485BPOS 1 d485bpos.txt POST-EFFECTIVE AMENDMENT NO. 17 As filed with the Securities and Exchange Commission on April 27, 2001 ______________ Registration No. 33-49998 811-7042 --------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. __ [ ] Post-Effective Amendment No. 17 [x] -- and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] Amendment No. 19 [x] -- SEPARATE ACCOUNT VA-2L ---------------------- (Exact Name of Registrant) TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY ---------------------------------------------- (Name of Depositor) 4333 Edgewood Road NE, Cedar Rapids, IA 52499 --------------------------------------------- (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including Area Code: (319) 297-8121 Name and Address of Agent for Service: Copy to: Frank A. Camp, Esquire Frederick R. Bellamy, Esquire Transamerica Occidental Life Insurance Co. Sutherland, Asbill & Brennan, LLP 4333 Edgewood Road, N.E. 1275 Pennsylvania Avenue, N.W. Cedar Rapids, Iowa 52499-0001 Washington, D.C. 20004-2402 Approximate date of proposed sale to the public: As soon as practicable after effectiveness of the Registration Statement. Title of Securities being registered: Variable Annuity Contracts It is proposed that this filing will become effective: [_] immediately upon filing pursuant to paragraph (b) [X] on May 1, 2001 pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(i) [_] on ______________ pursuant to paragraph (a)(1) If appropriate, check the following box: [_] This Post-Effective Amendment designates a new effective date for a previously filed Post-Effective Amendment. Dreyfus/Transamerica Triple Advantage(R) Variable Annuity A Flexible Purchase Payment Deferred Variable Annuity Issued By Transamerica Occidental Life Insurance Company Offering 27 Sub-Accounts within the Variable Account Designated as Separate Account VA-2L In Addition to A Fixed Account Prospectus May 1, 2001 . This prospectus contains information you should know before investing. Please keep this prospectus for future reference. . You can obtain more information about the contract by requesting a copy of the Statement of Additional Information (SAI) dated May 1, 2001. The SAI is available free by writing to Transamerica Occidental Life Insurance Company, Annuity Service Center, 4333 Edgewood Road N E, Cedar Rapids, Iowa 52499- 0001, or by calling 877-717-8861. The current SAI has been filed with the Securities and Exchange Commission ("SEC") and is incorporated by reference into this prospectus. The table of contents of the SAI is included at the end of this prospectus. . The SEC's web site is http://www.sec.gov . Transamerica's web site is http://www.transamericaservice.com . The contracts and the investment options are: . subject to risks, including loss of your investment; . not guaranteed to achieve their goal; . not bank deposits; and . not insured. . Neither the SEC nor any state securities commission has approved this investment offering or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. DREYFUS VARIABLE INVESTMENT FUND--SERVICE CLASS Managed by The Dreyfus Corporation Appreciation Portfolio Balanced Portfolio Disciplined Stock Portfolio Growth and Income Portfolio International Equity Portfolio International Value Portfolio Limited Term High Income Portfolio Quality Bond Portfolio Small Cap Portfolio Small Company Stock Portfolio Special Value Portfolio DREYFUS VARIABLE INVESTMENT FUND Managed by The Dreyfus Corporation Money Market Portfolio DREYFUS STOCK INDEX FUND-- SERVICE CLASS Managed by The Dreyfus Corporation and Mellon Equity Associates THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.-- SERVICE CLASS Managed by The Dreyfus Corporation and NCM Capital Management Group DREYFUS INVESTMENT PORTFOLIOS--SERVICE CLASS Managed by The Dreyfus Corporation Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio MidCap Stock Portfolio Technology Growth Portfolio TRANSAMERICA VARIABLE INSURANCE FUND, INC. Managed by Transamerica Investment Management, LLC Transamerica VIF Growth Portfolio
TABLE OF CONTENTS Page SUMMARY................................................................... 4 PERFORMANCE DATA.......................................................... 14 Yield Calculations....................................................... 14 Total Returns............................................................ 14 Performance Information.................................................. 14 TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE VARIABLE ACCOUNT... 15 Transamerica Occidental Life Insurance Company........................... 15 Published Ratings........................................................ 15 Insurance Marketplace Standards Association.............................. 16 The Variable Account..................................................... 16 THE FUNDS................................................................. 16 Resolution of Possible Conflicts......................................... 17 Sources of Additional Information........................................ 17 Addition, Deletion or Substitution....................................... 17 THE FIXED ACCOUNT......................................................... 18 The Interest Rate of the Fixed Account................................... 18 Guarantee Periods........................................................ 19 Interest Adjustment...................................................... 19 Expiration of Guarantee Period........................................... 19 THE CONTRACT.............................................................. 20 CONTRACT APPLICATION AND PURCHASE PAYMENTS................................ 20 Purchase Payments........................................................ 20 Right to Cancel Option................................................... 21 Additional Purchase Payments............................................. 21 Choosing One or More Investment Options.................................. 21 ACCOUNT VALUE............................................................. 21 How Your Variable Accumulation Units Are Created......................... 22 How Variable Accumulation Unit Values Are Calculated..................... 22 TRANSFERS................................................................. 22 Before the Annuity Date.................................................. 22 Telephone Transfers...................................................... 23 Possible Restrictions.................................................... 23 Dollar Cost Averaging.................................................... 24 Special Dollar Cost Averaging Option..................................... 24 Automatic Asset Rebalancing.............................................. 24 Transfers After the Annuity Date......................................... 25 CASH WITHDRAWALS.......................................................... 25 Withdrawals.............................................................. 25 Fees and Taxes Relating to Withdrawals or Surrenders..................... 26 Additional Withdrawal and Surrender Provisions........................... 26 Systematic Withdrawal Option............................................. 27
Page Eligibility and Rules of the Systematic Withdrawal Option................. 27 Automatic Payout Option................................................... 27 DEATH BENEFIT.............................................................. 27 Guaranteed Minimum Death Benefit.......................................... 27 Adjusted Partial Withdrawals.............................................. 28 Payment of Death Benefit.................................................. 28 Designation of Beneficiaries.............................................. 28 Death of Annuitant Before the Annuity Date................................ 29 Death of Owner Before the Annuity Date.................................... 29 Death of Annuitant or Owner After the Annuity Date........................ 29 CHARGES AND DEDUCTIONS..................................................... 29 Contingent Deferred Sales Load/Surrender Charge........................... 29 Administrative Charges.................................................... 31 Mortality and Expense Risk Charge......................................... 32 Premium Taxes............................................................. 32 Transfer Fee.............................................................. 32 Systematic Withdrawal Option.............................................. 33 Taxes..................................................................... 33 Portfolio Expenses........................................................ 33 Guaranteed Minimum Income Benefit Rider................................... 33 Tax Relief Rider.......................................................... 33 Interest Adjustment....................................................... 33 DISTRIBUTION OF THE CONTRACT............................................... 33 ANNUITY PAYMENTS........................................................... 34 Annuity Date.............................................................. 34 Annuity Payment........................................................... 34 Election of Annuity Forms and Payment Options............................. 35 Annuity Payment Options................................................... 35 Fixed Annuity Payment Option.............................................. 35 Variable Annuity Payment Option........................................... 36 Annuity Forms............................................................. 36 General................................................................... 37 Alternate Fixed Annuity Rates............................................. 37 THE GUARANTEED MINIMUM INCOME BENEFIT RIDER................................ 37 Minimum Annuitization Value............................................... 38 Minimum Annuitization Value Upgrade....................................... 39 GMIB Rider Fee............................................................ 39 Conditions of Exercise of the GMIB........................................ 39 Guaranteed Minimum Payment Option......................................... 39 Guaranteed Minimum Payment Fee............................................ 40 Termination of the GMIB Rider............................................. 40 TAX RELIEF RIDER........................................................... 40 Tax Relief Rider Amount................................................... 40
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TABLE OF CONTENTS (continued) Page Spousal Continuation..................................................... 41 Tax Relief Rider Fee..................................................... 41 Termination.............................................................. 41 QUALIFIED CONTRACTS....................................................... 41 The Automatic Payout Option.............................................. 42 Restrictions under Section 403(b) Programs............................... 42 FEDERAL TAX MATTERS....................................................... 43 Introduction............................................................. 43 Purchase Payments........................................................ 43 Taxation of Annuities in General......................................... 43 Withdrawals.............................................................. 44 Annuity Payments......................................................... 44 Withholding.............................................................. 44 Penalty Tax.............................................................. 45 Taxation of Death Benefit Proceeds....................................... 45 Required Distributions upon Owner's Death................................ 45 Transfers, Assignments, or Exchanges of the Contract..................... 46 Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations............................................................ 46 Multiple Policies........................................................ 46 Separate Account Charges................................................. 47 QUALIFIED CONTRACTS....................................................... 47
Page In General.............. 47 Qualified Pension and Profit Sharing Plans... 47 Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs................... 48 Tax Sheltered Annuities.............. 49 Restrictions Under Qualified Contracts.... 49 Possible Changes in Taxation............... 49 Other Tax Consequences.. 49 LEGAL PROCEEDINGS........ 49 ACCOUNTANTS AND FINANCIAL STATEMENTS.............. 49 VOTING RIGHTS............ 50 REINSTATEMENTS........... 50 AVAILABLE INFORMATION.... 50 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............. 51 APPENDIX A............... 52 Example of Calculations........... 52 APPENDIX B............... 53 Condensed Financial Information............ 53 APPENDIX C............... 57 Definitions............. 57
3 SUMMARY You will find a list of definitions of the terms used in this prospectus in Appendix C. The Contract We designed the flexible premium deferred variable annuity, the contract described in this prospectus, to aid individuals in long-term financial planning for retirement or other purposes. You may use the contract: . with non-qualified plans; . as an individual retirement annuity that qualifies for special tax treatment under Internal Revenue Code (the "Code") Section 408 and whose initial purchase payment is a rollover or transfer from a qualified retirement plan receiving special tax treatment under Code Sections 401(a), 403(b) or 408, a rollover IRA; or . as an individual retirement annuity that qualifies for special tax treatment under Code Section 408A and whose initial purchase payment is a rollover, transfer or conversion from other individual retirement plans issued under Sections 408 or 408A of the Code, a rollover Roth IRA. Additionally, with Transamerica's prior approval, you may use the contract: . as an IRA or Roth IRA whose initial purchase payment is limited to the contribution limitations of the Code with respect to contributory IRAs or contributory Roth IRAs under Code Sections 408 or 408A; . as an annuity under Code Section 403(b) Revenue Rule 90-24 (transfers only); and . with various types of qualified pension and profit-sharing plans under Code Section 401(a). Variable Account Fee Table The purpose of the following table is to help you understand the various costs and expenses that you, as the owner will bear directly and indirectly. The table reflects expenses of the variable account and the portfolios. The table assumes that the entire account value is in the variable account and that the contract is owned during the accumulation period. Different fees may apply after the annuity date including the guaranteed minimum payment option fee applicable after annuitization under the payment options in the guaranteed minimum income benefit rider. The information set forth should be considered together with the narrative provided under the heading Charges and Deductions in this prospectus, and with the funds' prospectuses. In addition to the expenses listed below, premium taxes may apply. 4 ANNUITY CONTRACT FEE TABLE --------------------------------------------------------------------------------
Contract Transaction Expenses(/1/) ------------------------------------------ Sales Charge Imposed On Purchase Payments....................... 0 Maximum Contingent Deferred Sales Load(/2/)................ 6% Transfer Fee(/3/)............... $0 - $10 Systematic Withdrawal Option Fee(/3/)....................... $0 - $25 Annual Account Fee(/4/)......... $0 - $30 Guaranteed Minimum Income Benefit Rider Fee.............. 0.30% Tax Relief Rider Fee............ 0.25%
Variable Account Annual Expenses (as a percentage of average account value) ----------------------------------- Mortality and Expense Risk Charges..................... 1.25% Administrative Expense Charge(/5/)................. 0.15% ----- TOTAL VARIABLE ACCOUNT ANNUAL EXPENSES............. 1.40%
-------------------------------------------------------------------------------- Portfolio Annual Expenses (as a percentage of assets after any fee waiver and/or expense reimbursement) --------------------------------------------------------------------------------
Management Other Rule 12b-1 Total Portfolio Fees Expenses Fees(/7/)(/8/) Annual Expenses ------------------------------------------------------------------------------- Appreciation(/9/) 0.75% 0.03% 0.25% 1.03% Balanced(/9/)(/10/) 0.75% 0.10% 0.15% 1.00% Disciplined Stock(/9/)(/10/) 0.75% 0.06% 0.19% 1.00% Growth and Income(/9/)(/10/) 0.75% 0.03% 0.22% 1.00% International Equity(/9/) 0.75% 0.24% 0.25% 1.24% International Value(/9/)(/10/) 1.00% 0.23% 0.17% 1.40% Limited Term High Income(/9/)(/10/) 0.65% 0.11% 0.14% 0.90% Money Market 0.50% 0.10% N/A 0.60% Quality Bond(/9/) 0.65% 0.07% 0.25% 0.97% Small Cap(/9/) 0.75% 0.03% 0.25% 1.03% Small Company Stock(/9/) 0.75% 0.18% 0.25% 1.18% Special Value(/9/)(/10/) 0.75% 0.12% 0.13% 1.00% Stock Index(/9/) 0.25% 0.01% 0.25% 0.52% Socially Responsible Growth(/9/) 0.75% 0.03% 0.25% 1.03% Core Bond(/10/)(/11/) 0.60% 0.20% 0.00% 0.80% Core Value(/9/)(/10/) 0.75% 0.25% 0.00% 1.00% Emerging Leaders(/10/)(/11/) 0.90% 0.60% 0.00% 1.50% Emerging Markets(/10/)(/11/) 1.25% 0.75% 0.00% 2.00% European Equity(/9/)(/10/)(/12/) 1.00% 0.25% 0.00% 1.25% Founders Discovery(/10/)(/11/) 0.90% 0.60% 0.00% 1.50% Founders Growth(/9/)(/10/) 0.75% 0.25% 0.00% 1.00% Founders International Equity(/9/)(/10/) 1.00% 0.50% 0.00% 1.50% Founders Passport(/9/)(/10/) 1.00% 0.50% 0.00% 1.50% Japan(/10/)(/11/) 1.00% 0.50% 0.00% 1.50% MidCap Stock(/9/)(/10/) 0.75% 0.25% 0.00% 1.00% Technology Growth(/9/) 0.75% 0.09% 0.16% 1.00% Transamerica VIF Growth(/13/)(/14/) 0.74% 0.11% -- 0.85%
Expense information regarding the portfolios has been provided by the funds. We have no reason to doubt the accuracy of the information, but have not verified those figures. In preparing the table above and the examples that follow, we have relied on the figures provided by the funds. These figures are for the year ended December 31, 2000, (unless otherwise stated), except that they have been restated to reflect the Rule 12b-1 fee for the Service Class Shares. Actual expenses in future years may be higher or lower than the figures given above. 5 Notes to Fee Table: 1. The contract transaction expenses apply to each contract, regardless of how the contract value is allocated between the variable account and the fixed account. The variable account annual expenses do not apply to the fixed account. 2. You may withdraw a portion of the purchase payments each year after the first contract year without any contingent deferred sales load (CDSL). After we have held a premium for seven contract years, you may withdraw the remaining premium payments without any CDSL. You may always withdraw accumulated earnings without a CDSL. 3. There is currently no fee for transfers. However, Transamerica may charge a fee equal to the lesser of $10 or 2% of the amount transfers in excess of 18 per year. Transamerica may also charge a fee of up to $25 per year if you elect the systematic withdrawal option, but we currently do not deduct this charge. 4. The current annual contract fee is the lesser of $30 or 2% of the contract value. We may change the fee annually, but it will not exceed the lesser of $60 or 2% of the contract value. This fee is waived if your account value is over $50,000. 5. If you annuitize under the rider and elect the guaranteed minimum payment option, there is a guaranteed minimum payment fee at an effective annual rate of 1.25% of the daily net asset value in the separate account. See Other Charges and Deductions. 6. The current annual administrative expense charge is 0.15%, during both the accumulation phase and the income phase. We may increase it to 0.25%. 7. The Fees shown are for the Service Class Shares, except for the Money Market Portfolio and Transamerica VIF Growth Portfolio. Contracts purchased before January 22, 2001 generally are invested only in the Initial Class Shares. If you are invested in the Initial Class Shares of each portfolio, the Total Portfolio Annual Expenses would be lower, since the Initial Class Shares are not subject to a Rule 12b-1 Fee. 8. The Rule 12b-1 Fees deducted from the Service Class Shares of these portfolios cover certain distribution and shareholder support services provided by Transamerica Occidental Life Insurance Company selling contracts investing in those portfolios. The amount of the Rule 12b-1 Fee is 0.25% before any fee waivers and/or expense reimbursements. 9. Other Expenses for Service Shares are based on other expenses for Initial Shares for the past fiscal year. 10. Total Portfolio Annual Expenses shown are net of any fee waiver and/or expense reimbursement. Total Portfolio Annual Expenses, without such fee waiver and/or expense reimbursement, would be as follows: 1.10% - Balanced; 1.06% - Disciplined Stock; 1.03% - Growth and Income; 1.48% - International Value; 1.01% - Limited High Term Income; 1.12% Special Value; 2.15% - Core Bond; 1.29% - Core Value; 2.45% - Emerging Leaders; 4.11% - Emerging Markets; 1.85% - European Equity; 2.18% - Founders Discovery; 1.33% - Founders Growth; 2.32% - Founders International Equity; 3.84% - Founders Passport; 3.65% - Japan; and 1.29% - MidCap Stock. 11. Other Expenses are estimated fees to be paid by the portfolio for the first full fiscal year, since it commenced operations on May 1, 2000. 12. The Dreyfus Corporation has agreed until December 31, 2001 to waive receipt of its fees and/or assume the expenses of the portfolio so that the expenses of either share class do not exceed 1.25%. For the fiscal year ended December 31, 2000, the net operating expenses for the portfolios initial shares were 1.27% pursuant to a contractual arrangement then in effect. The figures in the Portfolio Annual Expense Table have been restated to reflect the expense reimbursement in effect until December 31, 2001. 13. Total Portfolio Annual Expenses in the Fee Table include certain fee waivers. The Management Fee, Other Expenses and Total Portfolio Annual Expenses without certain fee waivers are: 0.75%, 0.11% and 0.86%, respectively. 14. The Adviser has agreed to waive part of its management fee or reimburse other operating expenses to ensure that Total Portfolio Annual Expenses for the portfolio (other than interest, taxes, brokerage commissions and extraordinary expenses) will not exceed a cap of 0.85% for the Growth Portfolio. The fee waivers and expense assumptions may be terminated at any time without notice, but are expected to continue through 2001. 6 Examples -- Table A(/1/) You would pay the following expenses on a $1,000 investment, assuming a hypothetical 5% annual return on assets, assuming the entire account value is in the applicable subaccount, and assuming no optional riders have been selected:
If the contract annuitized at the end of the applicable time period under an annuity form with life If the contract is contingencies,(/2/) or surrendered if at the end of the the contract is not applicable surrendered time period. or annuitized. --------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years ------------------------------------------------------------------------------ Appreciation(/3/) $84 $121 $167 $284 $25 $ 78 $133 $284 ------------------------------------------------------------------------------ Balanced(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Disciplined Stock(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Growth and Income(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ International Equity(/3/) $86 $127 $178 $305 $27 $ 84 $144 $305 ------------------------------------------------------------------------------ International Value(/3/) $88 $132 $186 $320 $29 $ 89 $152 $320 ------------------------------------------------------------------------------ Limited Term High Income(/3/) $82 $117 $161 $271 $24 $ 74 $127 $271 ------------------------------------------------------------------------------ Money Market $79 $108 $146 $241 $21 $ 65 $112 $241 ------------------------------------------------------------------------------ Quality Bond(/3/) $83 $119 $164 $278 $25 $ 76 $130 $278 ------------------------------------------------------------------------------ Small Cap(/3/) $84 $121 $167 $284 $25 $ 78 $133 $284 ------------------------------------------------------------------------------ Small Company Stock(/3/) $85 $125 $175 $299 $27 $ 83 $141 $299 ------------------------------------------------------------------------------ Special Value(/3/) $84 $120 $166 $281 $27 $ 83 $141 $299 ------------------------------------------------------------------------------ Stock Index(/3/) $78 $105 $142 $232 $20 $ 63 $108 $232 ------------------------------------------------------------------------------ Socially Responsible Growth Fund(/3/) $84 $121 $167 $284 $25 $ 78 $133 $284 ------------------------------------------------------------------------------ Core Bond(/3/) $81 $114 $156 $261 $23 $ 71 $122 $261 ------------------------------------------------------------------------------ Core Value(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Emerging Leaders(/3/) $89 $135 $191 $329 $30 $ 92 $157 $329 ------------------------------------------------------------------------------ Emerging Markets(/3/) $94 $149 $215 $375 $35 $107 $181 $375 ------------------------------------------------------------------------------ European Equity(/3/) $86 $127 $178 $306 $28 $ 85 $144 $306 ------------------------------------------------------------------------------ Founders Discovery(/3/) $89 $135 $191 $329 $30 $ 92 $157 $329 ------------------------------------------------------------------------------ Founders Growth(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Founders International Equity(/3/) $89 $135 $191 $329 $30 $ 92 $157 $329 ------------------------------------------------------------------------------ Founders Passport(/3/) $89 $135 $191 $329 $30 $ 92 $157 $329 ------------------------------------------------------------------------------ Japan(/3/) $89 $135 $191 $329 $30 $ 92 $157 $329 ------------------------------------------------------------------------------ MidCap Stock(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Technology Growth(/3/) $84 $120 $166 $281 $25 $ 77 $132 $281 ------------------------------------------------------------------------------ Transamerica VIF Growth $82 $115 $158 $266 $24 $ 73 $124 $266
(1) In preparing the examples above, we have relied on the data provided by the funds. We have no reason to doubt the accuracy of that information. However, we can not and have not verified those figures. (2) For annuitization under a form that does not include life contingencies, a contingent deferred sales load may apply. (3) The above expense figures are calculated using the Service Class Shares. The figures would have been slightly lower if the Initial Class Shares were used because the Initial Class Shares are not subject to a Rule 12b-1 Fee. 7 Examples--Table B(/1/) You would pay the following expenses on a $1,000 investment, assuming a hypothetical 5% annual return on assets, assuming the entire account value is in the applicable subaccount, and that the optional guaranteed minimum income benefit and the tax relief rider have both been selected.
If the contract annuitized at the end of the applicable time period under an annuity form with life If the contract is contingencies,(/2/) or surrendered if at the end of the the contract is not applicable surrendered time period. or annuitized. --------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years ------------------------------------------------------------------------------ Appreciation(/3/) $ 90 $138 $196 $345 $31 $ 95 $162 $345 ------------------------------------------------------------------------------ Balanced(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Disciplined Stock(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Growth and Income(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ International Equity(/3/) $ 92 $144 $207 $365 $33 $101 $173 $365 ------------------------------------------------------------------------------ International Value(/3/) $ 94 $149 $214 $379 $35 $106 $180 $379 ------------------------------------------------------------------------------ Limited Term High Income(/3/) $ 88 $134 $190 $333 $30 $ 91 $156 $333 ------------------------------------------------------------------------------ Money Market $ 85 $125 $175 $303 $27 $ 82 $141 $303 ------------------------------------------------------------------------------ Quality Bond(/3/) $ 89 $136 $194 $339 $30 $ 93 $160 $339 ------------------------------------------------------------------------------ Small Cap(/3/) $ 90 $138 $196 $345 $31 $ 95 $162 $345 ------------------------------------------------------------------------------ Small Company Stock(/3/) $ 91 $142 $204 $359 $33 $100 $170 $359 ------------------------------------------------------------------------------ Special Value(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Stock Index(/3/) $ 84 $122 $171 $295 $26 $ 80 $137 $295 ------------------------------------------------------------------------------ Socially Responsible Growth Fund(/3/) $ 90 $138 $196 $345 $31 $ 95 $162 $345 ------------------------------------------------------------------------------ Core Bond(/3/) $ 87 $131 $185 $323 $29 $ 88 $151 $323 ------------------------------------------------------------------------------ Core Value(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Emerging Leaders(/3/) $ 95 $152 $219 $388 $36 $109 $185 $388 ------------------------------------------------------------------------------ Emerging Markets(/3/) $100 $166 $243 $432 $41 $123 $209 $432 ------------------------------------------------------------------------------ European Equity(/3/) $ 92 $144 $207 $365 $33 $102 $173 $365 ------------------------------------------------------------------------------ Founders Discovery(/3/) $ 95 $152 $219 $388 $36 $109 $185 $388 ------------------------------------------------------------------------------ Founders Growth(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Founders International Equity(/3/) $ 95 $152 $219 $388 $36 $109 $185 $388 ------------------------------------------------------------------------------ Founders Passport(/3/) $ 95 $152 $219 $388 $36 $109 $185 $388 ------------------------------------------------------------------------------ Japan(/3/) $ 95 $152 $219 $388 $36 $109 $185 $388 ------------------------------------------------------------------------------ MidCap Stock(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Technology Growth(/3/) $ 90 $137 $195 $342 $31 $ 94 $161 $342 ------------------------------------------------------------------------------ Transamerica VIF Growth $ 88 $132 $188 $328 $29 $ 90 $154 $328
(1) In preparing the examples above, we have relied on the data provided by the funds. We have no reason to doubt the accuracy of that information. However, we can not and have not verified those figures. (2) For annuitization under a form that does not include life contingencies, a contingent deferred sales load may apply. (3) The above expense figures are calculated using the Service Class Shares. The figures would have been slightly lower if the Initial Class Shares were used because the Initial Class Shares are not subject to a Rule 12b-1 Fee. Example A and Example B will assist you in understanding the costs and expenses that you will bear, directly or indirectly. These include the year 2000 expenses of the underlying portfolios, including any fee waivers and/or expense reimbursements (said fee waivers and expense reimbursements are assumed to continue throughout the period shown in the examples). In addition to the expenses listed above, premium taxes may be applicable. These examples should not be considered a representation of past or future expenses, and actual expenses may be greater or less than those shown. The assumed 5% annual return is hypothetical and should not be considered a representation of past or future annual returns, which may be greater or less than the assumed rate. In the examples, the $30 annual account fee is reflected as a charge of 0.0750% based on average policy value of $40,000 (as of December 31, 2000). 8 Financial Information You will find condensed financial information on each sub-account in Appendix B. You will find the full financial statements and reports of independent auditors for the subaccounts and for Transamerica in the Statement of Additional Information. The Issuer The contract is issued by Transamerica Occidental Life Insurance Company (Transamerica, we, us or our). We will issue the contract as a certificate under a group annuity contract in some states and as an individual annuity contract in other states. This contract is not available in all states. This prospectus does not offer the sub-accounts or the fixed account in any jurisdiction where they are not allowed to be sold. We do not authorize any dealer, salesperson or other person to give information or make representations not contained in this prospectus. You should not rely on any information or representation that is not in this prospectus. Account Value We will establish and maintain an account for each individual annuity contract and for each certificate issued under a group contract. You, as owner, will receive either an individual annuity contract, or a certificate evidencing your coverage under a group annuity contract. The word "contract" as used herein refers to either the individual contract or the certificate. Before the annuity date, the account value will depend on the investment experience of each sub-account of the variable account you select. This does not apply to the fixed account. All payments and values provided under the contract when based on the investment experience of the variable account are variable and are not guaranteed as to dollar amount. Therefore, before the annuity date you, as the owner, bear the entire investment risk for amounts you allocate to the variable account. Any amounts you allocate to the fixed account are guaranteed by Transamerica as to their safety and at least 3% annual interest. There is no guaranteed or minimum cash surrender value, so the proceeds of a surrender could be less than the total purchase payments. Initial Purchase Payment The initial purchase payment for each contract must generally be at least $5,000. We will waive this minimum if the contract is sold as a qualified contract to certain retirement plans. Generally, each additional purchase payment must be at least $500. We will waive this minimum if you select an automatic payment plan. In no event, however, may the total of all purchase payments under a contract exceed $1,000,000 without our prior approval. The minimum net purchase payment that you may allocate to a sub-account with no current allocations is $500. The minimum amount that you can allocate to a new guarantee period is $1,000. See Contract Application and Purchase Payments. The Variable Account The variable account is a separate account, designated as Separate Account VA- 2L, divided into sub-accounts. Assets of each sub-account are invested in a specified mutual fund portfolio. The Sub-Accounts The following 27 sub-accounts are currently available for investment in the variable account: . Appreciation . Balanced . Disciplined Stock . Growth and Income . International Equity . International Value . Limited Term High Income . Money Market . Quality Bond . Small Cap . Small Company Stock . Special Value . Stock Index . Socially Responsible Growth . Core Bond . Core Value . Emerging Leaders . Emerging Markets 9 . European Equity . Founders Discovery . Founders Growth . Founders International Equity . Founders Passport . Japan . Mid Cap Stock . Technology Growth . Transamerica VIF Growth As of January 22, 2001, new contract owners may only invest in the Service Class sub-accounts, with the exception of the Money Market Sub-account and the Transamerica VIF Growth Sub-account. The Initial Class sub-accounts (other than the Money Market Sub-account and Transamerica VIF Growth Sub-account) are only available to contract owners that purchased the contract before January 22, 2001. The Service Class has a Rule 12b-1 Plan and the Initial Class does not. Each portfolio has distinct investment objectives and policies. These are described in the accompanying prospectuses for the funds. The funds pay their investment adviser and administrators certain fees charged against the assets of each portfolio. The account value, if any, and the amount of any variable annuity payments will vary to reflect the investment performance of all of the sub-accounts you select and the deduction of the charges. See Charges and Deductions on 33. For more information about the underlying portfolios, see the current prospectuses for the underlying fund portfolios, which are attached to this prospectus. The Fixed Account Each amount you initially allocate or transfer to the fixed account will establish a new guarantee period. Each guarantee period will have its own guaranteed interest rate with its own expiration date. The minimum interest rate will be 3% per year. You must allocate at least $1,000 to a new guarantee period. If you withdraw or transfer amounts from a guarantee period before its expiration date, you will generally be subject to an interest adjustment. This will reduce the interest credited to the amount withdrawn to 3% per year, which is the minimum annual rate. Transfers Before the Annuity Date Before the annuity date, you may make transfers among the sub-accounts and the guarantee periods of the fixed account. A "transfer" is the reallocation of amounts between the guaranteed periods of the fixed account and the sub- accounts, among the guarantee periods of the fixed account, and among sub- accounts. We charge a fee equal to the lesser of $10 or 2% of the transfer amount for each transfer in excess of 18 per contract year. Transfers under certain programs, such as Dollar Cost Averaging, will not count towards the 18 free transfers per contract year. If you transfer amounts from a guarantee period before its expiration date, it will generally be subject to an interest adjustment. This will reduce the interest credited to 3%, the minimum annual rate. Withdrawals You may withdraw all or part of the cash surrender value on or before the annuity date. However, amounts you withdraw may be subject to a contingent deferred sales load, depending on how long the withdrawn purchase payments have been held under the contract. Amounts you withdraw may be subject to a premium tax or similar tax, depending upon the state in which you live. Withdrawals may further be subject to any federal, state or local income tax, and a penalty tax. Withdrawals from qualified contracts may be subject to severe restrictions. Except for IRAs and Roth IRAs, qualified contracts are sold only with our prior approval. We will generally deduct the annual account fee on a full surrender of a contract, and if applicable the guaranteed minimum income benefit and tax relief rider fee. We will allow only one, and in some states no, partial withdrawal while the systematic withdrawal option is in effect. If you transfer amounts from a guarantee period before its expiration date, it will generally be subject to an interest adjustment. This will reduce the interest credited to 3%, the minimum annual rate. See Cash Withdrawals. The Contingent Deferred Sales Load/Surrender Charge We do not deduct a sales charge from purchase payments, although we may deduct premium taxes. 10 However, if any part of the account value is withdrawn, we may assess a contingent deferred sales load/surrender charge as follows:
Contingent Deferred Contract Years Since Sales Load Purchase Payment (as a % of purchase Receipt payments surrendered) ------------------------------------------------------------------------------ Less than 2 years 6% ------------------------------------------------------------------------------ 2 years but less than 4 years 5% ------------------------------------------------------------------------------ 4 years but less than 6 years 4% ------------------------------------------------------------------------------ 6 years but less than 7 years 2% ------------------------------------------------------------------------------ 7 or more 0%
After we have held a purchase payment for seven contract years, you may withdraw the remaining purchase payment without a contingent deferred sales load/surrender charge. You may make withdrawals each contract year before the annuity date up to the allowed amount described below without incurring a contingent deferred sales load. The allowed amount is equal to: . during the first contract year, the accumulated earnings not previously withdrawn; . after you have held your contract for at least one full contract year, and only for the first withdrawal in a contract year, the sum of: 1. 100% of purchase payments not previously withdrawn and received at least seven contract years before the date of withdrawal; plus, 2. the greater of: a) the accumulated earnings not previously withdrawn; or, b) 15% of purchase payments received at least one but less than seven complete contract years before the date of withdrawal not reduced to take into account any withdrawals deemed to be made from such purchase payments. . after the first contract year and after the first withdrawal in a contract year, the sum of: 1. 100% of purchase payments not previously withdrawn and received at least seven complete contract years before the date of withdrawal; plus, 2. accumulated earnings not previously withdrawn. We will waive the contingent deferred sales load/surrender charge on a withdrawal if the owner is confined to a hospital or nursing care facility for 45 days (30 days in Pennsylvania) out of a continuous 60 day period, and if other conditions are met. We will also waive the contingent deferred sales load in some states if the owner is diagnosed with a terminal illness after the first contract year. The illness must reasonably be expected to result in death within twelve months and other conditions apply. See Contingent Deferred Sales Load/Surrender Charge and Cash Withdrawals. Other Charges and Deductions We deduct a daily charge referred to as the Mortality and Expense Risk Charge. This charge is equal to a percentage of the value of the net assets in the variable account for the mortality and expense risks assumed. The effective annual rate of this charge is 1.25% of the value of the net assets in the variable account attributable to your contract. See Mortality and Expense Risk Charge. We guarantee that this mortality and expense risk charge will not be increased. We also deduct a daily charge referred to as the Administrative Expense Charge. This charge equals 0.15% annually of your net asset value in the variable account. It helps cover some of the costs of administering the contract and the variable account. This charge may change, but it is guaranteed not to exceed 0.25% annually. See Administrative Charges. There is also an administrative charge each year for contract maintenance, referred to as the Account Fee. This fee is currently $30, or 2% of the account value, if less. It will not be assessed for contract years in which the account value exceeds $50,000 on the last business day of the contract year or as of the date the contract is surrendered. For contracts values less than $50,000, we will deduct the account fee at the end of the contract year or when you surrender the contract, if earlier. We may change the account fee for any contract year. But we guarantee it will not exceed the lesser of $60 or 2% of the account value. After the annuity date this fee is referred to as the annuity fee. The annuity fee is $30 and will not change. 11 Currently we impose no fee for the systematic withdrawal option. But we reserve the right to charge for this option in the future. We charge a transfer fee of $10 or 2% of the transfer amount, whichever is less, for each transfer in excess of eighteen during a contract year. See Transfer Fee. If you elect the guaranteed minimum income benefit rider, there is an annual fee during the accumulation phase (before the annuity date) of 0.30% of the minimum annuitization value. If you annuitize under the rider and elect the guaranteed minimum payment option, there is a guaranteed minimum payment fee at an effective annual rate of 1.25% of the daily net asset value in the separate account. If you elect the tax relief rider, there is an annual fee during the accumulation phase of 0.25% of the account value. Charges for state premium taxes, including retaliatory premium taxes, will be imposed in some states. Depending on the applicability of such state taxes, we could deduct the charges from premiums, from amounts withdrawn, and/or from the annuity purchase amount upon annuitization. See Premium Taxes. In addition, if you withdraw or transfer amounts out of a guarantee period of the fixed account before its expiration date, it will generally be subject to an interest adjustment. This will reduce the interest earned on that amount to 3%, the minimum annual rate. The value of the net assets of the variable subaccounts will also reflect the management fees and operating expenses of the mutual fund portfolios (including, in most cases, Rule 12b-1 fees). Annuity Payments We will make annuity payments either on a fixed basis or a variable basis, or a combination of a fixed and variable basis, as you select. The annuity date cannot be earlier than the first day of the month coinciding with or immediately following the third contract anniversary, except for qualified contracts. We will begin annuity payments on the first day of the calendar month following the annuity date. You have a choice of four annuity forms: (1) Life Annuity; (2) Life and Contingent Annuity; (3) Life Annuity with Period Certain; and (4) Joint and Survivor Annuity. Death Benefits The death benefit will be equal to the greater of: 1. the account value on the date we receive all required information to process the death claim: 2. the Guaranteed Minimum Death Benefit on the date we receive all required information to process the death claim, plus purchase payments and minus withdrawals made after this date. The Guaranteed Minimum Death Benefit is the greater of: 1) the largest account value on any contract anniversary prior to the date of death or any owner's or annuitant's 86 birthday, adjusted for any subsequent purchase payments and adjusted withdrawals; or 2) the sum of purchase payments less adjusted withdrawals plus interest at a 5% annual effective rate up to: a) the contract anniversary prior to any owner's or annuitant's 86th birthday; or b) when this sum has grown to two times the amount of the payments less adjusted withdrawals; or c) the death of any owner or annuitant. We will generally pay the death benefit within seven days of receipt of the required proof of death and other required information. We must have sufficient information about the beneficiary to make the payment. We must receive the beneficiary's election of the method of settlement. If we receive no election of the settlement method, we will pay the death benefit no later than one year from the date of death. We do not charge a contingent deferred sales load or interest adjustment. The beneficiary generally may elect to receive the death benefit as either a lump sum or as an annuity. Federal Income Tax Consequences An owner who is a natural person, meaning an individual, rather than a corporation or trust, 12 generally should not be taxed on increases in the account value until a distribution under the contract occurs. A withdrawal or annuity payment, for example, would qualify as a distribution, thereby triggering a taxable event. A deemed distribution would also trigger a taxable event. Deemed distributions occur when owners pledge, loan, or assign a contract as collateral. All or part of any distribution or deemed distribution may be taxable as ordinary income. The taxable portion of distributions is generally subject to income tax withholding unless the recipient elects otherwise. Mandatory withholding may apply for certain qualified contracts. In addition, a federal penalty tax may apply to certain distributions or deemed distributions. Right to Cancel You have the right to examine the contract for a limited period, known as a free look period. You can cancel the contract by delivering or mailing a written notice of cancellation to our service center. You must do this before midnight of the tenth day (or longer if required by state law) after you receive the contract. If you give us notice and return the contract by mail, notice will be effective on the date we receive the notice. The amount of the refund may depend on the state of issuance. In most cases, we will refund the account value as of the date we receive the written notice and the contract. In some states, you may receive more than the account value. You should consult your registered representative for the applicable provision. See Purchase Payments and Account Value. 1035 Exchanges You can generally exchange one annuity contract for another in a "tax-free exchange' under Section 1035 of the Internal Revenue Code (sometimes called a "trustee to trustee" exchange). Before making an exchange, you should compare both annuities carefully. Remember that if you exchange 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 and other charges may be higher (or lower) and the benefits may be different. You should not exchange another annuity for this one unless you determine, after knowing all the facts, that the exchange 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 or otherwise). Certain provisions of the contracts may be different than the general description in this prospectus, and certain riders and options may not be available, because of legal restrictions in your state. See your contract for specific variations since any such state variations will be included in your contract or in riders or endorsements attached to your contract. See your agent or contact our administrative office for additional information that may be applicable to your state. You may request more information concerning your contract by contacting: Transamerica Annuity Service Center 4333 Edgewood Road NE Cedar Rapids, Iowa 52499-0001 1-877-717-8861 You should provide the contract number and the owner's and annuitant's names when requesting information regarding a specific contract. NOTE: The foregoing summary is qualified in its entirety by the detailed information in the remainder of this prospectus and in the prospectuses for the funds. They should be referred to for more detailed information. For qualified contracts, limits or restrictions may be imposed on purchase payments, withdrawals, distributions, benefits or other contract provisions due to: . the requirements of a particular retirement plan; . an endorsement to the contract; or . limitations or penalties imposed by the Code or the Employee Retirement Income Security Act of 1974, as amended. This prospectus does not describe such limitations or restrictions. There are various additional fees and charges associated with variable annuities. You should consider whether the features and benefits unique to variable annuities, such as the opportunity for lifetime payments, a guaranteed death benefit, guaranteed minimum income benefits, the tax relief rider, and the guaranteed level of certain charges are appropriate for your needs. Variable annuities also provide tax-deferral. The tax deferral features of variable annuities are unnecessary when purchased to fund a qualified plan. 13 PERFORMANCE DATA From time to time, we may advertise yields and average annual total returns for the sub-accounts of the variable account. In addition, we may advertise the effective yield of the Money Market Sub-Account. These figures will be based on historical information and do not indicate future performance. Yield Calculations The yield of the Money Market Sub-Account refers to the annualized income generated by an investment in that sub-account over a specified seven-day period. The yield is calculated by assuming: . the income generated for that seven-day period is generated each seven-day period over a 52-week period; and . it is shown as a percentage of the investment. The effective yield is calculated similarly but, when annualized, the income earned by an investment in that sub-account is assumed to be reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. The yield of a sub-account, other than that of the Money Market Sub-Account, refers to the annualized income generated by an investment in the sub-account over a specified thirty-day period. The yield is calculated by assuming that the income generated by the investment during that thirty-day period is generated each thirty-day period over a twelve-month period and is shown as a percentage of the investment. The yield calculations do not reflect the effect of any contingent deferred sales load or premium taxes that may apply to a particular contract. When the contingent deferred sales load is applied to a particular contract, the yield of that contract will be reduced. Total Returns Average annual total returns for each sub-account are based on performance data compiled since the sub-account commenced operations. Performance results are also measured over 1, 5 and 10 year time periods. Each return will represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment. This will include the deduction of any applicable contingent deferred sales load, but exclude the deduction of any premium taxes. Performance Information Performance information for any sub-account reflects only the performance of a hypothetical contract under which account value is allocated to a sub-account during a particular time period on which the calculations are based. It should be considered in light of: . the investment objectives; . investment policies; . characteristics of the portfolios in which the sub-account invests; and . the market conditions during the given time period. You should not consider it as a representation of what may be achieved in the future. For a description of the methods used to determine yield and total returns, see the Statement of Additional Information. Reports and promotional literature may also contain other information including but not limited to: 1. the ranking of any sub-account derived from rankings of variable annuity separate accounts or their investment products tracked by: . Lipper Analytical Services, Inc., . VARDS, . IBC/Donoghue's Money Fund Report, . Financial Planning Magazine, . Money Magazine, and . Bank Rate Monitor. 14 It may also include other rating services, companies, publications, or other persons who rank separate accounts or other investment products on overall performance or other criteria; and 2. the effect of tax deferred compounding on sub-account investment returns, or returns in general, which may be illustrated by graphs, charts, or otherwise. These may include a comparison, at various points in time, of the return from an investment, or returns in general, on a tax-deferred basis, assuming one or more tax rates, with the return on a currently taxable basis. We may also use other ranking services and indices. In our advertisements and sales literature, we may use charts and graphs to discuss and illustrate: . the implications of longer life expectancy for retirement planning; . the tax and other consequences of long-term investments; . the effects of the lifetime payout option; . the operation of certain special investment features in the policy--such as the dollar cost averaging option; . the effects of certain investment strategies, such as allocating purchase payments between the fixed account and an equity sub-account; and . the Social Security system and its projected payout levels and retirement plans generally. We may, from time to time, disclose average annual total returns and cumulative total returns for the sub-accounts in non-standard formats. We will assume that no contingent deferred sales load is applicable to these returns. Whenever we show non-standard performance, we will also show standardized performance. You will find additional information about the calculation of performance data in the Statement of Additional Information. We may also advertise performance figures for the sub-accounts based on the performance of the portfolios before the time the particular sub-account started. TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND THE VARIABLE ACCOUNT Transamerica Occidental Life Insurance Company Transamerica Occidental Life Insurance Company is an Iowa stock life insurance company incorporated on June 30, 1906. It is mainly engaged in the sale of life insurance and annuity contracts. The address for Transamerica is 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499. Transamerica is a wholly owned subsidiary of Transamerica Insurance Corporation of California, which in turn is a direct subsidiary of Transamerica Corporation. Our principal office is at 1150 South Olive Street, Los Angeles, California 90015. Transamerica Corporation is an indirect subsidiary of AEGON N.V., one of the world's leading international insurance groups. Published Ratings Transamerica may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to it by one or more independent rating organizations such as A.M. Best Company, Standard & Poor's, Moody's and Fitch Financial Ratings. The purpose of the ratings is to reflect the financial strength of Transamerica. These ratings should not be considered as bearing on the safety or investment performance of assets held in the variable account. Each year the A.M. Best Company reviews the financial status of thousands of insurers. Once it has completed its analysis of each insurer's financial strength, A.M. Best assigns the insurer a Best Rating. 