473  

TA PIMCO Tactical - Balanced Service Class

      7,420,343        (3,645,854 )      3,774,489       5,650,309        (2,041,524 )      3,608,785  

TA PIMCO Tactical - Conservative Service Class

      10,591,839        (3,537,875 )      7,053,964       9,828,648        (2,684,186 )      7,144,462  

TA PIMCO Tactical - Growth Service Class

      7,507,783        (6,534,388 )      973,395       16,090,501        (2,322,961 )      13,767,540  

TA PIMCO Total Return Initial Class

      208,538        (221,057 )      (12,519 )      13,067        (110,486 )      (97,419 ) 

TA PIMCO Total Return Service Class

      15,268,543        (10,483,546 )      4,784,997       15,087,351        (10,948,054 )      4,139,297  

TA PineBridge Inflation Opportunities Service Class

      2,256,416        (2,034,239 )      222,177       2,520,313        (2,486,711 )      33,602  

TA ProFunds UltraBear Service Class (OAM)

      2,438,408        (1,800,267 )      638,141       1,323,194        (410,952 )      912,242  

TA QS Investors Active Asset Allocation - Conservative Service Class

      3,368,386        (5,170,147 )      (1,801,761 )      6,375,209        (3,184,839 )      3,190,370  

TA QS Investors Active Asset Allocation - Moderate Service Class

      5,611,464        (12,500,755 )      (6,889,291 )      14,552,000        (8,879,707 )      5,672,293  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      3,135,792        (9,043,095 )      (5,907,303 )      16,072,453        (7,524,115 )      8,548,338  

TA Small/Mid Cap Value Initial Class

      12,125        (406,113 )      (393,988 )      175,037        (317,432 )      (142,395 ) 

TA Small/Mid Cap Value Service Class

      1,984,453        (1,402,001 )      582,452       2,016,740        (1,094,200 )      922,540  

TA T. Rowe Price Small Cap Initial Class

      6,801        (26,850 )      (20,049 )      139,818        (185,651 )      (45,833 ) 

TA T. Rowe Price Small Cap Service Class

      7,755,524        (4,922,906 )      2,832,618       6,003,982        (3,480,907 )      2,523,075  

TA Torray Concentrated Growth Initial Class

      36,527        (353,690 )      (317,163 )      —          (69,038 )      (69,038 ) 

TA Torray Concentrated Growth Service Class

      479,755        (519,329 )      (39,574 )      1,382,423        (8,583,646 )      (7,201,223 ) 

TA TS&W International Equity Initial Class

      25,149        (124,668 )      (99,519 )      15,588        (128,844 )      (113,256 ) 

TA TS&W International Equity Service Class

      377,469        (297,454 )      80,015       1,272,999        (440,362 )      832,637  

TA WMC US Growth Initial Class

      3,194        (338,336 )      (335,142 )      51,076        (443,861 )      (392,785 ) 

 

47

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

     Year Ended December 31, 2016     Year Ended December 31, 2015  

Subaccount

    Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		     Units
Purchased
in Dollars		      Units Redeemed
and Transferred
to/from
in Dollars		     Dollar Net
Increase
(Decrease)		  

TA WMC US Growth Service Class

    $ 3,552,465      $ (1,949,211 )    $ 1,603,254     $ 12,292,506      $ (820,654 )    $ 11,471,852  

Vanguard® Equity Index

      —          —         —         707,208        —         707,208  

Vanguard® International

      21,999        3       22,002       442,005        —         442,005  

Vanguard® Mid-Cap Index

      —          —         —         —          —         —    

Vanguard® REIT Index

      —          —         —         —          —         —    

Vanguard® Short-Term Investment Grade

      —          —         —         —          —         —    

Vanguard® Total Bond Market Index

      —          (1 )      (1 )      353,604        —         353,604  

Voya Global Perspectives Class S Shares

      —          —         —         —          —         —    

Voya Large Cap Value Class S Shares

      —          —         —         —          —         —    

Voya Strategic Allocation Conservative Class S Shares

      —          —         —         —          —         —    

Voya Strategic Allocation Moderate Class S Shares

      —          —         —         —          —         —    

Wanger International

      —          —         —         —          —         —    

Wanger USA

      —          —         —         —          —         —    

 

48

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights

The Separate Account offers various death benefit options, which have differing fees that are charged against the contract owner’s account balance. These charges are discussed in more detail in the individual’s policy. Differences in the fee structures for these units result in different unit values, expense ratios, and total returns.    

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

AB Balanced Wealth Strategy Class B Shares

 

                 

12/31/2016

      2,023,694      $ 12.01        to      $ 11.35      $ 4,215,929        1.84 %      0.65 %      to        2.20 %      3.77 %      to        2.18 % 

12/31/2015

      2,341,162        11.58        to        11.11        4,557,024        2.04       0.65       to        2.20       0.64       to        (0.91 ) 

12/31/2014

      2,304,500        11.51        to        11.21        4,312,479        2.49       0.65       to        2.20       6.42       to        4.78  

12/31/2013

      2,238,170        1.66        to        1.60        3,726,476        2.29       1.35       to        2.15       14.72       to        13.83  

12/31/2012

      2,041,079        1.03        to        1.40        2,914,759        1.93       0.65       to        2.15       11.86       to        10.98  

AB Growth and Income Class B Shares

 

                       

12/31/2016

      5,510,413        14.43        to        13.87        17,846,053        0.86       0.90       to        2.00       10.08       to        8.88  

12/31/2015

      5,217,993        13.11        to        12.74        14,390,342        1.24       0.90       to        2.00       0.52       to        (0.58 ) 

12/31/2014

      5,064,436        13.04        to        12.81        12,486,991        1.19       0.90       to        2.00       8.31       to        7.13  

12/31/2013

      4,585,573        1.48        to        1.69        8,677,657        1.03       1.15       to        1.95       33.06       to        32.02  

12/31/2012

      3,598,175        1.11        to        1.28        4,938,122        1.85       1.15       to        1.95       15.90       to        14.99  

AB Large Cap Growth Class B Shares

 

                          

12/31/2016

      217,408        2.02        to        1.99        447,199        —         1.15       to        1.95       1.19       to        0.40  

12/31/2015

      229,886        2.00        to        1.99        468,281        —         1.15       to        1.95       9.59       to        8.74  

12/31/2014

      251,314        1.82        to        1.83        465,125        —         1.15       to        1.95       12.54       to        11.66  

12/31/2013

      327,977        1.62        to        1.64        527,598        —         1.15       to        1.95       35.44       to        34.38  

12/31/2012

      398,027        1.20        to        1.22        474,803        0.03       1.15       to        1.95       15.37       to        14.46  

American Funds—Asset Allocation Class 2 Shares

 

                 

12/31/2016

      17,001,645        12.88        to        12.16        45,745,822        1.86       0.75       to        2.30       8.59       to        6.93  

12/31/2015

      15,909,527        11.86        to        11.38        32,340,462        1.68       0.75       to        2.30       0.64       to        (0.91 ) 

12/31/2014

      16,361,256        11.78        to        11.48        30,134,635        1.61       0.75       to        2.30       4.61       to        3.00  

12/31/2013

      14,533,866        1.56        to        1.51        23,115,662        1.55       1.45       to        2.25       21.92       to        20.97  

12/31/2012

      11,140,953        1.08        to        1.25        14,119,666        2.12       0.75       to        2.25       14.52       to        13.62  

American Funds—Bond Class 2 Shares

 

                       

12/31/2016

      5,550,075        10.24        to        9.68        15,744,768        1.72       0.75       to        2.30       2.18       to        0.61  

12/31/2015

      5,462,357        10.03        to        9.62        12,577,030        1.79       0.75       to        2.30       (0.47 )      to        (2.01 ) 

12/31/2014

      5,446,189        10.07        to        9.82        10,292,485        2.38       0.75       to        2.30       4.49       to        2.88  

12/31/2013

      4,887,114        1.09        to        1.06        6,408,763        2.06       1.45       to        2.25       (3.56 )      to        (4.31 ) 

12/31/2012

      3,780,187        1.08        to        1.11        4,240,313        2.90       0.75       to        2.25       3.86       to        3.04  

American Funds—Growth Class 2 Shares

 

                    

12/31/2016

      5,791,039        14.77        to        13.95        30,774,870        0.86       0.75       to        2.30       8.67       to        7.01  

12/31/2015

      5,846,107        13.59        to        13.04        25,212,890        0.64       0.75       to        2.30       6.06       to        4.43  

12/31/2014

      5,807,414        12.81        to        12.49        20,881,031        1.26       0.75       to        2.30       7.70       to        6.04  

12/31/2013

      3,642,635        1.65        to        1.60        7,965,095        1.03       1.45       to        2.25       28.24       to        27.24  

12/31/2012

      2,131,151        1.02        to        1.26        2,708,329        0.82       0.75       to        2.25       16.20       to        15.28  

American Funds—Growth-Income Class 2 Shares

 

                 

12/31/2016

      6,196,880        14.69        to        13.88        24,020,712        1.60       0.75       to        2.30       10.69       to        8.99  

12/31/2015

      6,078,747        13.27        to        12.73        19,534,129        1.37       0.75       to        2.30       0.70       to        (0.85 ) 

12/31/2014

      5,669,604        13.18        to        12.84        16,812,248        1.51       0.75       to        2.30       9.81       to        8.12  

12/31/2013

      4,007,265        1.63        to        1.58        8,516,932        1.73       1.45       to        2.25       31.59       to        30.56  

12/31/2012

      1,453,518        1.06        to        1.21        1,779,957        2.21       0.75       to        2.25       15.80       to        14.88  

American Funds—International Class 2 Shares

 

                 

12/31/2016

      4,168,809        10.66        to        10.07        11,475,849        1.49       0.75       to        2.30       2.76       to        1.18  

12/31/2015

      4,190,015        10.37        to        9.95        10,292,784        1.11       0.75       to        2.30       (5.24 )      to        (6.70 ) 

12/31/2014

      9,289,276        10.94        to        10.66        15,825,063        1.58       0.75       to        2.30       (3.38 )      to        (4.87 ) 

12/31/2013

      8,123,217        1.23        to        1.19        11,020,474        1.54       1.45       to        2.25       19.90       to        18.96  

12/31/2012

      3,947,848        0.91        to        1.00        3,992,382        1.87       0.75       to        2.25       16.21       to        15.30  

 

 

49

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

Fidelity® VIP Balanced Service Class 2

 

                       

12/31/2016

      9,610,359      $ 13.02        to      $ 12.30      $ 21,131,382        1.13 %      0.45 %      to        2.00 %      6.50 %      to        4.87 % 

12/31/2015

      10,652,231        12.22        to        11.73        20,942,222        1.38       0.45       to        2.00       (0.09 )      to        (1.63 ) 

12/31/2014

      10,374,254        12.23        to        11.92        18,248,581        1.52       0.45       to        2.00       9.52       to        7.84  

12/31/2013

      9,648,516        1.35        to        1.29        13,499,758        1.37       1.15       to        1.95       17.93       to        17.00  

12/31/2012

      9,447,576        1.18        to        1.10        10,651,429        1.62       0.45       to        1.95       13.51       to        12.61  

Fidelity® VIP Contrafund® Initial Class

 

                      