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 and annuity contracts in accordance with their terms, including its obligations under the fixed account provisions of this contract. Such ratings do not reflect the investment performance of the variable account or the degree of 15 risk associated with an investment in the variable account. Insurance Marketplace Standards Association In recent years, the insurance industry has recognized the need to develop specific principles and practices to help maintain the highest standards of marketplace behavior and enhance credibility with consumers. As a result, the industry established the Insurance Marketplace Standards Association (IMSA). As an IMSA member, we agree to follow a set of standards in our advertising, sales and service for individual life insurance and annuity products. The IMSA logo, which you will see on our advertising and promotional materials, demonstrates that we take our commitment to ethical conduct seriously. The Variable Account On May 22, 1992, Transamerica's Board of Directors passed resolutions to establish the Separate Account VA-2L of Transamerica, also referred to as the variable account, under the laws of the State of California. The variable account is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 as a unit investment trust. It meets the definition of a separate account under the federal securities laws. However, the SEC does not supervise the management or the investment practices or contracts of the variable account. The assets of the variable account are owned by Transamerica but they are held separately from the other assets of Transamerica. Section 10506 of the California Insurance Law provides that the assets of a separate account are not chargeable with liabilities incurred in any other business operation of the insurance company, except to the extent that assets in the separate account exceed the reserves and other liabilities of the separate account. Income, gains and losses incurred on the assets in the variable account, whether or not realized, are credited to or charged against the variable account without regard to Transamerica's other income, gains or losses. Therefore, the investment performance of the variable account is entirely independent of the investment performance of Transamerica's general account assets or any other separate account Transamerica maintains. The variable account has 27 sub-accounts, each of which invests solely in a specific corresponding portfolio. Changes to the sub-accounts may be made at Transamerica's discretion. THE FUNDS The companies that provide investment advice and administrative services for the portfolios offered through this contract are listed below. The following portfolios are currently offered through this contract: DREYFUS VARIABLE INVESTMENT FUND-- SERVICE CLASS Managed by The Dreyfus Corporation Appreciation Portfolio Balanced Portfolio Disciplined Stock Portfolio Growth and Income Portfolio International Equity Portfolio International Value Portfolio Limited Term High Income Portfolio Quality Bond Portfolio Small Cap Portfolio Small Company Stock Portfolio Special Value Portfolio DREYFUS VARIABLE INVESTMENT FUND Managed by The Dreyfus Corporation Money Market Portfolio DREYFUS STOCK INDEX FUND-- SERVICE CLASS Managed by The Dreyfus Corporation and Mellon Equity Associates THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.--SERVICE CLASS Managed by The Dreyfus Corporation DREYFUS INVESTMENT PORTFOLIOS-- SERVICE CLASS Managed by The Dreyfus Corporation Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio 16 MidCap Stock Portfolio Technology Growth Portfolio TRANSAMERICA VARIABLE INSURANCE FUND, INC. Managed by Transamerica Investment Management, LLC Transamerica VIF Growth Portfolio As of January 22, 2001, new contract owners may only invest in the Service Class sub-accounts, with the exception of the Money Market Sub-account and the Transamerica VIF Growth Sub-account. The Initial Class sub-accounts (other than the Money Market Sub-account and Transamerica VIF Growth Sub-account) are only available to contract owners that purchased the contract before January 22, 2001. Meeting objectives depends on various factors, including, but not limited to, how well the portfolio managers anticipate changing economic and market conditions. You should be aware of the following risks: . There is no assurance that any of these portfolios will achieve their stated objectives. . An investment in the contract is not insured or guaranteed by the FDIC or any other government agency. . Investing in the contract involves certain investment risks, including possible loss of principal. The portfolios are open-end management investment companies, or portfolios or series of, open-end management companies registered with the SEC under the 1940 Act, that are often referred to as mutual funds. This SEC registration does not involve SEC supervision of the investments or investment policies of the portfolios. Shares of the portfolios are not offered to the public but solely to the insurance company separate accounts and other qualified purchasers as limited by federal tax laws. These portfolios are not the same as mutual funds that may have very similar names that are sold directly to the public, and the performance of such publicly available funds, which have different portfolios and expenses, should not be considered as an indication of the performance of the portfolios. The assets of each portfolio are held separate from the assets of the other portfolios. Each portfolio operates as a separate investment vehicle. The income or losses of one portfolio have no effect on the investment performance of another portfolio. The sub-accounts reinvest dividends and/or capital gains distributions received from a portfolio in more shares of that portfolio as retained assets. Resolution of Possible Conflicts Since variable insurance products from other companies as well as Transamerica can invest in all of the portfolios, there is a possibility that a material conflict may arise between the interests of the variable account and other companies. If conflict occurs, the affected insurance companies will take the needed steps to resolve the matter. This may include stopping their separate account from investing in the portfolios. Sources of Additional Information You will find additional information in the current prospectuses for the portfolios, which accompany this prospectus, including: . the investment objectives; . the investment policies; . the investment advisory services; . the administrative services; . charges; and . operating expenses. You should read the portfolios' prospectuses carefully before you make any decision concerning the allocation of purchase payments to, or transfers among, the sub-accounts. Addition, Deletion or Substitution Transamerica does not control the portfolios. We therefore cannot guarantee that any of the sub-accounts of the variable account or any of the portfolios will always be available to investors for allocation of purchase payments or transfers. We retain the right to make changes in the variable account and in its investments. We reserve the right to: . eliminate the shares of any portfolio held by a sub-account; or 17 . substitute shares of another portfolio or of another investment company for the shares of any portfolio. If the shares of a portfolio are no longer available for investment or if, in our judgement, a portfolio is not fulfilling its intended purpose within the variable account, we reserve the right to remove it. To the extent required by the 1940 Act, we will inform contract owners in advance of any substitutions. We will also seek the SEC's advance approval before making substitutions. Nothing contained herein should be construed in any way as preventing or limiting the variable account from purchasing other securities for other series or classes of variable annuity contracts, or from effecting an exchange between series or classes of variable contracts on the basis of requests made by owners. At our discretion, based on marketing, tax, investment or other conditions, we can elect to establish new sub-accounts. We will make these new sub-accounts available to our existing contract owners on a basis which we will determine at that time. Each additional sub-account will purchase shares in a portfolio or in another mutual fund or investment vehicle. We may also eliminate one or more sub-accounts if, in our sole discretion, marketing, tax, investment or other conditions so warrant. In the event any sub-account is eliminated, we will notify owners and request a re-allocation of the amounts invested in the eliminated sub-account. In the event of any substitution or change, we may change the contracts in a way that appropriately reflects substitutions or changes. Furthermore, if we believe it to be in the best interests of persons having voting rights under the contracts, the variable account may be operated as a management company under the 1940 Act or any other form permitted by law. It may also be deregistered under this act in the event such registration is no longer required, or may be combined with one or more other separate accounts. THE FIXED ACCOUNT This prospectus is generally intended to serve owners as a disclosure document only for the contract and the variable account. For complete details regarding the fixed account, see the contract itself. The fixed account is not available in all states. Purchase payments allocated to and amounts transferred to the fixed account become part of Transamerica's general account, which supports insurance and annuity obligations. 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 Act or the 1940 Act. The Securities and Exchange Commission has not reviewed the disclosures in this prospectus which relate to the fixed account. The guarantee periods of the fixed account are part of Transamerica's general account. The general account consists of all Transamerica's general assets, other than those in the variable account, or assets in any other segregated asset account. Instead of the owner bearing the investment risk as with the variable account, we bear the full investment risk for all values in the fixed account. We have the sole right to determine how we will invest the assets of our general account while adhering to applicable laws. The Interest Rate of the Fixed Account You bear the risk that after the initial guarantee period we will not credit interest in excess of 3% per year to amounts you allocate to the fixed account. The allocation or transfer of funds to the fixed account does not entitle you to share in the overall investment returns of Transamerica's general account. Instead, we guarantee that the funds you allocate or transfer to the fixed account will accrue a specified annual interest rate for a specific duration. The rate of interest we credit will always be at least 3% per year. Consequently, if you allocate all net purchase payments only to the fixed account and make no transfers or withdrawals, the minimum amount of the account value will be determinable and guaranteed. We will establish a new guarantee period of a duration you select from those we are offering on net purchase payments you allocate to the fixed account. Every guarantee period we offer will have a duration of at least one year. The minimum amount you may allocate or transfer to a guarantee period is 18 $1,000. We will credit net purchase payments you allocate to the fixed account on the date we receive the payment at our service center. We will establish a new guarantee period as of the effective date of the transfer for any amount you transfer from another guarantee period, or from a sub-account of the variable account to the fixed account. We may delay payment of any withdrawal or transfer from the fixed account for up to six months after we receive the request. If we delay payment for more than 30 days, we will pay interest on the withdrawal amount up to the date of payment. Guarantee Periods Each guarantee period will have its own guaranteed interest rate and expiration date. The guaranteed interest rate applicable to a guarantee period will depend on the date it is established and the duration you choose. The guarantee period you choose may not extend beyond the annuity date. We reserve the right to change the maximum number of guarantee periods that may be in effect at any one time. A maximum of five guarantee periods in the fixed account may be in effect at any time. We will establish effective annual interest rates for each guarantee period. The effective annual interest rate we establish for a guarantee period will remain in effect for the duration of the guarantee period. We will credit interest to a guarantee period based on its daily balance at a daily rate which is equivalent to the guaranteed interest rate applicable to that guarantee period for amounts held during the entire guarantee period. Amounts withdrawn or transferred from a guarantee period before its expiration date will be subject to an interest adjustment as described below. In no event will the effective annual interest rate applicable to a guarantee period be less than 3% per year. Interest Adjustment Except in certain circumstances, an interest adjustment will be made to any amount withdrawn or transferred from a guarantee period before its expiration date. Any such amount withdrawn or transferred from a guarantee period will be credited with interest at a rate of only 3% per year from the date the guarantee period was established to the date of payment or transfer, regardless of the guaranteed interest rate. This means that any interest in excess of 3% will be forfeited on the amount withdrawn or transferred. Exceptions to the interest adjustment include: 1. Amounts withdrawn within 30 days before the expiration date of the guarantee period; 2. Amounts withdrawn from a guarantee period serving as the source account, if available, for dollar cost averaging transfers; and 3. Amounts paid as part of a death benefit. 4. Periodic withdrawals of cumulative interest credited; and 5. Withdrawals to satisfy any minimum distribution requirements. A contingent deferred sales load may apply to withdrawals made at the end of a guarantee period even if there is no interest adjustment made. Expiration of Guarantee Period At least 45 days, but not more than 60 days, before the expiration date of a guarantee period, we will notify you of the options available when a guarantee period expires. You may elect one of the following options: 1. transfer the guarantee amount of that guarantee period to a new guarantee period from among those being offered by us. The new guarantee period will be established on the later of: a) the date you select; or b) the date the notice, in a form and manner acceptable to us, is received at our service center, but in no event later than the day immediately following the expiration date of the previous guarantee period; or 2. transfer the guarantee amount of that guarantee period to one or more sub- accounts of the variable account. We must receive your notice electing one of these options at our service center before the expiration date of the guarantee period. If such election has not been received by us at our service center, the 19 guarantee amount of that guarantee period will remain in the fixed account. A new guarantee period of the same duration as the expiring guarantee period, if offered, will automatically be established by us with a new guaranteed interest rate. The new guarantee period will start on the day following the expiration date of the previous guarantee period. If we are not currently offering guarantee periods having the same duration as the expiring guarantee period, the new guarantee period will be the next longer duration. If we are not offering guarantee periods longer than the duration of the expiring guarantee period, the new guarantee period will be the next shorter duration. If the guarantee amount of an expiring guarantee period is less than $1,000, we reserve the right to transfer such amount to the Money Market Sub-Account of the variable account. If you make a transfer from a guarantee period within the 30-day period ending on its expiration date, it will not be counted for the purpose of determining the eighteen free transfers per contract year. This transfer will not be subject to any interest adjustment. THE CONTRACT The contract is a flexible purchase payment multi-funded individual deferred annuity contract. The rights and benefits under the contract, or in the certificate and group contract, are described below and in the contract. We reserve the right to modify the individual contract and the group contract and its certificates so that they conform to any federal or state statute, rule or regulation. Such modifications will give contract owners the benefits of these changes. We are responsible for the obligations stated in the contract. The contracts may be used for IRAs and Roth IRAs that qualify for special federal income tax treatment. With our prior approval, the contracts may also be available as Section 403(b) annuities and for use in Section 401(a) qualified pension and profit sharing plans established by corporate employers. Generally, qualified contracts contain restrictive provisions limiting the timing and amount of payments and distributions from the qualified contract. The owner designates the annuitant. The annuitant can be the same person as the owner and must be the same person in the case of certain qualified contracts. Annuity payments will be made to the annuitant after the annuity date unless, in the case of a non-qualified contract, the owner changes the payee after the annuity date. For each contract, a different account will be established and values, benefits and charges will be calculated separately. The various administrative rules described below will apply separately to each contract, unless otherwise noted. CONTRACT APPLICATION AND PURCHASE PAYMENTS Purchase Payments Please send all of your purchase payments to our service center. The initial purchase payment for each contract must generally be at least $5,000. We may, at our discretion, accept lower initial purchase payments for certain qualified contracts. We will ordinarily issue the contract and credit the initial net purchase payment within two days of receipt of a properly completed application and the purchase payment. At this time, the contract is accepted and funded with your purchase payment. A net purchase payment is defined as a purchase payment minus any applicable premium taxes. Acceptance of the application is subject to it being received in good order. We reserve the right to reject any application or purchase payment. Contracts normally will not be issued if an owner or annuitant is more than 90 years old, although we, in our discretion, may waive this restriction in certain cases. If the initial purchase payment allocated to the variable sub-account(s) cannot be credited within two days of receipt because the information is incomplete, or for any other reason, we will contact you. We will explain the reason for the delay and will refund the initial purchase payment within five business days, unless you consent to our retaining the initial purchase payment. Then, we will credit it to the variable sub-account(s) of your choice as soon as the requirements are fulfilled. 20 Right to Cancel Option Each contract provides for a free look period of 10 days (or longer if required by state law) after receipt of the contract during which you may cancel the contract. To cancel the contract you must return it to us with a written notice of cancellation. In most states, including for some ages of owners in some states, and in all states for IRAs, we will refund the greater of the purchase payments or account value as of the date the written notice and the contract are received by us. In some states you may receive a refund of more than the account value. You should consult your registered representative or investment adviser (or see your contract) for the applicable provision. Additional Purchase Payments You may make additional purchase payments into the contract at any time before the annuity date, as long as the annuitant or contingent annuitant (if any) is living. Additional purchase payments must be at least $500, or at least $100 if paid through an automatic payment plan. If you use an automatic payment plan, we will automatically deduct the additional purchase payments from a bank account. In addition, minimum allocation amounts apply. Additional net purchase payments are credited to the contract as of the date the payment is received. Currently, additional purchase payments may not be made to Section 401(a) and Section 403(b) annuity contracts. Total purchase payments for any contract may not exceed $1,000,000 without our prior approval. In no event may the sum of all purchase payments for a contract during any taxable year exceed the limits imposed by any applicable federal or state laws, rules, or regulations. Choosing One or More Investment Options You specify how purchase payments will be allocated under the contract. You may allocate the net purchase payments between and among one or more of the sub- accounts of the variable account and the guarantee periods of the fixed account. Portions must be whole number percentages and any allocation percentage for a sub-account must be at least 10%. If an allocation of an additional net purchase payment is directed to an inactive sub-account, then the amount allocated must be at least $500. If an allocation of an additional net purchase payment is directed to a new guaranteed period of the fixed account, then the amount allocated must be at least $1000. Each net purchase payment will be subject to the allocation percentages in effect at the time of receipt of such purchase payment. You may change the allocation percentages for new purchase payments among the sub-accounts and the guarantee periods at any time by submitting a request for such change, in a form acceptable to us, to our service center. Any changes to the allocation percentages are subject to the limitations above. Any change will take effect with the first purchase payment we receive with or after the request for such change at our service center, and will continue in effect until you change it again. ACCOUNT VALUE Before the annuity date, the account value is the sum of: . the fixed account accumulated value; plus . the variable account accumulated value. The fixed account accumulated value is the total dollar amount of all guarantee amounts held under the fixed account for the contract before the annuity date. The fixed account accumulated value is determined without any interest adjustment. The variable account accumulated value is the total dollar amount of all variable accumulation units under each sub-account of the variable account held for the contract before the annuity date. The variable account accumulated value before the annuity date is equal to: a) net purchase payments allocated to the sub-accounts; plus or minus b) any increase or decrease in the value of the assets of the sub-accounts due to investment results; less c) the daily mortality and expense risk charge; less d) the daily administrative expense charge; less e) any reductions for the annual account fee and the GMIB and TRR rider fees, if applicable; plus or minus f) amounts transferred from or to the fixed account; less 21 g) any applicable transfer fees and systematic withdrawal option fees; and less h) any withdrawals from the sub-accounts less any premium tax applicable to those withdrawals. The variable accumulated value is expected to change from valuation period to valuation period. The variable accumulated value changes to reflect the investment performance all of the selected portfolios, and also reflects the deductions for charges. A valuation period is the period between successive valuation days. It begins at the close of the New York Stock Exchange, generally 4:00 p.m. ET, on each valuation day. It ends at the close of the New York Stock Exchange on the next succeeding valuation day. A valuation day is each day that the New York Stock Exchange is open for regular business. The value of the variable account assets is determined at the end of each valuation day. To determine the value of an asset on a day that is not a valuation day, the value of that asset as of the end of the next valuation day will be used. How Your Variable Accumulation Units Are Created When you pay purchase payments into your contract, those payments are used to purchase variable accumulation units in the sub-accounts in which you have chosen to invest. At the end of each valuation period during which we received purchase payments, you will be credited with variable accumulation units. The number of units you receive is determined by dividing: . the portion of each net purchase payment allocated to the sub-accounts, by . the variable accumulation unit value, at the end of the valuation period. The variable accumulation units credited to your contract as the result of your initial net purchase payment are credited to your contract's value within two valuation days of the later of: 1. the date upon which our service center receives an acceptable and properly completed application; and 2. the date upon which our service center receives the initial purchase payment. The variable accumulation units credited to your contract as the result of subsequent purchase payments will be credited to your contract's value at the end of the valuation period during which we received your payment. How Variable Accumulation Unit Values Are Calculated The value of a variable accumulation unit for each sub-account for a valuation period is established at the end of each valuation period. It is calculated by multiplying the value of that unit at the end of the prior valuation period by the sub-account's net investment factor for the valuation period. The value of a variable accumulation unit may go up or down. The net investment factor is used to determine the value of accumulation and annuity unit values for the end of a valuation period. The applicable formula can be found in the Statement of Additional Information. There is an example in Appendix A to this prospectus. TRANSFERS When you transfer account values among the sub-accounts, those transfers will result in the purchase and/or cancellation of variable accumulation units. The value of these units will equal the total dollar amount you are transferring to or from a sub-account. These transactions are valued at the end of the valuation day on which we received your transaction request. Before the Annuity Date Before the annuity date, you may transfer any portion of the account value among the sub-accounts and the guarantee periods then offered by us. You can make transfers by giving a written request to our service center subject to the following conditions: . the minimum amount that may be transferred is $500; and . the minimum transfer to an inactive sub-account is $500; and . the minimum transfer required to establish a new guarantee period is $1,000. Transfers are also subject to terms and conditions that may be imposed by the portfolios. 22 Your transfer request must specify: . the sub-account or guarantee period from which the transfer is to be made; . the amounts you wish to transfer, subject to the minimum transfer amount; and . the sub-account or guarantee period you wish to receive the transfer. We impose a transfer fee equal to the lesser of $10 or 2% of the amount of the transfer for each transfer over 18 in a contract year. We also reserve the right to: . waive the transfer fee; . vary the number of transfers without charge (but not fewer than 12); or . not count transfers under certain options or services. The transfer will generally be effective on the date your request is received at our service center. If the transfer is made from a guarantee period before its expiration date, it will be subject to an interest adjustment. If a transfer from a guarantee period is made within the 30-day period ending on its expiration date, we will not count it for purposes of the 18 allowable transfers. It will also not be subject to any interest adjustment. If a transfer reduces the value in a sub-account to less than $500, then we reserve the right to transfer the remaining amount along with the amount you requested to be transferred according to your transfer instructions. Under current law, there will not be any tax liability to you as the owner if you make a transfer. Telephone Transfers We will allow telephone transfers if you have provided proper authorization for such transfers. We will provide you with limitations and rules for these transfers. We reserve the right to suspend telephone transfer privileges at any time, for some or all contracts, for any reason. Withdrawals are not permitted by telephone. We will employ reasonable procedures to confirm that instructions communicated by telephone are genuine. We will not be liable for any losses due to unauthorized or fraudulent instructions that we believed were genuine. The procedures we will follow for telephone transfers may include: a) requiring some form of personal identification before acting on instructions received by telephone; b) providing written confirmation of the transaction; and/or c) tape recording the instructions given by telephone. Possible Restrictions We reserve the right without prior notice, to modify, restrict, suspend or eliminate the transfer privileges, including telephone transfers, at any time and for any reason. For example, restrictions may be necessary to protect owners from adverse impacts on portfolio management of large and/or numerous transfers by market timers or others. We have determined that the movement of significant sub-account values from one sub-account to another may prevent the portfolio impacted by these transfers from taking advantage of investment opportunities. This occurs because the portfolio must maintain a significant cash position in order to handle redemptions. The contract you are purchasing was not designed for professional market timing organizations or other persons that use programmed, large, or frequent transfers. The use of such transfers may be disruptive to a portfolio. We reserve the right to reject any premium payment or transfer request from any person, if, in our judgment, an underlying fund portfolio would be unable to invest effectively in accordance with its investment objectives and policies or would otherwise be potentially adversely affected or if a portfolio would reject our purchase order. Such large and sudden movement of assets in any one portfolio may also cause a substantial increase in portfolio transaction costs. These costs must be indirectly borne by owners. Therefore, we reserve the right to require that all transfer requests be made by you, the owner and not by a third party holding a power of attorney. We may also require that each transfer request be made by a separate communication to us. We also reserve the right to 23 require that each transfer request be submitted in writing and be manually signed by the owner or owners. Dollar Cost Averaging Before the annuity date, you, as the owner, may request that a designated amount of money be automatically transferred from one, and only one, of the sub-accounts which invests in: . the Money Market Portfolio; . the Quality Bond Portfolio; . the Limited Term High Income Portfolio. Or you can have it transferred from the fixed account. This money may be transferred to any of the sub-accounts on a monthly basis by submitting a request to our service center. The request must be in a form and manner acceptable to us. You may not Dollar Cost Average into the fixed account. You may be able to transfer amounts from other source accounts in addition to the Money Market, Quality Bond and Limited Term High Income Sub-Accounts. These other source accounts can include the shortest guarantee period. Call our service center for the availability of source account options. Your transfers will begin the month after we receive your request (however, you must wait at least one week after we receive it). Dollar cost averaging transfers will not begin until 30 days after the contract date. Transfers will continue for the duration you selected unless terminated: 1. by you; 2. automatically by us because there are insufficient funds in the source account, or 3. for other reasons as set forth in the contract. You may request that monthly transfers be continued. You can accomplish this by giving notice to our service center in a form and manner acceptable to us within 30 days before the last monthly transfer. If no request to continue the monthly transfers is made by you, this option will terminate automatically with the last transfer. In order to be eligible for dollar cost averaging, you must meet the following conditions: 1. the value of the source account must be at least $5,000; 2. the minimum amount that you may transfer out of the source account is $250 per month; and 3. the minimum amount transferred into any other sub-account is the greater of $250 or 10% of the amount being transferred. Please note that dollar cost averaging transfers can not be made from a source account from which you are receiving systematic withdrawals or automatic payouts. You will not be charged for the dollar cost averaging service. Transfers that result from dollar cost averaging practices will not count toward your 18 free transfers. We will make no interest adjustments on dollar cost averaging transfers from the fixed account if we allow it as a source account. Special Dollar Cost Averaging Option (May not be available in all states. See contract for availability of the fixed account options.) When you make a purchase payment to the contract, you may elect to allocate the entire purchase payment to either the six or twelve month special Dollar Cost Averaging accounts of the fixed account. The purchase payment will be credited with interest at a guaranteed fixed rate. Amounts will then be transferred from the special Dollar Cost Averaging account to the variable sub-accounts pro rata on a monthly basis for six or twelve months (depending on the option you select) in the allocations you specified when you applied for the contract. Amounts from the sub-accounts and/or fixed account options may not be transferred into the special Dollar Cost Averaging accounts. In addition, if you request a transfer (other than a Dollar Cost Averaging transfer) or a withdrawal from a special Dollar Cost Averaging account, any amounts remaining in the special account will be transferred to the variable sub-accounts according to your original allocation instructions. The special Dollar Cost Averaging option will end and cannot be re-elected. The special Dollar Cost Averaging Option cannot be in effect at the same time the regular Dollar Cost Averaging is in effect. Automatic Asset Rebalancing When you allocate purchase payments to certain portfolios in certain percentages, you define how you 24 want your investments balanced. Changing market conditions affect each portfolio's performance, and can throw your allocations out of balance. You may instruct us to automatically rebalance the amounts by reallocating them among the variable sub-accounts, at the time and in the percentages that you specify. You must specify automatic asset rebalancing in your instructions to us. As the owner, you may elect to have the rebalancing done on an annual, semi-annual or quarterly frequency, and on a contract-year or calendar year basis. You may also elect to have amounts allocated among the sub-accounts using whole percentages, with a minimum of 10% allocated to each sub-account. You may elect to establish, change or terminate the automatic asset rebalancing by submitting a request to our service center in a form and manner acceptable to us. Automatic asset rebalancing will not count towards the limit of 18 free transfers in a contract year. We reserve the right to discontinue offering automatic asset rebalancing at any time and for any reason. Transfers After the Annuity Date If you elect a variable annuity payout option, you may make transfers among sub-accounts after the annuity date by submitting a request in a form acceptable to us to our service center. Transfers will generally be processed as of the date of the request for the transfer. Transfers may be made by telephone, subject to the limitations described under "Telephone Transfers." Your request will be subject to the following provisions: 1. transfers after the annuity date may be made no more than four times during any annuity year; and 2. the minimum amount transferred from one sub-account to another is the amount needed to support a current $75 monthly payment. Your transfers among sub-accounts during the annuity period will be processed based on the formula outlined in the Statement of Additional Information. CASH WITHDRAWALS Withdrawals You may generally withdraw all or part of your contract's cash surrender value at any time during the life of the annuitant and before the annuity date. You can do this by giving a written request to our service center. Your request will be subject to the rules below. Federal or state laws, rules or regulations may also apply. You cannot make withdrawals after the annuity date. Withdrawals may be taxable and subject to a penalty tax. Withdrawals from qualified contracts may be restricted or prohibited. If you surrender your contract on or before the annuity date we will pay you the cash surrender value. The cash surrender value is equal to: . the account value; minus . any account fee; minus . any interest adjustment; minus . any applicable contingent deferred sales load; minus . any GMIB and/or TRR rider fee deducted upon surrender; and minus . any applicable premium taxes. If the account value exceeds $50,000 on the date the contract is surrendered, and where permitted by law, we will waive the account fee. A full surrender of your contract will result in a cash withdrawal payment equal to the contract's cash surrender value at the end of the valuation period during which we receive your request with all of your completed forms. Only one partial withdrawal will be allowed annually while the systematic withdrawal option is in effect. Partial withdrawals must be at least $500. In the case of a partial withdrawal, you may instruct our service center as to the amounts to be withdrawn from each sub-account or fixed account. If you do not specify from where the withdrawal is to be made, the withdrawal will be taken pro rata from all sub-accounts and the fixed account with current values. If the requested withdrawal reduces the value of the sub-account to less than $500, we reserve the right to transfer the remaining value of that sub- 25 account pro rata among the other subaccounts. You will be notified in writing of any such transfer. A partial withdrawal will not be processed if it would reduce the account value to less than $2,000. In that case, you will be notified that you will have 10 days from the date notice is mailed to submit subsequent instructions to: a. withdraw a lesser amount, subject to the $500 minimum, leaving an account value of at least $2,000; or b. surrender the contract for its cash surrender value. Amounts payable will be determined as of the end of the valuation period during which the subsequent instructions are received. If, after the expiration of the 10-day period, no written election is received from you, your withdrawal request will be considered null and void, and no withdrawal will be processed. Fees and Taxes Relating to Withdrawals or Surrenders The account fee, unless waived, and the GMIB and/or TRR rider fee and premium taxes, if applicable, will be deducted from a full surrender before the application of any contingent deferred sales load. Your withdrawals may be taxable transactions. Moreover, the Code provides that a 10% penalty tax may be imposed on the taxable portions of distributions for certain early withdrawals. There is no contingent deferred sales load on withdrawals under the automatic payout option (described below). Withholding generally applies to the portion of the withdrawal, which is includable in income and subject to federal income tax. However, as an owner, you generally will be entitled to elect, in writing, not to have tax withholding apply. This is true except for distributions from certain qualified contracts that may be subject to mandatory 20% withholding. The federal income tax withholding rate for partial withdrawals and full surrenders is currently 10%, or 20% for certain qualified contracts, of the taxable amount of the withdrawal. Withholding applies only if the taxable amount of the withdrawal is at least $200. Some states also require withholding for state income taxes. Withdrawals, including surrender requests, generally will be processed as of the end of the valuation period during which the request, including all completed forms, is received. Payment of any cash withdrawal or lump sum death benefit due from the variable account will occur within seven days from the date we receive your request, except that we may postpone such payment if: 1. the New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; 2. an emergency exists as defined by the SEC, or the SEC requires that trading be restricted; or 3. the SEC permits a delay for the protection of owners. The withdrawal request will be effective when all appropriate forms are received. Payments of any amounts derived from purchase payments paid by check may be delayed until the check has cleared your bank. When a withdrawal is made from a guarantee period before its expiration date, the amount withdrawn will generally be subject to an interest adjustment. The payment of a withdrawal from the fixed account may be delayed for up to six months. If payment from the fixed account is delayed for more than 30 days, interest will be paid on the withdrawal amount up to the date of payment. You, as the owner, assume the investment risk for amounts allocated to the variable account. Certain withdrawals are subject to a contingent deferred sales load. The total amount paid upon surrender of the contract, taking into account any prior withdrawals, may be more or less than the total purchase payments paid. Additional Withdrawal and Surrender Provisions After a withdrawal of the total cash surrender value, or at any time that the account value is zero, all of your rights as the owner will terminate. Qualified contracts will be issued in connection with retirement plans which meet the requirements of the Code. You should refer to the terms of the particular retirement plans for any additional limitations or restrictions on your cash withdrawals, as these limitations or restrictions may supercede those of the contract issued by us. 26 You may elect, under the systematic withdrawal option or automatic payout option (but not both), to withdraw certain amounts on a periodic basis from the sub-accounts before the annuity date. Systematic Withdrawal Option Before the annuity date, you may elect to have withdrawals automatically made from one or more sub-account(s) on a monthly basis. Other distribution frequencies (such as quarterly or semi-annually) may be allowed. The withdrawals will begin no sooner than the month following receipt of your written notice. Please note, however, payments will not begin sooner than the later of: a. 30 days after the contract date; or b. the end of the free look period, allowing 5 days for delivery of the contract by mail. Upon written notice to you, we may change the day of the month on which withdrawals are made under this option. Withdrawals will be from the sub- account, or sub-accounts, and in the percentage allocations specified by you. If no specifications are made, withdrawals will be pro rata from all sub- accounts and the fixed account. Eligibility and Rules of the Systematic Withdrawal Option To be eligible for the systematic withdrawal option: . the account value must be at least $6,000 at the time you elect to use this option; . the minimum monthly amount that can be withdrawn is $50; and . the maximum monthly amount that can be withdrawn on an annual basis is 10% of remaining purchase payments as of the date of the first withdrawal. Systematic withdrawals are not subject to the contingent deferred sales load but can be reduced by any applicable premium tax. Systematic withdrawals may be taxable, subject to withholding, and subject to the 10% penalty tax. Systematic withdrawals will continue unless you terminate them or they are automatically terminated by us as described in the contract. If this option is terminated it may not be used again until the next contract anniversary. In some states, any partial withdrawal will automatically terminate the systematic withdrawal option. Any portion of such partial withdrawal which exceeds the allowed amount for withdrawals will be subject to a contingent deferred sales load. In some states other restrictions may apply. We reserve the right to impose an annual fee of up to $25 per contract year for administrative expenses associated with processing the systematic withdrawals. This fee, which is currently waived, will be deducted from each systematic withdrawal in equal installments during a contract year. Before requesting withdrawals from a qualified contract, consult your tax adviser and, if applicable, the particular retirement plan. There may be severe restrictions on withdrawals from qualified contracts. Automatic Payout Option, or APO Before the annuity date, you may elect the automatic payout option, referred to as the APO, to satisfy minimum distribution requirements under the Internal Revenue Code for certain qualified contracts. DEATH BENEFIT If an owner or annuitant dies before the annuity date, a death benefit is payable. The death benefit will be equal to the greatest of: (1) the account value on the date we receive the required information (see below); or (2) the Guaranteed Minimum Death Benefit, plus additional purchase payments received, less any partial withdrawals and any applicable premium taxes from the date of death to the date of payment of death proceeds. This may vary by state. Guaranteed Minimum Death Benefit The Guaranteed Minimum Death Benefit (GMDB) for contracts with any owner or with an annuitant age 85 or younger at the time of purchase, is equal to the greater of: 1) the largest account value on the contract date or on any contract anniversary prior to the earlier of the date of death or any owner's or annuitant's 86th birthday, adjusted for any subsequent purchase payments (less the sum of 27 all subsequent adjusted partial withdrawals and any premium taxes applicable to those withdrawals up to the date of death); or 2) the sum of all purchase payments, less adjusted partial withdrawals and any premium taxes applicable to those withdrawals, plus interest thereon equal to a 5% annual effective rate, credited on a daily basis up to: a) the contract anniversary prior to the earlier of any owner's or annuitant's 86th birthday; b) the date the sum of all purchase payments, (less the sum of all adjusted partial withdrawals and any premium taxes), together with credited interest, has grown to two times the amount of all purchase payments (less all adjusted partial withdrawals and any premium taxes) as a result of such interest accumulation, if earlier; or (c) the date of death of any owner or annuitant. For contracts purchased by any owner or with an annuitant age 85 or older, the Guaranteed Minimum Death Benefit available will be the sum of all purchase payments, less adjusted partial withdrawals and any premium taxes applicable to these withdrawals. The death benefit will be determined as of the valuation period during which the later of: a) proof of death of the owner or annuitant is received by our service center; or b) written notice of the method of settlement elected by the beneficiary is received at our service center. If no settlement method is elected, the death benefit will be calculated and paid as of a date no later than one year after the date of death. No contingent deferred sales load will apply. Until the death benefit is paid, the account value allocated to the variable account will remain in the sub-accounts as previously specified by the owner, or in the sub-accounts as reallocated according to instructions received by us from all beneficiaries. Therefore, the account value will fluctuate with the investment performance of the applicable sub-accounts. As a result, the amount of the death benefit will depend on the account value at the time the death benefit is paid, not as of the date of death. There is no extra charge for the death benefit, and it applies automatically, i.e., no election by the owner is necessary. (The GMDB may vary by state.) Adjusted Partial Withdrawals When you request a partial withdrawal, your guaranteed minimum death benefit may be reduced by an amount called the adjusted partial withdrawal. Under certain circumstances, the adjusted partial withdrawal may be more than the amount of your withdrawal request. 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 purchase payments. We have included a detailed explanation of this adjustment in the Statement of Additional Information. Payment of Death Benefit The death benefit is generally payable upon receipt of proof of death of the annuitant or any owner. Where the owner is not an individual, the death benefit is generally payable upon receipt of proof of death of the annuitant. Once our service center receives this proof and the beneficiary's choice of a method of settlement, the death benefit generally will be paid within seven days, or as soon thereafter as we have sufficient information to make the payment. The death benefit may be paid in a lump sum cash benefit. Subject to any limitations under any state or federal law, rule, or regulation, it may be paid under one of the annuity forms, unless a settlement agreement effective under the contract prevents this choice. If no settlement method is elected within one year of the date of death, the death benefit will be paid in a lump sum. The payment of the death benefit may be subject to certain distribution requirements under the federal income tax laws. Designation of Beneficiaries You, as the owner, may select one or more beneficiaries and name them in a form and manner acceptable to us. If you select more than one beneficiary, unless you indicate otherwise, they will each share equally in any death benefits payable. Different beneficiaries may be named with respect to 28 an annuitant's death and an owner's death. Respectively, these individuals are referred to as the annuitant's beneficiary and the owner's beneficiary. Before the annuitant's death, you may change the beneficiary by notice to our service center in a form and manner acceptable to us. You may also make the designation of beneficiary irrevocable by sending notice to and obtaining approval from our service center. Irrevocable beneficiaries may only be changed with the written consent of the designated irrevocable beneficiaries, except to the extent required by law. The interest of any beneficiary who dies before the owner or annuitant will terminate at the death of said beneficiary. The interest of any beneficiary who dies at the time of, or within 30 days after, the death of the owner or annuitant will also terminate if no benefits have been paid, unless the contract has been endorsed to provide otherwise. The benefits will then be paid as though the beneficiary had died before the owner or annuitant. If the interests of all designated beneficiaries have terminated, any benefits payable will be paid to the owner's estate. We may rely on an affidavit by any responsible person in determining the identity or non-existence of any beneficiary not identified by name. Death of Annuitant Before the Annuity Date If the annuitant dies before the annuity date and the annuitant is not an owner and there is no contingent annuitant, a death benefit under the contract relating to that annuitant will be paid to the annuitant's beneficiary. If there is a contingent annuitant, then upon the death of the annuitant the contingent annuitant will become the annuitant and no death benefit will be paid at that time. Death of Owner Before the Annuity Date If an owner dies before the annuity date, a death benefit will be paid to that owner's beneficiary. If the contract has joint owners, the surviving joint owner will be deemed the owner's beneficiary. If the owner's beneficiary is the deceased owner's spouse, then the spouse may elect to continue the contract as his or her own or receive payment of the death benefit. If the spouse elects to continue the contract, an amount equal to the excess, if any, of the Death Benefit over the account value will then be added to the account value. This amount will be added only once, at the time of such election. Furthermore, all future contingent deferred sales loads will be waived. The payment of the death benefit may be subject to certain distribution requirements under the federal income tax laws. Death of Annuitant or Owner After the Annuity Date If the annuitant or an owner dies after the annuity payments start, the remaining undistributed portion, if any, of the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such death. Under some annuity forms, there will be no death benefit. If the owner is not the annuitant, upon an owner's death, any remaining ownership rights will pass to the owner's beneficiary. CHARGES AND DEDUCTIONS No deductions are made from purchase payments except for any applicable premium taxes. Therefore, the full amount, less any premium taxes, of the purchase payments are invested in one or more of the sub-accounts of the variable account or the fixed account. As more fully described below, charges under the contract are assessed in three ways: 1. as deductions for the contract or annuity fees, any transfer fees, rider fees, systematic withdrawal option, (if any), any interest adjustment (for withdrawals and transfers from the fixed account) and, if applicable, for premium taxes; 2. as charges against the assets of the variable account for the assumption of mortality and expense risks, rider fees, and administrative expenses; and 3. as contingent deferred sales loads. In addition, certain deductions are made from the assets of the funds for investment management fees and expenses. These fees and expenses are described in the funds' prospectuses and their statements of additional information. Contingent Deferred Sales Load/Surrender Charge No deduction for sales charges is made from your purchase payments, although premium taxes may be 29 deducted. However, a contingent deferred sales load, or surrender charge, of up to 6% of purchase payments paid may be imposed on certain withdrawals or surrenders from the account value to partially cover certain expenses incurred by us relating to the sale of the contracts, including commissions paid to salespersons, the costs of preparation of sales literature and other promotional costs and acquisition expenses. We may also deduct the contingent deferred sales load if you annuitize your contract. The contingent deferred sales load/surrender charge percentage varies according to the number of contract years between the contract year in which a net purchase payment was credited to the contract and the contract year in which the withdrawal is made. The amount of this charge is determined by multiplying the amount withdrawn and subject to the contingent deferred sales load by the contingent deferred sales load percentage according to the following table.
Number of Contract Years Contingent Since Receipt of Deferred Each Purchase Payment Sales Load ------------------------ ---------- Less than one year................................................... 6% 1 year but less than 2 years......................................... 6% 2 years but less than 3 years........................................ 5% 3 years but less than 4 years........................................ 5% 4 years but less than 5 years........................................ 4% 5 years but less than 6 years........................................ 4% 6 years but less than 7 years........................................ 2% 7 or more years...................................................... 0%
In no event will the total contingent deferred sales load/surrender charge assessed against the contract exceed 6% of the aggregate purchase payments paid to a contract. Certain amounts may be withdrawn free of any contingent deferred sales load. You may make withdrawals up to this "allowed amount" without incurring a contingent deferred sales load/surrender charge each contract year before the annuity date. During the first contract year, the allowed amount is equal to accumulated earnings not previously withdrawn. For the first withdrawal, and only the first withdrawal in a contract year after the first contract year, the available allowed amount you may withdraw is equal to the sum of: 1. 100% of purchase payments not previously withdrawn and received at least seven contract years before the date of withdrawal; plus 2. the greater of: a. accumulated earnings not previously withdrawn; or b. 15% of purchase payments received at least one but less than seven complete contract years before the date of withdrawal not reduced to take into account any prior withdrawals deemed to be made from such purchase payments. After the first withdrawal in a contract year after the first contract year, the available allowed amount is equal to the sum of: 1. 100% of purchase payments not previously withdrawn and received at least seven contract years before the date of withdrawal; plus 2. accumulated earnings not previously withdrawn. Withdrawals will always be made first from your accumulated earnings, and then from your purchase payment on a first-in first-out basis. This is done so that accumulated earnings may be depleted with the first withdrawal and the 15% of purchase payments discussed above is not used in the calculation of the allowed amount. If an allowed amount is not withdrawn during a contract year, it does not carry over to the next contract year. However, accumulated earnings, if any, in your certificate value are always available as the allowed amount. No withdrawals are allowed from purchase payments made by a check which has not cleared. Some contract owners may hold contracts issued before 1995 which, when originally issued, provided for an allowed amount which was equal to the sum of: 1. all purchase payments not previously withdrawn and held more than seven contract years; plus 2. 10% of purchase payments held between one and seven contract years not reduced by any withdrawals made by the owner from such purchase payments. Under these contracts, withdrawals were made first from purchase payments on a first-in, first-out basis, then from earnings. The allowed amount that applies 30 to these owners will be determined by whichever formula provides them with the larger amount available, for full surrenders only, without a contingent deferred sales load. No contingent deferred sales load will be charged on the allowed amount if a contract is surrendered and you were eligible to withdraw the amount without charge but had not made such a withdrawal during the contract year. In addition, no contingent deferred sales load is charged: 1. upon annuitization after the first three contract years to an option involving life contingencies; 2. upon payment of the death benefit; 3. upon transfers of account value among the sub-accounts and the guarantee periods; 4. under the systematic withdrawal option; or, 5. in some circumstances, under the automatic payout option. Any applicable contingent deferred sales load will be deducted from the amount requested for both partial withdrawals and full surrenders. The contingent deferred sales load or premium tax applicable to a withdrawal from the fixed account will be deducted from the amount withdrawn after the interest adjustment, if any, is applied and before payment is made to you. The contingent deferred sales load arising from a withdrawal or surrender of the contract will be waived if you receive extended medical care in a licensed hospital or nursing care facility for at least 45 days (30 days for contracts issued in Pennsylvania) during any continuous 60 day period beginning on or after the first contract anniversary and the request for the withdrawal or surrender, together with proof of such extended care, is received at our service center during the term of such care or within 90 days after the last day upon which you received such extended care. This waiver of the contingent deferred sales load may not be available in all states and does not apply if you are receiving extended medical care in a licensed hospital or nursing care facility at the time you applied for the contract or at the contract date. Additionally, in some states, the contingent deferred sales load arising from a withdrawal or surrender of the contract will be waived if you are diagnosed, after the first contract year, with a terminal illness reasonably expected to result in death within twelve months. Proof of the terminal illness must be received by our service center at the time the withdrawal or surrender request is received. Administrative Charges At the end of each contract year before the annuity date, we deduct an annual account fee as partial compensation for expenses relating to the issue and maintenance of the contract and the variable account. The annual account fee is equal to the lesser of $30 or 2% of the account value. No account fee will be deducted for a contract year if your account value exceeds $50,000 on the last business day of the contract year or as of the date the contract is surrendered. The account fee may be changed upon 30 days advance written notice to you. In no event may this fee exceed the lesser of $60 or 2% of the account value. Such increases in the account fee will apply only to future deductions after the effective date of the change. The account fee will be deducted on a pro rata basis from each sub-account in which the contract is invested at the time of such deduction or from the fixed account if there are insufficient funds in the sub-accounts. If the entire amount is in the fixed account, then the annual account fee will be deducted on a pro rata basis from all guarantee periods. If you surrender your contract, we will deduct the account fee in full at the time of the surrender. After the annuity date, we deduct an annual annuity fee of $30 in equal amounts from each variable annuity payment made during the year. For example, if monthly payments are made, the amount paid per month will be $2.50. This fee will not be changed. No annuity fee will be deducted from fixed annuity payments. We also deduct an administrative expense charge from the variable account at the end of each valuation period both before and after the annuity date at an effective current annual rate of 0.15% of assets held in each sub-account. This deduction is for administrative expenses attributable to the contracts and the variable account which exceed the revenues received from the account fee, any transfer fee, and any fee imposed for systematic withdrawals. 31 We have the ability to increase or decrease this charge, but the charge is guaranteed not to exceed 0.25%. We will provide 30 days written notice of any change in fees. The administrative charges do not bear any relationship to the actual administrative costs of a particular contract. The administrative expense charge is reflected in the variable accumulation or variable annuity unit values for each sub-account. Mortality and Expense Risk Charge We impose a charge called the mortality and expense risk charge to compensate us for bearing certain mortality and expense risks under the contracts. For assuming these risks, we make a daily charge equal to 0.003403% corresponding to an effective annual rate of 1.25% of the value of the net assets in the variable account. This charge is imposed both before and after the annuity date. We guarantee that this charge of 1.25% will never increase. The mortality and expense risk charge is reflected in the variable accumulation or variable annuity unit values for each sub-account. Variable accumulated values and variable annuity payments are not affected by changes in actual mortality experience incurred by us. The mortality risks assumed by us arise from our contractual obligations to make annuity payments and to pay death benefits before the annuity date. The annuity payments are determined in accordance with the annuity tables and other provisions contained in the contract. Thus, you are assured that neither the annuitant's own longevity nor an unanticipated improvement in general life expectancy will adversely affect the annuity payments under the contract. We also bear substantial risk in connection with the death benefit before the annuity date, since we may pay a death benefit that is greater than the account value. The expense risk assumed by us is the risk that our actual expenses in administering the contract and the variable account will exceed the amount recovered through the administrative expense charge, account fees, transfer fees and any fees imposed for systematic withdrawals. If the mortality and expense risk charge is insufficient to cover actual costs and risks assumed, the loss will fall on us. Conversely, if this charge is more than sufficient, any excess will be profit to us. Currently, we expect a profit from this charge. We anticipate that the contingent deferred sales load will not generate sufficient funds to pay the cost of distributing the contracts. To the extent that the contingent deferred sales load is insufficient to cover the actual cost of contract distribution, the deficiency will be met from our general corporate assets which may include amounts, if any, derived from the mortality and expense risk charge. Premium Taxes We may be required to pay premium or retaliatory taxes currently ranging from 0% to 3.5% in connection with purchase payments or values under the contracts. Depending upon applicable state law, we may deduct a charge for the premium taxes which are payable with respect to a particular contract from the purchase payments, from amounts withdrawn, or from amounts applied on the annuity date. In some states, charges for both direct premium taxes and retaliatory premium taxes may be imposed at the same or different times with respect to the same purchase payment, depending upon applicable state law. In certain limited circumstances, a broker-dealer or other entity distributing the contracts may elect to pay to us an amount equal to the premium taxes that would otherwise be attributable to that entity's customers. In such cases, we will not impose a premium tax charge on those contracts. Transfer Fee We charge a fee equal to the lesser of $10 or 2% of the amount of transfer for each transfer in excess of 18 in a contract year. We reserve the right to: a) waive the transfer fee; b) vary the number of transfers without charge, but not fewer than 12; or c) not count transfers under certain options or services for purposes of the allowed number without charge. 32 Systematic Withdrawal Option We reserve the right to impose an annual fee, not to exceed $25, for administrative expenses associated with processing systematic withdrawals. This fee, which is currently waived, will be deducted in equal installments from each systematic withdrawal you take during a contract year. Taxes Under present laws, we will incur state or local taxes, in addition to the premium taxes described above, in several states. No charges are currently made for taxes other than state premium taxes. However, we reserve the right to deduct charges in the future for federal, state and local taxes or the economic burden resulting from the application of any tax laws that we determine to be attributable to the contracts. Portfolio Expenses The value of the assets in the variable account reflects the value of portfolio shares and therefore the fees and expenses paid by each portfolio. Guaranteed Minimum Income Benefit Rider If you elect the optional guaranteed minimum income benefit rider, there is an annual rider fee during the accumulation phase (before the annuity date) of 0.30% of the minimum annuitization value. This fee is deducted on each rider anniversary from each variable sub-account in proportion to the amount of account value in each sub-account. This rider fee may also be deducted upon a complete withdrawal. If you annuitize under the guaranteed minimum income benefit rider and select the guaranteed minimum payment option at the time of annuitization, then a guaranteed minimum payment option fee will be charged. This fee is reflected in the amount of the variable payments payable under this option. The guaranteed minimum payment option fee is currently at an annual rate of 1.25% of the daily net asset value in the variable investment options. Once the guaranteed minimum income benefit rider is added to your contract, neither the rider fee nor the guaranteed minimum payment option fee that is in effect at that time will change during the life of that guaranteed minimum income benefit rider. They could change if you upgrade the minimum annuitization value. Tax Relief Rider If you elect the tax relief rider, there is an annual rider fee during the accumulation phase of 0.25% of the policy value. This fee is also charged if you take a full withdrawal. The rider fee will be deducted on each rider anniversary and upon termination of the rider during the accumulation phase (once we receive any necessary regulatory approvals). The rider fee is equal to the policy value multiplied by the rider fee percentage shown on the first page of the rider. The rider fee is deducted pro rata from each investment choice. Interest Adjustment For a description of the interest adjustment applicable to early withdrawals and transfers from the guarantee periods of the fixed account, see The Fixed Account. DISTRIBUTION OF THE CONTRACT Transamerica Securities Sales Corporation, also referred to as TSSC, is the principal underwriter of the contracts under a Distribution Agreement with Transamerica. TSSC may also serve as an underwriter and distributor of other contracts issued through the variable account and certain other separate accounts of Transamerica and its affiliates. TSSC is an indirect wholly owned subsidiary of Transamerica Insurance Corporation. TSSC is registered with the SEC as a broker/dealer and is a member of the National Association of Securities Dealers, Inc., (the NASD). Its principal offices are located at 1150 South Olive, Los Angeles, California 90015. Transamerica pays TSSC for acting as the principal underwriter under a distribution agreement. TSSC has entered into sales agreements with other broker/dealers to solicit applications for the contracts through registered representatives who are licensed to sell securities and variable insurance products. These agreements provide that applications for the contracts may be solicited by registered representatives of the broker/dealers appointed by Transamerica to sell its variable life insurance and variable annuities. These broker/dealers are registered with the SEC and are members of the 33 NASD. The registered representatives are authorized under applicable state regulations to sell variable annuities. Under the agreements, contracts will be sold by broker/dealers which will generally receive compensation of up to 6.25% of any initial and additional purchase payments paid, although higher amounts may be paid in certain circumstances. Additional amounts may be paid in certain circumstances (such as upon certain annuitizations, when an additional commission of 2.5% of the account value annuitized may be paid). Additional amounts, including asset based trail commissions, may be paid in certain circumstances. Transamerica Financial Resources, Inc., referred to as TFR, also is an underwriter and distributor of the contracts. TFR is a wholly owned subsidiary of Transamerica Insurance Corporation of California and is registered with the SEC and the NASD as a broker/dealer. To the extent permitted by NASD rules, promotional incentives or payments may also be provided to broker/dealers based on sales volumes, the assumption of wholesaling functions or other sales-related criteria. Other payments may be made for other services that do not directly involve the sale of the policies. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. Transamerica intends to recoup commissions and other sales expenses primarily, but not exclusively, through: . The administrative charge; . The surrender charge; . The mortality and expense risk fee; and . Investment earnings on amounts allocated under policies to the fixed account. Commissions paid on the contract, including other incentives or payments, are not charged to the contract owners or the separate account. Pending regulatory approvals, Transamerica intends to distribute the policy in all states, except New York, and in certain possessions and territories. ANNUITY PAYMENTS Annuity Date Initially, you select the annuity date when you buy the contract. After that, you may change the annuity date from time to time by giving notice to our service center in a form and manner acceptable to us. Our service center must receive notice of each change at least 30 days before the then-current annuity date. The annuity date must not be earlier than the third contract anniversary, except for certain qualified contracts. The annuity date is the date that the annuity purchase amount is applied to provide the annuity payments under the contract. The annuity date will be used together with the annuity form and payment option you have selected. The annuity date will remain effective unless the entire account value has been withdrawn or the death benefit has been paid to the beneficiary before that date. The latest annuity date which may be elected is the later of: a) the first day of the calendar month immediately preceding the month of the annuitant's 85th birthday; or b) the first day of the month coinciding with or next following the tenth contract anniversary. This annuity date extension to the tenth contract anniversary may not be available in all states. The annuity date must be the first day of a calendar month. The first annuity payment will be on the first day of the month immediately following the annuity date. Annuity Payment The annuity purchase amount is the account value, minus any interest adjustment, minus any applicable contingent deferred sales load and minus any applicable premium taxes. Any contingent deferred sales load will be waived if the annuity form involves life contingencies and begins on or after the third contract anniversary. If the amount of the monthly annuity payment from the payment options which you select results in a monthly annuity payment of less than $150, or if the annuity purchase amount is less than $5,000, we reserve the right to use a less frequent mode of 34 payment or pay the cash surrender value in a cash payment. Monthly annuity payments from the variable annuity payment option will further be subject to a minimum monthly annuity amount of $75 from each sub-account of the variable account from which such payments are made. You may choose from the annuity forms below. We may consent to other plans of payment before the annuity date. For annuity forms involving life income, the actual age and/or sex of the annuitant, or a joint or contingent annuitant will affect the amount of each payment. Sex-distinct rates generally are not allowed under certain qualified contracts and in some jurisdictions. We reserve the right to ask for satisfactory proof of the annuitant's, or the joint or contingent annuitant's age. We may delay annuity payments until satisfactory proof is received. Since payments to older annuitants are expected to be fewer in number, the amount of each annuity payment will be greater for older annuitants than for younger annuitants. You may choose from the two annuity payment options described below. The annuity date and annuity forms available for qualified contracts may also be controlled by endorsements, the plan or applicable law. A portion or the entire amount of the annuity payments may be taxable as ordinary income. If, at the time the annuity payments begin, we have not received a proper written election not to have federal income taxes withheld, we must by law withhold such taxes from the taxable portion of such annuity payments and remit that amount to the federal government. Federal income tax withholding is mandatory for certain distributions from Section 401 retirement plans and 403(b) annuities. State income tax withholding may also apply. Election of Annuity Forms and Payment Options Before the annuity date and while the annuitant is living, you may, by written request, change the annuity form or annuity payment option or request payment of the cash surrender value of the contract. The request for change of the annuity date or annuity payment option must be received by our service center at least 30 days before the annuity date. If you do not select an annuity form and payment option within at least 30 days before the annuity date, we will make variable and/or fixed annuity payments according to the 120 month period certain and life annuity form and the applicable provisions of the contract. Annuity Payment Options The annuity forms may be paid under fixed or variable annuity payment options. Under the fixed annuity payment option, the amount of each payment will be determined on the annuity date and will not subsequently be affected by the investment performance of the sub-accounts. Under the variable annuity payment option, the annuity payments, after the first, will reflect the investment experience of the sub-account or sub- accounts you choose. You may elect a fixed annuity, a variable annuity, or a combination of both, in 25% increments of the annuity purchase amount. If you elect a combination, you must specify what part of the annuity purchase amount is to be applied to the fixed and variable payment options. The initial allocation of variable annuity units for the variable sub-accounts will be in proportion to the contract's value in the sub-accounts on the annuity date. Fixed Annuity Payment Option A fixed annuity provides for annuity payments that remain constant according to the terms of the annuity form elected. If a fixed annuity is selected, the portion of the annuity purchase amount used to provide the fixed annuity will be transferred to the general account assets. The amount of annuity payments will be established by the fixed annuity provisions selected and the age and sex, (if sex-distinct rates are allowed by law), of the annuitant and will not reflect investment performance after the annuity date. The fixed annuity payment amounts are determined by applying the annuity purchase rate specified in the contract to the portion of the annuity purchase amount you applied to the fixed annuity option. Payments may change after the death of the 35 annuitant under some annuity options; the amounts of these changes are fixed on the annuity date. Variable Annuity Payment Option A variable annuity provides for payments that vary in dollar amount, based on the investment performance of the selected sub-accounts of the variable account. The variable annuity purchase rate tables in the contract reflect an assumed, but not guaranteed, annual interest rate of 4%, so if the actual net investment performance of the sub-accounts is less than this rate, then the dollar amount of the actual annuity payments will decrease. If the actual net investment performance of the sub-accounts is higher than this rate, then the dollar amount of the actual annuity payments will increase. If the net investment performance exactly equals the 4% rate, then the dollar amount of the actual annuity payments will remain constant. Variable annuity payments will be based on the performance of the sub-accounts you select, and on the allocations you make among the sub-accounts. For further details as to the determination of variable annuity payments, see the Statement of Additional Information. There is also an example in Appendix A to this prospectus. Annuity Forms You may choose any of the annuity forms described below. Subject to our approval, you may also select any other annuity form we may offer. 1. Life Annuity. Payments start on the first day of the month immediately following the annuity date, if the annuitant is living. Payments end with the payment due just before the annuitant's death. There is no death benefit under this form. It is possible that only one payment will be made under this form if the annuitant dies before the second payment is due; only two payments will be made if the annuitant dies before the third payment is due, and so forth. 2. Life and Contingent Annuity. Payments start on the first day of the month immediately following the annuity date, if the annuitant is living. Payments will continue for as long as the annuitant lives. After the annuitant dies, payments will be made to the contingent annuitant, if living, for as long as the contingent annuitant lives. The continued payments can be in the same amount as the original payments, or in an amount equal to one-half or two-thirds thereof. Payments will end with the payment due just before the death of the contingent annuitant. There is no death benefit after both the annuitant and the contingent annuitant die. If the contingent annuitant does not survive the annuitant, payments will end with the payment due just before the death of the annuitant. It is possible that only one payment or very few payments will be made under this form, if the annuitant and contingent annuitant die shortly after payments begin. The written request for this form must: a)name the contingent annuitant; and b) state the percentage of payments for the contingent annuitant. Once annuity payments start under this annuity form, the person named as contingent annuitant for purposes of being the measuring life, may not be changed. We will need proof of age for the annuitant and the contingent annuitant before payments start. 3. Life Annuity With Period Certain. Payments start on the first day of the month immediately following the annuity date, if the annuitant is living. Payments will be made for the longer of: a)the annuitant's life; or b)the period certain. The period certain may be 120 or 180 or 240 months, but in no event may it exceed the life expectancy of the annuitant. If the annuitant dies after all payments have been made for the period certain, payments will cease with the payment due just before the annuitant's death. No benefit will then be payable to the annuitant's beneficiary. If the annuitant dies during the period certain, the rest of the period certain payments will be made to the annuitant's beneficiary. You may elect to have the present value of any remaining period certain payments paid to you in a single sum. If you do not elect to have the present value paid in a single sum after the annuitant's death, 36 you may designate a payee to receive any remaining payments payable if the annuitant's beneficiary dies before all of the payments under the period certain have been made. If the annuitant's beneficiary dies before receiving all of the remaining period certain payments and a designated payee does not survive the annuitant's beneficiary for at least 30 days, then the remaining payments will be paid to the owner, if living, otherwise in a single sum to the owner's estate. The written request for this form must: a)state the length of the period certain; and b)name the annuitant's beneficiary. 4. Joint and Survivor Annuity. Payments will be made, starting on the first day of the month immediately following the annuity date, if and for as long as the annuitant and joint annuitant are living. After the annuitant or joint annuitant dies, payments will continue as long as the survivor lives. The continued payments can be in the same amount as the original payments, or in an amount equal to one-half or two-thirds thereof. It is possible that only one payment or very few payments will be made under this form if the annuitant and joint annuitant both die shortly after payments begin. The written request for this form must: a)name the joint annuitant; and b) state the percentage of continued payments for the survivor. Once payments start under this annuity form, the person named as joint annuitant, for the purpose of being the measuring life, may not be changed. We will need proof of age for the joint annuitants before payments start. 5. Other Forms of Payment. Benefits can be provided under any other annuity form not described in this section subject to our agreement and any applicable state or federal law or regulation. Requests for any other annuity form must be made in writing to our service center at least 30 days before the annuity date. Once payments start under the annuity form and payment option you selected: a) no changes can be made in the annuity form and payment option; b) no additional purchase payments will be accepted under the contract; and c)no further withdrawals will be allowed. General You may, at any time after the annuity date by written notice to us at our service center, change the payee of annuity benefits being provided under the contract. The effective date of change in payee will be the later of: a) the date we receive the written request for such change; or b) the date you specify. If the contract is issued as a qualified contract, you may not change the payee on or after the annuity date. Alternate Fixed Annuity Rates The amount of any fixed annuity payments will be determined on the annuity date by using either the guaranteed fixed annuity rates or our current single premium fixed annuity rates at the time, whichever would result in a higher amount of monthly fixed annuity payments. THE GUARANTEED MINIMUM INCOME BENEFIT (GMIB) RIDER The optional "guaranteed minimum income benefit" (GMIB) rider assures you of a minimum level of income in the future by guaranteeing a minimum annuitization value (discussed below) 7 years after you elect the rider. If you want to purchase this optional rider, you must do so within 30 days after the contract date or within 30 days after any contract anniversary before you turn 81. Once elected, the GMIB rider can not be terminated. The GMIB rider guarantees: 1) the amount you will have to apply to a GMIB payment option, and 37 2) if you elect the guaranteed minimum payment option, that a minimum amount of those payments will be guaranteed once you begin to receive them. By electing this benefit, you can participate in the gains of the underlying variable investment options you select while knowing that you are guaranteed a minimum level of income in the future, regardless of the performance of the underlying variable investment options. Minimum Annuitization Value The minimum annuitization value on the rider date (the date the rider is added to your contract) is equal to the account value. After that, the minimum annuitization value is equal to the greater of the following: 1) the largest account value on the rider date or on any rider anniversary prior to the earlier of any owner's or annuitant's 86th birthday, plus any subsequent purchase payments (less the sum of all subsequent withdrawals adjusted as below and any premium taxes); or 2) the minimum annuitization value on the rider date plus the sum of all purchase payments received after the rider date, less withdrawals (adjusted as below) and premium taxes, plus interest thereon equal to the annual effective interest rate specified on page one of the rider up to: a) the rider anniversary prior to the earlier of any owner's or annuitant's 86th birthday; or b) the date the sum of all purchase payments, (less the sum of all adjusted withdrawals and premium taxes), together with credited interest, has grown to two times the amount of all purchase payments (less all adjusted withdrawals and premium taxes) as a result of such interest accumulation, if earlier. You can annuitize under the GMIB rider (subject to the conditions described in this section) at the greater of the annuity purchase amount or the minimum annuitization value. The annual effective interest rate is currently 5% per year; we may, at our discretion, change the rate in the future, but the rate will never be less than 3% per year, and once the rider is added to your contract, the annual rate will not vary during the life of that rider. Withdrawals may reduce the minimum annuitization value on a basis greater than dollar-for-dollar. See the Statement of Additional Information for more information. The GMIB rider does not establish or guarantee account value or guarantee performance of any investment option. The minimum annuitization value may only be used to annuitize using the GMIB payment options provided by the GMIB rider and may not be used with any of the annuity payment options listed in the Annuity Payment section of this prospectus. The GMIB payment options are: . Life Income--An election may be made for "No Period Certain" or "10 Years Certain." In the event of the death of the annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. . Joint and Full Survivor--An election may be made for "No Period Certain" or "10 Years Certain." Payments will be made as long as either the annuitant or joint annuitant is living. In the event of the death of both the annuitant and joint annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. NOTE CAREFULLY: IF: . You choose Life Income with No Period Certain or Joint and Full Survivor with No Period Certain; and . The annuitant(s) dies before the due date of the second (third, fourth, etc.) annuity payment; THEN: . We will make only one (two, three, etc.) annuity payment(s). The minimum annuitization value is used solely to calculate the GMIB payment and does not establish 38 or guarantee an account value or guarantee performance of any investment option. Other benefits and fees under the rider (the rider fee, the guaranteed payment fee, and the waiting period before the GMIB can be exercised, as well as the annual interest rate) are also guaranteed not to change after the rider is added. However, all of these benefit specifications may change if you elect to upgrade the minimum annuitization value. Minimum Annuitization Value Upgrade You can upgrade your minimum annuitization value to the policy value on a policy anniversary. This may be done within thirty days after any policy anniversary before your 85th birthday (earlier if required by state law). For your convenience, we will put the last date to upgrade on page one of the rider. If you upgrade: . the current rider will terminate and a new one will be issued with its own specified guaranteed benefits and fees (the new rider will be what is currently offered for new sales); . the new fees, thresholds and factors may be higher (or lower) than before; . the new annual growth rate may be lower (or higher) than before; and . you will have a new ten year waiting period before you can annuitize under the rider. It generally will not be to your advantage to upgrade unless your adjusted policy value exceeds your minimum annuitization value on the applicable policy anniversary. GMIB Rider Fee A rider fee, currently 0.30% of the minimum annuitization value on the each rider anniversary, is charged annually on the rider anniversary prior to annuitization. We will also charge this fee if you take a complete withdrawal. The rider fee is deducted from each variable sub-account in proportion to the amount of account value in each sub-account. This fee is deducted even if the account value exceeds the minimum annuitization value. Conditions of Exercise of the GMIB You can only annuitize using the GMIB within 30 days after the seventh or later rider anniversary after the GMIB is elected or, in the case of an upgrade of the minimum annuitization value, the seventh or later rider anniversary following the upgrade; we may, at our discretion, change the waiting period before the GMIB can be exercised in the future. You cannot, however, annuitize using the GMIB after the rider anniversary after your 94th birthday (earlier if required by state law). For your convenience, we will put the first and last date to annuitize using the GMIB on page one of the rider. NOTE CAREFULLY: If you annuitize at any time other than indicated above, you cannot use the GMIB. Guaranteed Minimum Payment Option If you elect the guaranteed minimum payment option, annuity payments under the GMIB are guaranteed to never be less than the initial payment. See the Statement of Additional Information for information concerning the calculation of the initial payment. It is not clear whether payments under the Guaranteed Minimum Payment Option will be treated as fixed or variable payments for federal income tax purposes. You should consult a competent tax adviser on this issue. Under this option, the payments will also be "stabilized" or held constant during each year after annuitization. During the first year after annuitizing using the GMIB, each stabilized payment will equal the initial payment. On each anniversary of annuitization thereafter, the stabilized payment will increase or decrease depending on the performance of the investment options you selected, and then be held constant at that amount for that year. The stabilized payment on each annuitization anniversary will equal the greater of the initial payment or the payment supportable by the annuity units in the selected investment options. If you elect not to receive guaranteed minimum payments, your payments: . are not guaranteed and may be less than the initial payment; . will vary according to the investment performance of the investment options you select; and 39 . will not be stabilized. The guaranteed minimum payments are based on conservative actuarial factors. For examples, the regular annuity payments described above are based on a 4% assumed interest rate (AIR) for both the initial payment and all subsequent payments. However, under the GMIB, the first payment is based on a 3% AIR, which means the first payment would be lower under the GMIB (all other things being equal). In addition, the GMIB uses a 5% AIR for subsequent annuity payments, which means that payments under the GMIB will rise slower to reflect good investment performance, and decrease faster in the case of poor investment performance. In addition, there is an additional fee for the GMIB annuity payments (see below). Therefore, the level of lifetime income that it guarantees may be less than the level that would be provided by application of the annuity purchase amount at otherwise applicable annuity factors. Therefore, the GMIB rider should be regarded as a safety net. See the Statement of Additional Information for additional information concerning stabilized payments. Guaranteed Minimum Payment Fee If you elect the guaranteed minimum payment option, a guaranteed minimum payment fee, currently equal to an effective annual rate of 1.25% of the daily net asset value in the variable investment options, is reflected in the amount of the variable payments you receive. The guaranteed minimum payment fee is included on page one of the rider. This option is irrevocable (you can not stop paying the fee once annuity payments began). Termination of the GMIB Rider The GMIB rider is irrevocable. You have the option not to use the benefit of the rider but you will not receive a refund of any fees you have paid. The GMIB rider will terminate upon the earliest of the following: . annuitization (you can get guaranteed minimum payments if you so elect if you annuitize using the GMIB), . upgrade of the minimum annuitization value (although a new rider will be issued), . termination of your contract, and . 30 days after the last date to annuitize under the rider as specified on the first page of your rider. The guaranteed minimum income benefit rider may not be available in all states. TAX RELIEF RIDER The optional "tax relief rider" or "TRR" might pay an additional death benefit amount when a death benefit is payable under your contract, under certain circumstances. The TRR amount will not be paid unless (a) the rider is in force, (b) a death benefit is payable on the contract and (c) there are rider earnings when the death benefit is calculated. The TRR is available for issue ages through age 80. Tax Relief Rider Amount The TRR amount is only payable if you elected the rider prior to the death triggering the payment of the contract death benefit and a death benefit is payable under the contract. The TRR amount is equal to: . the TRR factor (shown on page one of the rider); multiplied by . the rider earnings on the date used to calculate the death benefit. Rider earnings equal: . the contract death benefit; minus . account value on the rider date; minus . purchase payments after the rider date; plus . withdrawals after the rider date that exceed the rider earnings on the date of the withdrawal. No benefit is payable under the TRR if there are no rider earnings on the date the death benefit is calculated. If you purchase your contract as part of a 1035 transfer or added the TRR after you purchased the contract, rider earnings do not include any gains before the TRR is added to your contract. The TRR factor is currently 40% for issue ages under 71 and 25% for issue ages 71-80. We may, at our discretion, change the factors in the future. Once the tax relief rider is added to you contract, however, your factor will not vary during the life of the rider. 40 For purposes of computing taxable gains, both the death benefit payable under the contract and the TRR will be considered. Please see the Statement of Additional Information for an example which illustrates the TRR payable as well as the effect of a withdrawal on the TRR. Spousal Continuation If a spouse elects to continue the contract instead of receiving a death benefit and TRR, the spouse has the following options: . Continue the contract and receive a one-time account value increase equal to the TRR. At this time the rider would terminate. The spouse would have the option of immediately re-electing the rider as long as they are under the age of 81, however, it would only cover gains from the time of such election going forward; or . Continue the contract without the one-time account value increase and continue the rider as is. When the next death occurs, the rider will pay the TRR based on gains since the rider was issued, not since the time of the first death. Tax Relief Rider Fee A rider fee, currently 0.25% of the account value, is charged annually on each rider anniversary prior to annuitization. We will also charge this fee if you take a full withdrawal (subject to any necessary regulatory approvals). The rider fee will be deducted on each rider anniversary and upon termination of the rider during the accumulation phase. The rider fee is equal to the account value multiplied by the rider fee percentage shown on the first page of the rider. The rider fee is deducted pro rata from each investment choice. The fee will be deducted even during periods when the TRR would not pay any benefit (because there are no rider earnings). Termination The rider will remain in effect until: . you terminate it by notifying our service center in writing, . the contract is annuitized or surrendered, or . the TRR is paid or added to the account value under a spousal continuation. Once terminated, the TRR may be re-elected, however, a new rider will be issued and the tax relief rider amount will be re-determined. Please note that if the rider is terminated and then re-elected, it will only cover gains (if any) since it was re-elected. This rider may violate the requirements of certain qualified plans. Consult a competent tax adviser before electing this rider for any qualified plans. The tax relief rider or TRR may vary by state and may not be available in all states. QUALIFIED CONTRACTS The qualified contracts may be used to fund contributory and rollover IRAs and Roth IRAs. With our prior approval, qualified contracts may also be used for various types of qualified pension and profit sharing plans under Code Section 401, which permits corporate employers to establish various types of retirement plans for employees, and as Section 403(b) annuities. Currently, additional premiums after the initial premium may not be made to certificates used as Section 401(a) or Section 403(b) annuities. The tax rules applicable to distribution from qualified retirement plans, including restrictions on contributions and benefits, taxation of distributions, and any tax penalties, vary according to the type of plan and the terms and the conditions of the plan itself. Various tax penalties may apply to: a) contributions in excess of specified limits; b) distributions before age 59 1/2, subject to certain exceptions; c) distributions that do not satisfy specified requirements; and d) certain other transactions subject to qualified plans. If you are purchasing a contract for use in a qualified plan, you (the owner) should seek competent advice regarding the suitability of the proposed plan documents and the contracts to their specific needs. We reserve the right to decline to sell the contract to certain qualified plans or terminate the contract if, in our judgment, the contract is not appropriate for the plan. 41 If a contract is purchased to fund an IRA or Roth IRA, you (the owner) must also be the annuitant. In addition, under current tax law, minimum distributions are required from certain qualified contracts. You should consult your tax adviser concerning these matters. The Automatic Payout Option, or APO Before to the annuity date, for qualified contracts other than Roth IRAs, you may elect the automatic payout option, or APO, to satisfy minimum distribution requirements under Code Sections 401(a)(9), 403(b), and 408(b)(3). For IRAs and SEP/IRAs, (and if you are a 5% owner as defined in the code, for other qualified contracts) this may be elected no earlier than six months before the calendar year in which you attain age 70 1/2, and payments may not begin earlier than January of such calendar year. For other qualified contracts, APO can be elected no earlier than six months before the later of when you: a) attain age 70 1/2; or b) retire from employment. Additionally, APO withdrawals may not begin before the later of: a) 30 days after the contract date; or b) the end of the free look period. You may elect APO in any calendar month, but no later than the month in which you attain age 84. APO withdrawals will be from the sub-accounts and in the percentage allocations which you specify. If no specifications are made, withdrawals will be pro rata from all sub-accounts with value. Withdrawals can not be made from a sub-account from which dollar cost averaging transfers are being made. Payments will be made annually, and will continue unless terminated by you or automatically terminated by us as set forth in the contract. Once terminated, APO may not be elected again. If only APO withdrawals are made, no contingent deferred sales load will apply, regardless of the allowed amount. However, if a partial withdrawal is taken, that partial withdrawal and any subsequent withdrawals in that contract year will be subject to a contingent deferred sales load to the extent they exceed the allowed amount. To be eligible for this option, the following conditions must be met: 1. the account value must be at least $6,000 at the time of election; and 2. the annual withdrawal amount is the larger of the required minimum distribution under Code Sections 401(a)(9) or 408(b)(3), or $500. APO allows the required minimum distribution to be paid from the sub-accounts of the variable account. If there are insufficient funds in the variable account to make a withdrawal, or for other reasons as set forth in the contract, this option will terminate. In which case, if there are amounts in a contract's account value remaining in the fixed account, the minimum distribution requirements with regard to the account value may not be met. If amounts are transferred to sub-accounts from a guaranteed period before its expiration date, an interest adjustment will be made to such amounts. If you have more than one qualified plan subject to the Code's minimum distribution requirements, you must consider all such plans in the calculation of your minimum distribution requirement, but we will make calculations and distributions from this contract only. Restrictions under Section 403(b) Programs Certain restrictions apply to annuity contracts used in connection with Section 403(b) retirement plans. Code Section 403(b) provides for tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. According to the requirements of the Code, Section 403(b) annuities generally restrict distribution of: a) elective contributions made in years beginning after December 31, 1988; b) earnings on those contributions; or c) earnings on amounts attributable to elective contributions held as of the end of the last year beginning before January 1, 1989. Distributions of such amounts will be allowed only upon death of the employee, on or after attainment of age 59 1/2, separation from service, disability, or 42 financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. FEDERAL TAX MATTERS Introduction The following discussion is a general description of federal tax considerations relating to the contract and is not intended as tax advice. This discussion is not intended to address the tax consequences resulting from all of the situations in which a person may be entitled to or may receive a distribution under the contract. If you are concerned about these tax implications, you should consult a competent tax adviser before initiating any transaction. This discussion is based upon our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service, or simply, the IRS. No representation is made as to the likelihood of the continuation of the present federal income tax laws or of the current interpretation by the IRS. Moreover, no attempt has been made to consider any applicable state or other tax laws. The contract may be purchased: a) on a non-tax qualified basis for use as a non-qualified contract; or b) in connection with plans qualifying for special tax treatment as a qualified contract. Qualified contracts are designed for use by individuals solely as plans entitled to special income tax treatment under Code Sections 401, 403(b), 408 and 408A. The ultimate effect of federal income taxes on the amounts held under a contract, on annuity payments, and on the economic benefit to the owner, the annuitant, or the beneficiary may depend on: a) the type of retirement plan or arrangement for which the contract is purchased; b) the tax status of the individual concerned; or c) our tax status. In addition, certain requirements must be satisfied in purchasing a qualified contract with proceeds from a tax qualified retirement plan or other arrangement. Certain requirements must also be met when receiving distributions from a qualified contract in order to continue receiving special tax treatment. Therefore, if you are considering the purchase of a qualified contract, you should seek competent legal and tax advice regarding the suitability of the contract for your situation. You will also need to be aware of the applicable requirements, and the tax treatment of the rights and benefits of the contract. The following discussion assumes that a qualified contract is purchased with proceeds from and/or contributions under retirement plans that qualify for the intended special federal income tax treatment. The following discussion is also based on the assumption that the contract qualifies as an annuity contract for federal income tax purposes. The Statement of Additional Information discusses the requirements for qualifying as an annuity. Purchase Payments At the time the initial purchase payment is paid, as a prospective purchaser, you must specify whether you are purchasing a non-qualified contract or a qualified contract. If the initial purchase payment is derived from an exchange or surrender of another annuity contract, we may require that you provide information with regard to the federal income tax status of the previous annuity contract. We will require that you purchase separate contracts if you desire to invest monies qualifying for different annuity tax treatment under the Code. Each such separate contract would require the minimum initial purchase payment previously described. Additional purchase payments under a contract must qualify for the same federal income tax treatment as the initial purchase payment under the contract. We will not accept an additional purchase payment under a contract if the federal income tax treatment of such purchase payment would be different from that of the initial purchase payment. Taxation of Annuities In General Code Section 72 governs taxation of annuities in general. We believe that an owner who is a natural person generally is not taxed on increases in the value of a contract until distribution occurs by withdrawing all or part of the account value, for example, through withdrawals or annuity payments under the annuity option elected. For this purpose, the assignment, pledge, or agreement to assign or 43 pledge any portion of the account value, and in the case of a qualified contract, any portion of an interest in the plan, generally will be treated as a distribution. The taxable portion of a distribution, in the form of a single sum payment or an annuity, is taxable as ordinary income. The owner of any non-qualified contract who is not a natural person generally must include as income any increase in the excess of the account value over the investment in the contract during the taxable year. There are some exceptions to this rule and a prospective owner that is not a natural person, for example, a trust, may wish to discuss these with a competent tax adviser. The following discussion generally applies to contracts owned by natural persons. Withdrawals In the case of a withdrawal under a qualified contract, including withdrawals under the systematic withdrawal option or the automatic payout option, a ratable portion of the amount received is taxable. This portion is generally based on the ratio of the investment in the contract to the individual's total accrued benefit under the retirement plan. The investment in the contract generally equals the amount of any non-deductible purchase payments paid by or on behalf of any individual. For a qualified contract, the investment in the contract can be zero. Special tax rules may apply to certain distributions from a qualified contract. With respect to non-qualified contracts, partial withdrawals, including withdrawals under the systematic withdrawal option, are generally treated as taxable income to the extent that the account value immediately before the withdrawal exceeds the investment in the contract at that time. The investment in the contract is generally equal to the amount of non-deductible purchase payments made. If a partial withdrawal from the fixed account is subject to an interest adjustment, the account value immediately before the withdrawal will not be altered to take into account the interest adjustment. As a result, for purposes of determining the taxable portion of the partial withdrawal, the account value will be treated as including the amount deducted from the fixed account due to the interest adjustment. Full surrenders are treated as taxable income to the extent that the amount received exceeds the investment in the contract. It is possible that the Internal Revenue Service may take a position that charges and deductions for certain optional benefits or features are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat the annual fee for the Tax Relief Rider as a taxable distribution, which might also be subject to a tax penalty if the deduction occurs prior to age 59 1/2. Although we do not believe that the Tax Relief Rider fee or the charge for any other optional benefit provided under the contract should be treated as a taxable withdrawal, you should consult a tax advisor with respect to electing any optional benefit. Annuity Payments Although the tax consequences may vary depending on the annuity payment elected under the contract. In general, only the portion of the annuity payment that represents the amount by which the account value exceeds the investment in the contract will be taxed. After the investment in the contract is recovered, the full amount of any additional annuity payments is taxable. For variable annuity payments, the taxable portion is generally determined by an equation that establishes a specific dollar amount of each payment that is not taxed. The dollar amount is determined by dividing the investment in the contract by the total number of expected periodic payments. However, the entire distribution will be taxable once the recipient has recovered the dollar amount of his or her investment in the contract. For fixed annuity payments, in general, there is no tax on the portion of each payment which represents the same ratio that the investment in the contract bears to the total expected value of the annuity payments for the term of the payments. However, the remainder of each annuity payment is taxable. Once the investment in the contract has been fully recovered, the full amount of any additional annuity payments is taxable. If annuity payments cease as a result of an annuitant's death before full recovery of the investment in the contract, consult a competent tax adviser regarding deductibility of the unrecovered amount. Withholding The Code requires us to withhold federal income tax from distributions under the contracts. However, 44 except for distributions from certain qualified contracts, an owner will be entitled to elect, in writing, not to have tax withheld. Withholding applies to the portion of a distribution which is includible in income and subject to federal income tax, where the taxable amount is at least $200. Some states also require withholding for state income taxes. The withholding varies according to the type of distribution and the owner's tax status. "Eligible rollover distributions" from Section 401(a) plans, Section 403(a) annuities, and Section 403(b) tax sheltered annuities are subject to mandatory federal income tax withholding at the rate of 20%. An eligible rollover distribution is the taxable portion of any distribution from such a plan, except for certain distributions, such as minimum required distributions or settlement option payments made in a specified form. The 20% mandatory withholding does not apply, however, if the owner chooses a "direct rollover" from the plan to another tax-qualified plan or to an IRA, other than a Roth IRA. The federal income tax withholding rate for a distribution that is not an eligible rollover distribution is 10% of the taxable amount of the distribution. Penalty Tax A federal income tax penalty equal to 10% of the amount treated as taxable income may be imposed. In general, however, there is no penalty tax on distributions: 1. made on or after the date on which the owner attains age 59 1/2; 2. made as a result of death or disability of the owner; or 3. received in substantially equal periodic payments as a life annuity or a joint and survivor annuity for the lives or life expectancies of the owner and a designated beneficiary. Other tax penalties may apply to certain distributions under a qualified contract. Taxation of Death Benefit Proceeds Amounts may be distributed from the contract because of the death of an owner or the annuitant. Generally such amounts should be includable in income as follows: 1. if distributed in a lump sum, they are taxed in the same manner as a full surrender, as described above; or 2. if distributed under an annuity option, they are taxed in the same manner as annuity payments, as described above. Other rules relating to distributions at death apply to qualified contracts. You should consult your legal counsel and tax adviser regarding these rules and their impact on qualified contracts. Required Distributions upon Owner's Death Notwithstanding any provision of the contract or this prospectus to the contrary, no payment of benefits provided under a non-qualified contract will be allowed that does not satisfy the requirements of Code Section 72(s). If an owner dies before the annuity date, the death benefit payable to the owner's beneficiary will be distributed as follows: a) the death benefit must be completely distributed within five years of the owner's date of death; or b) the owner's beneficiary may elect, within the one-year period after the owner's date of death, to receive the death benefit in the form of an annuity from us. Please note that Item b) is based on the following requirements: 1. the annuity must be distributed in substantially equal installments over the life of the owner's beneficiary or over a period not extending beyond the life expectancy of the owner's beneficiary; and 2. the distributions must not begin later than one year after the owner's date of death. Notwithstanding Items a) and b) above, if the sole owner's beneficiary is the deceased owner's surviving spouse, then the surviving spouse may elect, within the one year period after the owner's date of death, to continue the contract under the same terms as before the owner's death. If the spouse elects to continue the contract, an amount equal to the excess, if any, of the Death Benefit over the account value will then be added to the account value. This amount will be added only once, at the time of such election. Furthermore, all future contingent deferred sales loads will be waived. 45 Upon receipt of such election from the spouse, in a form and manner acceptable to us, at our service office: 1. all rights of the spouse as owner's beneficiary under the contract in effect before such election will cease; 2. the spouse will become the owner of the contract and will also be treated as the contingent annuitant, if none has been named and only if the deceased owner was the annuitant; and 3. all rights and privileges granted by the contract or allowed by us will belong to the spouse as owner of the contract. This election will be deemed to have been made by the spouse if such spouse makes a purchase payment to the contract or fails to make a timely election as described in this paragraph. If the owner's beneficiary is a nonspouse, the distribution provisions described in subparagraphs a) and b) above, will apply even if the annuitant and/or contingent annuitant are alive at the time of the owner's death. If the nonspouse owner's beneficiary is not an individual, then only a cash payment will be paid. If no election is received by us from a nonspouse owner's beneficiary within the one-year period after the owner's date of death, then we will pay the death benefit to the owner's beneficiary in a cash payment. The death benefit will be determined as of the date we make the cash payment. Such cash payment will be in full settlement of all our liability under the contract. If the Annuitant Dies After Annuity Payments Start - If the annuitant dies after the annuity starts, any benefit payable will be distributed at least as rapidly as under the annuity form then in effect. If An Owner Dies After Annuity Payments Start - If the owner dies after the annuity starts, any benefit payable will continue to be distributed at least as rapidly as under the annuity form then in effect. All of the deceased owner's rights granted under the contract or allowed by us will pass to the owner's beneficiary. Joint Ownership - For purposes of this section, if the contract has joint owners we will consider the date of death of the first joint owner as the death of the owner and the surviving joint owner will become the owner of the contract, subject to the provisions described above. Similar rules apply to qualified contracts. Transfers, Assignments, or Exchanges of the Contract A transfer of ownership of a contract, the designation of an annuitant, payee, or beneficiary who is not also the owner, or the exchange of a contract may result in certain tax consequences to the owner that are not discussed herein. If you are contemplating any such designation, transfer, assignment, or exchange, you should contact a competent tax adviser with respect to the potential tax effects of such a transaction. Certain qualified contracts cannot be transferred or assigned, except as permitted by the Code or the Employee Retirement Income Security Act of 1974, or simply ERISA. Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations The discussion above provided general information 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. Multiple Policies All non-qualified deferred annuity contracts that are issued by Transamerica, or its affiliates, to the same owner during any calendar year are treated as one annuity contract for purposes of determining the amount includable in gross income under Code Section 72(e). In addition, the Treasury Department has specific authority to issue regulations that prevent the avoidance of Section 72(e) through the serial purchase of annuity contracts or otherwise. 46 Congress has also indicated that the Treasury Department may have authority to treat the combination purchase of an immediate annuity contract and a separate deferred annuity contract as a single annuity contract under its general authority to prescribe rules as may be necessary to enforce the income tax laws. Separate Account Charges It is possible that the Internal Revenue Service may take a position that fees for certain optional benefits are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat fees associated with the TRR as a taxable withdrawal, which might also be subject to a tax penalty if the withdrawal occurs prior to age 59 1/2. Although we do not believe that the fees associated with the TRR or any other optional benefit provided under the policy should be treated as taxable withdrawals you should consult your tax advisor prior to selecting any optional benefit under the policy. QUALIFIED CONTRACTS In General The qualified contract is designed for use as an IRA or Roth IRA. With our prior approval, the contract may also be used as a Section 403(b) annuity, and for use in qualified pension and profit sharing plans established by corporate employers. The tax rules applicable to participants and beneficiaries in retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: . contributions in excess of specified limits; . distributions before age 59 1/2, subject to certain exceptions; . distributions that do not conform to specified commencement and minimum distribution rules; and . other specified circumstances. We make no attempt to provide more than general information about use of the contracts with the various types of retirement plans. Owners and participants under retirement plans as well as annuitants and beneficiaries are cautioned that the rights of any person to any benefits under qualified contracts may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the contract issued in connection with such a plan. Some retirement plans are subject to distribution and other requirements that are not incorporated in the contracts or the administration of the contracts. Owners are responsible for determining that contributions, distributions and other transactions with respect to the contracts satisfy applicable law. Purchasers of contracts for use with any retirement plan should consult their legal counsel and tax adviser regarding the suitability of the contract. For qualified plans under Section 401(a), 403(a) and 403(b), 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: 1. reaches age 70 1/2; or 2. retires and also requires that the distributions must be made in a specified manner. If the plan participant is a "5 percent owner" as defined in the Code, distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the owner, or plan participant reaches, age 70 1/2. For IRAs described in Section 408, distributions generally must commence no later than of April 1 of the calendar year following the calendar year in which the owner, or plan participant, reaches age 70 1/2. Roth IRAs under Section 408A do not require distributions at any time before the owner's death. Qualified Pension and Profit Sharing Plans Code Section 401(a) permits employers to establish various types of retirement plans for employees. Such retirement plans may permit the purchase of the contract in order to provide retirement savings under the plans. The Self- Employed Individuals' Tax Retirement Act of 1962, as amended, commonly referred to as H.R. 10, also permits self-employed individuals to establish qualified plans for themselves and their employees. 47 The death benefit could be characterized as an incidental death benefit, the amount of which is limited in any pension or profit-sharing plan. Because the death benefit may exceed this limitation, employers using the contract in connection with such plans should consult their tax adviser. Adverse tax consequences to the plan, to the participant, or to both, may result if this contract is assigned or transferred to any individual as a means to provide benefits payments. If you are buying a contract for use with such plans you should seek competent advice regarding the suitability of the proposed plan documents and the contract to their specific needs. The contract is designed to invest retirement savings and not to distribute retirement benefits. Individual Retirement Annuities, Simplified Employee Plans and Roth IRAs The contract is designed for use with contributory and rollover IRAs and Roth IRAs. Code Section 408 permits eligible individuals to contribute to an individual retirement program known as an individual retirement annuity or individual retirement account, each hereinafter referred to as an IRA. A contributory IRA is a contract in which initial and subsequent purchase payments are subject to limitations imposed by the Code. Also, distributions from certain other qualified plans may be rolled over, or transferred on a tax-deferred basis into an IRA described in Code Section 408. A Section 408 IRA is an IRA described in Sections 408(a) or 408(b). Earnings in an IRA are not taxed until distributed. IRA contributions are limited each year to the lesser of $2,000 or 100% of the owner's compensation. This includes earned income as defined in Code Section 401(c)(2) and may be deductible in whole or in part depending on the individual's adjusted gross income and whether or not the individual is considered an active participant in a qualified plan. The limit on the amount contributed to an IRA does not apply to distributions from certain other types of qualified plans that are rolled over or transferred on a tax-deferred basis into an IRA. Other than nondeductible contributions, amounts in the IRA are taxed when distributed from the IRA. Distributions before age 59 1/2 are subject to a 10% penalty tax, unless certain exceptions apply. Purchasers should seek competent advice as to the suitability of the contract for use with IRAs. Eligible employers that meet specified criteria under Code Section 408(k) could establish simplified employee pension plans, also referred to as SEP-IRAs, for their employees using IRAs. Employer contributions that may be made to such plans are larger than the amounts that may be contributed to regular IRAs, and may be deductible to the employer. SEP-IRAs are subject to certain Code requirements regarding participation and amounts of contributions. The contract may also be used with rollover Roth IRAs and contributory Roth IRAs. Code Section 408A permits eligible individuals to contribute to an individual retirement program known as a Roth IRA on a non-deductible basis. A contributory Roth IRA is a contract to which initial and subsequent purchase payments are subject to limitations imposed by the Code. In addition, distributions from a Section 408 IRA may be converted to a Roth IRA. Distributions from a Roth IRA generally are not taxed, except that, once total distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made: 1. before age 59 1/2, subject to certain exceptions; or 2. during the five taxable years starting with the year in which the first contribution is made to any Roth IRA of the individual. Purchasers should seek competent advice as to the suitability of the contract for use with Roth IRAs. The sale of a contract for use with an IRA, SEP-IRA or Roth IRA may be subject to special disclosure requirements of the Internal Revenue Service. Purchasers of these contracts will be provided with supplemental information required by the Internal Revenue Service or other appropriate agency. Such purchasers will have the right to revoke their purchase within 7 days of the earlier of the establishment of the IRA, SEP-IRA or Roth IRA or their purchase. 48 The Internal Revenue Service has not reviewed all features of the contract (such as the Guaranteed Minimum Death Benefit and Tax Relief Rider) for qualification as an IRA, and has not addressed in a ruling of general applicability whether death benefit features such as those in the contract comport with IRA qualification requirements. Tax Sheltered Annuities Under Code Section 403(b), payments made by public school systems and certain tax exempt organizations to purchase annuity contracts for their employees are excludable from the gross income of the employee, subject to certain limitations. However, these payments may be subject to Social Security and Medicare (FICA) taxes. Code Section 403(b)(11) restricts the distribution under Code Section 403(b) annuity contracts of: . elective contributions made in years beginning after December 31, 1988; . earnings on those contributions; or . earnings in such years on amounts held as of the last year beginning before January 1, 1989. Distribution of those amounts may only occur upon death of the employee, attainment of age 59 1/2, separation from service, disability, or financial hardship. In addition, income attributable to elective contributions may not be distributed in the case of hardship. Pre-1989 contributions and earnings through December 31, 1989 are not subject to the restrictions described above. However, funds transferred to a qualified contract from a Section 403(b)(7) custodial account will be subject to the restrictions. The death benefit could be characterized as an incidental death benefit, the amount of which is limited in any Code Section 403(b) annuity contract. Because the death benefit may exceed this limitation, employers using the contract in connection with such plan should consult their tax adviser. Restrictions under Qualified Contracts Other restrictions may apply to the election, commencement, or distribution of benefits under qualified contracts or under the terms of the plans in respect of which qualified contracts are issued. A qualified contract will be amended as necessary to conform to the requirements of the Code. Possible Changes in Taxation Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the policy could change by legislation or otherwise. You should consult a tax adviser with respect to legal developments and their effect on the policy. Other Tax Consequences As noted above, the foregoing discussion of the federal income tax consequences is not exhaustive and special rules are provided with respect to other tax situations not discussed in this prospectus. Further, the federal income tax consequences discussed herein reflect our understanding of current law and the law may change. Federal gift and estate tax consequences and state and local estate, inheritance, and other tax consequences of ownership or receipt of distributions under the contract depend on the individual circumstances of each owner or recipient of the distribution. A competent tax adviser should be consulted for further information. LEGAL PROCEEDINGS There is no pending material legal proceeding affecting the variable account. Transamerica is involved in various kinds of routine litigation which, in management's judgment, are not of material importance to Transamerica's assets or to the variable account. ACCOUNTANTS AND FINANCIAL STATEMENTS The statutory-basis financial statements and schedules of Transamerica at December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and the financial statements of the subaccounts Separate Account VA-2L at December 31, 2000 and for each of the two years in the period then ended appearing in the Statement of Additional Information have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports appearing in the Statement of Additional Information. The financial statements audited by Ernst & Young LLP have been included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. 49 VOTING RIGHTS To the extent required by applicable law, all portfolio shares held in the variable account will be voted by Transamerica at regular and special shareholder meetings of the respective funds in accordance with instructions received from persons having voting interests in the corresponding sub-account. If, however, the 1940 Act or any regulation thereunder should be amended, or if the present interpretation thereof should change, or if Transamerica determines that it is allowed to vote all portfolio shares in its own right, Transamerica may elect to do so. The person with the voting interest is the owner. The number of votes which are available to an owner will be calculated separately for each sub-account of the variable account. Before the annuity date, that number will be determined by applying his or her percentage interest, if any, in a particular sub-account to the total number of votes attributable to that sub-account. The owner holds a voting interest in each sub-account to which the account value is allocated. After the annuity date, the number of votes decreases as annuity payments are made and as the reserves for the contract decrease. The number of votes of a portfolio will be determined as of the date coincident with the date established by that portfolio for determining shareholders eligible to vote at the meeting of the funds. Voting instructions will be solicited by written communication before such meeting in accordance with procedures established by the respective funds. Shares as to which no timely instructions are received and shares held by Transamerica as to which owners have no beneficial interest will be voted in proportion to the voting instructions which are received with respect to all contracts participating in the sub-account. Voting instructions to abstain on any item to be voted upon will be applied on a pro rata basis to reduce the votes eligible to be cast. Each person or entity having a voting interest in a sub-account will receive proxy material, reports and other material relating to the appropriate portfolio. It should be noted that the funds are not required to, and do not intend to, hold annual or other regular meetings of shareholders. REINSTATEMENTS You may surrender your contract and transfer your money directly to another life insurance company (sometimes referred to as a 1035 Exchange or a trustee- to-trustee transfer). You may also ask us to reinstate your contract after such a transfer by returning the same total dollar amount of funds to the applicable investment choices. The dollar amount will be used to purchase new accumulation units at the then current price. Because of changes in market value, your new accumulation units may be worth more or less than the units you previously owned. We recommend that you consult a tax professional to explain the possible tax consequences of exchanges and/or reinstatements. AVAILABLE INFORMATION Transamerica has filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933 relating to the contract offered by this prospectus. This prospectus has been filed as a part of the registration statement and does not contain all of the information set forth in the registration statement and exhibits thereto. Reference is hereby made to such Registration Statement and exhibits for further information relating to Transamerica and the contract. Statements contained in this prospectus, as to the content of the contract and other legal instruments, are summaries. For a complete statement of the terms thereof, reference is made to the instruments filed as exhibits to the registration statement. The registration statement and the exhibits thereto may be inspected and copied at the office of the SEC, located at 450 Fifth Street, N.W., Washington, D.C. 50 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION THE CONTRACT DOLLAR COST AVERAGING SPECIAL DOLLAR COST AVERAGING OPTION NET INVESTMENT FACTOR ANNUITY PERIOD GENERAL PROVISIONS CALCULATION OF YIELDS AND TOTAL RETURNS HISTORICAL PERFORMANCE DATA FEDERAL TAX MATTERS DISTRIBUTION OF THE CONTRACT SAFEKEEPING OF VARIABLE ACCOUNT ASSETS TRANSAMERICA STATE REGULATION RECORDS AND REPORTS FINANCIAL STATEMENTS APPENDIX
51 Appendix A Example of Variable Accumulation Unit Value Calculations Suppose the net asset value per share of a portfolio at the end of the current valuation period is $20.15; at the end of the immediately preceding valuation period it was $20.10; the valuation period is one day; and no dividends or distributions caused the portfolio to go ex-dividend during the current valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the one-day risk factor for mortality and expense risk charge and the administrative expense charge of .003814% (the daily equivalent of the current charge of 1.40% on an annual basis) gives a net investment factor of 1.002449. If the value of the variable accumulation unit for the immediately preceding valuation period had been 15.500000, the value for the current valuation period would be 15.537966 (15.5 x 1.002449). Example of Variable Annuity Unit Value Calculations Suppose the circumstances of the first example exist, and the value of a variable annuity unit for the immediately preceding valuation period had been 13.500000. If the first variable annuity payment is determined by using an annuity payment based on an assumed interest rate of 4% per year, the value of the variable annuity unit for the current valuation period would be 13.531613 (13.5 x 1.002449, which is the Net Investment Factor x 0.999893). 0.999893 is the factor, for a one-day valuation period, that neutralizes the assumed rate of four percent (4%) per year used to establish the variable annuity rates found in the contract. Example of Variable Annuity Payment Calculations Suppose that the account is currently credited with 3,200 variable accumulation units of a particular sub-account. Also suppose that the variable accumulation unit value and the variable annuity unit value for the particular sub-account for the valuation period which ends immediately preceding the first day of the month is 15.500000 and 13.500000 respectively, and that the variable annuity rate for the age and option elected is $5.73 per $1,000. Then the first variable annuity payment would be: 3.200 x 15.5 x 5.73 divided by 1,000 = $284.21, and the number of variable annuity units credited for future payments would be: 284.21 divided by 13.5 = 21.052444. For the second monthly payment, suppose that the variable annuity unit value on the 10th day of the second month is 13.565712. Then the second variable annuity payment would be $285.59 (21.052444 x 13.565712). 52 Appendix B CONDENSED FINANCIAL INFORMATION The following table sets forth certain information regarding the sub-accounts for the period from commencement of business operations of the sub-account through December 31, 2000. The variable accumulation unit values and the number of variable accumulation units outstanding for each sub-account for the periods shown are as follows: The following condensed financial information is derived from the financial statements of the variable account. The data should be read in conjunction with the financial statements, related notes, and other financial information included in the Statement of Additional Information.