12/31/2016

      —          14.35        to        14.17        —          —         0.65       to        1.00       7.31       to        6.93  

12/31/2015

      —          13.38        to        13.25        —          —         0.65       to        1.00       0.02       to        (0.33 ) 

12/31/2014

      —          13.37        to        13.30        —          —         0.65       to        1.00       11.22       to        10.83  

12/31/2013(1)

     —          12.03        to        12.00        —          —         0.45       to        0.80       —         to        —    

Fidelity® VIP Contrafund® Service Class 2

 

                   

12/31/2016

      6,870,488        14.09        to        13.54        34,500,882        0.67       0.90       to        2.00       6.77       to        5.60  

12/31/2015

      7,251,023        13.20        to        12.82        30,642,355        0.64       0.90       to        2.00       (0.48 )      to        (1.57 ) 

12/31/2014

      10,107,714        13.26        to        13.02        34,518,197        1.00       0.90       to        2.00       10.65       to        9.44  

12/31/2013

      8,210,472        1.57        to        2.01        19,087,033        0.93       1.15       to        1.95       29.46       to        28.45  

12/31/2012

      4,107,844        1.22        to        1.57        6,453,894        1.30       1.15       to        1.95       14.81       to        13.91  

Fidelity® VIP Equity-Income Service Class 2

 

                    

12/31/2016

      441,460        1.59        to        1.87        849,441        2.07       1.15       to        1.95       16.37       to        15.46  

12/31/2015

      522,920        1.37        to        1.62        881,845        2.83       1.15       to        1.95       (5.33 )      to        (6.07 ) 

12/31/2014

      589,612        1.44        to        1.73        1,054,722        2.49       1.15       to        1.95       7.25       to        6.40  

12/31/2013

      656,829        1.35        to        1.62        1,096,377        2.19       1.15       to        1.95       26.37       to        25.38  

12/31/2012

      807,587        1.06        to        1.30        1,063,363        2.85       1.15       to        1.95       15.72       to        14.81  

Fidelity® VIP Growth Service Class 2

 

                          

12/31/2016

      408,897        1.90        to        1.81        785,155        —         1.15       to        1.95       (0.59 )      to        (1.37 ) 

12/31/2015

      427,939        1.91        to        1.83        832,825        0.03       1.15       to        1.95       5.69       to        4.86  

12/31/2014

      451,279        1.81        to        1.75        830,866        —         1.15       to        1.95       9.75       to        8.89  

12/31/2013

      483,216        1.65        to        1.61        810,427        0.04       1.15       to        1.95       34.45       to        33.40  

12/31/2012

      535,630        1.23        to        1.20        677,785        0.34       1.15       to        1.95       13.10       to        12.20  

Fidelity® VIP Growth Opportunities Service Class 2

 

                 

12/31/2016

      1,283        1.83        to        1.36        1,792        0.05       1.25       to        1.55       (1.17 )      to        (1.46 ) 

12/31/2015

      1,328        1.85        to        1.38        1,880        0.00       1.25       to        1.55       4.04       to        3.74  

12/31/2014

      1,374        1.78        to        1.33        1,872        0.01       1.25       to        1.55       10.57       to        10.24  

12/31/2013

      1,420        1.61        to        1.21        1,753        0.06       1.25       to        1.55       35.84       to        35.44  

12/31/2012

      1,465        1.18        to        0.89        1,333        0.16       1.25       to        1.55       17.84       to        17.49  

Fidelity® VIP Mid Cap Initial Class

 

                          

12/31/2016

      —          14.36        to        14.18        —          —         0.65       to        1.00       11.51       to        11.12  

12/31/2015

      —          12.88        to        12.76        —          —         0.65       to        1.00       (2.03 )      to        (2.37 ) 

12/31/2014

      —          13.15        to        13.07        —          —         0.65       to        1.00       5.60       to        5.23  

12/31/2013(1)

     —          12.45        to        12.42        —          —         0.45       to        0.80       —         to        —    

Fidelity® VIP Mid Cap Service Class 2

 

                       

12/31/2016

      5,297,560        14.09        to        13.54        27,980,216        0.34       0.90       to        2.00       10.92       to        9.71  

12/31/2015

      5,521,714        12.71        to        12.34        24,624,604        0.27       0.90       to        2.00       (2.51 )      to        (3.58 ) 

12/31/2014

      3,544,494        13.03        to        12.80        16,020,401        0.03       0.90       to        2.00       5.08       to        3.93  

12/31/2013

      2,403,396        1.71        to        2.53        6,821,182        0.31       1.15       to        1.95       34.33       to        33.27  

12/31/2012

      2,903,033        1.27        to        1.90        6,046,828        0.55       1.15       to        1.95       13.25       to        12.36  

Fidelity® VIP Value Strategies Initial Class

 

                    

12/31/2016

      1,731        13.17        to        13.00        22,793        1.16       0.65       to        1.00       8.91       to        8.54  

12/31/2015

      1,731        12.09        to        11.98        20,931        1.17       0.65       to        1.00       (3.62 )      to        (3.95 ) 

12/31/2014

      1,732        12.54        to        12.47        21,720        1.06       0.65       to        1.00       6.10       to        5.73  

12/31/2013(1)

     1,732        11.82        to        11.79        20,474        2.62       0.45       to        0.80       —         to        —    

 

50

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

Fidelity® VIP Value Strategies Service Class 2

 

                 

12/31/2016

      2,168,759      $ 12.91        to      $ 12.41      $ 10,823,952        1.00 %      0.90 %      to        2.00 %      8.30 %      to        7.11 % 

12/31/2015

      2,209,354        11.93        to        11.59        9,569,134        0.90       0.90       to        2.00       (4.06 )      to        (5.11 ) 

12/31/2014

      4,363,341        12.43        to        12.21        15,028,804        1.33       0.90       to        2.00       5.56       to        4.40  

12/31/2013

      2,915,192        1.60        to        1.73        6,891,567        0.73       1.15       to        1.95       28.70       to        27.69  

12/31/2012

      1,121,443        1.24        to        1.36        1,912,777        0.44       1.15       to        1.95       25.61       to        24.62  

Franklin Founding Funds Allocation Class 4 Shares

 

                 

12/31/2016

      1,941,404        1.95        to        1.83        3,694,259        3.71       1.30       to        2.10       11.48       to        10.61  

12/31/2015

      2,139,547        1.75        to        1.66        3,663,185        2.77       1.30       to        2.10       (7.44 )      to        (8.17 ) 

12/31/2014

      2,570,942        1.89        to        1.80        4,770,440        2.69       1.30       to        2.10       1.43       to        0.64  

12/31/2013

      3,023,911        1.87        to        1.79        5,542,251        10.52       1.30       to        2.10       22.09       to        21.14  

12/31/2012

      3,389,714        1.03        to        1.48        5,106,586        2.60       0.60       to        2.10       13.69       to        12.79  

Franklin Income Class 2 Shares

 

                          

12/31/2016

      2,549,956        1.37        to        1.27        3,477,568        4.92       1.15       to        1.95       12.73       to        11.85  

12/31/2015

      2,995,232        1.22        to        1.14        3,637,520        4.37       1.15       to        1.95       (8.11 )      to        (8.83 ) 

12/31/2014

      6,650,565        1.33        to        1.25        8,687,407        4.96       1.15       to        1.95       3.43       to        2.61  

12/31/2013

      8,086,472        1.28        to        1.22        10,231,022        6.44       1.15       to        1.95       12.65       to        11.76  

12/31/2012

      9,333,469        1.14        to        1.09        10,518,336        6.22       1.15       to        1.95       11.37       to        10.49  

Franklin Mutual Shares Class 2 Shares

 

                       

12/31/2016

      582,908        1.32        to        1.22        775,627        1.91       1.15       to        1.95       14.74       to        13.84  

12/31/2015

      686,274        1.15        to        1.07        795,342        3.09       1.15       to        1.95       (6.02 )      to        (6.76 ) 

12/31/2014

      713,957        1.22        to        1.15        882,965        1.97       1.15       to        1.95       5.90       to        5.07  

12/31/2013

      785,500        1.15        to        1.09        918,292        2.05       1.15       to        1.95       26.80       to        25.81  

12/31/2012

      856,367        0.91        to        0.87        790,683        2.00       1.15       to        1.95       12.94       to        12.05  

Franklin Templeton Foreign Class 2 Shares

 

                    

12/31/2016

      1,725,317        0.99        to        0.92        1,683,083        1.97       1.15       to        1.95       5.96       to        5.13  

12/31/2015

      1,871,388        0.93        to        0.87        1,727,313        3.20       1.15       to        1.95       (7.56 )      to        (8.28 ) 

12/31/2014

      2,182,365        1.01        to        0.95        2,186,589        1.91       1.15       to        1.95       (12.14 )      to        (12.83 ) 

12/31/2013

      2,585,791        1.15        to        1.09        2,954,460        2.47       1.15       to        1.95       21.57       to        20.62  

12/31/2012

      3,037,562        0.95        to        0.91        2,859,834        2.77       1.15       to        1.95       16.88       to        15.96  

Invesco V.I. American Franchise Series II Shares

 

                 

12/31/2016

      125,436        1.49        to        1.44        183,985        —         1.15       to        1.95       0.86       to        0.07  

12/31/2015

      126,470        1.48        to        1.44        184,547        —         1.15       to        1.95       3.56       to        2.75  

12/31/2014

      128,301        1.43        to        1.40        181,411        —         1.15       to        1.95       6.94       to        6.10  

12/31/2013

      130,187        1.33        to        1.32        172,729        0.25       1.15       to        1.95       38.21       to        37.12  

12/31/2012(1)

     131,302        0.97        to        0.96        126,490        —         1.15       to        1.95       —         to        —    

Invesco V.I. Value Opportunities Series II Shares

 

                 

12/31/2016

      270,675        1.30        to        1.43        375,945        0.08       1.15       to        1.95       16.58       to        15.67  

12/31/2015

      284,360        1.12        to        1.24        341,515        2.29       1.15       to        1.95       (11.67 )      to        (12.36 ) 

12/31/2014

      297,786        1.27        to        1.41        407,212        1.15       1.15       to        1.95       5.18       to        4.35  

12/31/2013

      312,482        1.20        to        1.35        406,761        1.21       1.15       to        1.95       31.76       to        30.72  

12/31/2012

      317,094        0.91        to        1.03        314,505        1.10       1.15       to        1.95       16.31       to        15.39  

Janus Aspen—Enterprise Service Shares

 

                    

12/31/2016

      97,516        2.48        to        3.00        290,893        0.72       1.15       to        1.95       10.83       to        9.97  

12/31/2015

      101,617        2.24        to        2.73        275,800        0.76       1.15       to        1.95       2.59       to        1.78  

12/31/2014

      116,940        2.18        to        2.68        294,150        0.03       1.15       to        1.95       10.97       to        10.10  

12/31/2013

      128,083        1.96        to        2.43        288,077        0.36       1.15       to        1.95       30.54       to        29.51  

12/31/2012

      132,473        1.50        to        1.88        229,592        —         1.15       to        1.95       15.65       to        14.74  

Janus Aspen—Global Research Service Shares

 

                 

12/31/2016

      289,631        1.43        to        1.43        395,561        0.95       1.15       to        1.95       0.66       to        (0.12 ) 