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value Units Outstanding Sub-account Beginning of Period at End of Period at End of Period --------------------------------------------------------------------------------- Appreciation*(/2/) 2000................... $38.862 $38.077 8,193,471.439 1999................... $35.36 $38.862 8,513,807.354 1998................... $27.532 $35.36 8,121,246.029 1997................... $21.802 $27.532 6,447,159.634 1996................... $17.610 $21.802 3,665,146.389 1995................... $13.373 $17.610 2,077,029.504 1994................... $13.160 $13.373 919,622.615 1993................... $12.500 $13.160 237,733.021 --------------------------------------------------------------------------------- Balanced*(/6/) 2000................... $15.101 $14.450 5,776,345.909 1999................... $14.16 $15.101 4,426,908.448 1998................... $11.738 $14.16 2,280,501.753 1997................... $10.000 $11.738 647,855.304 --------------------------------------------------------------------------------- Disciplined Stock*(/5/) 2000................... $22.295 $19.977 6,539,032.706 1999................... $19.09 $22.295 5,856,978.740 1998................... $15.272 $19.09 4,753,022.290 1997................... $11.776 $15.272 2,278,146.352 1996................... $10.00 $11.776 618,809.191 --------------------------------------------------------------------------------- Growth and Income*(/4/) 2000................... $33.694 $31.974 6,432,258.706 1999................... $29.23 $33.694 6,548,394.692 1998................... $26.509 $29.23 7,270,897.396 1997................... $23.131 $26.509 7,480,387.355 1996................... $19.426 $23.131 6,332,649.215 1995................... $12.167 $19.426 2,565,038.589 1994................... $12.177 $12.167 4,300.380 --------------------------------------------------------------------------------- International Equity*(/4/) 2000................... $25.038 $20.643 2,269,168.557 1999................... $15.89 $25.038 2,296,712.753 1998................... $15.422 $15.89 2,456,885.911 1997................... $14.267 $15.422 2,176,230.247 1996................... $12.964 $14.267 1,480,395.223 1995................... $12.240 $12.964 530,374.642 1994................... $12.247 $12.240 8,552.073
53
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value Units Outstanding Sub-account Beginning of Period at End of Period at End of Period --------------------------------------------------------------------------------- International Value*(/5/) 2000................... $14.846 $14.101 1,377,476.194 1999................... $11.78 $14.846 1,432,408.023 1998................... $10.982 $11.78 1,380,692.935 1997................... $10.244 $10.982 1,047,389.002 1996................... $10.00 $10.244 230,868.491 --------------------------------------------------------------------------------- Limited Term High Income*(/6/) 2000................... $10.422 $9.428 3,514,966.504 1999................... $10.73 $10.422 5,300,351.762 1998................... $10.852 $10.73 6,458,312.119 1997................... $10.000 $10.852 2,424,231.798 --------------------------------------------------------------------------------- Money Market(/1/) 2000................... $1.258 $1.316 59,855,370.259 1999................... $1.22 $1.258 64,761,299.670 1998................... $1.175 $1.22 53,939,642.196 1997................... $1.132 $1.175 42,660,950.364 1996................... $1.093 $1.132 38,983,053.941 1995................... $1.048 $1.093 31,807,563.947 1994................... $1.018 $1.048 23,559,789.795 1993................... $1.021 $1.018 2,678,280.492 --------------------------------------------------------------------------------- Quality Bond*(/1/) 2000................... $15.683 $17.199 4,333,498.116 1999................... $15.88 $15.683 5,010,813.856 1998................... $15.260 $15.88 5,030,446.431 1997................... $14.142 $15.260 4,020,220.452 1996................... $13.908 $14.142 3,072,774.847 1995................... $11.710 $13.908 2,052,313.888 1994................... $12.445 $11.710 931,527.691 1993................... $12.310 $12.445 86,752.856 --------------------------------------------------------------------------------- Small Cap*(/1/) 2000................... $78.255 $87.446 2,018,390,168 1999................... $64.44 $78.255 2,096,729.991 1998................... $67.668 $64.44 2,615,765.058 1997................... $58.773 $67.668 2,954,842.907 1996................... $51.121 $58.773 2,736,720.675 1995................... $40.064 $51.121 2,155,879.198 1994................... $37.702 $40.064 1,250,237.625 1993................... $39.620 $37.702 138,557.449 --------------------------------------------------------------------------------- Small Company Stock*(/5/) 2000................... $13.083 $14.003 1,666,683.284 1999................... $11.99 $13.083 1,665,730.260 1998................... $12.935 $11.99 2,111,028.689 1997................... $10.772 $12.935 1,604,089.554 1996................... $10.00 $10.772 543,949.419
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Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Sub-account at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------ Special Value*(/1/) 2000................... $17.122 $17.848 1,959,903.631 1999................... $16.19 $17.122 2,347,756.875 1998................... $14.185 $16.19 2,764,173.241 1997................... $11.682 $14.185 2,649,561.005 1996................... $12.292 $11.682 1,232,530.711 1995................... $12.496 $12.292 1,288,429.555 1994................... $12.861 $12.496 1,486,438.137 1993................... $12.797 $12.861 167,686.797 ------------------------------------------------------------------------------------ Stock Index*(/1/) 2000................... $52.828 $47.264 5,610,267.635 1999................... $44.42 $52.828 5,113,716.960 1998................... $35.128 $44.42 4,443,711.383 1997................... $26.791 $35.128 3,357,236.245 1996................... $22.172 $26.791 2,030,280.057 1995................... $16.437 $22.172 977,271.816 1994................... $16.521 $16.437 348,937.285 1993................... $15.310 $16.521 93,536.733 ------------------------------------------------------------------------------------ Socially Responsible Growth*(/3/) 2000................... $43.996 $38.602 3,085,982.201 1999................... $34.30 $43.996 2,399,067.265 1998................... $26.879 $34.30 1,744,708.001 1997................... $21.221 $26.879 1,335,814.063 1996................... $17.752 $21.221 708,680.320 1995................... $13.377 $17.752 295,077.936 1994................... $13.364 $13.377 135,018.350 1993................... $12.490 $13.364 26,089.826 ------------------------------------------------------------------------------------ Core Bond*(/10/) 2000................... $10.00 $10.762 401,440.673 ------------------------------------------------------------------------------------ Core Value*(/7/) 2000................... $10.967 $12.120 1,671,632.569 1999................... $9.29 $10.967 618,554.557 1998................... $10.00 $9.29 95,759.521 ------------------------------------------------------------------------------------ Emerging Leaders*(/11/) 2000................... $10.00 $12.209 237,691.634 ------------------------------------------------------------------------------------ Emerging Markets*(/11/) 2000................... $10.00 $7.149 68,080.097 ------------------------------------------------------------------------------------ European Equity*(/9/) 2000................... $12.824 $12.395 408,844.616 1999................... $10.00 $12.824 71,170.963 ------------------------------------------------------------------------------------ Founders Discovery*(/11/) 2000................... $10.00 $7.474 1,566,915.606 ------------------------------------------------------------------------------------ Founders Growth*(/8/) 2000................... $12.632 $9.299 2,497,719.994 1999................... $10.00 $12.632 209,797.215 ------------------------------------------------------------------------------------ Founders International Equity*(/9/) 2000................... $13.894 $11.317 889,774.353 1999................... $10.00 $13.894 51,377.647
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Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Subaccount at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------ Founders Passport*(/8/) 2000................... $16.144 $11.820 1,743,018.957 1999................... $10.00 $16.144 230,853.270 ------------------------------------------------------------------------------------ Japan*(/11/) 2000................... $10.00 $7.692 42,342.493 ------------------------------------------------------------------------------------ MidCap Stock*(/7/) 2000................... $10.529 $11.244 2,352,335.934 1999................... $9.63 $10.529 677,575.571 1998................... $10.00 $9.63 467,292.833 ------------------------------------------------------------------------------------ Technology Growth*(/9/) 2000................... $15.383 $11.078 9,024,925.748 1999................... $10.00 $15.383 2,898,342.133 ------------------------------------------------------------------------------------ Transamerica VIF Growth(/7/) 2000................... $15.422 $13.736 3,644,221.142 1999................... $11.35 $15.422 2,963,758.863 1998................... $10.00 $11.35 1,634,054.907
(1) Sub-Account inception January 4, 1993. (7) Sub-Account inception May 1, 1998. (2) Sub-Account inception April 5, 1993. (8) Sub-Account inception May 3, 1999. (3) Sub-Account inception October 7, 1993. (9) Sub-Account inception October 1, 1999. (4) Sub-Account inception December 15, 1994. (10) Sub-Account inception May 1, 2000. (5) Sub-Account inception May 1, 1996. (11) Sub-Account inception December 15, 1999. (6) Sub-Account inception May 1, 1997.
*The figures shown reflect information for the Initial Class Shares. The Service Class Shares of the Appreciation Sub-account, Balanced Sub-account, Disciplined Stock Sub-account, Growth and Income Sub-account, International Equity Sub-account, International Value Sub-account, Limited Term High Income Sub-account, Quality Bond Sub-account, Small Cap Sub-account, Small Company Stock Sub-account, Special Value Sub-account, Dreyfus Stock Index Fund Sub- account, The Dreyfus Socially Responsible Growth Fund, Inc. Sub-account, Core Bond Sub-account, Core Value Sub-account, Emerging Leaders Sub-account, Emerging Markets Sub-account, European Equity Sub-account, Founders Discovery Sub-account, Founders Growth Sub-account, Founders International Equity Sub- account, Founders Passport Sub-account, Japan Sub-account, MidCap Stock Sub- account, and Technology Growth Sub-account were not available as of December 31, 2000, therefore comparable information for the Service Class Shares is not available. Financial Statements for the Variable Account and Transamerica The financial statements and reports of independent auditors for the variable account and Transamerica are contained in the Statement of Additional Information. 56 Appendix C DEFINITIONS Account: The account established and maintained under the contract to which your net purchase payments are credited. Account Value: The account value is equal to the sum of: a) the fixed accumulated value, plus b) the variable accumulated value. Active Sub-Account: A sub-account of the variable account in which the contract has current value. Annuitant: The person: (a) whose life is used to determine the amount of monthly annuity payments on the annuity date; and (b) who is the payee designated to receive monthly annuity payments, unless such payee is changed by the owner. The annuitant cannot be changed after the contract has been issued, except upon the annuitant's death before the annuity date if a contingent annuitant has previously been named. In the case of a qualified contract used to fund an IRA, Roth IRA, or a 403(b) annuity, the owner must be the annuitant. Annuitant's Beneficiary: The person or persons named by owner who may receive the death benefit under the contract , if: (a) the annuitant is not the owner, there is no named contingent annuitant and the annuitant dies before the annuity date and before the death of the owner or owners; or (b) the annuitant dies after the annuity date under an annuity form containing a period certain option. Annuity Date: The date on which the annuity purchase amount will be applied to provide an annuity under the annuity form and payment option selected by the owner. Monthly annuity payments will start the first day of the month immediately following the annuity date. Unless the annuity date is changed as allowed by the contract, the annuity date will be as shown in the contract. Annuity Payment: An amount paid by Transamerica at regular intervals to the annuitant and/or any other payee specified by the owner. It may be on a variable or fixed basis. Annuity Purchase Amount: The amount applied as a single purchase payment to provide an annuity under the annuity form and payment options available under the contract. The annuity purchase amount is equal to the account value, less any interest adjustment, less any applicable contingent deferred sales load, less any rider fees, and less any applicable premium taxes. In determining the annuity purchase amount, Transamerica will waive the contingent deferred sales load if the annuity form involves life contingencies and the annuity date occurs on or after the third contract anniversary. Annuity Year: A one-year period starting on the annuity date and, after that, each succeeding one-year period. Cash Surrender Value: The amount payable to the owner if the contract is surrendered on or before the annuity date. The cash surrender value is equal to the account value, less any interest adjustment, less the account fee, less any applicable contingent deferred sales load, less any rider fees, and less applicable premium taxes. Code: The U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder. Contingent Annuitant: The person who: (a) becomes the annuitant if the annuitant dies before the annuity date; or (b) may receive benefits under the contract if the annuitant dies after the annuity date under an annuity form containing a contingent annuity option. A contingent annuitant may be designated only if the owner is not also the annuitant. The contingent annuitant may be changed at any time by the owner while the annuitant is living and before the annuity date. Contingent Deferred Sales Load or Surrender Charge: A charge equal to a percentage of premiums withdrawn from the certificate that are less than seven years old. See Contingent Deferred Sales Load/Surrender Charge for the specific percentages. Contract Anniversary: The same month and day as the contract date in each calendar year after the calendar year in which the contract date occurs. Contract Date: The effective date of the contract as shown on the contract. 57 Contract Year: The 12-month period from the contract date and ending with the day before the first contract anniversary and each twelve-month period thereafter. The first contract year for any particular net purchase payment is the contract year in which the purchase payment is received by the service center. Expiration Date: The last day of a guarantee period. Fixed Account: The fixed account contains one or more guarantee periods to which all or portions of net purchase payments and transfers may be allocated. The fixed account assets are general assets of the company and are distinguishable from those allocated to a separate account of the company. Fixed Accumulated Value: The total dollar amount of all guarantee amounts held under the fixed account for the contract before the annuity date. The fixed accumulated value is determined without regard to any interest adjustment. Fixed Annuity: An annuity with predetermined payment amounts. Free Look Period: The period of time, beginning on the date the owner receives the contract, during which the owner has the right to cancel the contract. The length of this period depends upon the state of issuance. Funds: Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, The Dreyfus Socially Responsible Growth Fund, Inc., Dreyfus Investment Portfolios and Transamerica Variable Insurance Fund, Inc., in which the variable account currently invests. Guarantee Amount: An amount equal to: a) the amount of the net purchase payment or transfer allocated to a particular guarantee period with a particular expiration date; less b) any withdrawals or transfers made from that guarantee period; less c) any applicable transfer fee; less d) any reductions for the annual account fee and TRR Rider fee; and plus e) interest credited. Guarantee Period: The period for which a guaranteed interest rate is credited which shall not be less than one year. Inactive Sub-Account: A sub-account of the variable account in which the contract has a zero balance. Net Investment Factor: An index that measures the investment performance of a sub-account from one valuation period to the next. Net Purchase Payment: A purchase payment reduced by any applicable premium tax, including retaliatory premium taxes. Non-Qualified Contract: A contract that does not receive special tax treatment under the Code. Owner or Joint Owners: The person or persons who, while living, control all rights and benefits under the contract. Joint owners own the contract equally with the right of survivorship. The right of survivorship means that if a joint owner dies, his or her interest in the contract will pass to the surviving joint owner in accordance with the death benefit provision. Joint owners must be husband and wife as of the contract date (except in Pennsylvania). Qualified contracts may not have joint owners. Owner's Beneficiary: If the owner is an individual, the owner's beneficiary is the person(s) who may receive the death benefit if the owner dies before the annuity date and before the death of the annuitant. If the contract has joint owners, the surviving joint owner will be the owner's beneficiary. Payee: The person who receives the annuity payments after the annuity date. The payee will be the annuitant, unless otherwise changed by the owner. Portfolio: Dreyfus Stock Index Fund, The Dreyfus Socially Responsible Growth Fund, Inc., or any one of the series of Dreyfus Variable Investment Fund or any one of the portfolios of Dreyfus Investment Portfolios or the Growth Portfolio of Transamerica Variable Insurance Fund, Inc., underlying a sub-account of the variable account. Proof of Death: May be: (a) a copy of a certified death certificate; (b) a copy of a certified decree of a court of competent jurisdiction as to the finding of death; (c) a written statement by a medical doctor who attended the deceased; or (d) any other proof satisfactory to us. Qualified Contract: A contract issued in connection with a retirement plan or program that qualified for special tax treatment under Section 401(a), 403(b), 408 or 408A of the Code. 58 Receipt: Receipt and acceptance by us at our service center. Service Center: Transamerica's Annuity Service Center, at 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001 and at telephone (877) 717-8861. Source Account: A sub-account of the variable account or the fixed account, as permitted, from which dollar cost averaging transfers are being made. Sub-Account: A subdivision of the variable account investing solely in shares of one of the portfolios. Valuation Day: Any day the New York Stock Exchange is open for trading. Valuation Period: The time interval between the closing of the New York Stock Exchange on consecutive valuation days. Variable Account: Separate Account VA-2L, a separate account established and maintained by Transamerica for the investment of a portion of its assets. The variable account contains several sub-accounts to which all or portions of net purchase payments and transfers may be allocated. Variable Accumulated Value: The total dollar amount of all variable accumulation units under each sub-account of the variable account held for the contract before the annuity date. The variable accumulated value before the annuity date is equal to: (a) net purchase payments allocated to the sub- accounts; plus or minus (b) any increase or decrease in the value of assets of the sub-accounts due to investment results; less (c) the daily mortality and expense risk charge; less (d) the daily administrative expense charge; less (e) reductions for the annual account fee deducted on the last business day of each contract year; plus or minus (f) amounts transferred to or from the fixed account; less (g) any applicable transfer fees; less (h) any applicable rider fees; and less (i) withdrawals from the sub-accounts. Variable Accumulation Unit: A unit of measure used to determine the account value before the annuity date. The value of a variable accumulation unit varies with each sub-account. Variable Annuity: An annuity with payments which vary as to dollar amount in relation to the investment performance of specified sub-accounts of the variable account. Variable Annuity Unit: A unit of measure used to determine the amount of the second and each subsequent payment under a variable annuity payment option. The value of a variable annuity unit varies with each sub-account. Withdrawals: Refers to partial withdrawals, full surrenders, and systematic withdrawals that are paid in cash to the owner, or to any person or persons specified by the owner. Written Notice or Written Request: A notice or request in writing by the owner to our service center. Such a request must contain original signatures; no carbons or photocopies will be accepted. We reserve the right to accept a facsimile copy. 59 THE DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R) VARIABLE ANNUITY Issued by TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY Supplement Dated May 1, 2001 to the Prospectus dated May 1, 2001 For New Jersey residents, the optional guaranteed minimum income benefit is as described in this supplement and not as described in the prospectus. Guaranteed Minimum Income Benefit The optional guaranteed minimum income benefit ("GMIB") rider assures you of a minimum level of income in the future by guaranteeing you a minimum annuitization value (discussed below). You may elect to purchase this benefit, which provides a minimum amount you will have to apply to a GMIB payment option. Furthermore, if you elect the guaranteed minimum payment option, you will be guaranteed a minimum level of payments once you begin to receive them. By electing this benefit, you can participate in the gains of the underlying variable investment options you select while knowing that you are guaranteed a minimum level of income in the future, regardless of the performance of the underlying variable investment options. The GMIB will not be issued if you are 81 years old or older. You can annuitize under the GMIB (subject to the conditions described below) at the greater of the account value or the minimum annuitization value (subject to any applicable adjustment). Minimum Annuitization Value. If you add the GMIB in the first contract year, the minimum annuitization value on the rider date (i.e., the date the rider is added to the contract) is the total purchase payments paid less any prior withdrawals. If you add the GMIB after the first contract year, the minimum annuitization value on the rider date is the account value. After the rider date, the minimum annuitization value is equal to the greater of: . the greater of the minimum annuitization value on the Rider Date or the largest account value on any rider anniversary, prior to the earlier of any owner's or annuitant's 86th birthday, adjusted for any subsequent purchase payments (less the sum of all subsequent withdrawals adjusted as described below and any premium taxes); or . the minimum annuitization value on the rider date, plus the sum of all purchase payments received after the rider date, less withdrawals (adjusted as described below) and premium taxes, plus interest thereon, equal to the annual effective interest rate specified on page one of the rider, up to: a) the rider anniversary prior to the earlier of any owner's or annuitant's 86th birthday; or b) the date the sum of all purchase payments, (less the sum of all adjusted withdrawals and premium taxes), together with credited interest, has grown to two times the amount of all purchase payments, (less all adjusted withdrawals and premium taxes) as a result of such interest accumulation, if earlier. Please note that if you annuitize using the GMIB on any date other than the 30-day period following a rider anniversary, there may be a downward adjustment to your minimum annuitization value. However, if you annuitize within the 30-day period following any rider anniversary, no adjustment will be made. (See "Minimum Annuitization Value Adjustment" below.) Withdrawals may reduce the minimum annuitization value on a basis greater than dollar-for-dollar. (See the SAI for more information.) This Prospectus Supplement must be accompanied by the Prospectus for The Dreyfus/Transamerica Triple Advantage(R) Variable Annuity dated May 1, 2001. The minimum annuitization value may only be used to annuitize using the GMIB payment options and may not be used with any of the other annuity payment options listed in the prospectus. The GMIB payment options are: . Life Income--An election may be made for "No Period Certain" or "10 Years Certain". In the event of the death of the annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. . Joint and Full Survivor--An election may be made for "No Period Certain" or "10 Years Certain". Payments will be made as long as either the annuitant or joint annuitant is living. In the event of the death of both the annuitant and joint annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. Note Carefully: IF: . You chose Life Income with No Period Certain or Joint and Full Survivor with No Period Certain; and . The annuitant(s) dies before the due date of the second (third, fourth, etc.) annuity payment; THEN: . We will make only one (two, three, etc.) annuity payments. Please note that if you annuitize using the GMIB before the 7th rider anniversary, the first payment will be calculated with an annuity factor age adjustment. (See "Annuity Factor Age Adjustment" below.) Minimum Annuitization Value Adjustment. If you annuitize under the GMIB on any date after a 30-day period following a rider anniversary, the minimum annuitization value will be adjusted downward if your account value (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary) is less than the account value on the last rider anniversary or Rider Date (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary or Rider Date). The adjusted minimum annuitization value will equal: . the account value on the date you annuitize; plus . the minimum annuitization value on the most recent rider anniversary (or the rider date for annuitizations within the first rider year); minus . the account value on the most recent rider anniversary (or the rider date for annuitizations within the first rider year). The minimum annuitization value will not be adjusted if: . you annuitize within 30 days following a rider anniversary; or . your account value (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary) is more than the account value on last rider anniversary (or the rider date for annuitizations within the first rider year). Annuity Factor Age Adjustment. If you annuitize using the GMIB before the 7th rider anniversary, the first payment will be calculated with an annuity factor age adjustment resulting in lower payments than if an annuity factor age adjustment was not used. (See the SAI for information concerning the calculation of the initial payment.) The age adjustment shown in the table below should be subtracted from your current age. The age adjustment is as follows:
Number of Years Since the Rider Date Age Adjustment ------------------------------------------------------------------------------ 0-1 7 ------------------------------------------------------------------------------ 1-2 6 ------------------------------------------------------------------------------ 2-3 5 ------------------------------------------------------------------------------ 3-4 4 ------------------------------------------------------------------------------ 4-5 3 ------------------------------------------------------------------------------ 5-6 2 ------------------------------------------------------------------------------ 6-7 1 ------------------------------------------------------------------------------ 7 0
Please note that the minimum annuitization value is used solely to calculate the GMIB annuity payments. The GMIB does not establish or guarantee account value or guarantee performance of any S-2 investment option. Because this benefit is based on conservative actuarial factors, the level of lifetime income that it guarantees may be less than the level that would be provided by application of the account value at otherwise applicable adjusted annuity factors. Therefore, the GMIB should be regarded as a safety net. The costs of annuitizing under the GMIB include the guaranteed minimum payment fee (if the guaranteed minimum payment option is elected), and also the lower payout levels inherent in the annuity tables used for those minimum payouts (which may also include an annuity factor age adjustment). These costs should be balanced against the benefits of a minimum payout level. Benefits and fees under the GMIB rider (the rider fee and the guaranteed minimum payment fee) are guaranteed not to change after the rider is added. However, all of these benefits and fees may change if you elect to upgrade the minimum annuitization value. Minimum Annuitization Value Upgrade. You can upgrade your minimum annuitization value to the account value at any time before your 88th birthday. For your convenience, we will put the last date to upgrade on page one of the rider. If you upgrade: . the current rider will terminate and a new one will be issued with its own specified guaranteed benefits and fees; and . the new rider's specified benefits and fees may not be as advantageous as before. It generally will not be to your advantage to upgrade unless your account value exceeds your minimum annuitization value at that time. Conditions of Exercise of the Guaranteed Minimum Income Benefit. You can annuitize using the GMIB at any time. You cannot, however, annuitize using the GMIB after your 95th birthday. For your convenience, we will put the last date to annuitize using the GMIB on page one of the rider. Note Carefully: . If you annuitize at any time other than within a 30-day period following a rider anniversary, there may be a negative adjustment to your minimum annuitization value. (See "Minimum Annuitization Value Adjustment.") . If you annuitize before the 7th rider anniversary there will be an annuity factor age adjustment. (See "Annuity Factor Age Adjustment.") Guaranteed Minimum Payment Option. If you choose the guaranteed minimum payment option on the election date, annuity payments are guaranteed to never be less than the initial payment. (See the SAI for information concerning the calculation of the initial payment.) The payments will also be "stabilized" or held constant during each year. During the first year after annuitizing using the guaranteed minimum payment option, each stabilized payment will equal the initial payment. On each anniversary thereafter, the stabilized payment will increase or decrease depending on the performance of the investment options you selected (but will never be less than the initial payment), and then be held constant at that amount for that year. The stabilized payment on each anniversary will equal the greater of the initial payment or the payment supportable by the annuity units in the selected investment options. (See the SAI for additional information concerning stabilized payments.) Guaranteed Minimum Income Benefit Rider Fee. A rider fee, currently 0.35% of the minimum annuitization value on the contract anniversary, is charged annually prior to annuitization. We will also charge this fee if you take a complete withdrawal. The rider fee is deducted from each variable investment option in proportion to the amount of account value in each subaccount. Guaranteed Minimum Payment Option Fee. A guaranteed minimum payment option fee, currently equal to an effective annual rate of 1.25% of the daily net asset value in the separate account, is reflected in the amount of the variable payments you receive if you annuitize under the GMIB rider and choose the guaranteed minimum payment option. The guaranteed payment fee is included on page one of the rider. Termination. The GMIB will terminate upon the earliest of the following: . the date we receive written notice from you requesting termination of the GMIB; . annuitization (you will still get guaranteed minimum stabilized payments if you annuitize S-3 using the minimum annuitization value under the GMIB and you select the guaranteed minimum payment option); . upgrade of the minimum annuitization value (although we will issue a new rider to you); . termination of your contract; or . 30 days after the last date to elect the benefit as shown on page 1 of the rider. S-4 STATEMENT OF ADDITIONAL INFORMATION FOR DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R) VARIABLE ANNUITY SEPARATE ACCOUNT VA-2L Issued By TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY The Statement of Additional Information expands upon subjects discussed in the May 1, 2001 prospectus for the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity ("contract") issued by Transamerica Occidental Life Insurance Company. The owner may obtain a copy of the prospectus by writing to: Transamerica Occidental Life Insurance Company, Annuity Service Center, 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001 or calling 877-717-8861. Terms used in the current prospectus for the contract are incorporated in this statement. The contract will be issued as a certificate under a group annuity contract in some states and as an individual annuity contract in other states. The term "contract" as used herein refers to both the individual contract and the certificates issued under the group contract. This Statement of Additional Information is not a prospectus and should be read only in conjunction with the prospectus for the contract. Dated May 1, 2001 1 TABLE OF CONTENTS
Page ---- THE CONTRACT.................................................................................. 3 DOLLAR COST AVERAGING......................................................................... 3 SPECIAL DOLLAR COST AVERAGING OPTION.......................................................... 3 NET INVESTMENT FACTOR......................................................................... 3 ANNUITY PERIOD................................................................................ 4 Variable Annuity Units and Payments...................................................... 4 Variable Annuity Unit Value.............................................................. 4 Transfers After the Annuity Date......................................................... 4 GENERAL PROVISIONS............................................................................ 4 Adjusted Partial Withdrawals............................................................. 4 IRS Required Distributions............................................................... 6 Non-Participating........................................................................ 6 Misstatement of Age or Sex............................................................... 6 Proof of Existence and Age............................................................... 6 Assignment............................................................................... 6 Annuity Data............................................................................. 6 Annual Report............................................................................ 6 Incontestability......................................................................... 6 Ownership................................................................................ 7 Entire Contract.......................................................................... 7 Changes in the Contract.................................................................. 7 Protection of Benefits................................................................... 7 Delay of Payments and Transfers.......................................................... 7 Notices and Directions................................................................... 8 Sales in Special Situations............................................................. 8 Guaranteed Minimum Income Benefit (GMIB)--Hypothetical Illustration...................... 8 Tax Relief Rider (TRR) - Example......................................................... 9 CALCULATION OF YIELDS AND TOTAL RETURNS....................................................... 10 Money Market Sub-Account Yield Calculation............................................... 10 Other Sub-Account Yield Calculations..................................................... 11 Average Total Return Calculations........................................................ 11 Hypothetical (Adjusted Historical) Performance Data...................................... 11 Other Performance Data................................................................... 12 HISTORICAL PERFORMANCE DATA................................................................... 12 General Limitations...................................................................... 12 Money Market Sub-Account Yields.......................................................... 12 Sub-Account Performance Figures Including Adjusted Historical Performance................ 12 Since Commencement of the Sub-Accounts................................................... 12 Since Commencement of the Portfolios..................................................... 16 FEDERAL TAX MATTERS........................................................................... 19 Taxation of Transamerica................................................................. 19 Tax Status of the Contract............................................................... 19 DISTRIBUTION OF THE CONTRACT.................................................................. 20 SAFEKEEPING OF VARIABLE ACCOUNT ASSETS........................................................ 20 TRANSAMERICA.................................................................................. 21 General Information and History.......................................................... 21 STATE REGULATION.............................................................................. 21 RECORDS AND REPORTS........................................................................... 21 FINANCIAL STATEMENTS.......................................................................... 21 APPENDIX...................................................................................... 22 Annuity Transfer Formula................................................................. 22
2 THE CONTRACT As a supplement to the description in prospectus, the following provides additional information about the contract which may be of interest to some owners. DOLLAR COST AVERAGING We reserve the right to send written notification to you, as the owner, as to the options available if termination of dollar cost averaging, either by you or by us, results in the value of the receiving sub-account(s) to which monthly transfers were made to be less than $500. You will have 10 days from the date our notice is mailed to: (a) transfer the value of the sub-account(s) to another sub-account with a value equal to or greater than $500; or (b) transfer funds from another sub-account into the receiving sub-account(s) to bring the value of that sub-account to at least $500; or (c) submit an additional purchase payment to make the value of the sub-account equal to or greater than $500; or (d) transfer the entire value of the receiving sub-account(s) back into the source account from which the automatic transfers were made. If no election, in a form and manner acceptable to us, is made by you before the end of the 10 day period, we reserve the right to transfer the value of the receiving sub-account(s) back into the source account from which the automatic transfers were made. Transfers made as a result of (a), (b), or (d) above will not be counted for purposes of the eighteen free transfers per contract year limitation. SPECIAL DOLLAR COST AVERAGING OPTION (May not be available in all states. See contract for availability of the fixed account options.) When you apply for the contract, you may elect to allocate the entire initial purchase payment to either the six or twelve month special Dollar Cost Averaging account of the Fixed Account. The initial purchase payment will be credited with interest at a guaranteed fixed rate. Amounts will then be transferred from the special Dollar Cost Averaging account to the sub-accounts and/or general account options pro rata on a monthly basis for six or twelve months (depending on the option you select) in the allocations you specified when you applied for the contract. Amounts from the sub-accounts and/or general account options may not be transferred into the special Dollar Cost Averaging accounts. In addition, if you request a transfer (other than a Dollar Cost Averaging transfer) or a withdrawal from a special Dollar Cost Averaging account, any amounts remaining in the special account will be transferred to the sub-account and/or general account option according to your original allocation instructions. The special Dollar Cost Averaging option will end and cannot be reelected. NET INVESTMENT FACTOR For any sub-account of the variable account, the net investment factor for a valuation period, before the annuity date, is (a) divided by (b), minus (c) minus (d). Where (a) is The net asset value per share held in the sub-account, as of the end of the valuation period, plus or minus the per-share amount of any dividend or capital gain distributions if the "ex-dividend" date occurs in the valuation period, plus or minus a per-share charge or credit as we may determine, as of the end of the valuation period, for taxes. Where (b) is The net asset value per share held in the sub-account as of the end of the last prior valuation period. 3 Where (c) is The daily charge of 0.003403% (1.25% annually) for the mortality and expense risk charge under the contract times the number of calendar days in the current valuation period. Where (d) is The daily administrative expense charge, currently 0.000411% (0.15% annually) times the number of calendar days in the current valuation period. This charge may be increased, but will not exceed 0.000684% (0.25% annually). A valuation day is defined as any day that the New York Stock Exchange is open. ANNUITY PERIOD The variable annuity options provide for payments that fluctuate or vary in dollar amount, based on the investment performance of the elected variable account sub-account(s). Variable Annuity Units and Payments For the first monthly payment, the number of variable annuity units credited in each sub-account will be determined by dividing: (a) the portion of the value to be applied to the sub-account multiplied by the variable annuity purchase rate specified in the contract; by (b) the value of one variable annuity unit in that sub-account on the annuity date. The amount of each subsequent variable annuity payment equals the product of the number of variable annuity units in each sub-account and the sub-account's variable annuity unit value as of the tenth day of the month before the payment due date. The amount of each payment may vary as may the date of determination. Variable Annuity Unit Value The value of a variable annuity unit in a sub-account on any valuation day is determined as described below. The net investment factor for the valuation period (for the appropriate annuity payment frequency) just ended is multiplied by the value of the variable annuity unit for the sub-account on the preceding valuation day. The net investment factor after the annuity date is calculated in the same manner as before the annuity date and then multiplied by an interest factor. For regular annuity payments, the interest factor equals (.999893)n where n is the number of days since the preceding valuation day. This compensates for the 4% interest assumption built into the variable annuity purchase rates. For annuity payments under the GMIB, the rate is 5%; see the discussion below. Transfers After the Annuity Date After the annuity date, you may transfer variable annuity units from one sub-account to another, subject to certain limitations. (See "Transfers" in the prospectus.) The dollar amount of each subsequent monthly variable annuity payment after the transfer must be determined using the new number of variable annuity units multiplied by the sub-account's variable annuity unit value. The formula used to determine a transfer after the annuity date can be found in the Appendix to this Statement of Additional Information. GENERAL PROVISIONS Adjusted Partial Withdrawals The amount of your Guaranteed Minimum Death Benefit is reduced due to a partial withdrawal by an amount called the adjusted partial withdrawal. The reduction amount depends on the relationship between your Guaranteed Minimum Death Benefit and policy value. The adjusted partial withdrawal is equal to (1) multiplied by (2), where 4 (1) is the Gross Partial Withdrawals, where gross partial withdrawal = requested withdrawal plus interest plus any premium taxes plus contingent deferred sales loads on (excess partial withdrawal plus interest adjustment plus any premium taxes); and (2) is the adjustment factor = current death benefit prior to the withdrawal divided by the current account value prior to the withdrawal. The following examples describe the effect of a withdrawal on the Guaranteed Minimum Death Benefit and account value.
---------------------------------------------------------------------------------------------------------------------------------- Example 1 (Assumed Facts for Example) ---------------------------------------------------------------------------------------------------------------------------------- $75,000 Current Guaranteed Minimum Death Benefit (GMDB) before withdrawal ---------------------------------------------------------------------------------------------------------------------------------- $50,000 Current account value before withdrawal ---------------------------------------------------------------------------------------------------------------------------------- $75,000 Current death benefit (larger of policy value and GMDB) ---------------------------------------------------------------------------------------------------------------------------------- 6% Current contingent deferred sales load percentage ---------------------------------------------------------------------------------------------------------------------------------- $15,000 Requested withdrawal ---------------------------------------------------------------------------------------------------------------------------------- $11,250 Assumed withdrawal amount free of contingent deferred sales loads ---------------------------------------------------------------------------------------------------------------------------------- $ 3,750 Excess partial withdrawal (EPW): amount subject to contingent deferred sales loads ---------------------------------------------------------------------------------------------------------------------------------- $ 100 Interest adjustment ---------------------------------------------------------------------------------------------------------------------------------- $ 0 Premium taxes ---------------------------------------------------------------------------------------------------------------------------------- $ 231 Contingent deferred sales load on (EPW plus EIA plus premium taxes) = 0.06*(3,750 + 100 + 0) ---------------------------------------------------------------------------------------------------------------------------------- $ 4,081 Reduction in account value due to excess partial withdrawal = 3,750 + 100 + 0 + 231 ---------------------------------------------------------------------------------------------------------------------------------- $22,996.50 Adjusted partial withdrawal = (11,250 + 4,081)*75,000/50,000 ---------------------------------------------------------------------------------------------------------------------------------- $52,003.50 New GMDB (after withdrawal) = 75,000 - 22,996.50 ---------------------------------------------------------------------------------------------------------------------------------- $34,669 New account value (after withdrawal) = 50,000 - 11,250-4,081 ----------------------------------------------------------------------------------------------------------------------------------
Summary: Reduction in guaranteed minimum death benefit = $22,996.50 Reduction in account value = $15,331 Note, guaranteed minimum death benefit is reduced more than the account value since the guaranteed minimum death benefit was greater than the account value just prior to withdrawal.