12/31/2015

      299,642        1.42        to        1.44        406,816        0.53       1.15       to        1.95       (3.64 )      to        (4.40 ) 

12/31/2014

      308,504        1.48        to        1.50        436,369        0.94       1.15       to        1.95       5.96       to        5.13  

12/31/2013

      385,899        1.39        to        1.43        499,421        1.05       1.15       to        1.95       26.62       to        25.63  

12/31/2012

      436,257        1.10        to        1.14        447,699        0.76       1.15       to        1.95       18.49       to        17.56  

 

51

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

Janus Aspen—Perkins Mid Cap Value Service Shares

 

                 

12/31/2016

      1,004      $ 2.41        to      $ 2.29      $ 2,356        0.91 %      1.25 %      to        1.55 %      17.30 %      to        16.96 % 

12/31/2015

      1,039        2.06        to        1.96        2,083        1.04       1.25       to        1.55       (4.88 )      to        (5.16 ) 

12/31/2014

      1,075        2.16        to        2.07        2,268        3.34       1.25       to        1.55       7.10       to        6.78  

12/31/2013

      1,111        2.02        to        1.94        2,193        1.13       1.25       to        1.55       24.26       to        23.89  

12/31/2012

      1,147        1.62        to        1.56        1,823        0.85       1.25       to        1.55       9.42       to        9.09  

JPMorgan Insurance Trust Core Bond Class 1 Shares

 

                 

12/31/2016

      417,140        1.27        to        1.21        525,026        2.65       1.25       to        1.95       0.86       to        0.17  

12/31/2015

      500,032        1.26        to        1.21        624,029        3.69       1.25       to        1.95       (0.13 )      to        (0.81 ) 

12/31/2014

      544,722        1.27        to        1.22        681,481        3.84       1.25       to        1.95       3.62       to        2.91  

12/31/2013

      596,681        1.22        to        1.18        721,721        4.80       1.25       to        1.95       (2.69 )      to        (3.35 ) 

12/31/2012

      691,572        1.26        to        1.22        861,359        4.47       1.25       to        1.95       4.02       to        3.31  

JPMorgan Insurance Trust Mid Cap Value Class 1 Shares

 

                 

12/31/2016

      52,138        3.11        to        2.95        161,765        0.86       1.25       to        1.95       13.28       to        12.51  

12/31/2015

      52,138        2.75        to        2.62        142,851        0.99       1.25       to        1.95       (3.86 )      to        (4.52 ) 

12/31/2014

      52,138        2.86        to        2.75        148,638        0.78       1.25       to        1.95       13.69       to        12.91  

12/31/2013

      52,141        2.51        to        2.43        130,801        1.00       1.25       to        1.95       30.67       to        29.77  

12/31/2012

      52,144        1.92        to        1.87        100,145        1.04       1.25       to        1.95       18.88       to        18.06  

JPMorgan Insurance Trust Small Cap Core Class 1 Shares

 

                 

12/31/2016

      2,590        3.12        to        2.96        8,007        0.52       1.25       to        1.95       18.73       to        17.92  

12/31/2015

      2,637        2.63        to        2.51        6,877        0.14       1.25       to        1.95       (6.45 )      to        (7.09 ) 

12/31/2014

      2,687        2.81        to        2.70        7,500        0.14       1.25       to        1.95       8.24       to        7.50  

12/31/2013

      2,738        2.60        to        2.52        7,070        0.77       1.25       to        1.95       40.54       to        39.58  

12/31/2012

      7,078        1.85        to        1.80        13,016        0.20       1.25       to        1.95       18.24       to        17.43  

JPMorgan Insurance Trust U.S. Equity Class 1 Shares

 

                 

12/31/2016

      25,556        2.82        to        2.68        71,808        0.98       1.25       to        1.95       9.57       to        8.82  

12/31/2015

      25,897        2.58        to        2.46        66,448        1.12       1.25       to        1.95       (0.38 )      to        (1.07 ) 

12/31/2014

      26,225        2.59        to        2.49        67,588        0.91       1.25       to        1.95       12.50       to        11.72  

12/31/2013

      26,525        2.30        to        2.23        60,806        1.23       1.25       to        1.95       34.54       to        33.61  

12/31/2012

      26,813        1.71        to        1.67        45,715        1.48       1.25       to        1.95       16.19       to        15.38  

MFS® New Discovery Service Class

 

                          

12/31/2016

      728,669        2.12        to        1.99        1,699,029        —         1.15       to        1.95       7.57       to        6.72  

12/31/2015

      840,975        1.98        to        1.86        1,819,446        —         1.15       to        1.95       (3.26 )      to        (4.02 ) 

12/31/2014

      986,222        2.04        to        1.94        2,228,226        —         1.15       to        1.95       (8.55 )      to        (9.26 ) 

12/31/2013

      2,827,122        2.23        to        2.14        7,243,325        —         1.15       to        1.95       39.61       to        38.52  

12/31/2012

      3,306,787        1.60        to        1.54        6,060,367        —         1.15       to        1.95       19.52       to        18.57  

MFS® Total Return Service Class

 

                          

12/31/2016

      1,048,659        1.57        to        1.69        1,824,238        2.68       1.15       to        1.95       7.58       to        6.74  

12/31/2015

      1,107,681        1.46        to        1.58        1,794,787        2.37       1.15       to        1.95       (1.71 )      to        (2.48 ) 

12/31/2014

      1,155,873        1.49        to        1.62        1,913,348        1.70       1.15       to        1.95       7.01       to        6.17  

12/31/2013

      1,224,187        1.39        to        1.53        1,903,955        1.63       1.15       to        1.95       17.39       to        16.47  

12/31/2012

      1,346,339        1.18        to        1.31        1,788,262        2.48       1.15       to        1.95       9.67       to        8.80  

State Street Total Return V.I.S. Class 3 Shares

 

                 

12/31/2016

      1,363,223        11.59        to        10.95        2,313,919        1.77       0.65       to        2.20       5.39       to        3.78  

12/31/2015

      1,266,778        11.00        to        10.55        1,849,112        1.47       0.65       to        2.20       (1.98 )      to        (3.49 ) 

12/31/2014

      1,449,643        11.22        to        10.94        2,041,207        1.51       0.65       to        2.20       4.39       to        2.79  

12/31/2013

      1,490,526        1.30        to        1.26        1,940,897        1.28       1.35       to        2.15       13.11       to        12.23  

12/31/2012

      1,479,898        1.02        to        1.12        1,683,942        1.64       0.65       to        2.15       10.75       to        9.88  

TA Aegon High Yield Bond Initial Class

 

                       

12/31/2016

      36,425        11.43        to        1.85        98,517        5.97       0.45       to        1.90       14.83       to        13.20  

12/31/2015

      53,786        9.95        to        1.63        120,077        6.26       0.45       to        1.90       (4.65 )      to        (6.01 ) 

12/31/2014

      67,661        10.44        to        1.74        155,404        5.46       0.45       to        1.90       3.51       to        2.04  

12/31/2013

      62,132        1.19        to        1.70        140,297        5.39       0.45       to        1.90       6.12       to        4.61  

12/31/2012

      86,074        1.66        to        1.63        164,087        6.02       0.45       to        1.90       15.91       to        15.17  

 

52

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Aegon High Yield Bond Service Class

 

                    

12/31/2016

      2,268,819      $ 11.15        to      $ 10.71      $ 6,641,135        5.69 %      0.90 %      to        2.00 %      13.97 %      to        12.73 % 

12/31/2015

      2,568,185        9.78        to        9.50        5,904,739        6.14       0.90       to        2.00       (5.16 )      to        (6.19 ) 

12/31/2014

      2,664,043        10.31        to        10.13        5,933,436        5.62       0.90       to        2.00       2.68       to        1.55  

12/31/2013

      2,593,445        1.60        to        1.70        4,808,613        5.82       1.15       to        1.95       5.12       to        4.29  

12/31/2012

      1,977,400        1.52        to        1.63        3,311,088        5.53       1.15       to        1.95       15.76       to        14.85  

TA Aegon Government Money Market Initial Class

 

                 

12/31/2016

      58,892        1.00        to        0.92        78,249        0.01       1.25       to        1.90       (1.22 )      to        (1.85 ) 

12/31/2015

      106,547        1.02        to        0.94        143,537        0.01       1.25       to        1.90       (1.23 )      to        (1.86 ) 

12/31/2014

      126,305        1.03        to        0.96        172,527        0.01       1.25       to        1.90       (1.23 )      to        (1.86 ) 

12/31/2013

      268,180        1.04        to        0.97        371,427        0.01       1.25       to        1.90       (1.23 )      to        (1.86 ) 

12/31/2012

      323,812        1.05        to        0.99        454,737        0.01       1.25       to        1.90       (1.24 )      to        (1.87 ) 

TA Aegon Government Money Market Service Class

 

                 

12/31/2016

      12,254,624        9.84        to        9.29        36,408,179        0.01       0.45       to        2.00       (0.44 )      to        (1.97 ) 

12/31/2015

      10,390,576        9.88        to        9.48        47,562,444        0.01       0.45       to        2.00       (0.44 )      to        (1.98 ) 

12/31/2014

      13,187,371        9.93        to        9.67        63,067,404        0.01       0.45       to        2.00       (0.44 )      to        (1.98 ) 

12/31/2013

      19,530,196        0.99        to        0.95        41,003,054        —         0.45       to        1.95       (0.44 )      to        (1.91 ) 

12/31/2012

      13,671,844        1.00        to        0.97        13,803,900        0.01       0.45       to        1.95       (0.99 )      to        (1.92 ) 

TA Aegon U.S. Government Securities Initial Class

 

                 

12/31/2016

      127,683        1.45        to        1.25        251,979        0.88       1.25       to        1.90       (0.93 )      to        (1.56 ) 

12/31/2015

      153,991        1.46        to        1.27        307,218        2.22       1.25       to        1.90       (1.14 )      to        (1.77 ) 

12/31/2014

      184,056        1.48        to        1.29        371,973        3.93       1.25       to        1.90       3.36       to        2.70  

12/31/2013

      200,641        1.43        to        1.26        392,878        2.36       1.25       to        1.90       (3.44 )      to        (4.06 ) 

12/31/2012

      218,889        1.48        to        1.31        444,550        1.63       1.25       to        1.90       3.84       to        3.17  

TA Aegon U.S. Government Securities Service Class

 

                 

12/31/2016

      19,883,084        9.90        to        9.36        72,397,578        0.44       0.45       to        2.00       (0.31 )      to        (1.84 ) 

12/31/2015

      19,794,265        9.93        to        9.53        70,779,519        1.42       0.45       to        2.00       (0.62 )      to        (2.15 ) 

12/31/2014

      14,098,292        10.00        to        9.74        32,526,271        3.72       0.45       to        2.00       3.95       to        2.35  

12/31/2013

      14,372,501        1.00        to        1.20        26,764,225        2.28       0.45       to        1.95       (2.92 )      to        (4.35 ) 

12/31/2012

      22,228,708        1.25        to        1.27        28,835,995        1.70       0.45       to        1.95       3.82       to        2.85  

TA American Funds Managed Risk—Balanced Service Class

 

              

12/31/2016

      2,676,423        10.16        to        9.90        26,789,196        0.61       0.45       to        2.00       5.94       to        4.31  