------------------------------------------------------------------------------------------------------------------------------- Example 2 (Assumed Facts for Example) ------------------------------------------------------------------------------------------------------------------------------- $50,000 Current Guaranteed Minimum Death Benefit (GMDB) before withdrawal ------------------------------------------------------------------------------------------------------------------------------- $75,000 Current account value before withdrawal ------------------------------------------------------------------------------------------------------------------------------- $75,000 Current death benefit (larger of policy value and GMDB) ------------------------------------------------------------------------------------------------------------------------------- 6% Current contingent deferred sales load percentage ------------------------------------------------------------------------------------------------------------------------------- $15,000 Requested withdrawal ------------------------------------------------------------------------------------------------------------------------------- $ 7,500 Assumed withdrawal amount free of contingent deferred sales loads ------------------------------------------------------------------------------------------------------------------------------- $ 7,500 Excess partial withdrawal (EPW): amount subject to contingent deferred sales loads ------------------------------------------------------------------------------------------------------------------------------- $ 100 Interest adjustment ------------------------------------------------------------------------------------------------------------------------------- $ 0 Premium taxes ------------------------------------------------------------------------------------------------------------------------------- $ 456 Contingent deferred sales load on (EPW plus EIA plus premium taxes) = 0.06*(7,500 + 100 + 0) ------------------------------------------------------------------------------------------------------------------------------- $ 8,056 Reduction in account value due to excess partial withdrawal = 7,500 + 100 + 0 + 456 ------------------------------------------------------------------------------------------------------------------------------- $15,556 Adjusted partial withdrawal = (7,500 + 8,056)*75,000/75,000 ------------------------------------------------------------------------------------------------------------------------------- $34,444 New GMDB (after withdrawal) = 50,000 - 15,556 ------------------------------------------------------------------------------------------------------------------------------- $59,444 New account value (after withdrawal) = 75,000 - 7,500 - 8,056 -------------------------------------------------------------------------------------------------------------------------------
5 Summary: -------- Reduction in guaranteed minimum death benefit = $15,556 Reduction in account value = $15,556 Note, guaranteed minimum death benefit and account value are reduced by the same amount since the policy value was higher than the guaranteed minimum death benefit just prior to withdrawal. IRS Required Distributions The contract is intended to qualify as an annuity contract for federal income tax purposes. All provisions in the contract will be interpreted to maintain such tax qualification. We may make changes in order to maintain this qualification or to conform the contract to any applicable changes in the tax qualification requirements. We will provide you with a copy of any changes made to the contract. If any owner under a non-qualified contract dies before the entire interest in the contract is distributed, the value generally must be distributed to the designated beneficiary so that the contract qualifies as an annuity under the Code. (See "Federal Tax Matters" in the prospectus.) Non-Participating The contract is non-participating. No dividends are payable and the contract will not share in the profits or surplus earnings of Transamerica. Misstatement of Age or Sex If the age or sex of the annuitant or any other measuring life has been misstated in the application, or other form relied upon to determine annuity payment, the annuity payments under the contract will be whatever the annuity purchase amount applied on the annuity date would purchase on the basis of the correct age or sex of the annuitant and/or other measuring life. Any overpayments or underpayments by us as a result of any such misstatement may be respectively charged against or credited to the annuity payment or payments to be made after the correction so as to adjust for such overpayment or underpayment. Proof of Existence and Age Before making any payment under the contract, we may require proof of the existence and/or proof of the age of the annuitant or any other measuring life, or any other information deemed necessary in order to provide benefits under the contract. Assignment No assignment of a contract will be binding on us unless made in writing and given to us at our service center. We are not responsible for the adequacy of any assignment. Your rights and the interest of any annuitant or non-irrevocable beneficiary will be subject to the rights of any assignee of record. Annuity Data We will not be liable for obligations which depend on receiving information from a payee or measuring life until such information is received in a satisfactory form. Annual Report At least once each contract year prior to the annuity date, you will be given a report of the current account value. This report will also include any other information required by law or regulation. After the annuity date, a confirmation will be provided with every variable annuity payment. Incontestability Each contract is incontestable from the contract date. 6 Ownership Only you, as the owner(s) will be entitled to the rights granted by the contract, or allowed by us under the contract. If an owner dies, the rights of the owner belong to the estate of the owner unless the owner has previously named an owner's beneficiary. A surviving joint owner automatically becomes the owner's beneficiary. Entire Contract We have issued the contract in consideration and acceptance of the payment of the initial purchase payment and, where state law requires, the application. In those states that require a written application, a copy of the application is attached to and is part of the contract and, along with the contract and any riders, constitutes the entire contract. All statements made by you are considered representations and not warranties. We will not use any statement in defense of a claim unless it is made in the application and a copy of the application is attached to the contract when issued. The group annuity contract has been issued to a trust organized under Missouri law. However, the sole purpose of the trust is to hold the group annuity contract. You have all rights and benefits under the individual certificate issued under the group contract. Changes in the Contract Only two of our authorized officers, acting together, have the authority to bind Transamerica or to make any change in the individual contract or the group contract or individual certificates thereunder and then only in writing. We will not be bound by any promise or representation made by any other persons. We may not change or amend the individual contract or the group contract or individual certificates thereunder, except as expressly provided therein, without your consent. However, we may change or amend the individual contract or the group contract or individual certificates thereunder if such change or amendment is necessary for the individual contract or the group contract or individual certificates thereunder to comply with any state or federal law, rule or regulation. Protection of Benefits To the extent permitted by law, no benefit (including death benefits) under the contract will be subject to any claim or process of law by any creditor. Delay of Payments and Transfers Payment of any cash withdrawal or lump sum death benefit due from the variable account will occur within seven days from the date the election becomes effective, except that we may postpone such payment or transfers if: (1) the New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; or (2) an emergency exists as defined by the Securities and Exchange Commission (Commission), or the Commission requires that trading be restricted; or (3) the Commission permits a delay for the protection of owners. In addition, while it is our intention to process all transfers from the sub-accounts immediately upon receipt of a transfer request, the contract gives us the right to delay effecting a transfer from a sub-account for up to seven days, but only in certain limited circumstances. However, the staff of the Commission currently interprets the Investment Company Act of 1940 to require the immediate processing of all transfers, and in compliance with that interpretation we will process all transfers immediately unless and until the Commission or its staff changes its interpretation or otherwise permits us to exercise this right. Subject to such approval, we may delay effecting such a transfer only if there is a delay of payment from an affected portfolio. If this happens, and if the prior approval of the Commission or its staff is obtained, then we will calculate the dollar value or number of units involved in the transfer from a sub-account on or as of the date we receive a written transfer request, but will not process the transfer to the transferee sub-account until a later date during the seven-day delay period when the portfolio underlying the transferring sub-account obtains liquidity to fund the transfer request through sales of portfolio securities, new purchase payments, transfers by investors or otherwise. During this period, the amount transferred would not be invested in a sub-account. We may delay payment of any withdrawal from the fixed account for a period of not more than six months after we receive the request for such withdrawal. If we delay payment for more than 30 days, we will pay interest on the withdrawal amount up to the date of payment. (See "Cash Withdrawals" in the prospectus.) 7 Notices and Directions We will not be bound by any authorization, direction, election or notice which is not in writing, in a form and manner acceptable to us, and received at our service center. Any written notice we are required to send to you will be satisfied by our mailing of any such required written notice, by first-class mail, to your last known address as shown on our records. Sales in Special Situations We may sell the contracts in special situations that are expected to involve reduced expenses for us. These instances may include: 1. sales in certain group arrangements, such as employee savings plans; 2. sales to current or former officers, directors, employees and their families, of Transamerica and its affiliates; 3. sales to officers, directors, employees and their families, of the portfolios' investment advisers and their affiliates; or 4. sales to officers, directors, employees and sales agents, including registered representatives and their families, or broker-dealers and other financial institutions that have sales agreements with us to sell the contracts. In such situations: 1. the contingent deferred sales load may be reduced or waived; 2. the mortality and expense risk charge or administration charges may be reduced or waived; or 3. certain amounts may be credited to the contract account value, for example, amounts related to commissions or sales compensation otherwise payable to a broker-dealer may be credited to the contract account value. These reductions in fees or charges or credits to the account value will not unfairly discriminate against any contract owner. These reductions in fees or charges or credits to the account value are generally taxable and treated as purchase payments for purposes of income tax and any possible premium tax. Guaranteed Minimum Income Benefit (GMIB)--Hypothetical Illustration The amounts shown below are hypothetical guaranteed minimum monthly payment amounts under the guaranteed minimum income benefit rider for a $100,000 premium when annuity payments do not begin until the rider anniversary indicated in the left-hand column. These figures assume the following: . there were no subsequent purchase payments or withdrawals; . there were no premium taxes; . the $100,000 purchase payment is subject to the GMIB; . the annuitant is (or both annuitants are) 60 years old when the rider is issued; . the annual growth rate is 5.0% (once established, an annual growth rate will not change during the life of the GMIB rider); and . there was no upgrade of the minimum annuitization value. Six different annuity payment options are illustrated; a male annuitant, a female annuitant and a joint and survivor annuity, each on a Life Only and a Life with 10-Year Certain basis. The figures below, which are the amount of the guaranteed fixed monthly payment, are based on an assumed investment return of 3%. Subsequent payments are calculated using a 5% assumed investment return. If you choose the guaranteed minimum payment option, subsequent payments will never be less than the amount of the first payment. If you do not choose the guaranteed minimum payment option, subsequent payments may be less than the amount of the first payment. 8 Life Only = Life Annuity with No Period Certain Life 10 = Life Annuity with 10 Years Certain
-------------------------------------------------------------------------------------------------------------------------------- Rider Anniversary at Exercise Date Male Female Joint & Survivor -------------------------------------------------------------------------------------------------------------------------------- Life Only Life 10 Life Only Life 10 Life Only Life 10 -------------------------------------------------------------------------------------------------------------------------------- 7 (age 67) $ 808 $ 774 $ 702 $ 688 $ 622 $ 621 -------------------------------------------------------------------------------------------------------------------------------- 15 $1,530 $1,364 $1,304 $1,226 $1,112 $1,100 -------------------------------------------------------------------------------------------------------------------------------- 20 (age 80) $1,902 $1,546 $1,620 $1,426 $1,338 $1,296 --------------------------------------------------------------------------------------------------------------------------------
This hypothetical illustration should not be deemed representative of past or future performance of any underlying variable investment option. Withdrawals will affect the minimum annuitization value as follows: Withdrawals will reduce the minimum annuitization value on a pro-rata basis by an amount equal to the minimum annuitization value multiplied by the percentage reduction in the account value resulting from the withdrawal. The amount of the first payment provided by the GMIB will be determined by multiplying each $1,000 of minimum annuitization value (or account value if greater) by the applicable annuity factor shown in Schedule I of the GMIB rider. The applicable annuity factor depends upon the annuitant's (and joint annuitant's if any) sex (or without regard to gender if required by law), age, and the GMIB payment option selected and is based on a guaranteed interest rate of 3% and the "1983 Table a" mortality table improved to the year 2000 with projection Scale G. Subsequent payments will be calculated as described in the GMIB rider using a 5% assumed investment return. Subsequent payments may fluctuate annually in accordance with the investment performance of the annuity sub-accounts. However, if you choose the guaranteed minimum payment option detailed in the GMIB rider, subsequent payments are guaranteed to never be less than the initial payment. If you do not choose the guaranteed minimum payment option, subsequent payments may be less than the initial payment. Furthermore, if you elect the guaranteed minimum payment option, payments throughout each policy year will be stabilized to remain level. The stabilized payment on each subsequent contract anniversary after annuitization using the GMIB will equal the greater of the initial payment or the payment supportable by the annuity units in the selected sub-accounts. If you do not elect the guaranteed minimum payment option, subsequent payments will be equal to the supportable payment and could fluctuate throughout each policy year. The supportable payment is equal to the number of variable annuity units in the selected sub-accounts multiplied by the variable annuity unit values in those sub-accounts on the date the payment is made. The variable annuity unit values used to calculate the supportable payment will assume a 5% assumed investment return. Under the guaranteed minimum payment option, if the supportable payment at any payment date during a contract year is greater than the stabilized payment for that contract year, the excess will be used to purchase additional annuity units. Conversely, if the supportable payment at any payment date during a contract year is less than the stabilized payment for the contract year, there will be a reduction in the number of annuity units credited to the policy to fund the deficiency. In the case of a reduction, you will not participate as fully in the future investment performance of the sub-accounts you selected since fewer annuity units are credited to your policy. Purchases and reductions will be allocated to each sub-account on a proportionate basis. If you do not elect the guaranteed minimum payment option, no annuity units will be purchased or redeemed. Under the guaranteed minimum payment option, we bear the risk that we will need to make payments if all annuity units have been used in an attempt to maintain the stabilized payment at the initial payment level. In such event, we will make all future payments equal to the initial payment. Once all the annuity units have been used, the amount of your payment will not increase or decrease and will not depend upon the performance of any sub-accounts. To compensate us for this risk, a guaranteed minimum payment fee will be deducted. Tax Relief Rider - Example The following examples illustrate the additional death benefit payable by this rider as well as the effect of a withdrawal on the additional death benefit amount. 9
Example 1 --------- --------------------------------------------------------------------------------------------------- ------------------ policy value on the rider date: $100,000 --------------------------------------------------------------------------------------------------- ------------------ premiums paid after the rider date before surrender: $25,000 --------------------------------------------------------------------------------------------------- ------------------ gross partial surrenders after the rider date: $30,000 --------------------------------------------------------------------------------------------------- ------------------ death benefit on date of surrender $150,000 --------------------------------------------------------------------------------------------------- ------------------ rider earnings on date of surrender (death benefit - policy value on rider date $25,000 - premiums paid after rider date = $150,000 - $100,000 - $25,000): --------------------------------------------------------------------------------------------------- ------------------ amount of surrender that exceeds rider earnings ($30,000 - $25,000): $5,000 --------------------------------------------------------------------------------------------------- ------------------ base policy death benefit on the date of death benefit calculation: $200,000 --------------------------------------------------------------------------------------------------- ------------------ rider earnings (= death benefit - policy value on rider date - premiums since rider date + $80,000 surrenders since rider date that exceeded rider earnings at time of surrender = $200,000 - $100,000 - $25,000 + $5,000): --------------------------------------------------------------------------------------------------- ------------------ additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $32,000 $80,000): --------------------------------------------------------------------------------------------------- ------------------ total death benefit paid (= base policy death benefit plus additional death benefit amount: $232,000 --------------------------------------------------------------------------------------------------- ------------------ Example 2 --------- --------------------------------------------------------------------------------------------------- ------------------ policy value on the rider date: $100,000 --------------------------------------------------------------------------------------------------- ------------------ premiums paid after the rider date before surrender: $0 --------------------------------------------------------------------------------------------------- ------------------ gross partial surrenders after the rider date: $0 --------------------------------------------------------------------------------------------------- ------------------ base policy death benefit on the date of death benefit calculation: $75,000 --------------------------------------------------------------------------------------------------- ------------------ rider earnings (= death benefit - policy value on rider date - premiums since rider date + $0 surrenders since rider date that exceeded rider earnings at time of surrender = $75,000 - $100,000 - $0 + $0): --------------------------------------------------------------------------------------------------- ------------------ additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $0): $0 --------------------------------------------------------------------------------------------------- ------------------ total death benefit paid (= base policy death benefit plus additional death benefit amount: $75,000 --------------------------------------------------------------------------------------------------- ------------------
CALCULATION OF YIELDS AND TOTAL RETURNS Money Market Sub-Account Yield Calculation In accordance with regulations adopted by the Commission, we are required to compute the Money Market Sub-Account's current annualized yield for a seven-day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the Money Market Series 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) in the value of a hypothetical account having a balance of one unit of the Money Market Sub-Account and income other than investment income at the beginning of such seven-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 the deductions for the annual account fee, the mortality and expense risk charge and administrative expense charges and income and expenses accrued during the period. Because of these deductions, the yield for the Money Market Sub-Account of the variable account will be lower than the yield for the Money Market Portfolio. The Commission also permits us to disclose the effective yield of the Money Market Sub-Account for the same seven-day period, determined on a compounded basis. The effective yield is calculated by compounding the unannualized base period return by adding one to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one from the result. The yield on amounts held in the Money Market Sub-Account 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 Sub-Account's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Money Market Portfolio, the types and quality of portfolio securities held by the Money Market Portfolio, and operating expenses. In addition, the yield figures do not reflect the effect of any contingent deferred sales load (of up to 6% of purchase payments) that may be applicable to a contract. 10 Other Sub-Account Yield Calculations We may from time to time disclose the current annualized yield of one or more of the sub-accounts (except the Money Market Sub-Account) for 30-day periods. The annualized yield of a sub-account refers to the income generated by the sub-account over a specified 30-day period. Because this yield is annualized, the yield generated by a sub-account during the 30-day period is assumed to be generated each 30-day period. The yield is computed by dividing the net investment income per variable accumulation unit earned during the period by the price per unit on the last day of the period, according to the following formula: YIELD = 2[[a-b + 1]/6/ - 1] --- cd Where: a = net investment income earned during the period by the portfolio attributable to the shares owned by the sub-account. b = expenses for the sub-account accrued for the period (net of reimbursements). c = the average daily number of variable accumulation units outstanding during the period. d = the maximum offering price per variable accumulation unit on the last day of the period. Net investment income will be determined in accordance with rules established by the Commission. Accrued expenses will include all recurring fees that are charged to all contracts. The yield calculations do not reflect the effect of any contingent deferred sales load that may be applicable to a particular contract. The contingent deferred sales load ranges from 6% to 0% of the amount of account value withdrawn depending on the elapsed time since the receipt of each purchase payment attributable to the portion of the account value withdrawn. Because of the charges and deductions imposed by the variable account, the yield for the sub-account will be lower than the yield for the corresponding portfolio. The yield on amounts held in the sub-accounts normally will fluctuate over time. Therefore, the disclosed yield for any given period is not an indication or representation of future yields or rates of return. The sub-account's actual yield will be affected by the types and quality of portfolio securities held by the portfolio, and its operating expenses. Average Total Return Calculations We may from time to time also disclose average annual total returns for one or more of the sub-accounts for various periods of time. Average annual total return quotations are computed by finding the average annual compounded rates of return over one, five and ten year periods that would equate the initial amount invested to the ending redeemable value, according to the following formula: P[1 + T/n/]= ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of the one, five or ten-year period at the end of the one, five, or ten-year period (or fractional portion thereof). All recurring fees are recognized in the ending redeemable value. The standard average annual total return calculations will reflect the effect of any contingent deferred sales load that may be applicable to a particular period. Hypothetical (Adjusted Historical) Performance Data We may also disclose adjusted historical performance data for a sub-account, for periods before the sub-account commenced operations. Such performance information for the sub-account will be calculated based on the performance of the corresponding portfolio and the assumption that the sub-account was in existence for the same periods as those indicated for the portfolio, with a level of contract charges currently in effect. The portfolio used for these calculations will be the actual portfolio that the sub-account will invest in. 11 This type of adjusted historical performance data may be disclosed on both an average annual total return and a cumulative total return basis. Moreover, it may be disclosed assuming that the contract is not surrendered (i.e., with no deduction for the contingent deferred sales load) and assuming that the contract is surrendered at the end of the applicable period (i.e., reflecting a deduction for any applicable contingent deferred sales load). It might assume that no riders are elected and therefore not reflect any rider fees. 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 described above. The non-standard format will be identical to the standard format except that the contingent deferred sales load percentage will be assumed to be 0%. 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 formula assuming that the contingent deferred sales load percentage will be 0%. CTR = [ERV/P] - 1 Where: CTR = the cumulative total return net of sub-account recurring charges for the period. ERV = ending redeemable value of a hypothetical $1,000 payment at the beginning of the one, five, or ten-year period at the end of the one, five, or ten-year period (or fractional portion thereof). P = a hypothetical initial payment of $1,000. All non-standard performance data will be advertised only if the standard performance data is also disclosed. HISTORICAL PERFORMANCE DATA General Limitations The figures below represent the past performance of the sub-accounts and are not indicative of future performance. The figures may reflect the waiver of advisory fees and reimbursement of other expenses. Except for Transamerica Growth, the funds have provided the performance data for the sub-accounts. Except for Transamerica Growth, none of the funds or their investment advisers are affiliated with Transamerica. In preparing the tables below, we have relied on the data provided by the funds. While we have no reason to doubt the accuracy of the figures provided by the funds, we have not verified those figures. Money Market Sub-Account Yields The annualized yield for the Money Market Sub-Account for the seven-day period ending December 31, 2000 was 4.75%, the effective yield for the Money Market Sub-Account for the seven-day period ending December 31, 2000 was 4.86%, assuming no riders were in effect. If both the GMIB and TRR riders were in effective, the yield and effective yield would have been lower. Sub-Account Performance Figures Including Adjusted Historical Performance The charts below show historical performance data for the sub-accounts. Charts 1 through 3 show performance since the commencement of the sub-accounts. Charts 4 through 6 include, for certain sub-accounts, adjusted historical performance for the periods prior to the inception of the sub-accounts, based on the performance of the corresponding portfolios since their inception date, with a level of charges equal to those currently assessed under the contracts. These figures are not an indication of the future performance of the sub-accounts. Some of the figures reflect the waiver of advisory fees and reimbursement of other expenses for part or all of the periods indicated. Since Commencement of the Sub-Accounts The dates to the right of the sub-account names indicate the date of commencement of operation of the sub-accounts. 12 1. Average annual total returns for periods since inception of the sub-account are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the administration charge of $30 per annum adjusted for average account size and the maximum contingent deferred sales load of 6% but do not reflect premium taxes or the optional GMIB rider or TRR, which if reflected would reduce the figures.
-------------------------------------------------------------------------------------------------------------------------------- Inception of the SUB-ACCOUNT 1 Year Ended 3 Year Ended 5 Year Ended Sub-account (Sub-account Inception Date) 12/31/00 12/31/00 12/31/00 to 12/31/00 -------------------------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93)/(1)/ (8.92%) 9.44% 15.65% 15.24% -------------------------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ (11.53%) 4.97% N/A 8.86% -------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock (5/1/96)/(1)/ (18.70%) 6.70% N/A 14.61% -------------------------------------------------------------------------------------------------------------------------------- Growth and Income (12/15/94)/(1)/ (12.58%) 4.11% 9.33% 16.76% -------------------------------------------------------------------------------------------------------------------------------- International Equity (12/15/94)/(1)/ (24.12%) 8.25% 8.80% 8.67% -------------------------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ (10.16%) 7.32% N/A 6.99% -------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (14.91%) (6.30%) N/A (2.94%) -------------------------------------------------------------------------------------------------------------------------------- Money Market (1/4/93) (0.88%) 2.22% 3.01% 3.43% -------------------------------------------------------------------------------------------------------------------------------- Quality Bond (1/4/93)/(1)/ 4.54% 2.74% 3.77% 5.87% -------------------------------------------------------------------------------------------------------------------------------- Small Cap (1/4/93)/(1)/ 1.85% 5.93% 9.86% 17.71% -------------------------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ (3.38%) (0.49%) N/A 5.64% -------------------------------------------------------------------------------------------------------------------------------- Special Value (1/4/93)/(1)/ (2.68%) 5.93% 6.62% 7.08% -------------------------------------------------------------------------------------------------------------------------------- Stock Index (1/4/93)/(1)/ (18.55%) 7.87% 14.99% 14.66% -------------------------------------------------------------------------------------------------------------------------------- Socially Responsible Growth (10/7/93)/(1)/ (21.11%) 9.94% 15.31% 16.18% -------------------------------------------------------------------------------------------------------------------------------- Core Bond (5/1/2000)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 2.98% N/A N/A 4.93% -------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders (5/1/2000)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- Emerging Markets (5/1/2000)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- European Equity (10/1/99)/(1)/ (8.52%) N/A N/A 14.30% -------------------------------------------------------------------------------------------------------------------------------- Founders Discovery (5/1/2000)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- Founders Growth (5/3/99)/(1)/ (35.62%) N/A N/A (10.74%) -------------------------------------------------------------------------------------------------------------------------------- Founders International Equity (10/1/99)/(1)/ (25.09%) N/A N/A 4.42% -------------------------------------------------------------------------------------------------------------------------------- Founders Passport (5/3/99)/(1)/ (32.18%) N/A N/A 7.13% -------------------------------------------------------------------------------------------------------------------------------- Japan (5/1/2000)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ (3.71%) N/A N/A 0.90% -------------------------------------------------------------------------------------------------------------------------------- Technology Growth (10/1/99)/(1)/ (39.41%) N/A N/A (3.13%) -------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (5/1/98)/(2)/ (16.41%) N/A N/A 8.69% --------------------------------------------------------------------------------------------------------------------------------
13 2. Average annual total returns for period since inception of the sub-account are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum and the administration charge of $30 per annum adjusted for average account size but do not reflect the maximum contingent deferred sales load of 6% or the optional GMIB rider or TRR, which if reflected would reduce the figures. Performance data with no contingent deferred sales load deduction will only be disclosed if the performance data for the required periods with the contingent deferred sales load deduction is also disclosed.
---------------------------------------------------------------------------------------------------------------------------------- Inception of the SUB-ACCOUNT 1 Year Ended 3 Year Ended 5 Year Ended Sub-account to (Sub-Account Inception Date) 12/31/00 12/31/00 12/31/00 12/31/00 ---------------------------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93)/(1)/ (3.52%) 10.81% 16.09% 15.24% ---------------------------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ (6.13%) 6.46% N/A 9.95% ---------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock (5/1/96)/(1)/ (13.30%) 8.14% N/A 15.14% ---------------------------------------------------------------------------------------------------------------------------------- Growth and Income (12/15/94)/(1)/ (7.18%) 5.63% 9.89% 16.91% ---------------------------------------------------------------------------------------------------------------------------------- International Equity (12/15/94)/(1)/ (18.72%) 9.66% 9.37% 8.89% ---------------------------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ (4.76%) 8.75% N/A 7.66% ---------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (9.51%) (4.62%) N/A (1.62%) ---------------------------------------------------------------------------------------------------------------------------------- Money Market (1/4/93) 4.52% 3.79% 3.72% 3.43% ---------------------------------------------------------------------------------------------------------------------------------- Quality Bond (1/4/93)/(1)/ 10.54% 4.29% 4.45% 5.87% ---------------------------------------------------------------------------------------------------------------------------------- Small Cap (1/4/93)/(1)/ 7.25% 7.39% 10.41% 17.71% ---------------------------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ 2.03% 1.00% N/A 6.34% ---------------------------------------------------------------------------------------------------------------------------------- Special Value (1/4/93)/(1)/ 2.72% 7.39% 7.24% 7.08% ---------------------------------------------------------------------------------------------------------------------------------- Stock Index (1/4/93)/(1)/ (13.15%) 9.28% 15.44% 14.66% ---------------------------------------------------------------------------------------------------------------------------------- Socially Responsible Growth (10/7/93)/(1)/ (15.71%) 11.30% 15.76% 16.19% ---------------------------------------------------------------------------------------------------------------------------------- Core Bond (5/1/2000)/(1)/ N/A N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 8.38% N/A N/A 6.65% ---------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders (5/1/2000)/(1)/ N/A N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- Emerging Markets (5/1/2000)/(1)/ N/A N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- European Equity (10/1/99)/(1)/ (3.12%) N/A N/A 18.99% ---------------------------------------------------------------------------------------------------------------------------------- Founders Discovery (5/1/2000)/(1)/ N/A N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- Founders Growth (5/3/99)/(1)/ (30.22%) N/A N/A (7.26%) ---------------------------------------------------------------------------------------------------------------------------------- Founders International Equity (10/1/99)/(1)/ (19.69%) N/A N/A 9.19% ---------------------------------------------------------------------------------------------------------------------------------- Founders Passport (5/3/99)/(1)/ (26.78%) N/A N/A 10.57% ---------------------------------------------------------------------------------------------------------------------------------- Japan (5/1/2000)/(1)/ N/A N/A N/A N/A ---------------------------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ 1.69% N/A N/A 2.56% ---------------------------------------------------------------------------------------------------------------------------------- Technology Growth (10/1/99)/(1)/ (34.01%) N/A N/A 1.26% ---------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (5/1/98)/(2)/ (11.01%) N/A N/A 13.19% ----------------------------------------------------------------------------------------------------------------------------------
14 3. Cumulative total returns for periods since inception of the sub-accounts are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum and the administration charge of $30 per annum adjusted for average account size but do not reflect the maximum contingent deferred sales load of 6%, or the optional GMIB rider or TRR, which if reflected would reduce the figures. Performance data with no contingent deferred sales load deduction will only be disclosed if performance data for the required periods with the contingent deferred sales load deduction is also disclosed.
--------------------------------------------------------------------------------------------------------------- Inception of SUB-ACCOUNT Sub-account (Sub-Account Inception Date) to 12/31/00 --------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93)/(1)/ 200.29% --------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ 41.65% --------------------------------------------------------------------------------------------------------------- Disciplined Stock (5/1/96)/(1)/ 93.13% --------------------------------------------------------------------------------------------------------------- Growth and Income (12/15/94)/(1)/ 157.35% --------------------------------------------------------------------------------------------------------------- International Equity (12/15/94)/(1)/ 67.41% --------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ 41.16% --------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (5.82%) --------------------------------------------------------------------------------------------------------------- Money Market (1/4/93) 30.97% --------------------------------------------------------------------------------------------------------------- Quality Bond (1/4/93)/(1)/ 57.82% --------------------------------------------------------------------------------------------------------------- Small Cap (1/4/93)/(1)/ 268.51% --------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ 33.26% --------------------------------------------------------------------------------------------------------------- Special Value (1/4/93)/(1)/ 72.80% --------------------------------------------------------------------------------------------------------------- Stock Index (1/4/93)/(1)/ 198.69% --------------------------------------------------------------------------------------------------------------- Socially Responsible Growth (10/7/93)/(1)/ 196.33% --------------------------------------------------------------------------------------------------------------- Core Bond (5/1/2000)/(1)/ 8.43% --------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 18.77% --------------------------------------------------------------------------------------------------------------- Emerging Leaders (5/1/2000)/(1)/ 16.27% --------------------------------------------------------------------------------------------------------------- Emerging Markets (5/1/2000)/(1)/ (29.53%) --------------------------------------------------------------------------------------------------------------- European Equity (10/1/99)/(1)/ 24.27% --------------------------------------------------------------------------------------------------------------- Founders Discovery (5/1/2000)/(1)/ (30.92%) --------------------------------------------------------------------------------------------------------------- Founders Growth (5/3/99)/(1)/ (11.82%) --------------------------------------------------------------------------------------------------------------- Founders International Equity (10/1/99)/(1)/ 11.62% --------------------------------------------------------------------------------------------------------------- Founders Passport (5/3/99)/(1)/ 18.27% --------------------------------------------------------------------------------------------------------------- Japan (5/1/2000)/(1)/ (23.09%) --------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ 6.99% --------------------------------------------------------------------------------------------------------------- Technology Growth (10/1/99)/(1)/ 1.58% --------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (5/1/98)/(2)/ 39.33% ----------------------------------------------------------------------------------------------------------------
15 Since Commencement of the Portfolios The dates to the right of the portfolio names indicate the date of commencement of operation of the Portfolios. 4. Average annual total returns for periods since inception of the portfolio, including adjusted historical performance are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the administration charge of $30 per annum adjusted for average account size and the maximum contingent deferred sales load of 6% but do not reflect the optional GMIB rider or TRR, which if reflected would reduce the figures.
-------------------------------------------------------------------------------------------------------------------------------- Inception of the Corresponding PORTFOLIO 1 Year Ended 3 Year Ended 5 Year Ended Portfolio to (Corresponding Portfolio Inception Date) 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93)/(1)/ (8.92%) 9.44% 15.65% 15.24% -------------------------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ (11.53%) 4.97% N/A 8.86% -------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock (4/30/96)/(1)/ (18.70%) 6.70% N/A 14.61% -------------------------------------------------------------------------------------------------------------------------------- Growth and Income (5/2/94)/(1)/ (12.58%) 4.11% 9.33% 15.01% -------------------------------------------------------------------------------------------------------------------------------- International Equity (5/2/94)/(1)/ (24.12%) 8.25% 8.80% 7.66% -------------------------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ (10.16%) 7.32% N/A 6.99% -------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (14.91%) (6.30%) N/A (2.94%) -------------------------------------------------------------------------------------------------------------------------------- Money Market (8/31/90) (0.88%) 2.22% 3.01% 3.53% -------------------------------------------------------------------------------------------------------------------------------- Quality Bond (8/31/90)/(1)/ 4.54% 2.74% 3.77% 6.92% -------------------------------------------------------------------------------------------------------------------------------- Small Cap (8/31/90)/(1)/ 1.85% 5.93% 9.86% 30.91% -------------------------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ (3.38%) (0.54%) N/A 5.64% -------------------------------------------------------------------------------------------------------------------------------- Special Value (8/31/90)/(1)/ (2.68%) 5.93% 6.62% 6.41% -------------------------------------------------------------------------------------------------------------------------------- Stock Index (9/29/89)/(1)/ (18.55%) 7.87% 14.99% 12.86% -------------------------------------------------------------------------------------------------------------------------------- Socially Responsible (10/7/93)/(1)/ (21.11%) 9.94% 15.31% 16.18% -------------------------------------------------------------------------------------------------------------------------------- Core Bond (5/1/00)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 2.98% N/A N/A 4.93% -------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders (12/15/99)/(1)/ 28.43% N/A N/A 36.38% -------------------------------------------------------------------------------------------------------------------------------- Emerging Markets (12/15/99)/(1)/ (32.33%) N/A N/A (24.71%) -------------------------------------------------------------------------------------------------------------------------------- European Equity (4/30/99)/(1)/ (8.52%) N/A N/A 10.33% -------------------------------------------------------------------------------------------------------------------------------- Founders Discovery (12/15/99)/(1)/ (19.27%) N/A N/A (9.29%) -------------------------------------------------------------------------------------------------------------------------------- Founders Growth (9/30/98)/(1)/ (35.62%) N/A N/A 6.85% -------------------------------------------------------------------------------------------------------------------------------- Founders International Equity (9/30/98)/(1)/ (25.09%) N/A N/A 16.28% -------------------------------------------------------------------------------------------------------------------------------- Founders Passport (9/30/98)/(1)/ (32.18%) N/A N/A 16.65% -------------------------------------------------------------------------------------------------------------------------------- Japan (12/15/99)/(1)/ (3.15%) N/A N/A (0.41%) -------------------------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ (3.71%) N/A N/A 0.90% -------------------------------------------------------------------------------------------------------------------------------- Technology Growth (8/31/99)/(1)/ (39.41%) N/A N/A (2.40%) -------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (2/26/69)/(2)/ (16.41%) 18.45% 25.13% 25.12% --------------------------------------------------------------------------------------------------------------------------------
16 5. Average annual total returns for periods since inception of the portfolio including adjusted historical performance are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum and the administration charge of $30 per annum adjusted for average account size but do not reflect the maximum contingent deferred sales load of 6%, the GMIB rider or TRR, which if reflected would reduce the figures. Performance data with no contingent deferred sales load deduction will only be disclosed if the performance data for the required periods with no contingent deferred sales load deduction is also disclosed.
-------------------------------------------------------------------------------------------------------------------------------- Inception of the Corresponding PORTFOLIO 1 Year Ended 3 Year Ended 5 Year Ended Portfolio to (Corresponding Portfolio Inception Date) 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93)/(1)/ (3.52%) 10.81% 16.09% 15.24% -------------------------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ (6.13%) 6.46% N/A 9.95% -------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock (4/30/96)/(1)/ (13.30%) 8.14% N/A 15.14% -------------------------------------------------------------------------------------------------------------------------------- Growth and Income (5/2/94)/(1)/ (7.18%) 5.63% 9.89% 15.15% -------------------------------------------------------------------------------------------------------------------------------- International Equity (5/2/94)/(1)/ (18.72%) 9.66% 9.37% 7.87% -------------------------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ (4.76%) 8.75% N/A 7.66% -------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (9.51%) (4.62%) N/A (1.62%) -------------------------------------------------------------------------------------------------------------------------------- Money Market (8/31/90) 4.52% 3.79% 3.72% 3.54% -------------------------------------------------------------------------------------------------------------------------------- Quality Bond (8/31/90)/(1)/ 10.54% 4.29% 4.45% 6.93% -------------------------------------------------------------------------------------------------------------------------------- Small Cap (8/31/90)/(1)/ 7.25% 7.39% 10.41% 30.91% -------------------------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ 2.03% 1.00% N/A 6.34% -------------------------------------------------------------------------------------------------------------------------------- Special Value (8/31/90)/(1)/ 2.72% 7.39% 7.24% 6.41% -------------------------------------------------------------------------------------------------------------------------------- Stock Index (9/29/89)/(1)/ (13.15%) 9.28% 15.44% 12.86% -------------------------------------------------------------------------------------------------------------------------------- Socially Responsible (10/7/93)/(1)/ (15.71%) 11.30% 15.76% 16.19% -------------------------------------------------------------------------------------------------------------------------------- Core Bond (5/1/00)/(1)/ N/A N/A N/A N/A -------------------------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 8.38% N/A N/A 6.65% -------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders (12/15/99)/(1)/ 34.43% N/A N/A 42.00% -------------------------------------------------------------------------------------------------------------------------------- Emerging Markets (12/15/99)/(1)/ (26.93%) N/A N/A (19.50%) -------------------------------------------------------------------------------------------------------------------------------- European Equity (4/30/99)/(1)/ (3.12%) N/A N/A 13.68% -------------------------------------------------------------------------------------------------------------------------------- Founders Discovery (12/15/99)/(1)/ (13.87%) N/A N/A (4.13%) -------------------------------------------------------------------------------------------------------------------------------- Founders Growth (9/30/98)/(1)/ (30.22%) N/A N/A 8.89% -------------------------------------------------------------------------------------------------------------------------------- Founders International Equity (9/30/98)/(1)/ (19.69%) N/A N/A 18.12% -------------------------------------------------------------------------------------------------------------------------------- Founders Passport (9/30/98)/(1)/ (26.78%) N/A N/A 18.48% -------------------------------------------------------------------------------------------------------------------------------- Japan (12/15/99)/(1)/ 2.25% N/A N/A 4.73% -------------------------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ 1.69% N/A N/A 2.56% -------------------------------------------------------------------------------------------------------------------------------- Technology Growth (8/31/99)/(1)/ (34.01%) N/A N/A 1.70% -------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (2/26/69)/(2)/ (11.01%) 19.51% 25.42% 25.12% --------------------------------------------------------------------------------------------------------------------------------
17 6. Cumulative total returns for periods since inception of the portfolio, including hypothetical performance are as follows. These figures include mortality and expenses charges deducted at 1.25%, the administrative expenses charge of 0.15% per annum and the administration charge of $30 per annum adjusted for average account size but do not reflect the maximum contingent deferred sales load of 6%, the GMIB rider or TRR, which if reflected would reduce the figures. Performance data with no contingent deferred sales load deduction will only be disclosed if performance data for the required periods with no contingent deferred sales load deduction is also disclosed.