12/31/2015(1)

     977,622        9.59        to        9.49        9,319,240        —         0.45       to        2.00       —         to        —    

TA AB Dynamic Allocation Initial Class

 

                       

12/31/2016

      35,803        1.68        to        1.35        58,884        1.50       1.25       to        1.90       0.97       to        0.32  

12/31/2015

      40,362        1.66        to        1.35        65,845        1.27       1.25       to        1.90       (1.31 )      to        (1.94 ) 

12/31/2014

      40,726        1.69        to        1.37        67,420        1.03       1.25       to        1.90       4.26       to        3.59  

12/31/2013

      41,058        1.62        to        1.32        65,291        1.17       1.25       to        1.90       5.86       to        5.19  

12/31/2012

      39,894        1.53        to        1.26        60,017        0.85       1.25       to        1.90       4.82       to        4.15  

TA AB Dynamic Allocation Service Class

 

                    

12/31/2016

      8,614,962        10.78        to        10.19        22,289,282        1.25       0.45       to        2.00       1.53       to        (0.02 ) 

12/31/2015

      9,406,732        10.62        to        10.19        21,064,949        1.05       0.45       to        2.00       (0.87 )      to        (2.39 ) 

12/31/2014

      10,378,014        10.71        to        10.44        20,046,123        0.83       0.45       to        2.00       4.88       to        3.27  

12/31/2013

      10,720,245        1.10        to        1.33        15,864,132        0.98       0.45       to        1.95       6.41       to        4.84  

12/31/2012

      9,833,210        1.12        to        1.27        12,209,061        0.75       0.45       to        1.95       4.59       to        3.76  

TA Asset Allocation—Conservative Initial Class

 

                 

12/31/2016

      9,676        1.69        to        1.42        16,042        2.03       1.25       to        1.90       3.33       to        2.68  

12/31/2015

      9,676        1.64        to        1.38        15,547        2.66       1.25       to        1.90       (3.17 )      to        (3.79 ) 

12/31/2014

      35,716        1.69        to        1.44        59,352        2.70       1.25       to        1.90       0.93       to        0.28  

12/31/2013

      35,716        1.68        to        1.43        58,894        3.83       1.25       to        1.90       8.02       to        7.33  

12/31/2012

      67,315        1.55        to        1.34        102,912        3.41       1.25       to        1.90       6.13       to        5.45  

 

53

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Asset Allocation—Conservative Service Class

 

                 

12/31/2016

      23,849,251      $ 10.83        to      $ 10.23      $ 60,565,402        1.78 %      0.45 %      to        2.00 %      3.84 %      to        2.24 % 

12/31/2015

      29,281,139        10.43        to        10.01        64,424,762        2.02       0.45       to        2.00       (2.58 )      to        (4.08 ) 

12/31/2014

      31,677,104        10.70        to        10.43        61,576,298        2.49       0.45       to        2.00       1.49       to        (0.07 ) 

12/31/2013

      33,312,344        1.13        to        1.45        54,439,830        3.00       0.45       to        1.95       8.60       to        7.00  

12/31/2012

      31,209,493        1.04        to        1.35        43,570,834        3.07       0.45       to        1.95       5.97       to        5.14  

TA Asset Allocation—Growth Initial Class

 

                    

12/31/2016

      30,761        1.84        to        1.61        55,366        1.27       1.25       to        1.90       4.77       to        4.10  

12/31/2015

      82,219        1.76        to        1.54        141,457        1.65       1.25       to        1.90       (3.14 )      to        (3.76 ) 

12/31/2014

      82,871        1.81        to        1.61        147,420        2.36       1.25       to        1.90       1.46       to        0.81  

12/31/2013

      83,520        1.79        to        1.59        146,651        0.79       1.25       to        1.90       25.25       to        24.45  

12/31/2012

      45,481        1.43        to        1.28        63,855        1.29       1.25       to        1.90       11.20       to        10.49  

TA Asset Allocation—Growth Service Class

 

                    

12/31/2016

      2,822,565        12.15        to        11.48        7,545,147        1.99       0.45       to        2.00       5.35       to        3.73  

12/31/2015

      3,005,299        11.53        to        11.06        6,787,813        1.48       0.45       to        2.00       (2.55 )      to        (4.06 ) 

12/31/2014

      3,471,873        11.83        to        11.53        6,835,481        2.10       0.45       to        2.00       1.98       to        0.41  

12/31/2013

      3,835,267        1.32        to        1.63        6,095,272        1.03       0.45       to        1.95       25.82       to        23.97  

12/31/2012

      3,079,013        1.05        to        1.32        3,927,834        1.08       0.45       to        1.95       11.11       to        10.23  

TA Asset Allocation—Moderate Initial Class

 

                    

12/31/2016

      513,502        1.80        to        1.53        903,679        2.32       1.25       to        1.90       4.26       to        3.60  

12/31/2015

      477,423        1.72        to        1.48        807,013        2.04       1.25       to        1.90       (3.43 )      to        (4.05 ) 

12/31/2014

      508,985        1.79        to        1.54        892,285        2.15       1.25       to        1.90       1.50       to        0.85  

12/31/2013

      615,879        1.76        to        1.52        1,065,321        2.45       1.25       to        1.90       12.10       to        11.38  

12/31/2012

      625,757        1.57        to        1.37        967,012        2.67       1.25       to        1.90       8.08       to        7.39  

TA Asset Allocation—Moderate Service Class

 

                 

12/31/2016

      104,593,983        11.17        to        10.56        281,768,454        1.96       0.45       to        2.00       4.78       to        3.18  

12/31/2015

      111,980,841        10.66        to        10.23        279,599,191        1.85       0.45       to        2.00       (2.91 )      to        (4.41 ) 

12/31/2014

      119,812,391        10.98        to        10.70        289,657,459        2.15       0.45       to        2.00       2.15       to        0.58  

12/31/2013

      115,593,525        1.18        to        1.55        221,957,877        2.30       0.45       to        1.95       12.73       to        11.07  

12/31/2012

      96,011,691        1.05        to        1.39        141,669,166        2.66       0.45       to        1.95       7.86       to        7.01  

TA Asset Allocation—Moderate Growth Initial Class

 

                 

12/31/2016

      211,341        1.85        to        1.59        387,179        2.10       1.25       to        1.90       5.23       to        4.57  

12/31/2015

      149,672        1.76        to        1.52        261,989        2.19       1.25       to        1.90       (3.44 )      to        (4.06 ) 

12/31/2014

      186,731        1.82        to        1.59        337,554        2.82       1.25       to        1.90       1.31       to        0.66  

12/31/2013

      153,714        1.80        to        1.58        275,097        2.41       1.25       to        1.90       17.91       to        17.16  

12/31/2012

      214,324        1.52        to        1.35        324,237        2.46       1.25       to        1.90       9.27       to        8.57  

TA Asset Allocation—Moderate Growth Service Class

 

                 

12/31/2016

      57,499,076        11.66        to        11.02        162,356,929        1.79       0.45       to        2.00       5.78       to        4.16  

12/31/2015

      61,880,963        11.02        to        10.58        153,403,905        2.01       0.45       to        2.00       (2.96 )      to        (4.45 ) 

12/31/2014

      66,510,851        11.36        to        11.07        151,210,658        2.59       0.45       to        2.00       1.99       to        0.42  

12/31/2013

      68,282,174        1.24        to        1.61        128,458,358        2.12       0.45       to        1.95       18.51       to        16.77  

12/31/2012

      65,243,774        1.05        to        1.38        93,631,084        2.29       0.45       to        1.95       9.11       to        8.25  

TA Barrow Hanley Dividend Focused Initial Class

 

                 

12/31/2016

      1,213,323        14.36        to        2.01        3,032,677        2.05       0.45       to        1.90       14.40       to        12.78  

12/31/2015

      1,486,892        12.55        to        1.78        3,270,068        1.89       0.45       to        1.90       (4.03 )      to        (5.39 ) 

12/31/2014

      1,664,774        13.08        to        1.89        3,844,650        1.34       0.45       to        1.90       11.67       to        10.08  

12/31/2013

      1,867,664        1.37        to        1.71        3,838,988        2.31       0.45       to        1.90       29.66       to        27.82  

12/31/2012

      2,195,072        1.15        to        1.34        3,506,520        1.82       0.45       to        1.90       10.34       to        9.63  

TA Barrow Hanley Dividend Focused Service Class

 

                 

12/31/2016

      5,972,559        13.98        to        13.44        19,563,340        2.20       0.90       to        2.00       13.57       to        12.33  

12/31/2015

      4,581,223        12.31        to        11.96        12,481,040        1.56       0.90       to        2.00       (4.69 )      to        (5.74 ) 

12/31/2014

      2,227,705        12.92        to        12.69        6,012,268        1.25       0.90       to        2.00       10.93       to        9.72  

12/31/2013

      2,042,352        1.28        to        1.82        4,214,038        2.26       1.15       to        1.95       28.45       to        27.44  

12/31/2012

      5,187,651        1.00        to        1.43        7,871,863        1.74       1.15       to        1.95       10.20       to        9.33  

 

54

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA BlackRock Equity Smart Beta 100 Service Class

 

                 

12/31/2016(1)

     107,409      $ 10.55        to      $ 10.43      $ 1,126,448        —   %      0.45 %      to        2.00 %      —   %      to        —   % 

TA BlackRock Global Allocation Service Class

 

                    

12/31/2016

      29,085,578        11.17        to        10.53        62,055,519        0.38       0.45       to        2.00       4.09       to        2.49  

12/31/2015

      32,066,493        10.73        to        10.28        56,381,328        1.72       0.45       to        2.00       (1.67 )      to        (3.18 ) 

12/31/2014

      33,949,110        10.91        to        10.62        56,800,395        1.75       0.45       to        2.00       1.29       to        (0.36 ) 

12/31/2013

      36,030,640        1.18        to        1.47        55,988,891        1.13       0.45       to        2.05       13.92       to        12.13  

12/31/2012

      34,316,080        1.04        to        1.31        45,873,956        2.33       0.45       to        2.05       8.61       to        7.76  

TA BlackRock Global Allocation Managed Risk—Balanced Service Class

 

            

12/31/2016

      770,157        9.53        to        9.22        7,203,419        1.96       0.45       to        2.00       (0.08 )      to        (1.61 ) 

12/31/2015(1)

     348,633        9.54        to        9.37        3,294,098        —         0.45       to        2.00       —         to        —    

TA BlackRock Global Allocation Managed Risk—Growth Service Class

 

            

12/31/2016

      802,785        9.28        to        8.98        7,315,682        2.25       0.45       to        2.00       (0.64 )      to        (2.16 ) 

12/31/2015(1)

     491,576        9.34        to        9.18        4,545,309        —         0.45       to        2.00       —         to        —    

TA BlackRock Smart Beta 50 Service Class

 

                    

12/31/2016(1)

     345,827        10.23        to        10.11        3,516,806        —         0.45       to        2.00       —         to        —    

TA BlackRock Smart Beta 75 Service Class

 

                    

12/31/2016(1)

     81,476        10.30        to        10.18        833,826        —         0.45       to        2.00       —         to        —    

TA BlackRock Tactical Allocation Service Class

 

                 

12/31/2016

      32,609,979        11.55        to        10.92        100,557,415        2.32       0.45       to        2.00       4.44       to        2.84  

12/31/2015

      33,725,251        11.06        to        10.61        94,383,584        1.78       0.45       to        2.00       (0.57 )      to        (2.10 ) 

12/31/2014

      34,968,108        11.13        to        10.84        87,586,850        1.30       0.45       to        2.00       4.60       to        2.99  

12/31/2013

      33,268,265        1.18        to        1.59        66,492,168        1.34       0.45       to        1.95       11.84       to        10.20  

12/31/2012

      24,436,673        1.05        to        1.44        35,871,490        1.48       0.45       to        1.95       8.76       to        7.90  

TA Clarion Global Real Estate Securities Initial Class

 

                 

12/31/2016

      8,553        10.37        to        2.01        22,037        1.76       0.45       to        1.90       0.17       to        (1.25 ) 

12/31/2015

      8,987        10.35        to        2.04        23,333        3.42       0.45       to        1.90       (1.05 )      to        (2.46 ) 

12/31/2014

      14,673        10.46        to        2.09        38,903        1.46       0.45       to        1.90       13.06       to        11.45  

12/31/2013

      22,067        1.19        to        1.87        52,521        5.49       0.45       to        1.90       3.43       to        1.96  

12/31/2012

      22,372        1.39        to        1.84        51,946        3.56       0.45       to        1.90       23.70       to        22.91  

TA Clarion Global Real Estate Securities Service Class

 

                 

12/31/2016

      1,703,876        10.11        to        9.72        5,721,454        1.43       0.90       to        2.00       (0.48 )      to        (1.56 ) 

12/31/2015

      1,889,106        10.16        to        9.87        5,829,195        4.20       0.90       to        2.00       (1.76 )      to        (2.83 ) 

12/31/2014

      2,083,565        10.34        to        10.16        5,463,539        1.36       0.90       to        2.00       12.28       to        11.05  

12/31/2013

      1,851,330        1.11        to        1.89        3,363,372        5.47       1.15       to        1.95       2.53       to        1.72  

12/31/2012

      1,368,300        1.08        to        1.85        2,269,443        3.57       1.15       to        1.95       23.55       to        22.58  

TA International Moderate Growth Service Class

 

                 

12/31/2016

      19,645,357        10.32        to        9.75        41,499,204        1.87       0.45       to        2.00       0.62       to        (0.92 ) 

12/31/2015

      21,891,483        10.26        to        9.84        43,094,351        1.82       0.45       to        2.00       (2.32 )      to        (3.83 ) 

12/31/2014

      21,845,760        10.50        to        10.23        35,391,209        2.15       0.45       to        2.00       (1.23 )      to        (2.75 ) 

12/31/2013

      21,520,089        1.19        to        1.03        27,779,613        1.84       0.45       to        1.95       11.96       to        10.31  

12/31/2012

      18,158,917        1.06        to        0.94        17,563,626        2.83       0.45       to        1.95       11.20       to        10.32  

TA Janus Balanced Service Class

 

                          

12/31/2016

      17,165,988        12.25        to        11.57        66,683,993        1.09       0.45       to        2.00       3.65       to        2.06  

12/31/2015

      14,140,653        11.82        to        11.34        50,716,781        0.83       0.45       to        2.00       (0.33 )      to        (1.86 ) 

12/31/2014

      11,828,480        11.86        to        11.55        35,378,527        0.69       0.45       to        2.00       7.35       to        5.69  

12/31/2013

      9,040,332        1.26        to        1.12        15,597,184        0.70       0.45       to        1.95       18.49       to        16.74  

12/31/2012

      3,547,649        1.06        to        0.96        3,462,061        —         0.45       to        1.95       11.21       to        10.34  

TA Janus Mid-Cap Growth Initial Class

 

                       

12/31/2016

      32,509        11.40        to        1.88        47,880        —         0.45       to        1.90       (2.48 )      to        (3.87 ) 

12/31/2015

      24,339        11.69        to        1.95        33,445        —         0.45       to        1.90       (5.46 )      to        (6.80 ) 

12/31/2014

      28,385        12.36        to        2.10        41,630        —         0.45       to        1.90       (0.43 )      to        (1.85 ) 

12/31/2013

      36,941        1.39        to        2.14        54,906        0.81       0.45       to        1.90       38.52       to        36.55  

12/31/2012

      38,621        1.58        to        1.56        41,828        —         0.45       to        1.90       7.73       to        7.04  

 

55

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Janus Mid-Cap Growth Service Class

 

                    

12/31/2016

      1,076,773      $ 11.10        to      $ 10.67      $ 3,562,151        —   %      0.90 %      to        2.00 %      (3.18 )%      to        (4.23 )% 

12/31/2015

      1,283,293        11.47        to        11.14        3,821,907        —         0.90       to        2.00       (6.11 )      to        (7.14 ) 

12/31/2014

      1,405,002        12.21        to        12.00        4,158,692        —         0.90       to        2.00       (1.15 )      to        (2.24 ) 

12/31/2013

      1,427,218        2.03        to        2.02        3,367,567        0.60       1.15       to        1.95       37.25       to        36.17  

12/31/2012

      1,851,803        1.48        to        1.49        2,936,120        —         1.15       to        1.95       7.53       to        6.68  

TA Jennison Growth Initial Class

 

                          

12/31/2016

      840,949        15.07        to        2.13        1,422,270        —         0.45       to        1.90       (2.09 )      to        (3.48 ) 

12/31/2015

      1,148,264        15.39        to        2.20        2,001,597        —         0.45       to        1.90       10.90       to        9.33  

12/31/2014

      1,307,658        13.88        to        2.01        2,074,564        —         0.45       to        1.90       9.46       to        7.91  

12/31/2013

      1,426,689        1.46        to        1.87        2,088,334        0.26       0.45       to        1.90       37.09       to        35.14  

12/31/2012

      1,707,271        1.35        to        1.38        1,840,076        0.07       0.45       to        1.90       14.33       to        13.60  

TA Jennison Growth Service Class

 

                          

12/31/2016

      4,656,507        14.68        to        14.11        16,155,829        —         0.90       to        2.00       (2.78 )      to        (3.84 ) 

12/31/2015

      5,878,652        15.10        to        14.67        18,662,985        —         0.90       to        2.00       10.12       to        8.91  

12/31/2014

      4,747,106        13.72        to        13.47        12,818,115        —         0.90       to        2.00       8.81       to        7.62  

12/31/2013

      4,408,276        1.78        to        1.85        9,292,701        0.07       1.15       to        1.95       35.74       to        34.67  

12/31/2012

      3,985,152        1.31        to        1.37        5,977,859        —         1.15       to        1.95       14.09       to        13.19  

TA JPMorgan Core Bond Service Class

 

                       

12/31/2016

      9,984,860        10.27        to        9.70        27,671,195        1.90       0.45       to        2.00       1.60       to        0.04  

12/31/2015

      9,485,030        10.10        to        9.70        20,112,573        1.87       0.45       to        2.00       (0.11 )      to        (1.65 ) 

12/31/2014

      8,490,749        10.12        to        9.86        15,198,187        1.95       0.45       to        2.00       4.63       to        3.02  

12/31/2013

      5,404,361        1.01        to        1.03        7,409,619        2.83       0.45       to        1.95       (2.57 )      to        (4.00 ) 

12/31/2012

      4,215,614        1.10        to        1.07        4,541,364        2.84       0.45       to        1.95       3.56       to        2.74  

TA JPMorgan Enhanced Index Initial Class

 

                    

12/31/2016

      206,326        14.85        to        2.00        610,859        0.39       0.45       to        1.90       10.85       to        9.28  

12/31/2015

      236,425        13.40        to        1.83        634,049        0.97       0.45       to        1.90       (0.52 )      to        (1.94 ) 

12/31/2014

      261,524        13.47        to        1.86        655,455        0.80       0.45       to        1.90       13.67       to        12.06  

12/31/2013

      244,348        1.45        to        1.66        541,382        0.64       0.45       to        1.90       31.92       to        30.05  

12/31/2012

      260,637        1.29        to        1.28        442,008        1.21       0.45       to        1.90       14.91       to        14.17  

TA JPMorgan Enhanced Index Service Class

 

                    

12/31/2016

      466,902        14.48        to        13.92        4,419,905        0.16       0.90       to        2.00       10.13       to        8.93  

12/31/2015

      378,610        13.15        to        12.78        1,978,768        0.81       0.90       to        2.00       (1.25 )      to        (2.33 ) 

12/31/2014

      447,817        13.32        to        13.08        2,099,233        0.75       0.90       to        2.00       12.95       to        11.71  

12/31/2013

      223,242        1.54        to        1.71        448,924        0.53       1.15       to        1.95       30.63       to        29.61  

12/31/2012

      150,883        1.18        to        1.32        192,454        0.97       1.15       to        1.95       14.77       to        13.86  

TA JPMorgan Mid Cap Value Service Class

 

                    

12/31/2016

      5,651,589        14.75        to        13.93        26,255,068        1.90       0.45       to        2.00       13.77       to        12.02  

12/31/2015

      5,733,005        12.96        to        12.44        20,803,900        0.76       0.45       to        2.00       (3.37 )      to        (4.86 ) 

12/31/2014

      5,723,903        13.41        to        13.07        20,447,452        0.64       0.45       to        2.00       14.47       to        12.71  

12/31/2013

      4,415,296        1.49        to        1.88        10,486,357        0.38       0.45       to        1.95       30.88       to        28.95  

12/31/2012

      3,860,875        1.14        to        1.46        5,704,726        0.75       0.45       to        1.95       18.86       to        17.93  

TA JPMorgan Tactical Allocation Service Class

 

                 

12/31/2016

      22,814,234        11.05        to        10.44        83,825,181        1.16       0.45       to        2.00       3.73       to        2.13  

12/31/2015

      22,739,979        10.65        to        10.22        70,466,542        1.14       0.45       to        2.00       (0.85 )      to        (2.37 ) 

12/31/2014

      20,676,779        10.74        to        10.47        51,151,249        0.96       0.45       to        2.00       5.80       to        4.18  

12/31/2013

      19,949,918        1.10        to        1.08        30,794,952        1.02       0.45       to        1.95       4.82       to        3.28  

12/31/2012

      14,296,793        1.07        to        1.05        15,073,054        0.63       0.45       to        1.95       6.24       to        5.40  

TA Legg Mason Dynamic Allocation—Balanced Service Class

 

              

12/31/2016

      22,101,622        10.79        to        10.19        96,492,892        1.10       0.45       to        2.00       (1.11 )      to        (2.63 ) 

12/31/2015

      24,115,700        10.91        to        10.47        93,488,870        0.91       0.45       to        2.00       (2.52 )      to        (4.02 ) 

12/31/2014

      16,981,768        11.19        to        10.91        57,286,673        0.66       0.45       to        2.00       8.00       to        6.33  

12/31/2013

      14,019,229        1.08        to        1.08        26,970,451        0.21       0.45       to        1.95       8.88       to        7.28  

12/31/2012(1)

     4,608,121        1.02        to        1.01        4,653,300        —         0.45       to        1.95       —         to        —    

 

56

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Legg Mason Dynamic Allocation—Growth Service Class