--------------------------------------------------------------------------------------------------------------- Inception of the Corresponding PORTFOLIO Portfolio to (Corresponding Portfolio Inception Date) 12/31/00 --------------------------------------------------------------------------------------------------------------- Appreciation (4/5/93/(1)/ 200.29% --------------------------------------------------------------------------------------------------------------- Balanced (5/1/97)/(1)/ 41.65% --------------------------------------------------------------------------------------------------------------- Disciplined Stock (4/30/96)/(1)/ 93.13% --------------------------------------------------------------------------------------------------------------- Growth and Income (5/2/94)/(1)/ 156.17% --------------------------------------------------------------------------------------------------------------- International Equity (5/2/94)/(1)/ 65.72% --------------------------------------------------------------------------------------------------------------- International Value (5/1/96)/(1)/ 41.16% --------------------------------------------------------------------------------------------------------------- Limited Term High Income (4/30/97)/(1)/ (5.82%) --------------------------------------------------------------------------------------------------------------- Money Market (8/31/90) 43.28% --------------------------------------------------------------------------------------------------------------- Quality Bond (8/31/90)/(1)/ 100.02% --------------------------------------------------------------------------------------------------------------- Small Cap (8/31/90)/(1)/ 1,523.77% --------------------------------------------------------------------------------------------------------------- Small Company Stock (5/1/96)/(1)/ 33.26% --------------------------------------------------------------------------------------------------------------- Special Value (8/31/90)/(1)/ 90.22% --------------------------------------------------------------------------------------------------------------- Stock Index (9/29/89)/(1)/ 290.88% --------------------------------------------------------------------------------------------------------------- Socially Responsible (10/7/93)/(1)/ 196.33% --------------------------------------------------------------------------------------------------------------- Core Bond (5/1/00)/(1)/ 8.43% --------------------------------------------------------------------------------------------------------------- Core Value (5/1/98)/(1)/ 18.77% --------------------------------------------------------------------------------------------------------------- Emerging Leaders (12/15/99)/(1)/ 44.51% --------------------------------------------------------------------------------------------------------------- Emerging Markets (12/15/99)/(1)/ (20.37%) --------------------------------------------------------------------------------------------------------------- European Equity (4/30/99)/(1)/ 24.03% --------------------------------------------------------------------------------------------------------------- Founders Discovery (12/15/99)/(1)/ (4.33%) --------------------------------------------------------------------------------------------------------------- Founders Growth (9/30/98)/(1)/ 21.23% --------------------------------------------------------------------------------------------------------------- Founders International Equity (9/30/98)/(1)/ 45.71% --------------------------------------------------------------------------------------------------------------- Founders Passport (9/30/98)/(1)/ 46.71% --------------------------------------------------------------------------------------------------------------- Japan (12/15/99)/(1)/ 4.97% --------------------------------------------------------------------------------------------------------------- MidCap Stock (5/1/98)/(1)/ 6.99% --------------------------------------------------------------------------------------------------------------- Technology Growth (8/31/99)/(1)/ 2.28% --------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth (2/26/69)/(2)/ 945.75% ---------------------------------------------------------------------------------------------------------------
/(1)/The Service Class Shares were not available until December 31, 2000, therefore, the figures shown reflect performance for the Initial Class Shares only. Performance for the Service Class Shares would be lower because they are subject to a 12b-1 Fee. /(2)/The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc. is the successor to Separate Account Fund C of Transamerica Occidental Life Insurance Company, a management investment company funding variable annuities, through a reorganization on November 1, 1996. Accordingly, the performance data for the Transamerica VIF Growth Portfolio include performance of its predecessor. The performance shown in the "since inception" box for the Transamerica Growth Sub-Account is 10-year performance, not performance since 1969. 18 FEDERAL TAX MATTERS The Dreyfus/Transamerica Triple Advantage(R) Variable Annuity may be purchased on a non-tax qualified basis ("non-qualified contract") or purchased and used in connection with plans qualifying for special tax treatment ("qualified contract"). Qualified contracts are designed for use by retirement plans qualified for special tax treatment under Sections 401, 403(b), 408 or 408A of the Internal Revenue Code of 1986, as amended (the "Code"). The ultimate effect of federal income taxes on the account value, on annuity payments, and on the economic benefit to the owner, the annuitant or the beneficiary may depend on the type of retirement plan for which the contract is purchased, on the tax and employment status of the individual concerned and on our tax status. THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. Any person concerned about these tax implications should consult a competent tax adviser. This discussion is based upon our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service ("IRS"). No representation is made as to the likelihood of continuation of these present federal income tax laws or of the current interpretations by the IRS. Moreover, no attempt has been made to consider any applicable state or other tax laws. Taxation of Transamerica We are taxed as a life insurance company under Part I of Subchapter L of the Code. Since the variable account is not an entity separate from Transamerica, and its operations form a part of Transamerica, it will not be taxed separately as a "regulated investment company" under Subchapter M of the Code. Investment income and realized capital gains are automatically applied to increase reserves under the contracts. Under existing federal income tax law, we believe that the variable account investment income and realized net capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the contracts. Accordingly, we do not anticipate that we will incur any federal income tax liability attributable to the variable account and, therefore, we do not intend to make provisions for any such taxes. However, if changes in the federal tax laws or interpretations thereof result in our being taxed on income or gains attributable to the variable account, then we may impose a charge against the variable account (with respect to some or all contracts) in order to set aside provisions to pay such taxes. Tax Status of the Contract Code Section 817(h) requires that with respect to non-qualified contracts, the investments of the funds be "adequately diversified" in accordance with Treasury regulations in order for the contracts to qualify as annuity contracts under federal tax law. The variable account, through the funds, intends to comply with the diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the Funds' assets may be invested. In certain circumstances, owners of variable annuity contracts may be considered the owners, for federal income tax purposes, of the assets of the separate accounts used to support their contracts. In those circumstances, income and gains from the separate account assets would be includible in the variable contract owner's gross income. The IRS has stated in published rulings that a variable contract owner will be considered the owner of separate account assets if the contract owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. The Treasury Department has also announced, in connection with the issuance of regulations concerning diversification, that those regulations "do not provide guidance concerning the circumstances in which investor control for the investments of a segregated asset account may cause the investor (i.e., the owner), rather than the insurance company, to be treated as the owner of the assets in the account." This announcement also stated that guidance would be issued by way of regulations or rulings on the "extent to which policyholders may direct their investments to particular sub-accounts without being treated as owners of the underlying assets." The ownership rights under the contract are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that contract owners were not owners of separate account assets. For example, the owner has additional flexibility in allocating premium payments and account values. These differences could result in an owner being treated as the owner of a pro rata portion of the assets of the variable account. In addition, we do not know what standards will be set forth, if any, in the regulations or rulings which the Treasury Department has stated it expects to issue. We therefore reserve the right to modify the contract as necessary to attempt to prevent an owner from being considered the owner of a pro rata share of the assets of the variable account. 19 In order to be treated as an annuity contract for federal income tax purposes, Code Section 72(s) requires any non-qualified contract to provide that (a) if any owner dies on or after the annuity date but prior to the time the entire interest in the contract has been distributed, the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used as of the date of that owner's death; and (b) if any owner dies prior to the annuity date, the entire interest in the contract will be distributed within five years after the date of the owner's death. These requirements will be considered satisfied as to any portion of the owner's interest which is payable to or for the benefit of a "designated beneficiary" and which is distributed over the life of such "designated beneficiary" or over a period not extending beyond the life expectancy of that beneficiary, provided that such distributions begin within one year of the owner's death. The owner's "designated beneficiary" refers to a natural person designated by such owner as a beneficiary and to whom ownership of the contract passes by reason of death. However, if the owner's "designated beneficiary" is the surviving spouse of the deceased owner, the contract may be continued with the surviving spouse as the new owner. The non-qualified contracts contain provisions which are intended to comply with the requirements of Code Section 72(s), although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the requirements of Code Section 72(s) when clarified by regulation or otherwise. Other rules may apply to qualified contracts. DISTRIBUTION OF THE CONTRACT Transamerica Securities Sales Corporation ("TSSC") is principal underwriter of the contracts under a Distribution Agreement with Transamerica. TSSC may also serve as principal underwriter and distributor of other contracts issued through the variable account and certain other separate accounts of Transamerica and any of its affiliates. TSSC is an indirect wholly owned subsidiary of Transamerica Insurance Corporation. TSSC is registered with the Commission as a broker/dealer and is a member of the National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays TSSC for acting as the principal underwriter under a distribution agreement. TSSC has entered into sales agreements with other broker/dealers to solicit applications for the contracts through registered representatives who are licensed to sell securities and variable insurance products. These agreements provide that applications for the contracts may be solicited by registered representatives of the broker/dealers appointed by Transamerica to sell its variable life insurance and variable annuities. These broker/dealers are registered with the Commission and are members of the NASD. The registered representatives are authorized under applicable state regulations to sell variable life insurance and variable annuities. Transamerica Financial Resources, Inc. ("TFR") is an underwriter and distributor of the contracts. TFR is a wholly-owned subsidiary of Transamerica Insurance Corporation of California and is registered with the Commission and the NASD as a broker/dealer. Under the agreements, applications for the contracts will be sold by broker/dealers which will receive compensation as described in the prospectus. The offering of the contracts is expected to be continuous and neither TSSC nor TFR anticipate discontinuing the offering of the contracts. However, TSSC and TFR reserve the right to discontinue the offering of the contracts. During fiscal year 2000 and 1999, $40,610,303.06 and $17,147,205.77, respectively, in commissions was paid to TSSC and TFR as co-underwriters of the contracts; no amounts were retained by TSSC or TFR. SAFEKEEPING OF VARIABLE ACCOUNT ASSETS Title to assets of the variable account is held by Transamerica. The assets of the variable account are kept separate and apart from Transamerica general account assets. Records are maintained of all purchases and redemptions of portfolio shares held by each of the sub-accounts. 20 TRANSAMERICA General Information and History Transamerica Occidental Life Insurance Company was formerly known as Occidental Life Insurance Company of California. The name change occurred September 1, 1981. Transamerica is wholly-owned by Transamerica Insurance Corporation of California, which is in turn, wholly-owned by Transamerica Corporation. Transamerica Corporation is indirectly owned by AEGON N.V. of The Netherlands. AEGON N.V., a holding company, conducts it business through subsidiary companies engaged primarily in the insurance business. STATE REGULATION We are subject to the insurance laws and regulations of all the states where we are licensed to operate. The availability of certain contract rights and provisions depends on state approval and/or filing and review processes. Where required by state law or regulation, the contract will be modified accordingly. RECORDS AND REPORTS All records and accounts relating to the variable account will be maintained by us or by our service office. As presently required by the provisions of the 1940 Act and regulations promulgated thereunder which pertain to the variable account, reports containing such information as may be required under the 1940 Act or by other applicable law or regulation will be sent to owners semi-annually at their last known address of record. FINANCIAL STATEMENTS This Statement of Additional Information contains the financial statements of the subaccounts of the variable account as of December 31, 2000 and for each of the two years in the period then ended. The statutory-basis financial statements and schedules of Transamerica as of December 31, 2000 and 1999 and for each of the three years in the period then ended, included in this Statement of Additional Information should be considered only as bearing on the ability of Transamerica to meet its obligations under the contract. They should not be considered as bearing on the investment performance of the assets held in the variable account. 21 APPENDIX Annuity Transfer Formula Transfers after the annuity date are implemented according to the following formulas: (1) Determine the number of units to be transferred from the variable sub-account as follows: = AT/AUV1 (2) Determine the number of variable accumulation units remaining in such variable sub-account (after the transfer): = UNIT1 AT/AUV1 (3) Determine the number of variable accumulation units in the transferee variable sub-account (after the transfer): = UNIT2 + AT/AUV2 (4) Subsequent variable payments will reflect the changes in variable accumulation units in each variable sub-account as of the next variable payment's due date. Where: (AUV1) is the variable accumulation unit value of the variable sub-account that the transfer is being made from as of the end of the valuation period in which the transfer request was received. (AUV2) is the variable accumulation unit value of the variable sub-account that the transfer is being made to as of the end of the valuation period in which the transfer request was received. (UNIT1) is the number of variable accumulation units in the variable sub-account that the transfer is being made from, before the transfer. (UNIT2) is the number of variable accumulation units in the variable sub-account that the transfer is being made to, before the transfer. (AT) is the dollar amount being transferred from the variable sub-account. 22 Financial Statements Transamerica Occidental Life Insurance Company Years ended December 31, 2000, 1999 and 1998 with Report of Independent Auditors Transamerica Occidental Life Insurance Company Financial Statements - Statutory Basis Years ended December 31, 2000, 1999 and 1998 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.......................................................... 8 Notes to Financial Statements - Statutory Basis.................................................... 10 Statutory-Basis Financial Statement Schedules Schedule I - Summary of Investments - Other Than Investments in Related Parties................................................................................. 37 Schedule III - Supplementary Insurance Information................................................. 38 Schedule IV - Reinsurance.......................................................................... 40
Report of Independent Auditors The Board of Directors Transamerica Occidental Life Insurance Company We have audited the accompanying statutory-basis balance sheets of Transamerica Occidental Life Insurance Company, an indirect wholly-owned subsidiary of AEGON N.V., as of December 31, 2000 and 1999, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flow for each of the three years in the period ended December 31, 2000. Our audits also included the accompanying statutory-basis financial statement schedules required by Article 7 of Regulation S-X. These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa, which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States also are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of Transamerica Occidental Life Insurance Company at December 31, 2000 and 1999, or the results of its operations or its cash flow for each of the three years in the period ended December 31, 2000. 1 However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Transamerica Occidental Life Insurance Company at December 31, 2000 and 1999, and the results of its operations and its cash flow for each of the three years in the period ended December 31, 2000, in conformity with accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic statutory-basis financial statements taken as a whole, present fairly in all material respects the information set forth therein. Des Moines, Iowa April 13, 2001 2 Transamerica Occidental Life Insurance Company Balance Sheets - Statutory Basis (Dollars in thousands, except per share amounts)
December 31 2000 1999 -------------------------------- Admitted assets Cash and invested assets: Bonds $14,404,438 $12,820,804 Preferred stocks: Affiliated entities 1,740 58,219 Other 77,603 77,231 Common stocks: Affiliated entities (cost: 2000 - $335,248; 1999 - $444,459) 849,503 984,400 Other (cost: 2000 - $479,874; 1999 - $662,215) 600,594 1,270,039 Mortgage loans on real estate 1,140,481 385,590 Real estate 96,219 101,195 Policy loans 417,849 409,534 Cash and short-term investments 100,681 132,454 Receivables for securities 4,454 50,510 Net short-term notes receivable from affiliates 23,702 - Other investments 278,629 168,487 -------------------------------- Total cash and invested assets 17,995,893 16,458,463 Federal income tax recoverable - 160,075 Accrued investment income 230,386 226,823 Premiums deferred and uncollected 215,315 227,722 Reinsurance receivable 271,365 249,225 Accounts receivable 159,949 15,487 General agents pension fund 109,553 79,865 Funds withheld by affiliates 262,448 - Transfers from separate accounts due or accrued 81,118 73,163 Other admitted assets 166,998 150,344 Separate account assets 4,191,889 4,229,395 -------------------------------- Total admitted assets $23,684,914 $21,870,562 ================================
3
December 31 2000 1999 ------------------------------- Liabilities and capital and surplus Liabilities: Aggregate reserves for policies and contracts: Life $ 5,341,927 $ 4,993,074 Annuity 4,411,716 4,597,808 Accident and health 100,681 104,314 Policy and contract claim reserves 419,172 296,789 Supplementary contracts without life contingencies 227,909 208,349 Other policyholders' funds 74,696 69,705 Funding agreements and municipal reverse repurchase agreements 3,915,394 2,228,261 Remittances and items not allocated 124,862 48,424 Asset valuation reserve 331,625 578,958 Interest maintenance reserve 16,139 58,721 Funds held under coinsurance and other reinsurance treaties 2,520,027 2,274,229 Commissions and expense allowances payable on reinsurance assumed 95,725 77,588 Payable for securities - 36,997 Federal income taxes payable 22,694 - Payable to affiliates 26,084 - Other liabilities 465,198 265,295 Separate account liabilities 4,046,600 4,068,126 ------------------------------- Total liabilities 22,140,449 19,906,638 Commitments and contingencies (Note 10) Capital and surplus: Common stock, $12.50 par value, 4,000,000 shares authorized, 2,206,933 issued and outstanding 27,587 27,587 Paid-in surplus 589,600 509,600 Unassigned surplus 927,278 1,426,737 ------------------------------- Total capital and surplus 1,544,465 1,963,924 ------------------------------- Total liabilities and capital and surplus $ 23,684,914 $ 21,870,562 ===============================
See accompanying notes. 4 Transamerica Occidental Life Insurance Company Statements of Operations - Statutory Basis (Dollars in thousands)
Year ended December 31 2000 1999 1998 ------------------------------------------ Revenues: Premiums and other considerations, net of reinsurance: Life $1,270,078 $1,192,299 $1,208,356 Annuity 1,179,915 681,901 914,547 Accident and health 118,827 57,531 109,138 Net investment income 1,108,214 1,125,042 1,078,543 Amortization of interest maintenance reserve (2,359) 4,739 5,052 Commissions and expense allowances on reinsurance ceded 415,788 469,910 471,943 Income from fees associated with investment management, administration and contract guarantees for separate accounts 36,536 16,821 3,818 Other income 153,589 528,951 891,442 ------------------------------------------ 4,280,588 4,077,195 4,682,841 Benefits and expenses: Benefits paid or provided for: Life and accident and health 723,471 402,475 632,175 Surrender benefits 1,136,953 694,766 616,224 Other benefits 924,707 935,940 908,946 Increase (decrease) in aggregate reserves for policies and contracts: Life 328,852 392,921 421,442 Annuity (181,511) (145,685) (852,725) Accident and health (3,632) 19,578 (16,136) Other 10,792 (7,225) 9,458 ------------------------------------------ 2,939,632 2,292,770 1,719,384 Insurance expenses Commissions 680,635 691,802 728,533 General insurance expenses 331,316 272,168 222,471 Taxes, licenses and fees 42,636 53,309 35,957 Net transfer to separate accounts 175,350 50,572 200,243 Reinsurance reserve adjustments 47,887 509,668 1,009,559 Other 138,410 22,767 704,485 ------------------------------------------ 1,416,234 1,600,286 2,901,248 ------------------------------------------ 4,355,866 3,893,056 4,620,632 ------------------------------------------ Gain (loss) from operations before dividends to policyholders, federal income tax expense (benefit) and net realized capital gains (75,278) 184,139 62,209
5 Transamerica Occidental Life Insurance Company Statements of Operations - Statutory Basis (continued) (Dollars in thousands)
Year ended December 31 2000 1999 1998 --------------------------------------------- Dividends to policyholders $ 9,377 $ 9,294 $ 8,206 --------------------------------------------- Gain (loss) from operations before federal income tax expense (benefit) and net realized capital gains (84,655) 174,845 54,003 Federal income tax expense (benefit) 6,152 30,330 (70,408) --------------------------------------------- Gain (loss) from operations before net realized capital gains on investments (90,807) 144,515 124,411 Net realized capital gains on investments (net of related federal income taxes and amounts transferred from/to interest maintenance reserve) 292,197 17,515 76,071 --------------------------------------------- Net income $ 201,390 $ 162,030 $ 200,482 =============================================
See accompanying notes. 6 Transamerica Occidental Life Insurance Company Statements of Changes in Capital and Surplus - Statutory Basis (Dollars in thousands)
Total Common Paid-in Unassigned Capital and Stock Surplus Surplus Surplus -------------------------------------------------------- Balance at January 1, 1998 $27,587 $368,738 $1,159,903 $1,556,228 Net income - - 200,482 200,482 Change in non-admitted assets - - (45,392) (45,392) Change in unrealized capital gains - - 261,540 261,540 Change in asset valuation reserve - - (39,153) (39,153) Dividend to stockholder - - (80,000) (80,000) Change in liability for reinsurance in unauthorized companies - - (3,137) (3,137) Change in surplus in separate accounts - - 32,572 32,572 Change in surplus due to reinsurance - - (21,502) (21,502) Prior year adjustments - - (21,276) (21,276) Capital contribution - 3,800 - 3,800 ------------------------------------------------------- Balance at December 31, 1998 27,587 372,538 1,444,037 1,844,162 Net income - - 162,030 162,030 Change in non-admitted assets - - (2,824) (2,824) Change in unrealized capital gains - - 119,420 119,420 Change in asset valuation reserve - - (178,342) (178,342) Dividend to stockholder - - (79,000) (79,000) Change in liability for reinsurance in unauthorized companies - - (4,646) (4,646) Change in surplus in separate accounts - - 16,637 16,637 Change in surplus due to reinsurance - - (35,865) (35,865) Prior year adjustments - - (14,710) (14,710) Capital contribution - 137,062 - 137,062 ------------------------------------------------------- Balance at December 31, 1999 27,587 509,600 1,426,737 1,963,924 Net income - - 201,390 201,390 Change in non-admitted assets - - 42,867 42,867 Change in unrealized capital gains - - (528,752) (528,752) Change in asset valuation reserve - - 247,333 247,333 Dividend to stockholder - - (135,000) (135,000) Dividend of subsidiary to stockholder - - (210,386) (210,386) Change in liability for reinsurance in unauthorized companies - - (19,364) (19,364) Change in surplus in separate accounts - - (16,755) (16,755) Change in surplus due to reinsurance - - 9,587 9,587 Partnership termination - - (46,671) (46,671) Prior year adjustments - - (43,708) (43,708) Capital contribution - 80,000 - 80,000 -------------------------------------------------------- Balance at December 31, 2000 $27,587 $589,600 $ 927,278 $1,544,465 ========================================================
See accompanying notes. 7 Transamerica Occidental Life Insurance Company Statements of Cash Flow - Statutory Basis (Dollars in thousands)
Year ended December 31 2000 1999 1998 ------------------------------------------------------ Operating activities Premiums and annuity considerations $1,676,491 $ 319,552 $2,642,142 Fund deposits 627,634 351,170 363,889 Other policy proceeds and considerations 278,093 212,546 259,627 Allowances and reserve adjustments received on reinsurance ceded 443,651 1,861,584 93,368 Investment income received 1,119,095 1,088,846 1,068,856 Other income received 1,851,376 141,247 194,037 Life and accident and health claims paid (665,369) (266,727) (661,006) Surrender benefits and other fund withdrawals paid (1,137,020) (695,777) (618,854) Annuity and other benefits paid (653,975) (962,151) (948,840) Commissions, other expenses and taxes paid (1,083,271) (1,027,317) (950,827) Dividends paid to policyholders (9,820) (9,136) (8,102) Federal income taxes received (paid) 208,049 (146,945) 15,764 Reinsurance reserve transfers and other (546,720) (618,898) (1,891,421) --------------------------------------------------- Net cash provided by (used in) operating activities 2,108,214 247,994 (441,367) Investing activities Proceeds from investments sold, matured or repaid: Bonds 5,872,493 2,993,985 3,938,693 Stocks 2,122,089 220,666 488,559 Mortgage loans 15,173 11,248 37,335 Real estate - 3,050 20,300 Other invested assets 6,394 200 3,984 Miscellaneous proceeds 1,079 407 (25,830) --------------------------------------------------- Total investment proceeds 8,017,228 3,229,556 4,463,041 Taxes paid on net realized capital gains (178,914) - - --------------------------------------------------- Net proceeds from sales, maturities, or repayments of investments 7,838,314 3,229,556 4,463,041
8 Transamerica Occidental Life Insurance Company Statements of Cash Flow - Statutory Basis (continued) (Dollars in thousands)
Year ended December 31 2000 1999 1998 ------------------------------------------------------ Cost of investments acquired: Bonds $ (7,506,987) $(3,656,035) $(4,225,623) Stocks (1,273,183) (611,404) (331,131) Mortgage loans (771,604) (9,800) (121,139) Real estate (1,287) (5,064) (7,030) Other invested assets (132,908) (35,204) (36,752) Miscellaneous applications (1,242) (93,194) - --------------------------------------------------- Total cost of investments acquired (9,687,211) (4,410,701) (4,721,675) Net decrease (increase) in policy loans (8,315) 1,094 (3,174) --------------------------------------------------- Net cost of investments acquired (9,695,526) (4,409,607) (4,724,849) --------------------------------------------------- Net cash used in investing activities (1,857,212) (1,180,051) (261,808) Financing and miscellaneous activities Other cash provided: Capital and surplus paid-in 80,000 137,062 3,800 Other sources 1,343,871 562,978 1,485,965 --------------------------------------------------- Total other cash provided 1,423,871 700,040 1,489,765 Other cash applied: Dividends paid to stockholder (135,000) (79,000) (80,000) Other applications, net (1,571,646) (70,086) (347,482) --------------------------------------------------- Total other cash applied (1,706,646) (149,086) (427,482) --------------------------------------------------- Net cash provided by (used in) financing and miscellaneous activities (282,775) 550,954 1,062,283 --------------------------------------------------- Net increase (decrease) in cash and short-term investments (31,773) (381,103) 359,108 Cash and short-term investments: Beginning of year 132,454 513,557 154,449 --------------------------------------------------- End of year $ 100,681 $ 132,454 $ 513,557 ===================================================
See accompanying notes. 9 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (Dollars in thousands) December 31, 2000 1. Organization and Summary of Significant Accounting Policies Transamerica Occidental Life Insurance Company (the "Company") is a stock life insurance company domiciled in Iowa. The Company is a wholly-owned subsidiary of Transamerica Insurance Corporation, which is a wholly-owned subsidiary of Transamerica Corporation ("Transamerica"). Transamerica is an indirect wholly-owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands. The Company has two wholly-owned insurance subsidiaries: Transamerica Life Insurance and Annuity Company ("TALIAC") and Transamerica Life Insurance Company of New York ("TONY"). As discussed in Note 11, in 2000, the Company transferred its entire ownership interest in its subsidiary, Transamerica Life Insurance Company of Canada, in the form of a dividend to its parent. Also in 2000, the Company was redomiciled from California to Iowa. Nature of Business The Company engages in providing life insurance, pension and annuity products, reinsurance, structured settlements and investment products which are distributed through a network of independent and company-affiliated agents and independent brokers. The Company's customers are primarily in the United States and are distributed in 49 states. 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. Actual results could differ from those estimates. Significant estimates and assumptions are utilized in the calculation of aggregate policy reserves, policy and contract claim reserves, guaranty fund assessment accruals and valuation allowances on investments. It is reasonably possible that actual experience could differ from the estimates and assumptions utilized which could have a material impact on the financial statements. 10 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) The accompanying financial statements have been prepared on the basis of accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa ("Insurance Department"), which practices differ in some respects from accounting principles generally accepted in the United States. The more significant of these differences are as follows: (a) bonds are generally reported at amortized cost rather than segregating the portfolio into held-to-maturity (reported at amortized cost), available-for-sale (reported at fair value), and trading (reported at fair value) classifications; (b) acquisition costs of acquiring new business are charged to current operations as incurred rather than deferred and amortized over the life of the policies or over the expected gross profit stream; (c) policy reserves on traditional life products are based on statutory mortality rates and interest which may differ from reserves based on reasonable assumptions of expected mortality, interest, and withdrawals which include a provision for possible unfavorable deviation from such assumptions; (d) policy reserves on certain investment products use discounting methodologies based on statutory interest rates rather than full account values; (e) reinsurance amounts are netted against the corresponding asset or liability rather than shown as gross amounts on the balance sheet; (f) deferred income taxes are not provided for the difference between the financial statement and income tax bases of assets and liabilities; (g) net realized gains or losses attributed to changes in the level of interest rates in the market are deferred and amortized over the remaining life of the bond or mortgage loan, rather than recognized as gains or losses in the statement of operations when the sale is completed; (h) potential declines in the estimated realizable value of investments are provided for through the establishment of a formula-determined statutory investment reserve (reported as a liability), changes to which are charged directly to surplus, rather than through recognition in the statement of operations for declines in value, when such declines are judged to be other than temporary; (i) certain assets designated as "non-admitted assets" have been charged to surplus rather than being reported as assets; (j) revenues for universal life and investment products consist of premiums received rather than policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed; (k) pension expense is recorded as amounts are paid; (l) adjustments to federal income taxes of prior years are charged or credited directly to unassigned surplus, rather than reported as a component of expense in the statement of operations; (m) policyholder dividends are recognized when declared rather than over the term of the related policies; (n) a liability is established for "unauthorized reinsurers" and changes in this liability are charged or credited directly to unassigned surplus; and (o) the 11 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) accounts and operations of the Company's subsidiaries are not consolidated but are included in investments in common stocks at the statutory net carrying value, changes to which are charged or credited directly to unassigned surplus. The effects of these variances have not been determined by the Company but are presumed to be material. The National Association of Insurance Commissioners ("NAIC") has revised the Accounting Practices and Procedures Manual in a process referred to as Codification. The revised manual will be effective January 1, 2001. The State of Iowa has adopted the provisions of the revised manual. The revised manual has changed, to some extent, prescribed statutory accounting practices and will result in changes to the accounting practices that the Company uses to prepare its statutory-basis financial statements. The cumulative effect of changes in accounting principles adopted to conform to the revised Accounting Practices and Procedures Manual, will be reported as an adjustment to surplus as of January 1, 2001. Management believes the effect of these changes will not result in a significant reduction in the Company's statutory-basis capital and surplus as of adoption. Other significant accounting policies are as follows: Cash and Short-Term Investments For purposes of the statements of cash flow, the Company considers all highly liquid investments with remaining maturity of one year or less when purchased to be short-term investments. Investments Investments in bonds (except those to which the Securities Valuation Office of the NAIC has ascribed a value), mortgage loans on real estate and short-term investments are reported at cost adjusted for amortization of premiums and accrual of discounts. Amortization is computed using methods which result in a level yield over the expected life of the investment. The Company reviews its prepayment assumptions on mortgage 12 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) and other asset-backed securities at regular intervals and adjusts amortization rates retrospectively when such assumptions are changed due to experience and/or expected future patterns. Investments in preferred stocks in good standing are reported at cost. Investments in preferred stocks not in good standing are reported at the lower of cost or market. Common stocks of unaffiliated companies are carried at market value. Common stock of the Company's affiliated insurance subsidiaries are recorded at the equity in statutory-basis net assets. Real estate is reported at cost less allowances for depreciation. Depreciation of real estate is computed principally by the straight-line method. Policy loans are reported at unpaid principal. Other investments consist of investments in various joint ventures and limited partnerships, which are recorded at equity in underlying net assets, and derivative instruments, which are valued in accordance with the NAIC Accounting Practices and Procedures manual and Purposes and Procedures manual of the SVO. All derivative instruments are used for hedging purposes and valued on a basis consistent with the hedged item. The Company uses interest rate swaps, interest rate caps and floors, options, swaptions and certain other derivatives as part of its overall interest rate risk management strategy for certain life insurance and annuity products. As the Company only uses derivatives for hedging purposes, the Company values all derivative instruments on a consistent basis as the hedged item. Upon termination, gains and losses on those instruments are included in the carrying values of the underlying hedged items and are amortized over the remaining lives of the hedged items as adjustments to investment income or benefits from the hedged items. Any unamortized gains or losses are recognized when the underlying hedged items are sold. Interest rate swap contracts are used to convert the interest rate characteristics (fixed or variable) of certain investments to match those of the related insurance liabilities that the investments are supporting. The net interest effect of such swap transactions is reported as an adjustment of interest income from the hedged items as incurred. Interest rate caps and floors are used to limit the effects of changing interest rates on yields of variable rate or short-term assets or liabilities. The initial cost of any such agreements is amortized to net investment income over the life of the agreement. Periodic payments that are receivable as a result of the agreements are accrued as an adjustment of interest income or benefits from the hedged item. 13 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) Net realized capital gains and losses are determined on the basis of specific identification and are recorded net of related federal income taxes. The Asset Valuation Reserve ("AVR") is established by the Company to provide for potential losses in the event of default by issuers of certain invested assets. These amounts are determined using a formula prescribed by the NAIC and are reported as a liability. The formula for the AVR provides for a corresponding adjustment for realized gains and losses. Under a formula prescribed by the NAIC, the Company defers, in the Interest Maintenance Reserve ("IMR"), the portion of realized gains and losses on sales of fixed income investments, principally 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 security. 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 on real estate where rent is in arrears for more than three months. Further, income is not accrued when collection is uncertain. During 2000, the Company excluded investment income due and accrued of $1,518 with respect to such practices. No such investment income due and accrued was excluded during 1999 and 1998. Aggregate Policy Reserves Life, annuity and accident and health benefit reserves are developed by actuarial methods and are determined based on published tables based on statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum required by law. The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958 and 1980 Commissioners' Standard Ordinary 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 Commissioners' Reserve Valuation Methods. Reserves for universal life policies are based on account balances adjusted for the Commissioners' Reserve Valuation Method. 14 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) Deferred annuity reserves are calculated according to the Commissioners' 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 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. Accident and health policy reserves are equal to the greater of the gross unearned premiums or any required midterminal reserves plus net unearned premiums and the present value of amounts not yet due on both reported and unreported claims. 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 statement 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. Funding Agreements and Municipal Reverse Repurchase Agreements Funding agreements and municipal reverse repurchase agreements are investment contracts issued to municipalities, corporations, mutual funds and other institutional investors 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. As of December 31, 2000, funding agreements totaling $1,690,548 contained provisions which allow the policyholder to withdraw their funds at book value after certain advance notice periods which range up to one year in duration. Separate Accounts Assets held in trust for purchases of variable 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 market. Income and gains and 15 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) 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 Company received variable contract premiums of $350,784, $255,210 and $352,298 in 2000, 1999 and 1998, respectively. Premium Revenues Premiums from life insurance policies are recognized as revenue when due, and premiums from annuity contracts are recognized when received. Accident and health premiums are earned pro rata over the terms of the policies. Other Income Other income consists primarily of profit sharing on reinsurance ceded and reserve adjustments on ceded modified coinsurance transactions. 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 inforce blocks of business are included in surplus rather than gain from operations. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively. Prior Year Adjustments Prior year adjustments charged directly to surplus in 2000 relate to expenses incurred for sales practices litigation of $8,199, the write off of software of $30,043 and suspense adjustments of $5,466. There was no overall impact to surplus resulting from the software write off as this item was previously nonadmitted. Prior year adjustments charged directly to surplus in 1999 relate primarily to expenses incurred for sales practices litigation of $7,710 and a suspense asset adjustment of $7,000. Prior year adjustments in 1998 relate primarily to expenses incurred for sales practices litigation of $8,276 and a reserve valuation adjustment of $13,000 on single premium immediate annuities. 16 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 1. Organization and Summary of Significant Accounting Policies (continued) Reclassifications Certain reclassifications have been made to the 1999 and 1998 financial statements to conform to the 2000 presentation. 2. Fair Values of Financial Instruments Statement of Financial Accounting Standard ("SFAS") No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the statutory-basis balance sheet, for which it is practicable to estimate that value. SFAS No. 119, Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments, requires additional disclosure about derivatives. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. SFAS No. 107 and No. 119 exclude certain financial instruments and all nonfinancial instruments from their disclosure requirements and allow companies to forego the disclosures when those estimates can only be made at excessive cost. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and short-term investments: The carrying amounts reported in the balance sheet for these instruments approximate their fair values. Investment securities: Fair values for fixed maturity securities (including preferred stocks) are based on quoted market prices, where available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, are estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality, and maturity of the investments. The fair values for equity securities, other than affiliated entities, are based on quoted market prices. 17 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 2. Fair Values of Financial Instruments (continued) Mortgage loans and policy loans: The fair values for mortgage loans are estimated utilizing discounted cash flow analyses, using interest rates reflective of current market conditions and the risk characteristics of the loans. The fair value of policy loans is assumed to equal their carrying amount. Net short-term notes receivable from affiliates: The fair value for net short-term notes receivable from affiliates approximate their carrying value. Investment contracts: Fair values for the Company's liabilities under investment-type insurance contracts, including separate account liabilities, are estimated using discounted cash flow calculations, based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. Derivatives: Estimated fair value of interest rate swaps, caps, floors, options and swaptions are based upon the latest quoted market price. Estimated fair value of interest rate swaps are based upon the pricing differential for similar swap agreements. Fair values for the Company's insurance contracts other than investment contracts 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, which minimizes exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts. The following sets forth a comparison of the fair values and carrying amounts of the Company's financial instruments subject to the provisions of SFAS No. 107 and No. 119: 18 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 2. Fair Values of Financial Instruments (continued) The carrying amounts and fair values of financial instruments are as follows (in thousands):
December 31 2000 1999 -------------------------------- -------------------------------------- Carrying Fair Carrying Fair Amount Value Amount Value -------------------------------- -------------------------------------- Admitted assets Bonds $14,404,438 $14,562,288 $12,820,804 $12,681,458 Preferred stocks other than affiliates 77,603 78,621 77,231 42,448 Common stocks other than affiliates 600,594 600,594 1,270,039 1,270,039 Mortgage loans on real estate 1,140,481 1,170,426 385,590 363,650 Policy loans 417,849 417,849 409,534 396,956 Floors, caps, options and swaptions 47,543 109,800 56,964 60,129 Interest rate swaps 10,994 11,367 - (65,953) Cash and short-term investments 100,681 100,681 132,454 132,454 Net short-term notes receivable from affiliates 23,702 23,702 - - Separate account assets 4,191,889 4,191,889 4,229,395 4,229,395 Liabilities Investment contract liabilities 7,275,853 7,187,031 8,807,732 8,800,196 Separate account liabilities 3,919,092 4,022,404 3,941,489 3,941,489
19 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments The Company's investment in common stocks of its wholly owned subsidiaries, based on the statutory capital and surplus of the subsidiaries, is summarized as follows:
Carrying Cost Amount ---------------------------- At December 31, 2000: TALIAC $ 238,418 $ 823,859 TONY 83,600 25,470 Other 13,230 174 ---------------------------- $ 335,248 $ 849,503 ============================ At December 31, 1999: TALIAC $ 238,418 $ 797,109 TONY 83,600 50,142 Transamerica Life Insurance Company of Canada 113,711 135,565 Others 8,730 1,584 ---------------------------- $ 444,459 $ 984,400 ============================
In 1999 and 1998, the Company received a dividend of $50,000 from its wholly-owned subsidiary, TALIAC. Certain financial information with respect to TALIAC and TONY, the Company's wholly-owned insurance subsidiaries, is as follows:
December 31 2000 1999 ------------------------------ Cash and investments $15,244,044 $14,869,284 Other assets 6,492,031 6,948,284 ------------------------------ Total assets 21,736,075 21,817,568 Aggregate reserves 11,067,366 9,977,508 Other liabilities 9,819,380 10,992,809 ------------------------------ Total liabilities 20,886,746 20,970,317 ------------------------------ Total capital and surplus $ 849,329 $ 847,251 ==============================
20 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) The carrying value and estimated fair value of investments in debt securities are summarized as follows (in thousands):
Gross Gross Estimated Carrying Unrealized Unrealized Fair Value Gains Losses Value --------------------------------------------------------------- December 31, 2000 United States Government and agencies $ 722,783 $ 8,263 $ 959 $ 730,087 State, municipal and other government 344,859 53,300 669 397,490 Public utilities 1,453,514 56,108 28,252 1,481,370 Industrial and miscellaneous 9,255,458 296,606 285,486 9,266,578 Mortgage and other asset- backed securities 2,627,824 77,521 18,582 2,686,763 --------------------------------------------------------------- 14,404,438 491,798 333,948 14,562,288 Preferred stocks 77,603 6,622 5,604 78,621 --------------------------------------------------------------- $14,483,781 $498,420 $341,292 $14,640,909 =============================================================== December 31, 1999 United States Government and agencies $ 189,325 $ 11,396 $ 1,968 $ 198,753 State, municipal and other government 106,484 3,673 1,482 108,675 Foreign governments 50,820 353 3,328 47,845 Public utilities 1,718,582 20,020 38,842 1,699,760 Industrial and miscellaneous 9,345,228 103,079 230,148 9,218,159 Mortgage and other asset- backed securities 1,410,365 - 2,099 1,408,266 --------------------------------------------------------------- 12,820,804 138,521 277,867 12,681,458 Preferred stocks 77,231 6,399 41,182 42,448 --------------------------------------------------------------- $12,898,035 $144,920 $319,049 $12,723,906 ===============================================================
21 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) The carrying value and estimated fair value of bonds at December 31, 2000, 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.
Estimated Carrying Fair Amount Value ------------------------------ Due in one year or less $ 293,736 $ 293,384 Due after one year through five years 2,573,899 2,614,419 Due after five years through ten years 2,648,540 2,617,591 Due after ten years 6,260,439 6,350,131 Mortgage and other asset-backed securities 2,627,824 2,686,763 ------------------------------ $ 14,404,438 $ 14,562,288 ==============================
A detail of net investment income is presented below:
Year ended December 31 2000 1999 1998 --------------------------------------------- Interest on bonds and preferred stocks $1,068,590 $ 994,418 $ 952,235 Dividends from common stocks 5,332 53,192 53,000 Interest on mortgage loans 49,068 28,314 28,713 Rental income on real estate 30,180 28,008 27,288 Interest on policy loans 22,994 27,086 24,780 Cash and short-term investments 5,938 10,526 10,939 Other investments 18,427 16,343 17,198 --------------------------------------------- 1,200,529 1,157,887 1,114,153 Less investment expenses (92,315) (32,845) (35,610) --------------------------------------------- Net investment income $1,108,214 $ 1,125,042 $ 1,078,543 =============================================
22 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) Proceeds from sales and maturities of bonds and related gross realized capital gains and losses were as follows:
Year ended December 31 2000 1999 1998 ------------------------------------------------ Proceeds $ 5,872,493 $ 2,993,985 $ 3,938,693 Gross realized gains $ 94,531 $ 46,135 $ 44,290 Gross realized losses (157,019) (43,142) (27,768) ------------------------------------------------ Net realized capital gains (losses) $ (62,488) $ 2,993 $ 16,522 ================================================
At December 31, 2000, investments with an aggregate carrying value of $9,236 were on deposit with regulatory authorities or were restrictively held in bank custodial accounts for the benefit of such regulatory authorities as required by statute. Realized capital gains (losses) and changes in unrealized gains (losses) for investments are summarized below:
Realized ---------------------------------------- Year ended December 31 2000 1999 1998 ---------------------------------------- Bonds $ (62,488) $ 2,993 $ 16,522 Preferred stocks 6,124 (6,085) 2,405 Common stocks 499,621 41,011 164,984 Other (17,086) (90,400) (7,021) ---------------------------------------- 426,171 (52,481) 172,080 Tax effect (178,914) 71,941 (84,425) Transfer from (to) interest maintenance reserve 44,940 (1,945) (11,584) ---------------------------------------- Net realized gains $ 292,197 $ 17,515 $ 76,071 ========================================
23 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) The other loss of $90,400 in 1999 primarily resulted from the net pretax loss incurred on an ineffective equity collar hedge (see Note 9). Unrealized ------------------------------------------ Year ended December 31 2000 1999 1998 ------------------------------------------ Bonds $ (10,264) $ (5,756) $ (871) Preferred stocks (4,499) 2,271 (2,741) Common stocks (512,790) 125,177 257,582 Mortgage loans (1,791) - - Other invested assets 592 (2,272) 7,570 ------------------------------------------ Change in unrealized $ (528,752) $ 119,420 $ 261,540 ========================================== Gross unrealized gains and gross unrealized losses on common stock of unaffiliated entities are as follows: December 31 2000 1999 ---------------------------- Unrealized gains $172,202 $640,014 Unrealized losses (51,482) (32,190) ---------------------------- Net unrealized gains $120,720 $607,824 ============================ During 2000, the Company issued mortgage loans with interest rates ranging from 7.39% to 9.51%. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 85%. The Company requires all mortgaged properties to carry fire insurance equal to the value of the underlying property. At December 31, 2000 and 1999, the Company held a mortgage loan loss reserve in the asset valuation reserve of $6,792 and $4,586, respectively. The mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows: 24 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued)
Geographic Distribution Property Type Distribution --------------------------------------------------------- ---------------------------------------------- December 31 December 31 2000 1999 2000 1999 ---------------------- ------------------ Pacific 35% 42% Office 38% 22% South Atlantic 24 26 Apartment 18 40 Middle Atlantic 11 15 Retail 18 7 Mountain 7 - Other 17 28 E. North Central 5 2 Industrial 9 3 W. South Central 5 1 W. North Central 5 6 New England 5 8 E. South Central 3 -
At December 31, 2000, the Company had no investments (excluding U. S. Government guaranteed or insured issues) which individually represented more than ten percent of capital and surplus and the asset valuation reserve, collectively. The operations of the Company are subject to risk of interest rate fluctuations to the extent that there is a difference between the cash flows from the Company's interest-earning assets and the cash flows related to its liabilities. In the normal course of its operations, the Company hedges some of its interest rate risk with derivative financial instruments. These derivatives comprise primarily of interest rate swap agreements, interest rate floor agreements, foreign currency swap agreements, call option agreements, S&P 500 call option agreements, and options to enter into interest rate swap agreements (swaptions). The Company does not use derivatives financial instruments for trading or speculative purposes, nor is the Company a party to any leveraged derivative contracts. Interest swap agreements are intended to help the Company more closely match the cash flows received from its assets to the payments on its liabilities. The Company's interest rate swap agreements generally provide that one party pays interest at a floating rate in relation to movements in an underlying index and the other party pays interest at a fixed rate. Generally, no cash is exchanged at the outset of the contract, and no principal payments are made by either party. A single net payment is made usually by one counterparty at each settlement date. Interest rate swaps that terminate prior to maturity are generally settled for the fair value of the swap on the termination date. 25 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) Interest rate floor agreements purchased by the Company provide for the receipt of payments in the event interest rates fall below specified levels. Interest rate floors are intended to mitigate the Company's risk of reinvesting the cash flow it receives from calls, mortgage prepayments, and redemptions on its investment portfolio at lower interest rates. A single premium payment is made by the Company at the beginning of the contract. Once the interest rate floor becomes effective, if the actual rate moves below the agreed upon floor rate, the Company receives payment equal to the difference between the actual rate and the floor rate times the notional amount of the agreement. The Company purchases swaptions to help manage the risk of interest rate fluctuations by providing an option to enter into an interest rate swap in the event of unfavorable interest rate movements. A single premium payment is made by the purchaser at the beginning of the contract. Once the option is exercised, the parties enter into an interest rate swap agreement. The Company has credit risk exposure to the extent that a counterparty fails to make payment on its obligation. While the Company is exposed to credit risk in the event of nonperformance by the other party, nonperformance is not anticipated due to the credit rating of the counterparties. At December 31, 2000, all of the Company's derivative financial instruments were with financial institutions rated A or better by one or more of the major credit rating agencies. Market risk is the risk the Company faces from a change in the market value of a derivative instrument. The Company uses derivatives as hedges, consequently, when the value of the derivative changes, the value of a corresponding hedged asset or liability will 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). The Company mitigates this risk by actively measuring and monitoring correlation and taking corrective action as necessary. 26 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 3. Investments (continued) At December 31, 2000 and 1999, the Company's outstanding financial instruments with on and off balance sheet risks, shown in notional amounts are summarized as follows:
Notional Amount 2000 1999 -------------------------------- Derivative securities Interest rate swaps: Receive float-pay float $ 15,833 $ 298,631 Receive fixed-pay float 3,342,842 2,195,954 Receive float-pay fixed 700,742 270,862 Interest rate floor agreements 500,445 400,000 Swaptions 6,500,000 6,500,000 Call options 32,199 31,999
4. Reinsurance The Company is involved in both the cession and assumption of reinsurance with other companies, including affiliated companies. Risks are reinsured with other companies to permit the recovery of a portion of the direct losses. These reinsured risks are treated as though, to the extent of the reinsurance, they are risks for which the Company is not liable. 27 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 4. Reinsurance (continued) Policy liabilities and accruals are reported in the accompanying financial statements net of reinsurance ceded. The Company remains liable to the extent the reinsuring companies do not meet their obligations under these reinsurance treaties. Premiums earned reflect the following reinsurance assumed and ceded amounts:
Ceded/Retroceded to Assumed from ------------------------------------------------------------- Direct Affiliated Unaffiliated Affiliated Unaffiliated Net Amount Companies Companies Companies Companies Amount ----------------------------------------------------------------------------------------------- Year ended December 31, 2000: Premium revenue $ 2,623,910 $ 199,290 $1,574,257 $ 359,387 $1,359,070 $ 2,568,820 =============================================================================================== At December 31, 2000: Reserves for future policy benefits $ 13,967,778 $ 3,402,793 $3,590,670 $ 524,069 $2,355,940 $ 9,854,324 Policy and contract claims payable 313,976 34,769 267,285 4,844 402,406 419,172 ----------------------------------------------------------------------------------------------- $ 14,281,754 $ 3,437,562 $3,857,955 $ 528,913 $2,758,346 $ 10,273,496 =============================================================================================== Year ended December 31, 1999: Premium revenue $ 2,281,775 $ 112,947 $2,274,338 $ 157,197 $1,880,044 $ 1,931,731 =============================================================================================== At December 31, 1999: Reserves for future policy benefits $ 14,241,446 $ 4,124,327 $3,056,908 $ 233,126 $2,401,859 $ 9,695,196 Policy and contract claims payable 127,030 40,341 137,047 1,824 345,323 296,789 ----------------------------------------------------------------------------------------------- $ 14,368,476 $ 4,164,668 $3,193,955 $ 234,950 $2,747,182 $ 9,991,985 =============================================================================================== Year ended December 31, 1998: Premium revenue $ 2,314,662 $ 298,339 $2,482,419 $ 198,460 $2,499,677 $ 2,232,041 =============================================================================================== At December 31, 1998: Reserves for future policy benefits $ 14,778,562 $ 4,978,700 $2,931,865 $136,208 $2,424,077 $ 9,428,282 Policy and contract claims payable 121,330 45,187 316,533 11,018 385,519 156,147 ----------------------------------------------------------------------------------------------- $ 14,899,892 $ 5,023,887 $3,248,398 $147,226 $2,809,596 $ 9,584,429 ===============================================================================================
In 2000, the Company entered into a reinsurance transaction with two affiliated companies in which the company assumed certain structured settlement liabilities on a funds withheld basis. As a result, the Company has recorded a related asset of $262,448. 28 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 5. Income Taxes The Company's taxable income or loss is included in the consolidated return of Transamerica Corporation for the period ended July 21, 1999. The method of allocation between the companies for the period ended July 21, 1999, is subject to written agreement approved by the Board of Directors. Tax payments are made to, or refunds received from, Transamerica Corporation in amounts which would result from filing separate tax returns with federal taxing authorities, except that tax benefits attributable to operating losses and other carryovers are recognized currently since utilization of these benefits is assured by Transamerica Corporation. The provision does not purport to represent a proportionate share of the consolidated tax. For the period beginning July 22, 1999, the Company will join in a consolidated tax return with certain life affiliates, including TALIAC and TONY. The method of allocation between the companies for the period beginning July 22, 1999, is subject to a written agreement as approved by the Board of Directors. This agreement requires that tax payments are made to, or refunds are received from the Company, in amounts which would results from filing separate tax returns with federal taxing authorities. Following is a reconciliation of federal income taxes computed at the statutory rate with the income tax provision, excluding income taxes related to net realized gains on investment transactions (in thousands):
Year ended December 31 2000 1999 1998 ------------------------------------------------------ Computed tax at federal statutory rate (35%) $(29,629) $ 61,196 $ 18,901 Tax reserve adjustment 11,844 (1,153) (3,463) Deferred acquisition costs - tax basis 6,082 13,326 4,677 Reinsurance adjustments - (14,442) (7,525) Difference in statutory and tax bases of investments - (2,399) (10,990) Prior year under (over) accrual 46,125 24,640 (13,055) Tax credits (27,111) (16,000) (17,698) Dividend received deduction (1,420) (17,500) (17,500) IMR amortization 826 - - Other items - net (565) (17,338) (23,755) ------------------------------------------------- Federal income tax expense (benefit) $ 6,152 $ 30,330 $(70,408) =================================================
29 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 5. Income Taxes (continued) Prior to 1984, as provided for under the Life Insurance Company Tax Act of 1959, a portion of statutory income was not subject to current taxation but was accumulated for income tax purposes in a memorandum account referred to as the policyholder's surplus account. No federal income taxes have been provided for in the financial statements on income deferred in the policyholders' surplus account ($117,701 at December 31, 2000). To the extent dividends are paid from the amount accumulated in the policyholders' surplus account, net earnings would be reduced by the amount of tax required to be paid. Should the entire amount in the policyholders' surplus account become taxable, the tax thereon computed at current rates would amount to approximately $41,195. The Company's federal income tax returns have been examined and closing agreements have been executed with the Internal Revenue Service through 1993. The examination fieldwork for 1994 and 1995 has been completed and a tentative settlement has been reached at Appeals. The examination fieldwork for 1995 through 1997 has been completed and a petition has been filed in the tax court. An examination is underway for 1998 and for the period from January 1 through July 21, 1999 (short tax period). 6. Policy and Contract Attributes 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, are summarized as follows: 30 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 6. Policy and Contract Attributes (continued)
December 31 2000 1999 ---------------------------------------------------------------- Amount Percent Amount Percent ---------------------------------------------------------------- Subject to discretionary withdrawal - with adjustment: With market value adjustment $ 994,166 7% $ 9,134 - At book value less surrender charge 537,251 4 435,717 3% At market value 3,367,374 26 7,385,279 53 Subject to discretionary withdrawal - without adjustment 1,419,091 11 1,748,102 13 Not subject to discretionary withdrawal provision 6,760,644 52 4,417,004 31 --------------------------------------------------------- Total annuity reserves and deposit liabilities 13,078,526 100% 13,995,236 100% === === Less reinsurance ceded (5,209,341) (5,820,180) -------------- -------------- Net annuity reserves and deposit liabilities $ 7,869,185 $ 8,175,056 ============== ==============
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 estimated 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 market value changes are borne entirely by the policyholder. Information regarding the separate accounts of the Company is as follows:
Nonindexed Guaranteed Guaranteed Indexed More Than 4% Nonguaranteed Total ----------- ------------ -------------- ----------- Premiums, deposits and other considerations for the year ended December 31, 2000 $ - $ - $ 349,535 $ 349,535 =========== =========== ============ =========== Reserves for separate accounts as of December 31, 2000 $ 17,528 $ 754,619 $ 3,188,901 $ 3,961,048 =========== ========== ============= =========== Reserves by withdrawal characteristics as of December 31, 2000: At market value $ - $ - $ 3,188,901 $ 3,188,901 Not subject to discretionary withdrawal 17,528 754,619 - 17,528 ---------- ---------- ------------ ----------- $ 17,528 $ 754,619 $ 3,188,901 $ 3,961,048 ========== ========== ============ ===========
Comparative information for 1999 and 1998 is not available. 31 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 6. Policy and Contract Attributes (continued) A reconciliation of the amounts transferred to and from the separate accounts is presented below:
Year ended December 31 2000 1999 1998 ---------------------------------------------- Transfer as reported in the summary of operations of the separate accounts statement: Transfers to separate accounts $350,784 $ 255,210 $352,298 Transfers from separate accounts 181,133 217,729 173,152 ------------------------------------------ Net transfers to separate accounts 169,651 37,481 179,146 Reconciling adjustments: Deposits (withdrawals) from separate accounts 5,287 13,091 21,097 Other fund adjustment 412 - - ------------------------------------------ Net transfers as reported in the statements of operations $175,350 $ 50,572 $200,243 ==========================================
Components of deferred and uncollected premiums are as follows:
Gross Loading Net ------------------------------------------------------ December 31, 2000 Life and annuity: Ordinary first-year business $ 30,778 $ 17,890 $ 12,888 Ordinary renewal business 411,229 17,145 394,084 Group life direct business 4,968 - 4,968 Reinsurance ceded (212,969) - (212,969) ------------------------------------------------ 234,006 35,035 198,971 Accident and health 16,344 - 16,344 ------------------------------------------------ $ 250,350 $ 35,035 $ 215,315 ================================================ December 31, 1999 Life and annuity: Ordinary first-year business $ 52,710 $ - $ 52,710 Ordinary renewal business 263,678 36,000 227,678 Group life direct business 759 - 759 Reinsurance ceded (123,315) - (123,315) ------------------------------------------------ 193,832 36,000 157,832 Accident and health 69,890 - 69,890 ------------------------------------------------ $ 263,722 $ 36,000 $ 227,722 ================================================
32 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 7. Dividend Restrictions The Company is subject to limitations, imposed by the State of Iowa, on the payment of dividends to its parent company. 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 statutory surplus as of the preceding December 31, or (b) 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 2001, without the prior approval of insurance regulatory authorities, is $156,700. 8. Pension Plan and Other Postretirement Benefits Substantially all employees are covered by noncontributory defined benefit plans sponsored by the Company and the Retirement Plan for Salaried Employees of Transamerica Corporation and Affiliates in which the Company also participates. Pension benefits are based on the employee's compensation during the highest paid 60 consecutive months during the 120 months before retirement. The general policy is to fund current service costs currently and prior service costs over periods ranging from 10 to 30 years. Assets of those plans are invested principally in publicly traded stocks and bonds. The Company's total pension costs were approximately $1,100, $800 and $600 for the years ended December 31, 2000, 1999 and 1998, respectively. The Company also participates in various contributory defined benefit programs sponsored by Transamerica Corporation that provide medical and certain other benefits to eligible retirees. The Company accounts for the costs of such benefit programs under the accrual method and amortizes its transition obligation for retirees and fully eligible or vested employees over 20 years. Postretirement benefit costs charged to income was approximately $3,000 for each of the years ended December 31, 2000, 1999 and 1998. 33 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 9. Related Party Transactions The Company shares certain offices, employees and general expenses with affiliated companies. Beginning in 2000, the Company receives data processing, investment advisory and management, marketing and administration services from affiliates. During 2000, the Company paid $21,323 for these services, which approximates their costs to the affiliates. Payables to affiliates bear interest at the thirty-day commercial paper rate of 6.40% at December 31, 2000. At December 31, 2000, the Company has short-term notes receivable from affiliates of $155,000 and short-term notes payable to affiliates of $131,298. Interest on these notes accrue at rates ranging from 6.49% to 6.52%. In March 1999, the Company entered into an equity collar (which expired December 17, 1999), with an unrelated party to hedge the price fluctuations of their unaffiliated equity securities portfolio. In addition, Transamerica Corporation agreed to protect the Company from any ineffectiveness in the hedge that would expose the Company to loss net of tax benefit. As a result of the ineffectiveness of the collar with the unrelated party and the payment that the Company was required to make upon settlement, Transamerica Corporation made a payment of approximately $172,000 to the Company in December 1999. 34 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 10. Commitments and Contingencies The Company is a defendant in various legal actions arising from its operations. These include legal actions similar to those faced by many other major life insurers which allege damages related to sales practices for universal life policies sold between January 1981 and June 1996. In one such action, the Company and plaintiff's counsel entered into a settlement which was approved on June 26, 1997. The settlement required prompt notification to affected policyholders. Administrative and policy benefit costs associated with the settlement of $8,199, $7,710 and $8,276 after-tax have been incurred in 2000, 1999 and 1998, respectively, and reflected in these statements as prior period adjustments. Additional costs related to the settlement are not expected to be material and will be incurred over a period of years. In the opinion of the Company, any ultimate liability which might result from other litigation would not have a materially adverse effect on the combined financial position of the Company or the results of its operations. 11. Stock Dividend of Subsidiary to Stockholder On December 1, 2000, the Company paid a stock dividend to its stockholder, Transamerica Insurance Corporation, consisting of 100% of the outstanding common and preferred stock of Transamerica Life Insurance Company of Canada. The dividend of $210,386 represented the Company's equity basis carrying value for the stock at the time it was distributed. 12. Partnership Termination During 2000, the Company increased its ownership of its Taiwan branch operations to 100% through a buyout of its 60% partner, Pacific Life Insurance Ltd., for a payment of $19,192. A receivable from the partner of $35,510 was also written off in conjunction with the buy-out. Additional costs of $17,100 were incurred as a result of the scheduled termination of reinsurance treaties with three unaffiliated companies. These items were recorded as a charge to unassigned surplus on a net of tax basis. 35 Transamerica Occidental Life Insurance Company Notes to Financial Statements - Statutory Basis (continued) (Dollars in thousands) 13. Reconciliation to Insurance Department Annual Statement The following table reconciles net income and total capital and surplus as reported in the Annual Statement filed with the Insurance Department to the amounts reported in the accompanying financial statements as of and for the year ended December 31, 2000: Total Capital Net Income and Surplus --------------------------- Amounts reported in Annual Statement $251,510 $1,594,585 Adjustments related to reinsurance treaties (97,108) (97,108) Adjustments to policy and contract claim reserves 20,000 20,000 Tax effect of adjustments 26,988 26,988 --------------------------- Amounts reported herein $201,390 $1,544,465 =========================== 36 Statutory-Basis Financial Statement Schedules Transamerica Occidental Life Insurance Company Summary of Investments - Other Than Investments in Related Parties (Dollars in thousands) December 31, 2000 Schedule I
Amount at Which Shown Market in the Type of Investment Cost (1) Value Balance Sheet -------------------------------------------------------------------------------------------------------- Fixed maturities Bonds: United States government and government agencies and authorities $ 776,949 $ 784,961 $ 776,949 States, municipalities and political subdivisions 1,007,229 1,090,510 1,007,229 Foreign governments 91,391 95,359 91,391 Public utilities 1,453,514 1,481,370 1,453,514 All other corporate bonds 11,075,355 11,110,088 11,075,355 Preferred stock 79,343 78,621 79,343 ---------------------------------------------------- Total fixed maturities 14,483,781 14,640,909 14,483,781 Equity securities Common stocks: Banks, trust and insurance 42,398 43,817 43,817 Industrial, miscellaneous and all other 437,476 556,777 556,777 ---------------------------------------------------- Total equity securities 479,874 600,594 600,594 Mortgage loans on real estate 1,140,481 1,140,481 Real estate 96,219 96,219 Policy loans 417,849 417,849 Other long-term investments 278,629 278,629 Cash and short-term investments 100,681 100,681 -------------- ------------------ Total investments $16,997,514 $17,118,234 ============== ==================
(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual discounts. 37 Transamerica Occidental Life Insurance Company Supplementary Insurance Information (Dollars in thousands) December 31, 2000 Schedule III
Future Policy Policy and Benefits and Unearned Contract Expenses Premiums Liabilities ----------------------------------------------------------------------------------------------------------- Year ended December 31, 2000: Individual life $5,330,707 $ - $328,828 Individual health 39,295 48,256 16,298 Group life and health 15,770 8,580 53,306 Annuity 4,411,716 - 20,740 ------------------------------------------------------- $9,797,488 $56,836 $419,172 ======================================================= Year ended December 31, 1999: Individual life $4,988,602 $ - $240,452 Individual health 42,065 28,046 33,481 Group life and health 31,586 2,616 32,963 Annuity 4,602,281 - (10,107) ------------------------------------------------------- $9,664,534 $30,662 $296,789 ======================================================= Year ended December 31, 1998: Individual life $4,595,349 $ - $121,089 Individual health 26,439 41,669 (9,445) Group life and health 12,953 3,675 47,840 Annuity 4,748,197 - (3,337) ------------------------------------------------------- $9,382,938 $ 45,344 $156,147 =======================================================
38
Benefits, Claims Net Losses and Other Premium Investment Settlement Operating Premiums Revenue Income* Expenses Expenses* Written -------------------------------------------------------------------------------------------------- $1,241,149 $ 447,840 $1,245,378 $ 934,952 43,836 8,517 84,424 89,362 $91,282 103,920 11,522 (55,633) 114,131 49,345 1,179,915 640,335 1,665,463 277,789 ------------------------------------------------------------------------------- $2,568,820 $1,108,214 $2,939,632 $1,416,234 =============================================================================== $ 894,532 $ 405,705 $ 909,143 $ 703,605 (10,184) 2,770 (33,811) 35,665 $80,328 158,775 10,967 134,414 124,689 65,217 888,608 705,600 1,283,024 736,327 ------------------------------------------------------------------------------- $1,931,731 $1,125,042 $2,292,770 $1,600,286 =============================================================================== $1,070,236 $ 400,313 $1,242,592 $ 492,976 51,827 4,483 3,265 100,839 $63,828 195,431 4,003 160,581 89,231 50,433 914,547 669,744 312,946 2,218,202 ------------------------------------------------------------------------------- $2,232,041 $1,078,543 $1,719,384 $2,901,248 ===============================================================================
* Allocations of net investment income and other operating expenses are based on a number of assumptions of estimates, and the results would change if different methods were applied. 39 Transamerica Occidental Life Insurance Company Reinsurance (Dollars in thousands) December 31, 2000 Schedule IV
Assumed Percentage Ceded to From of Amount Gross Other Other Net Assumed Amount Companies Companies Amount to Net ------------------------------------------------------------------------------------------------------------------------- Year ended December 31, 2000: Life insurance in force $626,744,294 $455,425,869 $ 21,882,466 $193,200,891 11% Premiums: Individual life $ 1,457,065 $ 1,119,760 $ 903,844 $ 1,241,149 74% Individual health 91,282 95,419 47,973 43,836 109% Group life and health 49,345 124,268 178,843 103,920 172% Annuity 1,026,218 434,100 587,797 1,179,915 49% --------------------------------------------------------------------------------------- $ 2,623,910 $ 1,773,547 $ 1,718,457 $ 2,568,820 67% ======================================================================================= Year ended December 31, 1999: Life insurance in force $547,304,907 $370,217,933 $ 17,677,754 $194,764,728 9% Premiums: Individual life $ 1,181,390 $ 1,220,329 $ 933,471 $ 894,532 104% Individual health 80,328 97,296 6,784 (10,184) -% Group life and health 65,217 247,870 341,428 158,775 215% Annuity 954,840 513,149 755,558 888,608 85% --------------------------------------------------------------------------------------- $ 2,281,775 $ 2,078,644 $ 2,037,241 $ 1,931,731 149% ======================================================================================= Year ended December 31, 1998: Life insurance in force $190,331,317 $308,297,855 $307,915,635 $189,922,097 162% Premiums: Individual life $ 1,253,362 $ 958,929 $ 776,803 $ 1,070,236 73% Individual health 63,828 134,991 122,991 51,827 237% Group life and health 50,433 268,973 413,971 195,431 212% Annuity 948,039 1,128,452 1,384,372 914,547 151% --------------------------------------------------------------------------------------- $ 2,315,662 $ 2,491,345 $ 2,698,137 $ 2,232,041 168% =======================================================================================
40 Financial Statements Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Year ended December 31, 2000 with Report of Independent Auditors Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Financial Statements Year ended December 31, 2000 Contents Report of Independent Auditors............................................. 1 Financial Statements Balance Sheets............................................................. 2 Statements of Operations................................................... 14 Statements of Changes in Contract Owners' Equity........................... 20 Notes to Financial Statements.............................................. 31 Report of Independent Auditors The Board of Directors and Contract Owners of the Dreyfus/Transamerica Triple Advantage Variable Annuity, Transamerica Occidental Life Insurance Company We have audited the accompanying balance sheets of Separate Account VA-2L of Transamerica Occidental Life Insurance Company (comprised of the Balanced, Appreciation, Disciplined Stock, Growth and Income, International Equity, International Value, Limited Term High Income, Money Market, Quality Bond, Small Cap, Small Company Stock, Special Value, Zero Coupon 2000, Dreyfus Stock Index, Dreyfus Socially Responsible Growth, Core Bond, Core Value, Emerging Leaders, Emerging Markets, European Equity, Founders Discovery, Founders Growth, Founders International Equity, Founders Passport, Japan, MidCap Stock, Technology Growth, and TA VIF Growth subaccounts), which are available for investment by contract owners of the Dreyfus/Transamerica Triple Advantage Variable Annuity, as of December 31, 2000, and the related statements of operations for the periods indicated thereon and changes in contract owners' equity for the periods indicated thereon. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the 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. Our procedures included confirmation of mutual fund shares owned as of December 31, 2000, by correspondence with the mutual funds' transfer agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the respective subaccounts of Separate Account VA-2L of Transamerica Occidental Life Insurance Company which are available for investment by contract owners of the Dreyfus/Transamerica Triple Advantage Variable Annuity at December 31, 2000, and the results of operations and changes in contract owners' equity for the periods indicated thereon in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Des Moines, Iowa February 2, 2001 1 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets December 31, 2000
Disciplined Balanced Appreciation Stock Subaccount Subaccount Subaccount ------------------------------------------------ Assets Cash $ - $ - $ - Investments in mutual funds, at current market value: Dreyfus Variable Investment Fund: Balanced Portfolio 83,468,640 - - Appreciation Portfolio - 311,983,855 - Disciplined Stock Portfolio - - 130,633,301 Growth and Income Portfolio - - - International Equity Portfolio - - - International Value Portfolio - - - Limited Term High Income Portfolio - - - Money Market Portfolio - - - Quality Bond Portfolio - - - Small Cap Portfolio - - - Small Company Stock Portfolio - - - Special Value Portfolio - - - Zero Coupon 2000 Portfolio - - - Dreyfus Stock Index Fund - - - Dreyfus Socially Responsible Growth Fund - - - Dreyfus Investment Portfolios: Core Bond Portfolio - - - Core Value Portfolio - - - Emerging Leaders Portfolio - - - Emerging Markets Portfolio - - - European Equity Portfolio - - - Founders Discovery Portfolio - - - Founders Growth Portfolio - - - Founders International Equity Portfolio - - - Founders Passport Portfolio - - - Japan Portfolio - - - MidCap Stock Portfolio - - - Technology Growth Portfolio - - - Transamerica Variable Insurance Fund: TA VIF Growth Portfolio - - - ------------------------------------------------ Total investments in mutual funds 83,468,640 311,983,855 130,633,301 ------------------------------------------------ Total assets $ 83,468,640 $ 311,983,855 $ 130,633,301 ================================================
2
Growth and International International Limited Term Income Equity Value High Income Money Market Quality Bond Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ----------------------------------------------------------------------------------------------------------- $ - $ 55 $ 5 $ - $ - $ 4 - - - - - - - - - - - - - - - - - - 205,662,618 - - - - - - 54,273,028 - - - - - - 18,859,704 - - - - - - 33,140,686 - - - - - - 78,777,766 - - - - - - 74,533,334 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------- 205,662,618 54,273,028 18,859,704 33,140,686 78,777,766 74,533,334 ----------------------------------------------------------------------------------------------------------- $ 205,662,618 $ 54,273,083 $ 18,859,709 $ 33,140,686 $ 78,777,766 $ 74,533,338 ===========================================================================================================
3 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets (continued)
Disciplined Balanced Appreciation Stock Subaccount Subaccount Subaccount ------------------------------------------------- Liabilities and contract owners' equity Liabilities: Contract terminations payable $ 20 $ 191 $ 96 ------------------------------------------------- Total liabilities 20 191 96 Contract owners' equity: Deferred annuity contracts terminable by owners 83,468,620 311,983,664 130,633,205 ------------------------------------------------- Total liabilities and contract owners' equity $ 83,468,640 $311,983,855 $130,633,301 =================================================
See accompanying notes. 4
Growth and International International Limited Term Income Equity Value High Income Money Market Quality Bond Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------------------------------------------------------------------------------------------- $ 248 $ - $ - $ - $ 34,914 $ - ------------------------------------------------------------------------------------------------------- 248 - - - 34,914 - 205,662,370 54,273,083 18,859,709 33,140,686 78,742,852 74,533,338 ------------------------------------------------------------------------------------------------------- $ 205,662,618 $ 54,273,083 $ 18,859,709 $ 33,140,686 $ 78,777,766 $ 74,533,338 =======================================================================================================
5 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets (continued)
Small Company Small Cap Stock Special Value Subaccount Subaccount Subaccount ------------------------------------------------------ Assets Cash $ - $ - $ - Investments in mutual funds, at current market value: Dreyfus Variable Investment Fund: Balanced Portfolio - - - Appreciation Portfolio - - - Disciplined Stock Portfolio - - - Growth and Income Portfolio - - - International Equity Portfolio - - - International Value Portfolio - - - Limited Term High Income Portfolio - - - Money Market Portfolio - - - Quality Bond Portfolio - - - Small Cap Portfolio 176,501,072 - - Small Company Stock Portfolio - 23,338,830 - Special Value Portfolio - - 34,980,435 Zero Coupon 2000 Portfolio - - - Dreyfus Stock Index Fund - - - Dreyfus Socially Responsible Growth Fund - - - Dreyfus Investment Portfolios: Core Bond Portfolio - - - Core Value Portfolio - - - Emerging Leaders Portfolio - - - Emerging Markets Portfolio - - - European Equity Portfolio - - - Founders Discovery Portfolio - - - Founders Growth Portfolio - - - Founders International Equity Portfolio - - - Founders Passport Portfolio - - - Japan Portfolio - - - MidCap Stock Portfolio - - - Technology Growth Portfolio - - - Transamerica Variable Insurance Fund: TA VIF Growth Portfolio - - - --------------------------------------------------- Total investments in mutual funds 176,501,072 23,338,830 34,980,435 --------------------------------------------------- Total assets $176,501,072 $23,338,830 $34,980,435 ===================================================
6
Dreyfus Zero Socially Coupon Dreyfus Stock Responsible Emerging Emerging 2000 Index Growth Core Bond Core Value Leaders Markets Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------------------------------------------------------------------------------------------------------- $ - $ - $ 38 $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 803 - - - - - - - 265,165,167 - - - - - - - 119,124,405 - - - - - - - 4,320,142 - - - - - - - 20,260,958 - - - - - - - 2,901,902 - - - - - - - 486,672 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----------------------------------------------------------------------------------------------------------------- 803 265,165,167 119,124,405 4,320,142 20,260,958 2,901,902 486,672 ----------------------------------------------------------------------------------------------------------------- $803 $265,165,167 $119,124,443 $4,320,142 $20,260,958 $2,901,902 $486,672 =================================================================================================================
7 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets (continued)
Small Company Small Cap Stock Special Value Subaccount Subaccount Subaccount ---------------------------------------------------- Liabilities and contract owners' equity Liabilities: Contract terminations payable $ 189 $ 227 $ 6 ---------------------------------------------------- Total liabilities 189 227 6 Contract owners' equity: Deferred annuity contracts terminable by owners 176,500,883 23,338,603 34,980,429 ---------------------------------------------------- Total liabilities and contract owners' equity $176,501,072 $23,338,830 $34,980,435 ====================================================
See accompanying notes. 8
Dreyfus Zero Socially Coupon Dreyfus Stock Responsible Emerging Emerging 2000 Index Fund Growth Core Bond Core Value Leaders Markets Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------------------------------------------------------------------------------------------------------- $257 $ 484 $ - $ - $ 2 $ 2 $ - ----------------------------------------------------------------------------------------------------------------- 257 484 - - 2 2 - 546 265,164,683 119,124,443 4,320,142 20,260,956 2,901,900 486,672 ----------------------------------------------------------------------------------------------------------------- $803 $265,165,167 $119,124,443 $4,320,142 $20,260,958 $2,901,902 $486,672 =================================================================================================================
9 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets (continued)
European Founders Founders Equity Discovery Growth Subaccount Subaccount Subaccount ---------------------------------------------------- Assets Cash $ 2 $ 40 $ - Investments in mutual funds, at current market value: Dreyfus Variable Investment Fund: Balanced Portfolio - - - Appreciation Portfolio - - - Disciplined Stock Portfolio - - - Growth and Income Portfolio - - - International Equity Portfolio - - - International Value Portfolio - - - Limited Term High Income Portfolio - - - Money Market Portfolio - - - Quality Bond Portfolio - - - Small Cap Portfolio - - - Small Company Stock Portfolio - - - Special Value Portfolio - - - Zero Coupon 2000 Portfolio - - - Dreyfus Stock Index Fund - - - Dreyfus Socially Responsible Growth Fund - - - Dreyfus Investment Portfolios: Core Bond Portfolio - - - Core Value Portfolio - - - Emerging Leaders Portfolio - - - Emerging Markets Portfolio - - - European Equity Portfolio 5,067,543 - - Founders Discovery Portfolio - 11,711,747 - Founders Growth Portfolio - - 23,225,167 Founders International Equity Portfolio - - - Founders Passport Portfolio - - - Japan Portfolio - - - MidCap Stock Portfolio - - - Technology Growth Portfolio - - - Transamerica Variable Insurance Fund: TA VIF Growth Portfolio - - - --------------------------------------------------- Total investments in mutual funds 5,067,543 11,711,747 23,225,167 --------------------------------------------------- Total assets $5,067,545 $11,711,787 $23,225,167 ===================================================
10
Founders International Founders MidCap Technology TA VIF Equity Passport Japan Stock Growth Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------------------------------------------------------------------------------------------ $ 2 $ 4 $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10,069,735 - - - - - - 20,602,867 - - - - - - 325,715 - - - - - - 26,448,756 - - - - - - 99,976,071 - - - - - - 50,057,182 ----------------------------------------------------------------------------------------------------- 10,069,735 20,602,867 325,715 26,448,756 99,976,071 50,057,182 ----------------------------------------------------------------------------------------------------- $10,069,737 $20,602,871 $325,715 $26,448,756 $99,976,071 $50,057,182 =====================================================================================================
11 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Balance Sheets (continued)
European Founders Founders Equity Discovery Growth Subaccount Subaccount Subaccount ------------------------------------------------- Liabilities and contract owners' equity Liabilities: Contract terminations payable $ - $ - $ 10 ------------------------------------------------- Total liabilities - - 10 Contract owners' equity: Deferred annuity contracts terminable by owners 5,067,545 11,711,787 23,225,157 ------------------------------------------------- Total liabilities and contract owners' equity $5,067,545 $11,711,787 $23,225,167 =================================================
See accompanying notes. 12
Founders Founders Technology International Passport MidCap Stock Growth TA VIF Growth Equity Subaccount Subaccount Japan Subaccount Subaccount Subaccount Subaccount ------------------------------------------------------------------------------------------------------- $ $ - $ - $ 18 $ 1,057 $ 29 ------------------------------------------------------------------------------------------------------- - - - 18 1,057 29 10,069,737 20,602,871 325,715 26,448,738 99,975,014 50,057,153 ------------------------------------------------------------------------------------------------------- $10,069,737 $20,602,871 $325,715 $26,448,756 $99,976,071 $50,057,182 =======================================================================================================
13 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Operations Year ended December 31, 2000, except as noted
Disciplined Balanced Appreciation Stock Subaccount Subaccount Subaccount ------------------------------------------------- Net investment income (loss) Income: Dividends $ 2,667,031 $ 5,560,679 $ 1,422,646 Expenses: Administrative, mortality and expense risk charges 1,029,188 4,445,708 1,875,965 ------------------------------------------------- Net investment income (loss) 1,637,843 1,114,971 (453,319) Net realized and unrealized capital gain (loss) from investments Net realized capital gain (loss) from sales of investments: Proceeds from sales 2,906,041 37,906,220 11,141,743 Cost of investments sold 2,959,228 30,361,681 9,327,668 ------------------------------------------------- Net realized capital gain (loss) from sales of investments (53,187) 7,544,539 1,814,075 Net change in unrealized appreciation/depreciation of investments: Beginning of period 578,476 70,983,849 25,352,458 End of period (4,420,876) 54,820,593 8,927,449 ------------------------------------------------- Net change in unrealized appreciation/depreciation of investments (4,999,352) (16,163,256) (16,425,009) ------------------------------------------------- Net realized and unrealized capital gain (loss) from investments (5,052,539) (8,618,717) (14,610,934) ------------------------------------------------- Increase (decrease) from operations $(3,414,696) $ (7,503,746) $(15,064,253) =================================================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 14
Limited Term Growth and International International High Income Money Market Quality Bond Income Subaccount Equity Subaccount Value Subaccount Subaccount Subaccount Subaccount -------------------------------------------------------------------------------------------------------------- $ 8,674,944 $ 10,654,179 $ 1,948,817 $ 4,950,655 $ 3,776,723 $ 4,314,220 2,993,799 833,959 263,883 608,945 911,522 993,708 -------------------------------------------------------------------------------------------------------------- 5,681,145 9,820,220 1,684,934 4,341,710 2,865,201 3,320,512 19,529,025 13,313,820 5,576,248 20,879,070 55,103,191 17,644,049 16,669,016 11,523,106 5,491,798 24,812,386 55,103,191 18,680,612 -------------------------------------------------------------------------------------------------------------- 2,860,009 1,790,714 84,450 (3,933,316) - (1,036,563) 35,481,113 17,229,806 1,802,064 (7,080,728) - (4,825,669) 15,696,653 (5,593,468) (1,010,959) (11,482,666) - (645,161) -------------------------------------------------------------------------------------------------------------- (19,784,460) (22,823,274) (2,813,023) (4,401,938) - 4,180,508 -------------------------------------------------------------------------------------------------------------- (16,924,451) (21,032,560) (2,728,573) (8,335,254) - 3,143,945 -------------------------------------------------------------------------------------------------------------- $(11,243,306) $(11,212,340) $(1,043,639) $ (3,993,544) $ 2,865,201 $ 6,464,457 ==============================================================================================================
15 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Operations (continued)
Small Cap Small Company Special Value Subaccount Stock Subaccount Subaccount ------------------------------------------------------- Net investment income (loss) Income: Dividends $78,681,177 $ 42,574 $1,833,848 Expenses: Administrative, mortality and expense risk charges 2,474,131 322,789 492,126 ------------------------------------------------------- Net investment income (loss) 76,207,046 (280,215) 1,341,722 Net realized and unrealized capital gain (loss) from investments Net realized capital gain (loss) from sales of investments: Proceeds from sales 20,763,407 4,404,101 8,128,207 Cost of investments sold 16,614,696 3,931,792 7,818,761 ------------------------------------------------------- Net realized capital gain (loss) from sales of investments 4,148,711 472,309 309,446 Net change in unrealized appreciation/depreciation of investments: Beginning of period 28,529,871 1,476,987 2,148,602 End of period (33,296,257) 2,717,448 1,762,867 ------------------------------------------------------- Net change in unrealized appreciation/depreciation of investments (61,826,128) 1,240,461 (385,735) ------------------------------------------------------- Net realized and unrealized capital gain (loss) from investments (57,677,417) 1,712,770 (76,289) ------------------------------------------------------- Increase (decrease) from operations $18,529,629 $1,432,555 $1,265,433 =======================================================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 16
Dreyfus Socially Dreyfus Stock Responsible Zero Coupon Index Growth Core Bond Core Value Emerging Leaders Emerging Markets 2000 Subaccount Subaccount Subaccount Subaccount (1) Subaccount Subaccount (1) Subaccount (1) --------------------------------------------------------------------------------------------------------------------------- $ 909,799 $ 6,876,099 $ 975,090 $ 83,113 $ 585,462 $ 93,731 $ 1,907 236,697 3,853,668 1,636,538 11,279 152,143 8,962 2,430 --------------------------------------------------------------------------------------------------------------------------- 673,102 3,022,431 (661,448) 71,834 433,319 84,769 (523) 21,620,970 20,540,047 10,469,131 338,833 797,249 215,294 1,259,600 21,891,039 16,631,417 8,532,161 337,422 781,148 198,536 1,335,593 --------------------------------------------------------------------------------------------------------------------------- (270,069) 3,908,630 1,936,970 1,411 16,101 16,758 (75,993) (292,035) 63,523,971 24,651,914 - 235,374 - - (259) 25,726,281 7,002,821 43,144 1,310,808 144,034 (16,199) --------------------------------------------------------------------------------------------------------------------------- 291,776 (37,797,690) (17,649,093) 43,144 1,075,434 144,034 (16,199) --------------------------------------------------------------------------------------------------------------------------- 21,707 (33,889,060) (15,712,123) 44,555 1,091,535 160,792 (92,192) --------------------------------------------------------------------------------------------------------------------------- $ 694,809 $(30,866,629) $(16,373,571) $116,389 $1,524,854 $245,561 $ (92,715) ===========================================================================================================================
17 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Operations (continued)
European Founders Founders Equity Discovery Growth Subaccount Subaccount (1) Subaccount ---------------------------------------------------- Net investment income (loss) Income: Dividends $ 141,203 $ - $ 43,604 Expenses: Administrative, mortality and expense risk charges 46,658 58,528 190,306 ---------------------------------------------------- Net investment income (loss) 94,545 (58,528) (146,702) Net realized and unrealized capital gain (loss) from investments Net realized capital gain (loss) from sales of investments: Proceeds from sales 910,080 109,081 1,002,801 Cost of investments sold 803,553 122,299 1,006,275 ---------------------------------------------------- Net realized capital gain (loss) from sales of investments 106,527 (13,218) (3,474) Net change in unrealized appreciation/depreciation of investments: Beginning of period 143,874 - 411,644 End of period (257,172) (2,403,787) (5,960,435) ---------------------------------------------------- Net change in unrealized appreciation/depreciation of investments (401,046) (2,403,787) (6,372,079) ---------------------------------------------------- Net realized and unrealized capital gain (loss) from investments (294,519) (2,417,005) (6,375,553) ---------------------------------------------------- Increase (decrease) from operations $ (199,974) $ (2,475,533) $ (6,522,255) ====================================================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 18
Founders Founders Technology TA VIF Growth International Passport Japan MidCap Stock Growth Subaccount Equity Subaccount Subaccount Subaccount (1) Subaccount Subaccount Subaccount ---------------------------------------------------------------------------------------------------------- $ 130,444 $ 702,766 $ 12,142 $ 432,473 $ 91,229 $ 5,092,951 71,299 247,829 1,808 197,946 1,559,387 768,793 ---------------------------------------------------------------------------------------------------------- 59,145 454,937 10,334 234,527 (1,468,158) 4,324,158 498,736 8,718,558 1,208,166 1,274,384 8,410,190 7,626,776 538,408 11,294,246 1,244,428 1,153,363 8,009,800 6,353,888 ---------------------------------------------------------------------------------------------------------- (39,672) (2,575,688) (36,262) 121,021 400,390 1,272,888 50,688 543,264 - 934,261 9,384,661 9,120,368 (1,375,228) (7,798,487) (23,565) 970,830 (38,443,042) (3,351,058) ---------------------------------------------------------------------------------------------------------- (1,425,916) (8,341,751) (23,565) 36,569 (47,827,703) (12,471,426) ---------------------------------------------------------------------------------------------------------- (1,465,588) (10,917,439) (59,827) 157,590 (47,427,313) (11,198,538) ---------------------------------------------------------------------------------------------------------- $ (1,406,443) $ (10,462,502) $ (49,493) $ 392,117 $ (48,895,471) $ (6,874,380) ==========================================================================================================
19 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity Year ended December 31, 2000, except as noted
Balanced Subaccount Appreciation Subaccount ----------------------------- -------------------------------- 2000 1999 2000 1999 ----------------------------- -------------------------------- Operations: Net investment income (loss) $ 1,637,843 $ 3,629,237 $ 1,114,971 $ (1,364,759) Net realized capital gain (loss) (53,187) 1,136,569 7,544,539 32,081,052 Net change in unrealized appreciation/ depreciation of investments (4,999,352) (1,356,529) (16,163,256) (1,161,477) ----------------------------- -------------------------------- Increase (decrease) from operations (3,414,696) 3,409,277 (7,503,746) 29,554,816 Contract transactions: Net contract purchase payments 12,435,730 17,692,025 29,540,411 34,205,085 Transfer payments from (to) other subaccounts or general account 14,698,963 17,478,455 (1,387,238) 8,608,983 Contract terminations, withdrawals, and other deductions (7,104,282) (4,021,996) (39,532,877) (28,640,938) ----------------------------- -------------------------------- Increase (decrease) from contract transactions 20,030,411 31,148,484 (11,379,704) 14,173,130 ----------------------------- -------------------------------- Net increase (decrease) in contract owners' equity 16,615,715 34,557,761 (18,883,450) 43,727,946 Contract owners' equity: Beginning of period 66,852,905 32,295,144 330,867,114 287,139,168 ----------------------------- -------------------------------- End of period $ 83,468,620 $ 66,852,905 $ 311,983,664 $ 330,867,114 ============================= ================================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 20
Disciplined Stock Growth and Income International Equity Subaccount Subaccount Subaccount ---------------------------------- -------------------------------- ------------------------------- 2000 1999 2000 1999 2000 1999 ---------------------------------- -------------------------------- ------------------------------- $ (453,319) $ (288,275) $ 5,681,145 $ 5,062,648 $ 9,820,220 $ 1,414,086 1,814,075 6,333,129 2,860,009 6,248,889 1,790,714 1,571,904 (16,425,009) 11,962,884 (19,784,460) 18,955,723 (22,823,274) 17,848,660 ---------------------------------- -------------------------------- ------------------------------- (15,064,253) 18,007,738 (11,243,306) 30,267,260 (11,212,340) 20,834,650 18,591,698 19,412,211 19,116,391 10,886,482 8,624,397 1,956,531 7,922,971 10,056,418 2,452,403 (12,882,637) 8,170,835 (1,131,313) (11,401,053) (7,611,224) (25,307,635) (20,162,619) (8,814,202) (3,197,542) ---------------------------------- -------------------------------- ------------------------------- 15,113,616 21,857,405 (3,738,841) (22,158,774) 7,981,030 (2,372,324) ---------------------------------- -------------------------------- ------------------------------- 49,363 39,865,143 (14,982,147) 8,108,486 (3,231,310) 18,462,326 130,583,842 90,718,699 220,644,517 212,536,031 57,504,393 39,042,067 ---------------------------------- -------------------------------- ------------------------------- $ 130,633,205 $ 130,583,842 $ 205,662,370 $ 220,644,517 $ 54,273,083 $ 57,504,393 ================================== ================================ ===============================
21 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity (continued)
International Value Limited Term High Subaccount Income Subaccount ----------------------------- ------------------------------ 2000 1999 2000 1999 ----------------------------- ------------------------------ Operations: Net investment income (loss) $ 1,684,934 $ 1,558,718 $ 4,341,710 $ 5,944,448 Net realized capital gain (loss) 84,450 48,840 (3,933,316) (6,230,826) Net change in unrealized appreciation/ depreciation of investments (2,813,023) 2,618,078 (4,401,938) (1,447,293) ----------------------------- ------------------------------ Increase (decrease) from operations (1,043,639) 4,225,636 (3,993,544) (1,733,671) Contract transactions: Net contract purchase payments 1,169,375 1,630,628 2,517,188 15,292,952 Transfer payments from (to) other subaccounts or general account (745,213) 1,136,198 (11,527,559) (19,845,177) Contract terminations, withdrawals, and other deductions (1,786,558) (1,987,983) (9,095,080) (7,791,162) ----------------------------- ------------------------------ Increase (decrease) from contract transactions (1,362,396) 778,843 (18,105,451) (12,343,387) ----------------------------- ------------------------------ Net increase (decrease) in contract owners" equity (2,406,035) 5,004,479 (22,098,995) (14,077,058) Contract owners' equity: Beginning of period 21,265,744 16,261,265 55,239,681 69,316,739 ----------------------------- ------------------------------ End of period $ 18,859,709 $ 21,265,744 $ 33,140,686 $ 55,239,681 ============================= ==============================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 22
Money Market Quality Bond Small Cap Subaccount Subaccount Subaccount ---------------------------------- ------------------------------- --------------------------------- 2000 1999 2000 1999 2000 1999 ------------------------------- ------------------------------- --------------------------------- $ 2,865,201 $ 2,483,330 $ 3,320,512 $ 3,372,403 $ 76,207,046 $ (2,055,435) - - (1,036,563) (791,238) 4,148,711 10,325,925 - - 4,180,508 (3,818,511) (61,826,128) 21,815,790 ------------------------------- ------------------------------- --------------------------------- 2,865,201 2,483,330 6,464,457 (1,237,346) 18,529,629 30,086,280 25,670,078 79,063,088 5,463,527 8,998,773 10,506,523 5,026,232 (10,721,382) (46,333,650) (6,569,575) (1,621,795) 5,136,227 (21,819,701) (20,582,523) (19,391,915) (9,411,154) (7,412,821) (21,752,107) (17,760,149) ------------------------------- ------------------------------- --------------------------------- (5,633,827) 13,337,523 (10,517,202) (35,843) (6,109,357) (34,553,618) ------------------------------- ------------------------------- --------------------------------- (2,768,626) 15,820,853 (4,052,745) (1,273,189) 12,420,272 (4,467,338) 81,511,478 65,690,625 78,586,083 79,859,272 164,080,611 168,547,949 ------------------------------- ------------------------------- --------------------------------- $ 78,742,852 $ 81,511,478 $ 74,533,338 $78,586,083 $ 176,500,883 $ 164,080,611 =============================== =============================== =================-===============
23 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity (continued)
Small Company Stock Subaccount Special Value Subaccount ---------------------------- ----------------------------- 2000 1999 2000 1999 ---------------------------- ----------------------------- Operations: Net investment income (loss) $ (280,215) $ (311,801) $ 1,341,722 $ 2,947,869 Net realized capital gain (loss) 472,309 (777,425) 309,446 2,647,847 Net change in unrealized appreciation/ depreciation of investments 1,240,461 2,746,306 (385,735) (3,264,474) ---------------------------- ----------------------------- Increase (decrease) from operations 1,432,555 1,657,080 1,265,433 2,331,242 Contract transactions: Net contract purchase payments 2,872,541 1,512,292 1,191,359 2,589,652 Transfer payments from (to) other subaccounts or general account (173,267) (4,756,004) (3,149,124) (5,913,094) Contract terminations, withdrawals, and other deductions (2,586,423) (1,941,505) (4,526,248) (3,547,286) ----------------------------- ----------------------------- Increase (decrease) from contract transactions 112,851 (5,185,217) (6,484,013) (6,870,728) ---------------------------- ----------------------------- Net increase (decrease) in contract owners' equity 1,545,406 (3,528,137) (5,218,580) (4,539,486) Contract owners' equity: Beginning of period 21,793,197 25,321,334 40,199,009 44,738,495 ---------------------------- ----------------------------- End of period $ 23,338,603 $ 21,793,197 $ 34,980,429 $ 40,199,009 ============================ =============================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 24
Zero Coupon 2000 Dreyfus Stock Index Dreyfus Socially Responsible Subaccount Subaccount Growth Subaccount ------------------------------------ ---------------------------------- ---------------------------------- 2000 1999 2000 1999 2000 1999 ------------------------------------ ---------------------------------- ---------------------------------- $ 673,102 $ 790,270 $ 3,022,431 $ 1,550,822 $ (661,448) $ 2,417,727 (270,069) (24,203) 3,908,630 22,548,200 1,936,970 6,140,232 291,776 (512,997) (37,797,690) 17,763,235 (17,649,093) 12,756,278 ------------------------------------ ---------------------------------- ---------------------------------- 694,809 253,070 (30,866,629) 41,862,257 (16,373,571) 21,314,237 870,860 1,726,358 40,931,132 25,613,575 26,157,133 13,650,843 (17,041,256) (557,660) 21,658,028 23,386,348 16,725,296 17,035,882 (3,975,324) (2,997,228) (36,705,002) (18,088,782) (12,932,700) (6,288,711) ------------------------------------ ---------------------------------- ---------------------------------- (20,145,720) (1,828,530) 25,884,158 30,911,141 29,949,729 24,398,014 ------------------------------------ ---------------------------------- ---------------------------------- (19,450,911) (1,575,460) (4,982,471) 72,773,398 13,576,158 45,712,251 19,451,457 21,026,917 270,147,154 197,373,756 105,548,285 59,836,034 ------------------------------------ ---------------------------------- ---------------------------------- $ 546 $ 19,451,457 $ 265,164,683 $ 270,147,154 $ 119,124,443 $ 105,548,285 ==================================== ================================== ==================================
25 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity (continued)
Core Bond Core Value Subaccount Subaccount ----------------- ----------------------------- 2000 (1) 2000 1999 ----------------- ----------------------------- Operations: Net investment income (loss) $ 71,834 $ 433,319 $ (25,328) Net realized capital gain (loss) 1,411 16,101 124,383 Net change in unrealized appreciation/ depreciation of investments 43,144 1,075,434 192,119 --------------- ----------------------------- Increase (decrease) from operations 116,389 1,524,854 291,174 Contract transactions: Net contract purchase payments 2,113,036 5,935,702 1,724,915 Transfer payments from (to) other subaccounts or general account 2,111,142 6,908,886 4,458,905 Contract terminations, withdrawals, and other deductions (20,425) (891,906) (579,963) --------------- ----------------------------- Increase (decrease) from contract transactions 4,203,753 11,952,682 5,603,857 --------------- ----------------------------- Net increase (decrease) in contract owners' equity 4,320,142 13,477,536 5,895,031 Contract owners' equity: Beginning of period - 6,783,420 888,389 --------------- ----------------------------- End of period $4,320,142 $20,260,956 $6,783,420 =============== =============================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 26
Emerging Emerging Founders Leaders Markets European Equity Discovery Subaccount Subaccount Subaccount Subaccount ------------------ ----------------- -------------------------------- ------------------ 2000 (1) 2000 (1) 2000 1999 2000 (1) ------------------ ----------------- -------------------------------- ------------------ $ 84,769 $ (523) $ 94,545 $ 9,091 $ (58,528) 16,758 (75,993) 106,527 1,965 (13,218) 144,034 (16,199) (401,046) 143,874 (2,403,787) ------------------ ----------------- -------------------------------- ------------------ 245,561 (92,715) (199,974) 154,930 (2,475,533) 1,049,094 577,582 2,071,254 316,851 8,740,624 1,631,549 22,700 2,469,456 446,319 5,653,496 (24,304) (20,895) (185,915) (5,376) (206,800) ------------------ ----------------- -------------------------------- ------------------ 2,656,339 579,387 4,354,795 757,794 14,187,320 ------------------ ----------------- -------------------------------- ------------------ 2,901,900 486,672 4,154,821 912,724 11,711,787 - - 912,724 - - ------------------ ----------------- -------------------------------- ------------------ $ 2,901,900 $ 486,672 $ 5,067,545 $ 912,724 $ 11,711,787 ================== ================= ================================ ==================
27 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity (continued)