 

              

12/31/2016

      15,446,885      $ 11.07        to      $ 10.46      $ 62,664,292        0.99 %      0.45 %      to        2.00 %      (1.43 )%      to        (2.94 )% 

12/31/2015

      16,046,497        11.23        to        10.77        66,569,685        0.69       0.45       to        2.00       (3.38 )      to        (4.87 ) 

12/31/2014

      12,452,814        11.62        to        11.33        41,526,468        0.57       0.45       to        2.00       7.69       to        6.04  

12/31/2013

      9,288,777        1.14        to        1.14        20,070,907        0.19       0.45       to        1.95       15.09       to        13.40  

12/31/2012(1)

     2,788,564        1.01        to        1.00        2,801,716        —         0.45       to        1.95       —         to        —    

TA Managed Risk—Balanced ETF Service Class

 

                 

12/31/2016

      127,929,980        11.09        to        10.48        438,296,472        1.66       0.45       to        2.00       3.29       to        1.70  

12/31/2015

      140,114,274        10.74        to        10.30        432,034,799        1.30       0.45       to        2.00       (2.21 )      to        (3.71 ) 

12/31/2014

      136,879,690        10.98        to        10.70        342,152,293        0.95       0.45       to        2.00       4.08       to        2.48  

12/31/2013

      129,881,636        1.16        to        1.17        209,472,792        1.09       0.45       to        1.95       10.93       to        9.30  

12/31/2012

      92,769,802        1.15        to        1.07        103,256,948        1.28       0.45       to        1.95       7.32       to        6.31  

TA Managed Risk—Conservative ETF Service Class

 

                 

12/31/2016

      33,427,887        11.05        to        10.44        88,366,488        1.62       0.45       to        2.00       3.61       to        2.02  

12/31/2015

      37,681,242        10.67        to        10.24        86,100,597        1.49       0.45       to        2.00       (1.13 )      to        (2.65 ) 

12/31/2014

      40,013,205        10.79        to        10.52        77,921,336        1.25       0.45       to        2.00       4.77       to        3.16  

12/31/2013

      35,123,308        1.11        to        1.19        52,461,737        1.34       0.45       to        1.95       6.99       to        5.41  

12/31/2012

      32,111,247        1.05        to        1.13        37,084,247        1.08       0.45       to        1.95       5.56       to        4.57  

TA Managed Risk—Growth ETF Service Class

 

                    

12/31/2016

      122,841,558        11.43        to        10.80        354,352,467        1.66       0.45       to        2.00       4.20       to        2.60  

12/31/2015

      130,279,773        10.97        to        10.53        339,220,776        1.48       0.45       to        2.00       (3.95 )      to        (5.43 ) 

12/31/2014

      139,255,241        11.42        to        11.13        326,832,308        1.06       0.45       to        2.00       3.51       to        1.91  

12/31/2013

      122,516,985        1.26        to        1.19        196,467,643        1.25       0.45       to        1.95       18.25       to        16.51  

12/31/2012

      79,318,618        1.10        to        1.02        84,454,388        1.65       0.45       to        1.95       10.44       to        9.41  

TA Market Participation Strategy Service Class

 

                 

12/31/2016

      8,820,580        11.77        to        11.12        34,140,280        0.16       0.45       to        2.00       3.70       to        2.10  

12/31/2015

      8,065,884        11.35        to        10.89        31,264,212        —         0.45       to        2.00       (3.68 )      to        (5.16 ) 

12/31/2014

      6,502,270        11.78        to        11.48        27,861,249        —         0.45       to        2.00       7.56       to        5.91  

12/31/2013

      4,873,843        1.13        to        1.11        12,392,847        —         0.45       to        1.95       13.78       to        12.11  

12/31/2012(1)

     728,061        0.99        to        0.99        720,954        —         0.45       to        1.95       —         to        —    

TA MFS International Equity Initial Class

 

                    

12/31/2016

      46,174        10.48        to        1.57        61,836        1.54       0.45       to        1.90       (0.37 )      to        (1.78 ) 

12/31/2015

      53,642        10.52        to        1.60        72,782        1.60       0.45       to        1.90       (0.37 )      to        (1.79 ) 

12/31/2014

      49,145        10.56        to        1.63        67,563        0.96       0.45       to        1.90       (5.60 )      to        (6.94 ) 

12/31/2013

      49,155        1.33        to        1.75        72,262        1.15       0.45       to        1.90       17.56       to        15.89  

12/31/2012

      49,166        1.43        to        1.51        62,062        1.64       0.45       to        1.90       20.64       to        19.87  

TA MFS International Equity Service Class

 

                    

12/31/2016

      5,268,104        10.22        to        9.82        13,345,400        1.35       0.90       to        2.00       (1.03 )      to        (2.11 ) 

12/31/2015

      5,061,054        10.33        to        10.03        12,388,616        1.27       0.90       to        2.00       (1.14 )      to        (2.22 ) 

12/31/2014

      1,240,007        10.44        to        10.26        3,695,090        0.95       0.90       to        2.00       (6.26 )      to        (7.28 ) 

12/31/2013

      995,804        1.35        to        1.83        2,398,959        1.15       1.15       to        1.95       16.43       to        15.52  

12/31/2012

      784,016        1.16        to        1.58        1,119,091        1.52       1.15       to        1.95       20.48       to        19.53  

TA Morgan Stanley Capital Growth Initial Class

 

                 

12/31/2016

      28,129        2.11        to        2.05        63,699        —         1.25       to        1.90       (3.47 )      to        (4.08 ) 

12/31/2015

      34,497        2.18        to        2.14        81,045        —         1.25       to        1.90       10.41       to        9.70  

12/31/2014

      33,027        1.98        to        1.95        70,381        —         1.25       to        1.90       4.70       to        4.03  

12/31/2013

      20,201        1.89        to        1.87        41,179        0.67       1.25       to        1.90       46.42       to        45.49  

12/31/2012

      20,240        1.29        to        1.29        28,219        —         1.25       to        1.90       14.11       to        13.38  

TA Morgan Stanley Capital Growth Service Class

 

                 

12/31/2016

      641,141        15.30        to        14.71        3,709,725        —         0.90       to        2.00       (3.37 )      to        (4.43 ) 

12/31/2015

      530,782        15.84        to        15.39        2,180,373        —         0.90       to        2.00       10.45       to        9.24  

12/31/2014

      487,574        14.34        to        14.09        1,461,885        —         0.90       to        2.00       4.84       to        3.69  

12/31/2013

      500,196        1.72        to        1.93        1,052,865        0.49       1.15       to        1.95       46.20       to        45.06  

12/31/2012

      465,486        1.18        to        1.33        630,426        —         1.15       to        1.95       13.89       to        12.99  

 

57

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Multi-Managed Balanced Initial Class

 

                    

12/31/2016

      12,065      $ 2.35        to      $ 2.06      $ 27,775        1.18 %      1.25 %      to        1.90 %      6.55 %      to        5.87 % 

12/31/2015

      23,192        2.21        to        1.95        50,184        1.37       1.25       to        1.90       (1.02 )      to        (1.65 ) 

12/31/2014

      23,192        2.23        to        1.98        50,777        1.38       1.25       to        1.90       9.44       to        8.74  

12/31/2013

      23,192        2.04        to        1.82        46,465        1.58       1.25       to        1.90       16.63       to        15.89  

12/31/2012

      23,192        1.75        to        1.57        39,897        —         1.25       to        1.90       11.17       to        10.46  

TA Multi-Managed Balanced Service Class

 

                    

12/31/2016

      12,471,373        12.82        to        12.11        83,405,643        1.01       0.45       to        2.00       7.16       to        5.51  

12/31/2015

      4,342,112        11.97        to        11.48        13,596,331        1.19       0.45       to        2.00       (0.51 )      to        (2.04 ) 

12/31/2014

      4,141,602        12.03        to        11.72        10,150,180        1.24       0.45       to        2.00       10.00       to        8.31  

12/31/2013

      3,663,589        1.26        to        1.81        6,706,218        1.48       0.45       to        1.95       17.23       to        15.50  

12/31/2012

      2,836,668        1.31        to        1.57        4,481,180        1.45       0.45       to        1.95       11.11       to        10.24  

TA Multi-Manager Alternative Strategies Service Class

 

                 

12/31/2016

      21,576        10.01        to        9.64        212,059        2.59       0.45       to        1.65       1.56       to        0.35  

12/31/2015

      13,978        9.85        to        9.60        136,414        0.36       0.45       to        1.65       (6.03 )      to        (7.15 ) 

12/31/2014

      2,886        10.49        to        10.34        30,031        0.83       0.45       to        1.65       2.49       to        1.27  

12/31/2013(1)

     598        10.23        to        10.21        6,116        —         0.45       to        1.65       —         to        —    

TA PIMCO Tactical—Balanced Service Class

 

                    

12/31/2016

      11,684,566        11.48        to        10.85        37,518,764        0.29       0.45       to        2.00       4.91       to        3.30  

12/31/2015

      11,441,634        10.95        to        10.50        32,381,298        —         0.45       to        2.00       (2.98 )      to        (4.48 ) 

12/31/2014

      11,037,640        11.28        to        11.00        30,107,695        1.04       0.45       to        2.00       7.35       to        5.70  

12/31/2013

      9,401,250        1.10        to        0.99        16,381,046        0.59       0.45       to        1.95       11.35       to        9.71  

12/31/2012

      3,645,065        0.99        to        0.91        3,358,618        1.49       0.45       to        1.95       (0.17 )      to        (0.96 ) 

TA PIMCO Tactical—Conservative Service Class

 

                 

12/31/2016

      7,056,786        11.29        to        10.67        24,094,824        0.44       0.45       to        2.00       4.51       to        2.90  

12/31/2015

      6,127,329        10.80        to        10.36        16,490,590        0.31       0.45       to        2.00       (2.52 )      to        (4.02 ) 

12/31/2014

      5,302,381        11.08        to        10.80        10,002,783        1.31       0.45       to        2.00       8.24       to        6.57  

12/31/2013

      3,388,194        1.07        to        0.94        4,859,792        0.67       0.45       to        1.95       7.67       to        6.09  

12/31/2012

      1,792,209        0.99        to        0.89        1,613,212        1.19       0.45       to        1.95       0.37       to        (0.43 ) 

TA PIMCO Tactical—Growth Service Class

 

                    

12/31/2016

      7,608,963        11.55        to        10.91        30,537,277        —         0.45       to        2.00       4.40       to        2.80  

12/31/2015

      7,697,689        11.07        to        10.62        28,486,728        —         0.45       to        2.00       (3.89 )      to        (5.37 ) 

12/31/2014

      6,170,132        11.51        to        11.22        15,981,612        1.80       0.45       to        2.00       5.92       to        4.29  

12/31/2013

      5,087,552        1.14        to        0.98        8,054,694        0.75       0.45       to        1.95       16.28       to        14.57  

12/31/2012

      1,751,213        0.98        to        0.85        1,512,853        0.41       0.45       to        1.95       (0.46 )      to        (1.25 ) 

TA PIMCO Total Return Initial Class

 

                          

12/31/2016

      173,971        1.64        to        1.39        279,735        3.25       1.25       to        1.90       1.45       to        0.80  

12/31/2015

      184,212        1.62        to        1.38        292,408        2.68       1.25       to        1.90       (0.55 )      to        (1.19 ) 

12/31/2014

      244,451        1.63        to        1.40        390,765        1.82       1.25       to        1.90       3.38       to        2.72  

12/31/2013

      271,387        1.58        to        1.36        420,257        1.95       1.25       to        1.90       (3.75 )      to        (4.36 ) 

12/31/2012

      344,743        1.64        to        1.42        555,485        3.95       1.25       to        1.90       6.22       to        5.53  

TA PIMCO Total Return Service Class

 

                          

12/31/2016

      33,634,576        10.14        to        9.58        76,869,825        2.22       0.45       to        2.00       2.02       to        0.45  

12/31/2015

      35,901,430        9.94        to        9.53        71,428,468        2.62       0.45       to        2.00       0.07       to        (1.47 ) 

12/31/2014

      38,303,298        9.93        to        9.68        68,015,822        1.68       0.45       to        2.00       3.87       to        2.27  

12/31/2013

      45,280,868        1.02        to        1.33        65,446,075        2.05       0.45       to        1.95       (3.20 )      to        (4.62 ) 

12/31/2012

      43,554,435        1.29        to        1.40        59,123,962        4.32       0.45       to        1.95       6.25       to        5.26  

TA PineBridge Inflation Opportunities Service Class

 

                 

12/31/2016

      9,361,263        9.21        to        8.70        14,601,121        0.59       0.45       to        2.00       3.34       to        1.75  

12/31/2015

      10,242,463        8.91        to        8.55        14,060,193        1.26       0.45       to        2.00       (3.30 )      to        (4.79 ) 

12/31/2014

      11,260,430        9.22        to        8.98        14,671,181        0.31       0.45       to        2.00       2.91       to        1.33  

12/31/2013

      13,261,771        0.94        to        0.98        14,478,869        0.34       0.45       to        1.95       (9.95 )      to        (11.28 ) 

12/31/2012

      13,767,765        1.14        to        1.11        15,370,289        0.26       0.45       to        1.95       5.08       to        4.25  

 

58

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA ProFunds UltraBear Service Class (OAM)

 

                    

12/31/2016

      18,800,019      $ 0.06        to      $ 0.06      $ 1,139,167        —   %      1.00 %      to        1.95 %      (24.36 )%      to        (25.04 )% 

12/31/2015

      13,939,989        0.08        to        0.08        1,122,262        —         1.00       to        1.95       (8.20 )      to        (9.05 ) 

12/31/2014

      4,425,558        0.09        to        0.09        390,086        —         1.00       to        1.95       (26.32 )      to        (27.01 ) 

12/31/2013

      3,540,863        0.12        to        0.12        425,843        —         1.00       to        1.95       (45.65 )      to        (46.16 ) 

12/31/2012

      17,756,040        0.67        to        0.22        3,953,441        —         0.45       to        1.95       (30.13 )      to        (30.79 ) 

TA QS Investors Active Asset Allocation—Moderate Service Class

 

              

12/31/2016

      28,275,068        10.50        to        9.92        89,329,578        1.21       0.45       to        2.00       1.73       to        0.17  

12/31/2015

      32,742,037        10.32        to        9.90        95,406,942        0.98       0.45       to        2.00       (4.71 )      to        (6.17 ) 

12/31/2014

      33,943,565        10.83        to        10.55        95,420,430        0.66       0.45       to        2.00       3.15       to        1.56  

12/31/2013

      31,068,876        1.16        to        1.11        56,227,242        0.55       0.45       to        1.95       10.62       to        8.99  

12/31/2012

      12,789,199        1.05        to        1.02        13,133,992        0.16       0.45       to        1.95       7.22       to        6.22  

TA QS Investors Active Asset Allocation—Conservative Service Class

 

            

12/31/2016

      9,783,495        10.50        to        9.92        25,125,769        1.26       0.45       to        2.00       2.19       to        0.62  

12/31/2015

      11,470,352        10.27        to        9.85        26,610,104        1.00       0.45       to        2.00       (2.80 )      to        (4.29 ) 

12/31/2014

      12,551,291        10.57        to        10.30        24,423,931        1.05       0.45       to        2.00       3.14       to        1.55  

12/31/2013

      12,761,034        1.11        to        1.08        17,995,165        1.13       0.45       to        1.95       6.59       to        5.02  

12/31/2012

      9,990,889        1.05        to        1.02        10,318,056        0.42       0.45       to        1.95       5.72       to        4.73  

TA QS Investors Active Asset Allocation—Moderate Growth Service Class

 

            

12/31/2016

      15,556,628        10.52        to        9.94        53,011,793        1.06       0.45       to        2.00       1.51       to        (0.05 ) 

12/31/2015

      18,408,252        10.37        to        9.95        58,624,473        1.03       0.45       to        2.00       (6.95 )      to        (8.39 ) 

12/31/2014

      19,144,493        11.14        to        10.86        55,073,814        0.82       0.45       to        2.00       2.76       to        1.18  

12/31/2013

      16,804,541        1.23        to        1.14        30,703,256        0.85       0.45       to        1.95       15.98       to        14.28  

12/31/2012

      9,243,757        1.06        to        1.00        9,309,067        0.75       0.45       to        1.95       9.85       to        8.82  

TA Small/Mid Cap Value Initial Class

 

                    

12/31/2016

      320,871        15.02        to        11.90        3,209,500        0.76       0.45       to        1.55       20.58       to        19.28  

12/31/2015

      358,219        12.46        to        9.98        3,066,345        1.02       0.45       to        1.55       (2.95 )      to        (4.00 ) 

12/31/2014

      378,313        12.83        to        10.39        3,330,797        0.79       0.45       to        1.55       4.75       to        3.62  

12/31/2013

      418,523        1.45        to        10.03        3,611,831        0.42       0.45       to        1.55       35.71       to        34.24  

12/31/2012

      492,637        1.39        to        7.47        3,142,391        0.54       0.45       to        1.55       14.94       to        14.60  

TA Small/Mid Cap Value Service Class

 

                       

12/31/2016

      3,406,282        14.63        to        14.06        10,341,703        0.55       0.90       to        2.00       19.73       to        18.42  

12/31/2015

      3,497,356        12.22        to        11.87        8,150,627        0.82       0.90       to        2.00       (3.60 )      to        (4.66 ) 

12/31/2014

      3,341,690        12.68        to        12.45        7,605,510        0.64       0.90       to        2.00       3.99       to        2.86  

12/31/2013

      2,199,252        1.79        to        1.70        4,056,739        0.29       1.15       to        1.95       34.49       to        33.44  

12/31/2012

      1,936,575        1.33        to        1.28        2,533,553        0.27       1.15       to        1.95       14.72       to        13.81  

TA T. Rowe Price Small Cap Initial Class

 

                    

12/31/2016

      65,922        15.53        to        2.59        265,399        —         0.45       to        1.90       10.72       to        9.15  

12/31/2015

      78,635        14.03        to        2.38        261,501        —         0.45       to        1.90       1.97       to        0.52  

12/31/2014

      153,368        13.75        to        2.36        295,834        —         0.45       to        1.90       6.07       to        4.56  

12/31/2013

      180,817        1.51        to        2.26        331,926        0.07       0.45       to        1.90       43.42       to        41.39  

12/31/2012

      199,364        1.59        to        1.60        257,578        —         0.45       to        1.90       14.26       to        13.52  

TA T. Rowe Price Small Cap Service Class

 

                    

12/31/2016

      5,742,239        15.14        to        14.55        29,755,780        —         0.90       to        2.00       10.01       to        8.81  

12/31/2015

      5,862,406        13.76        to        13.37        24,844,869        —         0.90       to        2.00       1.24       to        0.13  

12/31/2014

      5,746,945        13.60        to        13.35        22,421,531        —         0.90       to        2.00       5.29       to        4.14  

12/31/2013

      4,912,670        2.18        to        2.28        14,082,513        —         1.15       to        1.95       42.07       to        40.95  

12/31/2012

      4,271,914        1.53        to        1.62        7,692,095        —         1.15       to        1.95       14.09       to        13.19  

TA Torray Concentrated Growth Initial Class

 

                    

12/31/2016

      240,921        13.70        to        2.05        1,386,531        0.46       0.45       to        1.90       6.26       to        4.75  

12/31/2015

      300,767        12.90        to        1.95        1,647,122        0.54       0.45       to        1.90       (2.01 )      to        (3.41 ) 

12/31/2014

      312,882        13.16        to        2.02        1,765,697        0.86       0.45       to        1.90       9.50       to        7.94  

12/31/2013

      340,616        1.44        to        1.87        1,772,939        0.99       0.45       to        1.90       32.50       to        30.62  

12/31/2012

      441,843        1.43        to        1.44        1,719,363        0.84       0.45       to        1.90       15.68       to        14.94  

 

59

Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

TA Torray Concentrated Growth Service Class

 

                 

12/31/2016

      854,672      $ 13.35        to      $ 12.83      $ 2,608,184        0.14 %      0.90 %      to        2.00 %      5.52 %      to        4.37 % 

12/31/2015

      938,864        12.65        to        12.29        2,541,038        0.35       0.90       to        2.00       (2.72 )      to        (3.78 ) 

12/31/2014

      3,902,173        13.00        to        12.77        9,918,986        0.70       0.90       to        2.00       8.76       to        7.57  

12/31/2013

      3,636,014        1.69        to        1.90        7,755,616        0.78       1.15       to        1.95       31.30       to        30.27  

12/31/2012

      3,035,386        1.29        to        1.46        4,696,125        0.99       1.15       to        1.95       15.49       to        14.58  

TA TS&W International Equity Initial Class

 

                    

12/31/2016

      316,110        10.86        to        1.49        672,352        2.65       0.45       to        1.90       0.63       to        (0.80 ) 

12/31/2015

      374,274        10.80        to        1.50        777,937        2.98       0.45       to        1.90       0.86       to        (0.57 ) 

12/31/2014

      425,897        10.70        to        1.51        886,720        2.39       0.45       to        1.90       (5.61 )      to        (6.95 ) 

12/31/2013

      486,627        1.35        to        1.62        1,084,356        2.29       0.45       to        1.90       23.79       to        22.03  

12/31/2012

      583,020        1.24        to        1.33        1,054,272        2.23       0.45       to        1.90       15.30       to        14.56  

TA TS&W International Equity Service Class

 

                    

12/31/2016

      695,271        10.58        to        10.16        2,505,044        2.57       0.90       to        2.00       (0.13 )      to        (1.22 ) 

12/31/2015

      659,509        10.59        to        10.29        2,459,651        3.18       0.90       to        2.00       0.13       to        (0.96 ) 

12/31/2014

      597,875        10.58        to        10.39        1,710,204        2.32       0.90       to        2.00       (6.23 )      to        (7.25 ) 

12/31/2013

      559,458        1.21        to        1.73        1,151,493        2.21       1.15       to        1.95       22.66       to        21.70  

12/31/2012

      415,528        0.99        to        1.42        520,759        2.04       1.15       to        1.95       15.11       to        14.20  

TA WMC US Growth Initial Class

 

                          

12/31/2016

      1,806,388        14.52        to        1.89        2,506,822        0.40       0.45       to        1.90       2.35       to        0.90  

12/31/2015

      2,057,869        14.19        to        1.87        2,814,938        0.71       0.45       to        1.90       6.37       to        4.86  

12/31/2014

      2,344,356        13.34        to        1.78        3,041,752        0.87       0.45       to        1.90       10.61       to        9.03  

12/31/2013

      2,741,240        1.36        to        1.64        3,277,307        1.03       0.45       to        1.90       31.87       to        30.00  

12/31/2012

      3,154,123        1.17        to        1.26        2,886,812        0.31       0.45       to        1.90       11.76       to        11.05  

TA WMC US Growth Service Class

 

                          

12/31/2016

      4,989,273        14.15        to        13.60        16,149,242        0.17       0.90       to        2.00       1.62       to        0.52  

12/31/2015

      5,171,418        13.92        to        13.53        14,352,790        0.42       0.90       to        2.00       5.66       to        4.50  

12/31/2014

      1,038,319        13.18        to        12.94        2,909,622        0.69       0.90       to        2.00       9.84       to        8.64  

12/31/2013

      975,383        1.36        to        1.69        1,861,412        0.81       1.15       to        1.95       30.63       to        29.61  

12/31/2012

      778,449        1.04        to        1.31        1,097,644        0.12       1.15       to        1.95       11.57       to        10.69  

Vanguard® Equity Index

 

                             

12/31/2016

      54,305        14.86        to        14.67        802,610        2.21       0.65       to        1.00       11.09       to        10.70  

12/31/2015

      54,305        13.38        to        13.25        723,578        1.78       0.65       to        1.00       0.61       to        0.26  

12/31/2014

      —          13.30        to        13.22        —          —         0.65       to        1.00       13       to        12.38  

12/31/2013(1)

     —          11.79        to        11.76        —          —         0.45       to        0.80       —         to        —    

Vanguard® International

 

                             

12/31/2016

      42,274        10.87        to        10.73        457,069        1.41       0.65       to        1.00       1.22       to        0.87  

12/31/2015

      40,206        10.74        to        10.64        430,009        2.00       0.65       to        1.00       (1.41 )      to        (1.76 ) 

12/31/2014

      —          10.89        to        10.83        —          —         0.65       to        1.00       (6.66 )      to        (6.99 ) 

12/31/2013(1)

     —          11.67        to        11.64        —          —         0.45       to        0.80       —         to        —    

Vanguard® Mid-Cap Index

 

                             

12/31/2016

      —          14.44        to        14.26        —          —         0.65       to        1.00       10.40       to        10.01  

12/31/2015

      —          13.08        to        12.96        —          —         0.65       to        1.00       (2.07 )      to        (2.42 ) 

12/31/2014

      —          13.36        to        13.28        —          —         0.65       to        1.00       12.86       to        12.46  

12/31/2013(1)

     —          11.84        to        11.81        —          —         0.45       to        0.80       —         to        —    

Vanguard® REIT Index

 

                             

12/31/2016

      —          12.59        to        12.43        —          —         0.65       to        1.00       7.66       to        7.28  

12/31/2015

      —          11.69        to        11.58        —          —         0.65       to        1.00       1.56       to        1.21  

12/31/2014

      —          11.51        to        11.45        —          —         0.65       to        1.00       29.27       to        28.82  

12/31/2013(1)

     —          8.91        to        8.89        —          —         0.45       to        0.80       —         to        —    

Vanguard® Short-Term Investment Grade

 

                    

12/31/2016

      —          10.34        to        10.21        —          —         0.65       to        1.00       2.05       to        1.70  

12/31/2015

      —          10.13        to        10.04        —          —         0.65       to        1.00       0.47       to        0.12  

12/31/2014

      —          10.08        to        10.03        —          —         0.65       to        1.00       1.10       to        0.74  

12/31/2013(1)

     —          9.98        to        9.95        —          —         0.45       to        0.80       —         to        —    

 

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Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  

Subaccount

    Units      Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio		      Net Assets      Investment
Income
Ratio*		     Expense Ratio**
Lowest to Highest		     Total Return***
Corresponding to
Lowest to Highest
Expense Ratio		  

Vanguard® Total Bond Market Index

 

                          

12/31/2016

      34,255      $ 10.28        to      $ 10.15      $ 350,212        2.27 %      0.65 %      to        1.00 %      1.81 %      to        1.45 % 

12/31/2015

      34,255        10.10        to        10.00        344,505        2.44       0.65       to        1.00       (0.32 )      to        (0.66 ) 

12/31/2014

      —          10.13        to        10.07        —          —         0.65       to        1.00       5.21       to        4.84  

12/31/2013(1)

     —          9.63        to        9.61        —          —         0.45       to        0.80       —         to        —    

Voya Global Perspectives Class S Shares

 

                    

12/31/2016

      —          9.68        to        9.54        —          —         1.29       to        2.14       5.19       to        4.30  

12/31/2015(1)

     —          9.20        to        9.15        —          —         1.29       to        2.14       —         to        —    

Voya Large Cap Value Class S Shares

 

                          

12/31/2016

      —          10.40        to        10.26        —          —         1.29       to        2.14       12.13       to        11.18  

12/31/2015(1)

     —          9.28        to        9.23        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Conservative Class S Shares

 

                 

12/31/2016

      —          10.00        to        9.86        —          —         1.29       to        2.14       4.12       to        3.25  

12/31/2015(1)

     —          9.61        to        9.55        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Moderate Class S Shares

 

                 

12/31/2016

      —          9.98        to        9.84        —          —         1.29       to        2.14       4.96       to        4.07  

12/31/2015(1)

     —          9.51        to        9.45        —          —         1.29       to        2.14       —         to        —    

Wanger International

 

                             

12/31/2016

      —          10.30        to        10.16        —          —         0.45       to        0.80       (1.85 )      to        (2.19 ) 

12/31/2015

      —          10.49        to        10.39        —          —         0.45       to        0.80       (0.35 )      to        (0.70 ) 

12/31/2014

      —          10.53        to        10.47        —          —         0.45       to        0.80       (4.83 )      to        (5.17 ) 

12/31/2013(1)

     —          11.06        to        11.04        —          —         0.45       to        0.80       —         to        —    

Wanger USA

                                

12/31/2016

      —          14.35        to        14.17        —          —         0.45       to        0.80       13.18       to        12.78  

12/31/2015

      —          12.68        to        12.56        —          —         0.45       to        0.80       (1.06 )      to        (1.40 ) 

12/31/2014

      —          12.81        to        12.74        —          —         0.45       to        0.80       4.31       to        3.95  

12/31/2013(1)

     —          12.28        to        12.25        —          —         0.45       to        0.80       —         to        —    

 

(1)  See footnote 1

 

* These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the Mutual Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the Mutual Fund in which the subaccounts invest.
** These amounts represent the annualized contract expenses of the subaccount, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the Mutual Fund have been excluded.
*** These amounts represent the total return for the periods indicated, including changes in the value of the Mutual Fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. Total returns reflect a full twelve month period and total returns for subaccounts opened during the year have not been disclosed as they may not be indicative of a full year return. Expense ratios not in effect for the full twelve months are not reflected in the total return as they may not be indicative of a full year return.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

6. Administrative and Mortality and Expense Risk Charges

TFLIC deducts a daily administrative charge equal to an annual rate of .15% of the daily net assets value of each subaccount for administrative expenses. TFLIC also deducts an annual charge during the accumulation phase, not to exceed $35, proportionately from the subaccounts’ unit values. An annual charge ranging from 0.30% to 1.85% is deducted (based on the death benefit selected) from the unit values of the subaccounts of the Separate Account for TFLIC’s assumption of certain mortality and expense risks incurred in connection with the contract. The charge is assessed daily based on the net asset value of the Mutual Fund. Charges for administrative and mortality and expense risk are an expense of the subaccount. Charges reflected above are those currently assessed and may be subject to change. Contract owners should see their actual policy and any related attachments to determine their specific charges.

In addition to M&E, the following subaccounts are assessed a daily charge for fund facilitation fees:

 

Subaccount

    Facilitation Fee Assessed  

AB Balanced Wealth Strategy Class B Shares

      0.20 % 

American Funds—Asset Allocation Class 2 Shares

      0.30 % 

American Funds—Bond Class 2 Shares

      0.30 % 

American Funds—Growth Class 2 Shares

      0.30 % 

American Funds—Growth-Income Class 2 Shares

      0.30 % 

American Funds—International Class 2 Shares

      0.30 % 

Fidelity® VIP Contrafund® Initial Class

      0.20 % 

Fidelity® VIP Mid Cap Initial Class

      0.20 % 

Fidelity® VIP Value Strategies Initial Class

      0.20 % 

Franklin Founding Funds Allocation Class 4 Shares

      0.15 % 

State Street Total Return V.I.S. Class 3 Shares

      0.20 % 

Vanguard® Equity Index

      0.20 % 

Vanguard® International

      0.20 % 

Vanguard® Mid-Cap Index

      0.20 % 

Vanguard® REIT Index

      0.20 % 

Vanguard® Short-Term Investment Grade

      0.20 % 

Vanguard® Total Bond Market Index

      0.20 % 

Voya Global Perspectives Class S Shares

      0.14 % 

Voya Large Cap Value Class S Shares

      0.14 % 

Voya Strategic Allocation Conservative Class S Shares

      0.14 % 

Voya Strategic Allocation Moderate Class S Shares

      0.14 % 

7. Income Tax

Operations of the Separate Account form a part of TFLIC, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986, as amended (the Code).    The operations of the Separate Account are accounted for separately from other operations of TFLIC for purposes of federal income taxation. The Separate Account is not separately taxable as a regulated investment company under Subchapter M of the Code and is not otherwise taxable as an entity separate from TFLIC. Under existing federal income tax laws, the income of the Separate Account is not taxable to TFLIC, as long as earnings are credited under the variable annuity contracts.

 

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Table of Contents

Transamerica Financial Life Insurance Company

Separate Account VA BNY

Notes to Financial Statements

December 31, 2016

 

8. Subsequent Events

The Separate Account has evaluated the financial statements for subsequent events through the date which the financial statements were issued. During this period, there were no subsequent events requiring recognition or disclosure in the financial statements.

9. Related Parties

Transamerica Capital, Inc. (“TCI”), a wholesaling broker-dealer, is an affiliated entity of TFLIC and an indrect wholly owned subsidiary of AEGON N.V.. TCI distributes TFLIC’s products through broker-dealers and other financial intermediaries.

The subaccounts invest in the mutual funds listed in Footnote 1. These investments include funds managed by Transamerica Asset Management, Inc. (“TAM”). Transamerica Fund Services, Inc. (“TFS”) serves as a transfer agent to TAM, and AEGON USA Asset Management Holding, LLC (“AAM”) serves as a sub-advisor for certain funds managed by TAM. TAM, TFS and AAM are affiliated entities of TFLIC and indirect wholly owned subsidiaries of AEGON N.V.. Funds managed by TAM are identified by their fund name, which includes reference to Aegon, Transamerica or both. The Separate Account pays management fees to the related funds as detailed in the fund prospectus.

No charges other than those disclosed in Footnote 6 are deducted for the service rendered by related parties.

Contract owners may transfer funds between available subaccount options within the Separate Account. These transfers are performed at unit value at the time of the transfer.

 

63