Founders Growth Founders International Subaccount Equity Subaccount ------------------------------- --------------------------- 2000 1999 2000 1999 -------------------------------------------------------------- Operations: Net investment income (loss) $ (146,702) $ 11,575 $ 59,145 $ 42,716 Net realized capital gain (loss) (3,474) 145,727 (39,672) 109,776 Net change in unrealized appreciation/ depreciation of investments (6,372,079) 411,644 (1,425,916) 50,688 ------------------------------- ---------------------------- Increase (decrease) from operations (6,522,255) 568,946 (1,406,443) 203,180 Contract transactions: Net contract purchase payments 15,936,768 873,166 6,532,312 275,527 Transfer payments from (to) other subaccounts or general account 12,268,681 1,300,885 4,643,312 235,190 Contract terminations, withdrawals, and other deductions (1,108,240) (92,794) (413,308) (33) ------------------------------- ---------------------------- Increase (decrease) from contract transactions 27,097,209 2,081,257 10,762,316 510,684 ------------------------------- ---------------------------- Net increase (decrease) in contract owners' equity 20,574,954 2,650,203 9,355,873 713,864 Contract owners' equity: Beginning of period 2,650,203 - 713,864 - ------------------------------- ---------------------------- End of period $ 23,225,157 $ 2,650,203 $ 10,069,737 $ 713,864 =============================== ============================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 28
Founders Passport Japan MidCap Stock Subaccount Subaccount Subaccount ----------------------------------- ---------------- ----------------------------------- 2000 1999 2000 (1) 2000 1999 ----------------------------------- ---------------- ----------------------------------- $ 454,937 $ 219,438 $ 10,334 $ 234,527 $ (63,765) (2,575,688) 36,124 (36,262) 121,021 143,749 (8,341,751) 543,264 (23,565) 36,569 577,349 ----------------------------------- ---------------- ----------------------------------- (10,462,502) 798,826 (49,493) 392,117 657,333 12,335,802 463,355 218,404 9,130,076 1,535,770 16,266,430 2,491,062 161,599 10,805,770 777,326 (1,263,864) (26,238) (4,795) (1,013,264) (338,426) ----------------------------------- ---------------- ---------------------------------- 27,338,368 2,928,179 375,208 18,922,582 1,974,670 ----------------------------------- ---------------- ----------------------------------- 16,875,866 3,727,005 325,715 19,314,699 2,632,003 3,727,005 - - 7,134,039 4,502,036 ----------------------------------- ---------------- ----------------------------------- $ 20,602,871 $ 3,727,005 $ 325,715 $ 26,448,738 $ 7,134,039 =================================== ================ ===================================
29 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Statements of Changes in Contract Owners' Equity (continued)
Technology Growth TA VIF Growth Subaccount Subaccount ---------------------------------- ---------------------------- 2000 1999 2000 1999 ------------------------------------------------------------------ Operations: Net investment income (loss) $ (1,468,158) $ (69,018) $ 4,324,158 $ (497,665) Net realized capital gain (loss) 400,390 489,824 1,272,888 3,247,834 Net change in unrealized appreciation/ depreciation of investments (47,827,703) 9,384,660 (12,471,426) 8,036,026 ------------------------------ --------------------------- Increase (decrease) from operations (48,895,471) 9,805,466 (6,874,380) 10,786,195 Contract transactions: Net contract purchase payments 47,793,677 6,234,045 9,538,392 6,007,635 Transfer payments from (to) other subaccounts or general account 67,133,279 28,749,969 9,604,731 12,413,490 Contract terminations, withdrawals, and other deductions (10,642,733) (203,218) (7,919,250) (2,045,464) ------------------------------ --------------------------- Increase (decrease) from contract transactions 104,284,223 34,780,796 11,223,873 16,375,661 ============================== =========================== Net increase (decrease) in contract owners' equity 55,388,752 44,586,262 4,349,493 27,161,856 Contract owners' equity: Beginning of period 44,586,262 - 45,707,660 18,545,804 ------------------------------ --------------------------- End of period $ 99,975,014 $ 44,586,262 $ 50,057,153 $ 45,707,660 ============================== ===========================
(1) Commencement of operations, May 1, 2000. See accompanying notes. 30 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements December 31, 2000 1. Organization and Summary of Significant Accounting Policies Organization The Separate Account VA-2L of Transamerica Occidental Life Insurance Company (the "Mutual Fund Account") is a segregated investment account of Transamerica Occidental Life Insurance Company ("Transamerica Life"), an indirect wholly-owned subsidiary of Transamerica Corporation. During 1999, Transamerica Corporation was merged with an indirect wholly-owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands. The Mutual Fund Account is registered with the Securities and Exchange Commission as a Unit Investment Trust pursuant to provisions of the Investment Company Act of 1940. The Mutual Fund Account consists of twenty-eight investment subaccounts, thirteen of which are invested in specified portfolios of the Dreyfus Variable Investment Fund, one of which is invested in the Dreyfus Stock Index Fund, one of which is invested in the Dreyfus Socially Responsible Growth Fund, twelve of which are invested in specified portfolios of the Dreyfus Investment Portfolios, and one of which is invested in the TA VIF Growth Portfolio of the Transamerica Variable Insurance Fund, Inc. (each a "Series Fund" and collectively "the Series Funds"). Activity in these twenty-eight subaccounts is available to contract owners of the Dreyfus/Transamerica Triple Advantage Variable Annuity, issued by Transamerica Life. The Appreciation Portfolio of the Dreyfus Variable Investment Fund and the Appreciation Subaccount were formerly known as the Capital Appreciation Portfolio and the Capital Appreciation Subaccount, respectively. The Special Value Portfolio of the Dreyfus Variable Investment Fund and the Special Value Subaccount were previously reported as the Managed Assets Portfolio and the Managed Assets Subaccount, respectively. Effective December 27, 2000, the Zero Coupon 2000 Subaccount was no longer available to new contract owners. Investments Net purchase payments received by the Mutual Fund Account are invested in the portfolios of the Series Funds, as selected by the contract owner. Investments are stated at the closing net asset values per share as of December 31, 2000. Prior to July 31, 2000, realized capital gains and losses from the sale of shares in the Series Funds were determined on the basis of average cost. Subsequent to this date, such gains and losses are determined on the first-in, first-out basis. This change was implemented by establishing the average cost of the portfolio as of July 31, 2000 as the opening cost for purposes of the first-in, first-out basis. This change has no effect on "net realized and unrealized capital gains (loss) from investments" and "increase (decrease) from operations" as reported in the statement of operations. 31 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 1. Organization and Summary of Significant Accounting Policies (continued) 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 Series Funds are credited or charged to contract owners' equity. Dividend Income Dividends received from the Series Funds investments are reinvested to purchase additional mutual fund shares. 2. Investments A summary of the mutual fund investments at December 31, 2000 follows:
Number of Net Asset Value Market Shares Held Per Share Value Cost ----------------------------------------------------------------- Dreyfus Variable Investment Fund: Balanced Portfolio 5,568,288.182 $ 14.99 $ 83,468,640 $ 87,889,516 Appreciation Portfolio 8,018,089.318 38.91 311,983,855 257,163,262 Disciplined Stock Portfolio 5,400,301.836 24.19 130,633,301 121,705,852 Growth and Income Portfolio 8,759,055.274 23.48 205,662,618 189,965,965 International Equity Portfolio 3,538,007.072 15.34 54,273,028 59,866,496 International Value Portfolio 1,394,948.484 13.52 18,859,704 19,870,663 Limited Term High Income Portfolio 3,917,338.784 8.46 33,140,686 44,623,352 Money Market Portfolio 78,777,766.310 1.00 78,777,766 78,777,766 Quality Bond Portfolio 6,543,751.879 11.39 74,533,334 75,178,495 Small Cap Portfolio 4,379,679.217 40.30 176,501,072 209,797,329 Small Company Stock Portfolio 1,290,864.465 18.08 23,338,830 20,621,382 Special Value Portfolio 2,387,743.026 14.65 34,980,435 33,217,568 Zero Coupon 2000 Portfolio 65.912 12.19 803 1,062 Dreyfus Stock Index Fund 7,798,975.498 34.00 265,165,167 239,438,886 Dreyfus Socially Responsible Growth Fund 3,455,886.410 34.47 119,124,405 112,121,584 Dreyfus Investment Portfolios: Core Bond Portfolio 334,117.689 12.93 4,320,142 4,276,998 Core Value Portfolio 1,342,674.458 15.09 20,260,958 18,950,150 Emerging Leaders Portfolio 170,199.518 17.05 2,901,902 2,757,868 Emerging Markets Portfolio 52,727.191 9.23 486,672 502,871 European Equity Portfolio 338,287.235 14.98 5,067,543 5,324,715 Founders Discovery Portfolio 972,736.469 12.04 11,711,747 14,115,534 Founders Growth Portfolio 1,576,725.555 14.73 23,225,167 29,185,602 Founders International Equity Portfolio 592,337.327 17.00 10,069,735 11,444,963 Founders Passport Portfolio 1,212,646.672 16.99 20,602,867 28,401,354
32 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 2. Investments (continued)
Number of Net Asset Value Market Shares Held Per Share Value Cost ----------------------------------------------------------------- Japan Portfolio 29,029.901 $ 11.22 $ 325,715 $ 349,280 MidCap Stock Portfolio 1,850,857.636 14.29 26,448,756 25,477,926 Technology Growth Portfolio 7,045,530.000 14.19 99,976,071 138,419,113 Transamerica Variable Insurance Fund: TA VIF Growth Portfolio 2,298,309.571 21.78 50,057,182 53,408,240
The aggregate cost of purchases and proceeds from sales of investments were as follows:
Period ended December 31 ------------------------------------------------------------------ 2000 1999 ----------------------------- ------------------------------- Purchases Sales Purchases Sales ----------------------------- ------------------------------- Dreyfus Variable Investment Fund: Balanced Portfolio $ 24,576,805 $ 2,906,041 $ 44,473,572 $ 9,702,552 Appreciation Portfolio 27,607,661 37,906,220 82,873,843 69,937,158 Disciplined Stock Portfolio 25,816,490 11,141,743 43,992,128 22,328,965 Growth and Income Portfolio 21,405,360 19,529,025 31,000,075 47,897,993 International Equity Portfolio 31,053,843 13,313,820 11,837,135 12,730,527 International Value Portfolio 5,895,607 5,576,248 14,869,912 12,545,160 Limited Term High Income Portfolio 7,153,177 20,879,070 33,086,609 39,608,695 Money Market Portfolio 58,198,744 55,103,191 172,132,508 162,302,034 Quality Bond Portfolio 10,458,709 17,644,049 27,109,193 23,823,265 Small Cap Portfolio 90,873,749 20,763,407 28,041,111 64,857,750 Small Company Stock Portfolio 4,240,718 4,404,101 4,565,561 10,078,478 Special Value Portfolio 3,740,088 8,128,207 7,921,419 12,612,148 Zero Coupon 2000 Portfolio 2,150,802 21,620,970 5,790,728 6,825,795 Dreyfus Stock Index Fund 43,967,280 20,540,047 89,096,058 51,216,130 Dreyfus Socially Responsible Growth Fund 39,680,620 10,469,131 41,800,549 14,906,200 Dreyfus Investment Portfolios: Core Bond Portfolio 4,614,420 338,833 - - Core Value Portfolio 13,155,645 797,249 8,772,931 3,167,652 Emerging Leaders Portfolio 2,956,404 215,294 - - Emerging Markets Portfolio 1,838,464 1,259,600 - - European Equity Portfolio 5,358,198 910,080 847,214 79,109 Founders Discovery Portfolio 14,237,833 109,081 - - Founders Growth Portfolio 27,947,652 1,002,801 2,932,236 833,738 Founders International Equity Portfolio 11,318,290 498,736 1,186,081 630,776 Founders Passport Portfolio 36,491,230 8,718,558 3,527,923 359,677
33 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 2. Investments (continued)
Period ended December 31 ---------------------------------------------------------------- 2000 1999 ---------------------------- ----------------------------- Purchases Sales Purchases Sales ---------------------------- ----------------------------- Japan Portfolio $ 1,593,708 $ 1,208,166 $ - $ - MidCap Stock Portfolio 20,432,297 1,274,384 4,797,058 2,938,686 Technology Growth Portfolio 109,857,975 8,410,190 37,803,685 1,722,571 Transamerica Variable Insurance Fund: TA VIF Growth Portfolio 23,169,807 7,626,776 33,502,647 17,669,017
3. Contract Owners' Equity A summary of deferred annuity contracts terminable by owners at December 31, 2000 follows:
Accumulation Accumulation Total Contract Subaccounts Units Owned Unit Value Value ---------------------------------------------------------------------------------------------------------- Balanced 5,776,345.909 $ 14.450073 $ 83,468,620 Appreciation 8,193,471.439 38.077104 311,983,664 Disciplined Stock 6,539,032.706 19.977451 130,633,205 Growth and Income 6,432,258.706 31.973585 205,662,370 International Equity 2,629,168.557 20.642679 54,273,083 International Value 1,337,476.194 14.100968 18,859,709 Limited Term High Income 3,514,966.504 9.428450 33,140,686 Money Market 59,855,370.259 1.315552 78,742,852 Quality Bond 4,333,498.116 17.199347 74,533,338 Small Cap 2,018,390.168 87.446365 176,500,883 Small Company Stock 1,666,683.284 14.003022 23,338,603 Special Value 1,959,903.631 17.848035 34,980,429 Zero Coupon 2000 31.042 17.588120 546 Dreyfus Stock Index 5,610,267.635 47.264177 265,164,683 Dreyfus Socially Responsible Growth 3,085,982.201 38.601792 119,124,443 Core Bond 401,440.673 10.761595 4,320,142 Core Value 1,671,632.569 12.120460 20,260,956 Emerging Leaders 237,691.634 12.208677 2,901,900 Emerging Markets 68,080.097 7.148521 486,672 European Equity 408,844.616 12.394794 5,067,545 Founders Discovery 1,566,915.606 7.474421 11,711,787 Founders Growth 2,497,719.994 9.298543 23,225,157 Founders International Equity 889,774.353 11.317181 10,069,737 Founders Passport 1,743,018.957 11.820222 20,602,871 Japan 42,342.493 7.692400 325,715 MidCap Stock 2,352,335.934 11.243606 26,448,738 Technology Growth 9,024,925.748 11.077655 99,975,014 TA VIF Growth 3,644,221.142 13.736036 50,057,153
34 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 3. Contract Owners' Equity (continued) A summary of changes in contract owners' account units follows:
Disciplined Growth and International Balanced Appreciation Stock Income Equity Subaccount Subaccount Subaccount Subaccount Subaccount ---------------------------------------------------------------------- Units outstanding at January 1, 1999 2,280,502 8,121,246 4,753,022 7,270,897 2,456,886 Units purchased 1,219,137 947,398 980,457 354,962 132,100 Units redeemed and transferred 927,269 (554,837) 123,500 (1,077,464) (292,273) ---------------------------------------------------------------------- Units outstanding at December 31, 1999 4,426,908 8,513,807 5,856,979 6,548,395 2,296,713 Units purchased 841,629 767,886 879,604 582,213 377,597 Units redeemed and transferred 507,809 (1,088,222) (197,550) (698,349) (45,141) ---------------------------------------------------------------------- Units outstanding at December 31, 2000 5,776,346 8,193,471 6,539,033 6,432,259 2,629,169 ====================================================================== Limited International Term High Money Quality Value Income Market Bond Small Cap Subaccount Subaccount Subaccount Subaccount Subaccount ---------------------------------------------------------------------- Units outstanding at January 1, 1999 1,380,693 6,458,312 53,939,643 5,030,446 2,615,765 Units purchased 108,274 1,434,666 119,997,794 492,407 75,500 Units redeemed and transferred (56,559) (2,592,626) (109,176,137) (512,039) (594,535) ---------------------------------------------------------------------- Units outstanding at December 31, 1999 1,432,408 5,300,352 64,761,300 5,010,814 2,096,730 Units purchased 80,794 253,617 19,944,152 332,305 126,812 Units redeemed and transferred (175,726) (2,039,002) (24,850,082) (1,009,621) (205,152) ---------------------------------------------------------------------- Units outstanding at December 31, 2000 1,337,476 3,514,967 59,855,370 4,333,498 2,018,390 ======================================================================
35 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 3. Contract Owners' Equity (continued)
Dreyfus Small Zero Socially Company Special Coupon Dreyfus Stock Responsible Stock Value 2000 Index Growth Subaccount Subaccount Subaccount Subaccount Subaccount ---------------------------------------------------------------------- Units outstanding at January 1, 1999 2,111,028 2,764,173 1,263,164 4,443,711 1,744,708 Units purchased 129,873 126,894 103,154 555,180 366,118 Units redeemed and transferred (575,171) (543,310) (212,414) 114,826 288,241 ---------------------------------------------------------------------- Units outstanding at December 31, 1999 1,665,730 2,347,757 1,153,904 5,113,717 2,399,067 Units purchased 212,103 68,135 50,565 817,869 633,365 Units redeemed and transferred (211,150) (455,988) (1,204,438) (321,318) 53,550 ---------------------------------------------------------------------- Units outstanding at December 31, 2000 1,666,683 1,959,904 31 5,610,268 3,085,982 ====================================================================== Core Core Emerging Emerging European Bond Value Leaders Markets Equity Subaccount Subaccount Subaccount Subaccount Subaccount ---------------------------------------------------------------------- Units outstanding at January 1, 1999 - 95,760 - - - Units purchased - 160,949 - - 29,758 Units redeemed and transferred - 361,846 - - 41,413 ---------------------------------------------------------------------- Units outstanding at December 31, - 1999 618,555 - - 71,171 Units purchased 392,699 514,202 171,860 161,595 164,260 Units redeemed and transferred 8,742 538,876 65,832 (93,515) 173,414 ---------------------------------------------------------------------- Units outstanding at December 31, 2000 401,441 1,671,633 237,692 68,080 408,845 ======================================================================
36 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 3. Contract Owners' Equity (continued)
Founders Founders Founders International Founders Discovery Growth Equity Passport Subaccount Subaccount Subaccount Subaccount -------------------------------------------------------- Units outstanding at January 1, 1999 - - - - Units purchased - 88,018 27,720 36,530 Units redeemed and transferred - 121,779 23,658 194,323 -------------------------------------------------------- Units outstanding at December 31, 1999 - 209,797 51,378 230,853 Units purchased 2,338,809 1,453,372 518,198 882,241 Units redeemed and transferred (771,893) 834,551 320,198 629,925 -------------------------------------------------------- Units outstanding at December 31, 2000 1,566,916 2,497,720 889,774 1,743,019 ======================================================== MidCap Technology TA VIF Japan Stock Growth Growth Subaccount Subaccount Subaccount Subaccount -------------------------------------------------------- Units outstanding at January 1, 1999 - 467,293 - 1,634,055 Units purchased - 163,544 519,493 487,820 Units redeemed and transferred - 46,739 2,378,849 841,884 -------------------------------------------------------- Units outstanding at December 31, 1999 - 677,576 2,898,342 2,963,759 Units purchased 56,785 838,684 3,612,383 654,250 Units redeemed and transferred (14,443) 836,076 2,514,201 26,212 -------------------------------------------------------- Units outstanding at December 31, 2000 42,342 2,352,336 9,024,926 3,644,221 ========================================================
4. Administrative, Mortality and Expense Risk Charges Mortality and expense risk charges are deducted from each subaccount of the Separate Account on a daily basis which is equal, on an annual basis, to 1.25% of the daily net asset value of the subaccount. This amount can never increase and is paid to Transamerica Life. An administrative expense charge is also deducted by Transamerica Life from each subaccount on a daily basis which is equal, on an annual basis, to .15% of the daily net asset value of the subaccount. This amount may change, but it is guaranteed not to exceed a maximum effective annual rate of .25%. 37 Separate Account VA-2L of Transamerica Occidental Life Insurance Company - Dreyfus/Transamerica Triple Advantage Variable Annuity Notes to Financial Statements (continued) 4. Administrative, Mortality and Expense Risk Charges (continued) The following charges are deducted from a contract holder's account by Transamerica Life and not directly form the Separate Account. An annual contract fee is deducted at the end of each contract year prior to the annuity date. Currently, this charge is $30 (or 2% of the account value, if less). After the annuity date this charge is referred to as the Annuity Fee. The Annuity Fee is $30. 5. Taxes Operations of the Mutual Fund Account form a part of Transamerica Life, 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 Mutual Fund Account are accounted for separately from other operations of Transamerica Life for purposes of federal income taxation. The Mutual Fund 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 Transamerica Life. Under existing federal income tax laws, the income of the Mutual Fund Account, to the extent applied to increase reserves under the variable annuity contracts, is not taxable to Transamerica Life. 38 PART C Other Information Item 24. Financial Statements and Exhibits (a) Financial Statements All required financial statements are included in Parts A and B of this Registration Statement. (b) Exhibits (1) Resolution of the Board of Directors of Transamerica Occidental Life Insurance Company ("Transamerica") authorizing establishment of the Variable Account. (1) (2) Not Applicable. (3) (a) Master Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance, Transamerica Financial Resources, Inc., Dreyfus Service Corporation, and Dreyfus Service Organization, Inc. (4) (b) Principal Agency Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Organization, Inc. (4) (c) Distribution Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Corporation. (4) (d) Form of Sales Agreement among Dreyfus Service Corporation, Dreyfus Service Organization, Inc., and Broker-Dealers. (4) (e) Amendment Dated as of August 31, 1993, to Master Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Financial Resources, Inc., Dreyfus Service Corporation and Dreyfus Service Organization, Inc. (6) (f) Amendment Dated as of August 31, 1993 to Principal Agency Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Organization, Inc. (6) (g) Amendment Dated as of August 31, 1993 to Distribution Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Corporation. (6) (h) Distribution Agreement between Transamerica Occidental Life Insurance Company and Transamerica Insurance Securities Sales Corporation, dated as of August 24, 1994. (8) (i) Sales Agreement among Transamerica Insurance Securities Sales Corporation, Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (j) Services Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Insurance Securities Sales Corporation, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (k) Services Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Insurance Securities Sales Corporation, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (l) Form of Sales Agreement between Transamerica Occidental Life Insurance Company, Transamerica Life Insurance and Annuity Company, First Transamerica Life Insurance Company and Transamerica Securities Sales Corporation. (10) (4) Group Contract Form, Certificate Form, Individual Contract Form and Endorsements. (a) Contract form and Endorsements. (5) (i) Form of Flexible Purchase Payment Multi-Funded Deferred Master Group Annuity Contract. (5) (ii) Form of Automatic Payout Option Endorsement to Group Contract. (5) (iii) Form of Dollar Cost Averaging Option Endorsement to Group Contract. (5) (iv) Form of Systematic Withdrawal Option Endorsement to Group Contract. (5) (v) Form of Guaranteed Minimum Death Benefit Endorsement to Group Contract. (5) (vi) Form of Fixed Account Rider to Group Contract. (7) (vii) Form of Tax Relief Rider. (18) (b) Certificate of Participation Form and Endorsements. (5) (i) Form of Certificate of Participation. (5) (ii) Form of IRA Endorsement to Certificate. (5) (iii) Form of Dollar Cost Averaging Option Endorsement to Certificate. (5) (iv) Form of Systematic Withdrawal Option Endorsement to Certificate. (5) (v) Form of Automatic Payout Option Endorsement to Certificate. (5) (vi) Form of Benefit Distribution Endorsement to Certificate. (5) (vii) Form of Death Benefit Endorsement to Group Contract. (14) (viii) Form of Individual Purchase Payment Endorsement. (14) (ix) Form of Guaranteed Minimum Income Builder Rider. (14) (x) Form of Tax Relief Rider.(18) (c) Individual Contract Form and Endorsements. (6) (i) Form of Flexible Purchase Payment Multi-Funded Deferred Individual Annuity Contract. (6) (ii) Form of IRA Endorsement to Individual Contract. (6) (iii) Form of Benefit Distribution Endorsement. (6) (iv) Form of Dollar Cost Averaging Option Endorsement to Individual Contract. (6) (v) Form of Systematic Withdrawal Option Endorsement to Individual Contract. (6) (vi) Form of Automatic Payout Option Endorsement to Individual Contract. (6) (vii) Form of Guaranteed Minimum Death Benefit Endorsement to Individual Contract. (6) (viii) Form of Fixed Account Rider to Individual Contract. (7) (x) Form of Death Benefit Endorsement. (14) (xi) Form of Initial Purchase Payment Endoresment. (14) (xii) Form of Guaranteed Minimum Income Benefit Rider. (14) (xiii) Form of Tax Relief Rider.(18) (5) (a) Form of Application for and Acceptance of Group Annuity Contract. (5) (b) Form of Application for Enrollment under Group Annuity Contract. (5) (c) Form of Application for Individual Annuity Contract. (6) (6) (a) Restated Articles of Incorporation of Transamerica. (1) (a)(1) Articles of Redomestication and Reincorporation of Transamerica Occidental Life Insurance Company. (16) (b) Restated By-Laws of Transamerica. (1) (b)(1) Amended and Restated By-Laws of Transamerica Occidental Life Insurance Company. (16) (7) Not Applicable. (8) (a) Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (4) (b) Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Life and Annuity Index Fund, Inc. (4) (c) Participation Agreement between Transamerica Occidental Life Insurance Company and The Dreyfus Socially Responsible Growth Fund, Inc. (6) (d) Administrative Services Agreement between Transamerica Occidental Life Insurance Company and Vantage Computer Systems, Inc. (4) (e) Amendment Dated as of August 31, 1993 to Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (6) (f) Amendment Dated as of August 31, 1993 to Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Life and Annuity Index Fund, Inc. (6) (g) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of March 3, 1993, As Amended, between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (8) (g)(1) Form of Fund Participation Agreement (Dreyfus). (17) (h) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of August 31, 1993 between Transamerica Occidental Life Insurance Company and Dreyfus Socially Responsible Growth Fund, Inc. (8) (i) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of March 3, 1993, As Amended, between Transamerica Occidental Life Insurance Company and Dreyfus Stock Index Fund. (8) (j) Form of Participation Agreement (Transamerica). (17) (9) (a) Opinion and Consent of Counsel. (9) (b) Consent of Counsel. (11) (10) (a) Consent of Independent Auditors. (17) (b) Opinion and Consent of Actuary. (17) (11) No financial statements are omitted from item 23. (12) Not applicable. (13) Performance Data Calculations. (6) (14) Not applicable. (15) Powers of Attorney. Frank Beardsley (12) Richard N. Latzer (15) Thomas J. Cusak (11) Karen MacDonald (15) James W. Dederer (15) Gary U. Rolle' (15) Paul E. Rutledge III (15) T. Desmond Sugrue (11) George A. Foegele (15) Nooruddin S. Veerjee (15) David E. Gooding (15) Robert A. Watson (11) Edgar H. Grubb (11) Frank C. Herringer (11) Patrick S. Baird (15) Brenda K. Clancy (15) Douglas C. Kolsrud (15) Craig D. Vermie (15) Ron F. Wagley (17) Bruce Clark (17) (1) Filed with initial filing of this form N-4 Registration Statement, File No. 33-49998 (July 24, 1992). (2) Incorporated by reference to Exhibit 7(c) of Post-Effective Amendment No.1 to the Registration Statement of Transamerica Occidental Life Insurance Company's Separate Account VL on Form S-6, File No. 33-28107 (April 30, 1990) (3) Incorporated by reference to Exhibit 7(d) of Post-Effective Amendment No. 2 to the Registration Statement of Transamerica Occidental Life Insurance Company's Separate Account VL on Form S-6, File No. 33-28107 (April 30, 1991) (4) Filed with Post-Effective Amendment No. 1 to this Form N-4 Registration Statement, File No. 33-49998 (April 30, 1993). (5) Filed with Post-Effective Amendment No. 3 to this Form N-4 Registration Statement, File No. 33-49998 (March 8, 1994). (6) Filed with Post-Effective Amendment No. 4 to this Form N-4 Registration Statement, File No. 33-49998 (April 29, 1994). (7) Filed with Post-Effective Amendment No. 5 to this Form N-4 Registration Statement, File No. 33-49998 (March 1, 1995). (8) Filed with Post-Effective Amendment No. 6 to this Form N-4 Registration Statement File No. 33-49998 (April 28, 1995). (9) Filed with Post-Effective Amendment No. 7 to this Form N-4 Registration Statement File No. 33-49998 (April 26, 1996). (10) Filed with Post-Effective Amendment No. 8 to this Form N-4 Registration Statement File No. 33-49998 (April 28, 1997). (11) Filed with Post-Effective Amendment No. 9 to this Form N-4 Registration Statement file No. 33-49998 (April 28, 1998). (12) Filed with Post-Effective Amendment No. 10 to this Form N-4 Registration Statement file No. 33-49998 (February 26, 1999). (13) Filed with Post-Effective Amendment No. 11 to this Form N-4 Registration Statement file No. 33-49998 (April 28, 1999). (14) Filed with Post-Effective Amendment No. 13 to this Form N-4 Registration Statement file No. 33-49998 (December 6, 1999). (15) Filed with Post-Effective Amendment No. 14 to this Form N-4 Registration Statement file No 33-49998 (April 28, 2000) (16) Filed with Post-Effective Amendment No 16 to this Form N-4 Registration Statement file No. 33-49998 (February 9, 2001) (17) Filed herewith. (18) To be filed by Amendment. Item 25. List of Directors and Officers of the Depositor Principal Positions and Name Offices with Depositor ---- ---------------------- Patrick S. Baird Director Paul E. Rutledge III Director, President - Reinsurance Division Ron F. Wagley Director, President - Insurance Products Division James W. Dederer Director, Executive Vice President Larry N. Norman Executive Vice President Brenda K. Clancy Director, Senior Vice President, Corporate George A. Foegele Director, Senior Vice President Douglas C. Kolsrud Director, Senior Vice President, Investment Division Karen MacDonald Director, Executive Vice President and Chief Operating Officer Richard N. Latzer Director, Investment Officer Gary U. Rolle' Director, Investment Officer Craig D. Vermie Director, Vice President and Counsel, Corporate David M. Goldstein Vice President and Deputy General Counsel Bruce Clark Chief Financial Officer Frank A. Camp Vice President and Financial Markets Division General Counsel Item 26. Persons Controlled by or under Common Control With the Depositor or Registrant.
Jurisdiction of Percent of Voting Name Incorporation Securities Owned Business ---- --------------- ----------------- -------- AEGON N.V. Netherlands 51.16% of Vereniging Holding company AEGON Netherlands Membership Association Groninger Financieringen B.V. Netherlands 100% AEGON N.V. Holding company AEGON Netherland N.V. Netherlands 100% AEGON N.V. Holding company AEGON Nevak Holding B.V. Netherlands 100% AEGON N.V. Holding company AEGON International N.V. Netherlands 100% AEGON N.V. Holding company Voting Trust Trustees: Delaware Voting Trust K.J.Storm Donald J. Shepard H.B. Van Wijk Dennis Hersch AEGON U.S. Holding Corporation Delaware 100% Voting Trust Holding company Short Hills Management Company New Jersey 100% AEGON U.S. Holding company Holding Corporation COPRA Reinsurance Company New York 100% AEGON U.S. Holding company Holding Corporation AEGON Management Company Indiana 100% AEGON U.S. Holding company Holding Corporation AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company RCC North America Inc. Delaware 100% AEGON U.S. Real estate Transamerica Holding Company Delaware 100% AEGON USA, Inc. Holding company AEGON Funding Corp. Delaware 100% Transamerica Issue debt Holding Corporation securities-net proceeds used to make loans to affiliates First AUSA Life Insurance Maryland 100% Transamerica Holding Insurance holding Company Company company AUSA Life Insurance New York 82.33% First AUSA Life Insurance Company, Inc. Insurance Company 17.67% Veterans Life Insurance Company Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance Company of America
Life Investors Alliance, LLC Delaware 100% LIICA Purchase, own, and hold the equity interest of other entities Great American Insurance Iowa 100 % LIICA Marketing Agency, Inc. Bankers United Life Iowa 100% Life Investors Insurance Assurance Company Insurance Company of America Transamerica Life Insurance Iowa 100% First AUSA Life Ins. Co. Insurance Company AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing Group, Inc. AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of of Kentucky Services Group, Inc. structured settlements AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of Services Group, Inc. structured settlements Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance First AUSA Life Ins. Co. Iowa Fidelity Life Insurance Arizona 100% of Common Voting Stock Insurance Co. First AUSA Life Ins. Co. Western Reserve Life Ohio 100% First AUSA Life Ins. Co. Insurance Assurance Co. of Ohio WRL Series Fund, Inc. Maryland Various Mutual fund WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides Assurance Co. of Ohio administration for affiliated mutual fund WRL Investment Florida 100% Western Reserve Life Registered Management, Inc. Assurance Co. of Ohio Investment advisor ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency and Subsidiaries Assurance Co. of Ohio ISI Insurance Agency Alabama 100% ISI Insurance Agency, Insurance agency of Alabama, Inc. Inc. ISI Insurance Agency Ohio 100% ISI Insurance Agency, Insurance agency of Ohio, Inc. Inc. ISI Insurance Agency Massachusetts 100% ISI Insurance Agency, Insurance agency of Massachusetts, Inc. Inc. ISI Insurance Agency Texas 100% ISI Insurance Agency, Insurance agency of Texas, Inc. Inc.
ISI Insurance Agency Hawaii 100% ISI Insurance Agency, Insurance agency of Hawaii, Inc. Inc. ISI Insurance Agency New Mexico 100% ISI Insurance Agency, Insurance agency of New Mexico, Inc. Inc. AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance agency Assurance Co. of Ohio Monumental General Casualty Maryland 100% First AUSA Life Ins. Co. Insurance Co. United Financial Services, Maryland 100% First AUSA Life Ins. Co. General agency Inc. Bankers Financial Life Ins. Arizona 100% First AUSA Life Ins. Co. Insurance Co. The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency Cadet Holding Corp. Iowa 100% First AUSA Life Ins. Co. Holding company Monumental General Life Puerto Rico 51% First AUSA Life Insurance Insurance Company of Insurance Company Puerto Rico 49% Baldrich & Associates of Puerto Rico AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company Group, Inc. Trip Mate Insurance Agency, Kansas 100% Monumental General Sale/admin. of Inc. Insurance Group, Inc. travel insurance Monumental General Maryland 100% Monumental General Provides management Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated third party administrator National Association Maryland 100% Monumental General Provides actuarial Management and Consultant Administrators, Inc. consulting services Services, Inc. Monumental General Mass Maryland 100% Monumental General Marketing arm for Marketing, Inc. Insurance Group, Inc. sale of mass marketed insurance coverage Transamerica Capital, Inc. California 100% AUSA Holding Co. Broker/Dealer Endeavor Management Company California 100% AUSA Holding Co. Investment Management Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of America, Inc. automobile extended maintenance contracts Massachusetts Fidelity Trust Iowa 100% AUSA Holding Co. Trust company Co. Money Service, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling for employees and agents of affiliated companies ADB Corporation, L.L.C. Delaware 100% Money Services, Inc. Special purpose limited Liability company ORBA Insurance Services, Inc. California 26.91% Money Services, Inc. Insurance agency Great Companies, L.L.C. Iowa 30% Money Services, Inc. Markets & sells mutual funds & individually managed accounts Roundit, Inc. Maryland 50% AUSA Holding Co. Financial services Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency Zahorik Texas, Inc. Texas 100% Zahorik Company, Inc. Insurance agency Long, Miller & Associates, California 33-1/3% AUSA Holding Co. Insurance agency L.L.C. AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment Services, Inc. advisor InterSecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer Associated Mariner Financial Michigan 100% InterSecurities, Inc. Holding company/ Group, Inc. management services Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency of Massachusetts, Inc. Agency, Inc. Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency Ohio, Inc. Agency, Inc. Associated Mariner Agency Texas 100% Associated Mariner Insurance agency Texas, Inc. Agency, Inc. PIA 2000-A, L.P. Delaware Intersecurities, Inc. is the Private placement General Partner investment limited partnership Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services Idex Management, Inc. Delaware 100% AUSA Holding Co. Investment advisor
IDEX Mutual Funds Massachusetts Various Mutual fund Diversified Investment Delaware 100% AUSA Holding Co. Registered investment Advisor, Inc. advisor Diversified Investors Delaware 100% Diversified Investment Broker-Dealer Securities Corp. Advisors, Inc. George Beram & Company, Inc. Massachusetts 100% Diversified Investment Employee benefit and Advisors, Inc. actuarial consulting AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer (De-registered) Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency Canadian Dealer Network Inc. AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor Management, Inc. AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate Advisors, Inc. administrative and real estate investment AEGON USA Real Estate Delaware 100% AEGON USA Realty Real estate and Services, Inc. Advisors, Inc. mortgage holding company QSC Holding, Inc. Delaware 100% AEGON USA Realty Real estate and Advisors, Inc. financial software production and sales Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling Advisors, Inc. Landauer Realty Associates, Texas 100% Landauer Associates, Inc. Real estate counseling Inc. Realty Information Systems, Iowa 100% AEGON USA Realty Information Systems Inc. Advisors, Inc. for real estate investment management USP Real Estate Investment Iowa 12.89% First AUSA Life Ins. Co. Real estate Trust 13.11% PFL Life Ins. Co. investment trust 4.86% Bankers United Life Assurance Co. RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership Partnership Inc. is General Partner and 5% owner. Commonwealth General Delaware 100% Transamerica Holding Holding company Corporation ("CGC") Company AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life Insurance Company AEGON Alliances, Inc. Virginia 100% Benefit Plans, Inc. General agent Capital 200 Block Corporation Delaware 100% CGC Real estate holdings Commonwealth General Kentucky 100% CGC Administrator of Assignment Corporation structured settlements AEGON Institutional Markets, Delaware 100% CGC Provider of Inc. investment, marketing and admin. services to ins. cos. Monumental Agency Group, Inc. Kentucky 100% CGC Provider of services to insurance companies Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of (EIN 23-1720755) management support services Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose Corporation Agency, Inc. subsidiary Financial Planning Services, Dist. Columbia 100% Ampac Insurance Special-purpose Inc. Agency, Inc. subsidiary Frazer Association Illinois 100% Ampac Insurance TPA license-holder Consultants, Inc. Agency, Inc. National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose Agency, Inc. subsidiary Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment Agency, Inc. lessor Veterans Benefit Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of Agency, Inc. group insurance programs Veterans Insurance Services, Delaware 100% Ampac Insurance Special-purpose Inc. Agency, Inc. subsidiary Academy Insurance Group, Inc. Delaware 100% CGC Holding company Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company Group, Inc. Pension Life Insurance New Jersey 100% Academy Life Insurance company Company of America Insurance Company FED Financial, Inc. Delaware 100% Academy Insurance Special-purpose Group, Inc. subsidiary
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose Group, Inc. subsidiary Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent Group, Inc. Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose Insurance Agency, Inc. Group, Inc. subsidiary Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose Group, Inc. subsidiary Ampac, Inc. Texas 100% Academy Insurance Managing general agent Group, Inc. Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose (EIN 23-2364438) Group, Inc. subsidiary Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose Group, Inc. subsidiary Force Financial Services, Inc. Massachusetts 100% Force Financial Group, Special-purpose Inc. subsidiary Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose Group, Inc. subsidiary NCOAA Management Company Texas 100% Academy Insurance Special-purpose Group, Inc. subsidiary NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club Group, Inc. Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. Services, Inc. Group, Inc. services Unicom Administrative Germany 100% Unicom Administrative Provider of admin. Services, GmbH Services, Inc. services Capital General Development Delaware 100% CGC Holding company Corporation Monumental Life Maryland 73.33% Capital General Insurance company Insurance Company Development Company 26.77% First AUSA Life Insurance Company AEGON Special Markets Maryland 100% Monumental Life Marketing company Group, Inc. Insurance Company Peoples Benefit Life Iowa 3.7% CGC Insurance company Insurance Company 20.0% Capital Liberty, L.P. 76.3% Monumental Life Insurance Company
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company Life Insurance Company Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Insurance Special-purpose Company subsidiary Coverna Direct Insurance Maryland 100% Peoples Benefit Insurance agency Services, Inc. Life Insurance Company Ammest Realty Corporation Texas 100% Monumental Life Special-purpose Insurance Company subsidiary JMH Operating Company, Inc. Mississippi 100% People's Benefit Life Real estate holdings Insurance Company Capital Liberty, L.P. Delaware 99.0% Monumental Life Holding company Insurance Company 1.0% CGC Transamerica Corporation Delaware 100% AEGON NV Major interest in ("TAC") insurance and finance AEGON Funding Company II Delaware 100% TAC Commercial paper insurance Transamerica Pacific Hawaii 100% TAC Life insurance Insurance Company, Ltd. TREIC Enterprises, Inc. Delaware 100% TFC Investments ARC Reinsurance Corporation Hawaii 100% Transamerica Corp. Property & Casualty Insurance Transamerica Management, Inc. Delaware 100% ARC Reinsurance Corp. Asset management Inter-America Corporation California 100% Transamerica Corp. Insurance Broker Pyramid Insurance Company, Hawaii 100% Transamerica Corp. Property & Casualty Ltd. Insurance Transamerica Business Tech Delaware 100% Transamerica Corp. Telecommunications Corp. and data processing Transamerica CBO I, Inc. Delaware 100% Transamerica Corp. Owns and manages a pool of high-yield bonds Transamerica Corporation Oregon 100% Transamerica Corp. Name holding only - (Oregon) Inactive Transamerica Finance Corp. Delaware 100% Transamerica Corp. Commercial & Consumer Lending & equipment leasing TA Leasing Holding Co., Inc. Delaware 100% Transamerica Finance Corp. Holding company
Trans Ocean Ltd. Delaware 100% TA Leasing Holding Co. Holding company Inc. Trans Ocean Container Corp. Delaware 100% Trans Ocean Ltd. Intermodal leasing ("TOCC") SpaceWise Inc. Delaware 100% TOCC Intermodal leasing Trans Ocean Container Delaware 100% TOL Intermodal leasing Finance Corp. Trans Ocean Leasing Germany 100% TOCC Intermodal leasing Deutschland GmbH Trans Ocean Leasing PTY Ltd. Austria 100% TOCC Intermodal leasing Trans Ocean Management S.A. Switzerland 100% TOCC Intermodal leasing Trans Ocean Regional California 100% TOCC Holding company Corporate Holdings Trans Ocean Tank Services Delaware 100% TOCC Intermodal leasing Corp. Transamerica Leasing Inc. Delaware 100% TA Leasing Holding Co. Leases & Services intermodal equipment Transamerica Leasing Holdings Delaware 100% Transamerica Leasing Inc. Holding company Inc. ("TLHI") Greybox Logistics Services Delaware 100% TLHI Intermodal leasing Inc. Greybox L.L.C. ("G") Delaware 100% TLHI Intermodal freight container interchange facilitation service Transamerica Trailer France 100% Greybox L.L.C. Leasing Leasing S.N.C. Greybox Services Limited U.K. 100% TLHI Intermodal leasing Intermodal Equipment, Inc. Delaware 100% TLHI Intermodal leasing Transamerica Leasing N.V. Belg. 100% Intermodal Equipment Inc. Leasing Transamerica Leasing SRL Italy 100% Intermodal Equipment Inc. Leasing Transamerica Distribution Delaware 100% TLHI Dormant Services, Inc. Transamerica Leasing Belg. 100% TLHI Leasing Coordination Center Transamerica Leasing do Braz. 100% TLHI Container Leasing Brasil Ltda.
Transamerica Leasing GmbH Germany 100% TLHI Leasing Transamerica Trailer Leasing Poland 100% TLHI Leasing Sp. z.o.o Transamerica Leasing Limited U.K. 100% TLHI Leasing ICS Terminals (UK) Limited U.K. 100% Transamerica Leasing Leasing Limited Transamerica Leasing Pty. Ltd. Australia 100% TLHI Leasing Transamerica Leasing (Canada) Canada 100% TLHI Leasing Inc. Transmerica Leasing (HK) Ltd. H.K. 100% TLHI Leasing Transamerica Leasing S. Africa 100% TLHI In Liquidation - (Proprietary) Limited Intermodal leasing Transamerica Trailer Holdings Delaware 100% TLHI Holding company I Inc. Transamerica Trailer Holdings Delaware 100% TLHI Holding company II Inc. Transamerica Trailer Holdings Delaware 100% TLHI Holding company III Inc. Transamerica Trailer Leasing Swed. 100% TLHI Leasing AB Transamerica Trailer Leasing Switzerland 100% TLHI Leasing AG Transamerica Trailer Leasing Denmark 100% TLHI Leasing A/S Transamerica Trailer Leasing Germany 100% TLHI Leasing GmbH Transamerica Trailer Leasing Belgium 100% TLHI Leasing (Belgium) N.V. Transamerica Trailer Leasing Netherlands 100% TLHI Leasing (Netherlands) B.V. Transamerica Alquiler de Spain 100% TLHI Leasing Trailer Spain S.L. Transamerica Transport Inc. New Jersey 100% TLHI Dormant Transamerica Commercial Delaware 100% Transamerica Finance Corp. Holding company Finance Corporation, I ("TCFCI") Transamerica Equipment Delaware 100% TCFCI Investment in Various Financial Services equipment leases and Corporation loans
BWAC Credit Corporation Delaware 100% TCFCI Inactive BWAC International Corporation Delaware 100% TCFCI Retail Appliance and furniture stores BWAC Twelve, Inc. Delaware 100% TCFCI Holding company TIFCO Lending Corporation Illinois 100% BWAC Twelve, Inc. General financing Transamerica Insurance Maryland 100% BWAC Twelve, Inc. Insurance premium Finance Corporation ("TIFC") financing Transamerica Insurance California 100% TIFC Insurance premium Finance Corporation, California Transamerica Insurance Ontario 100% TIFC Insurance premium Finance Corporation, Canada financing Transamerica Business Credit Delaware 100% TCFCI Lending, leasing & Corporation ("TBCC") equipment financing Transamerica Mezzanine Delaware 100% TBCC Holding company Financing, Inc. Bay Capital Corporation Delaware 100% TBCC Special purpose corporation Coast Funding Corporation Delaware 100% TBCC Special purpose corporation Transamerica Small Business Delaware 100% TBCC Holding company Capital, Inc. ("TSBC") Transamerica Emergent Delaware 100% SBCI Dormant Business Capital Holdings, Inc. Gulf Capital Corporation Delaware 100% TBCC Special purpose corporation Direct Capital Equity Delaware 100% TBCC Small business loans Investment, Inc. TA Air East, Corp. Delaware 100% TBCC Special purpose corporation TA Air I, Corp. Delaware 100% TEFS Special purpose corporation TA Air II, Corp. Delaware 100% TEFS Special purpose corporation TA Air III, Corp. Delaware 100% TBCC Special purpose corporation
TA Air IV, Corp. Delaware 100% TBCC Special purpose corporation TA Air V, Corp. Delaware 100% TBCC Special purpose corporation TA Air VI, Corp. Delaware 100% TBCC Special purpose corporation TA Air VII, Corp. Delaware 100% TBCC Special purpose corporation TA Air VIII, Corp. Delaware 100% TBCC Special purpose corporation TA Air IX, Corp. Delaware 100% TBCC Special purpose corporation TA Air X, Corp. Delaware 100% TBCC Special purpose corporation TA Air XI, Corp. Delaware 100% TEFS Special purpose corporation TA Air XII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIV, Corp. Delaware 100% TEFS Special purpose corporation TA Air XV, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVI, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVIII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIX, Corp. Delaware 100% TEFS Special purpose corporation TA Air XX, Corp. Delaware 100% TEFS Special purpose corporation TA Heli I, Inc. Delaware 100% TEFS Special purpose corporation
TA Marine I, Inc. Delaware 100% TBCC Special purpose corporation TA Marine II, Inc. Delaware 100% TBCC Special purpose corporation TA Marine IV, Inc. Delaware 100% TEFS Special purpose corporation TA Marine VI, Inc. Delaware 100% TEFS Special purpose corporation TA Marine V, Inc. Delaware 100% TEFS Special purpose corporation TA Marine III, Corp. Delaware 100% TEFS Special purpose corporation TA Public Finance Air I, Corp. Delaware 100% TEFS Special purpose corporation TBC I, Inc. Delaware 100% TBCC Special purpose corporation TBC II, Inc. Delaware 100% TBCC Special purpose corporation TBC III, Inc. Delaware 100% TBCC Special purpose corporation TBC IV, Inc. Delaware 100% TBCC Special purpose corporation TBC V, Inc. Delaware 100% TBCC Special purpose corporation TBC VI, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax I, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax II, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax III, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax IV, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax V, Inc. Delaware 100% TBCC Special purpose corporation
TBC Tax VI, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax VII, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax VIII, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax IX, Inc. Delaware 100% TBCC Special purpose corporation The Plain Company Delaware 100% TBCC Special purpose corporation Transamerica Distribution Delaware 100% TCFCI Holding company Finance Corporation ("TDFC") Transamerica Accounts Holding Delaware 100% TDFC Holding company Corp. Transamerica Commercial Delaware 100% TIFC Finance company Finance Corporation ("TCFC") Transamerica Acquisition Canada 100% TCFCC Holding company Corporation, Canada Transamerica Distribution Delaware 100% TCFC Commercial Finance Finance Corporation - Overseas, Inc. ("TDFOI") TDF Mauritius Limited Mauritius 100% TDFOI Mauritius holding company Inventory Funding Trust Delaware 100% TCFC Delaware Business Trust Inventory Funding Company, LLC Delaware 100% Inventory Funding Trust Holding company TCF Asset Management Colorado 100% TCFC A depository for Corporation foreclosed real and personal property Transamerica Joint Ventures, Delaware 100% TCFC Holding company Inc. Transamerica Inventory Delaware 100% TDFC Holding company Finance Corporation ("TIFC") Transamerica GmbH, Inc. Delaware 100% TIFC Holding company Transamerica Netherlands 100% Trans. GmbH, Inc. Commercial lending in Fincieringsmaatschappij B.V. Europe BWAC Seventeen, Inc. Delaware 100% TIFC Holding company
Transamerica Commercial Ontario 100% BWAC Seventeen, Inc. Dormant Finance Canada, Limited Transamerica Commercial Canada 100% BWAC Seventeen, Inc. Commercial finance Finance Corporation, Canada TCF Commercial Leasing Ontario 100% TCFCC Dormant Corporation, Canada Cantrex Group Inc. Quebec 76% TACC Buying group and retail merchant services BWAC Twenty-One, Inc. Delaware 100% TIFC Holding company Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Commercial lending Finance Limited ("TCFL") TDF Credit Insurance Services U.K. 100% TCFL Credit insurance Limited brokerage Whirlpool Financial Poland 100% TCFL Inactive - commercial Corporation Polska Spozoo finance Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Holding company Holdings Limited Transamerica Commercial France 100% TIFC Factoring company Finance France S.A. Transamerica GmbH Frankfurt, 100% GmbH Commercial lending in Germany Germany Transamerica Retail Financial Delaware 100% TIFC Provides retail Services Corporation financing ("TRFSC") Transamerica Bank, NA Delaware 100% TRFSC Bank Transamerica Consumer Finance Delaware 100% TRFSC Consumer finance Holding Company ("TCFHC") holding company Transamerica Mortgage Company Delaware 100% TCFHC Consumer mortgages Transamerica Consumer Delaware 100% TCFHC Securitization company Mortgage Receivables Company Metropolitan Mortgage Company Florida 100% TCFHC Consumer mortgages Easy Yes Mortgage, Inc. Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Easy Yes Mortgage, Inc. Georgia 100% Metropolitan Mtg. Co. No active business/Name holding only
First Florida Appraisal Florida 100% Metropolitan Mtg. Co. Appraisal and Services, Inc. inspection services First Georgia Appraisal Georgia 100% First FL App. Srvc, Inc. Appraisal services Services, Inc. Freedom Tax Services, Inc. Florida 100%. Metropolitan Mtg. Co. Property tax information services J.J. & W. Advertising, Inc. Florida 100% Metropolitan Mtg. Co. Advertising and marketing services J.J. & W. Realty Corporation Florida 100% Metropolitan Mtg. Co. To hold problem REO properties Liberty Mortgage Company of Florida 100% Metropolitan Mtg. Co. No active Ft. Myers, Inc. business/Name holding only Metropolis Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Perfect Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Transamerica Vendor Financial Delaware 100% TDFC Provides commercial Service Corporation leasing Transamerica Distribution Mexico 99% TCFC Holding company in Finance Corporation de Mexican subsidiaries Mexico S. de R.L. de C.V. TDF de Mexico S. de R.L. de Mexico 99% TDFC Mex Service company for C.V. Whirlpool receivables Transamerica Corporate Mexico 99% TDFC Mex Holds employees Services De Mexico S. de R.L. de CV Transamerica Distribution Mexico 99% TCFC Finance company Finance Factorje S.A. de C.V. Transamerica Distribution Finance Insurance Services, Illinois 100% TCFC Finance company Inc. Transamerica Flood Hazard Delaware 100% TAC Flood Zone Certification, Inc. certification service Transamerica Home Loan California 100% TFC Consumer mortgages Transamerica Lending Company Delaware 100% TFC In liquidation - lending Transamerica Public Finance, Delaware 70% TFC Financial Services LLC Transamerica Financial California 100% Transamerica Corp. Investments Products, Inc.
Transamerica Insurance Iowa 100% TIHI Holding company Corporation ("TIC") Arbor Life Insurance Company Arizona 100% TIC Life insurance, disability insurance Plaza Insurance Sales Inc. California 100% TIC Casualty insurance placement Transamerica Advisors, Inc. California 100% TIC Retail sale of investment advisory services Transamerica Annuity Services New Mexico 100% TIC Performs services Corp. required for structured settlements Transamerica Financial Delaware 100% TIC Retail sale of Resources, Inc. securities products Financial Resources Insurance Texas 100% Transamerica Fin. Res. Retail sale of Agency of Texas securities products TBK Insurance Agency Ohio 100% Transamerica Fin. Res. Variable insurance of Ohio, Inc. contract sales in state of Ohio Transamerica Financial Alabama 100% Transamerica Fin. Res. Insurance agent & Resources Agency of Alabama, broker Inc. Transamerica Financial Massachusetts 100% Transamerica Fin. Res. Insurance agent & Resources Ins. Agency of broker Massachusetts, Inc. Transamerica International Delaware 100% TIC Holding & Insurance Services, Inc. administering foreign ("TIISI") operations AEGON Canada Inc. ("ACI") Canada 100% TIHI Holding company Transamerica Life Canada Canada 100% ACI Life insurance company Home Loans and Finance Ltd. U.K. 100% TIISI Inactive Transamerica Occidental Life Iowa 100% TIC Life insurance Insurance Company ("TOLIC") NEF Investment Company California 100% TOLIC Real estate development Transamerica China Hong Kong 99% TOLIC Holding company Investments Holdings Limited Transamerica Life Insurance N. Carolina 100% TOLIC Life insurance and Annuity Company ("TALIAC") Transamerica Assurance Company Missouri 100% TALIAC Life and disability insurance
Gemini Investments, Inc. Delaware 100% TALIAC Investment subsidiary Transamerica Life Insurance Canada 100% TOLIC Sells individual life Company of Canada insurance & investment products in all provinces and territories of Canada Transamerica Life Insurance New York 100% TOLIC Insurance sales Company of New York Transamerica South Park Delaware 100% TOLIC Market analysis Resources, Inc. Transamerica Variable Maryland 100% TOLIC Mutual Fund Insurance Fund USA Administration Services, Kansas 100% TOLIC Third party Inc. administrator Transamerica Products, Inc. California 100% TIC Holding company ("TPI") Transamerica Products II, Inc. California 100% TPI Co-general partner Transamerica Products IV, Inc. California 100% TPI Co-general partner Transamerica Products I, Inc. California 100% TPI Co-general partner Transamerica Securities Sales Maryland 100% TIC Life insurance sales Corp. Transamerica Service Company Delaware 100% TIC Passive loss tax service Transamerica International RE Bermuda 100% TAC Reinsurance (Bermuda) Ltd. Transamerica Intellitech, Inc. Delaware 100% TFC Real estate information and technology services Transamerica International Delaware 100% TAC Holding company Holdings, Inc. ("TIHI") Transamerica Investment Delaware 100% TAC Investment adviser Services, Inc. ("TISI") Transamerica Income Shares, Maryland 100% TISI Mutual fund Inc. Transamerica LP Holdings Corp. Delaware 100% TAC Limited partnership investment Transamerica Real Estate Tax Delaware 100% TFC Real estate tax Service, Inc. reporting and processing services Transamerica Realty Services, Delaware 100% TAC Real estate Inc. ("TRS") investments Bankers Mortgage Company of CA California 100% TRS Investment management
Pyramid Investment Corporation Delaware 100% TRS Real estate company The Gilwell Company California 100% TRS Ground lessee of 517 Washington Street, San Francisco Transamerica Affordable California 100% TRS General partner LHTC Housing, Inc. Partnership Transamerica Minerals Company California 100% TRS Owner and lessor of oil and gas properties Transamerica Oakmont California 100% TRS General partner Corporation retirement properties Transamerica Senior Delaware 100% TAC Owns retirement Properties, Inc. ("TSPI") properties Transamerica Senior Living, Delaware 100% TSPI Manages retirement Inc. properties
Item 29. Principal Underwriter Transamerica Securities Sales Corporation (TSSC) and Transamerica Financial Resources (TFR) are the co-underwriters of the Certificates and the Individual Contracts as defined in the Investment Company Act of 1940. TSSC became Principal Underwriter effective 8-24-94. NAME AND PRINCIPAL POSITION AND OFFICES WITH BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION ---------------------------------------------------------------------------- Catherine Collinson Director Sandy Brown President, Treasurer and Director Karen MacDonald Director George Chuang Vice President and Chief Financial Officer Chris Shaw Vice President, Chief Compliance Officer and Secretary *The Principal business address for each officer and director is 1150 South Olive, Los Angeles, CA 90015. NAME AND PRINCIPAL POSITION AND OFFICES WITH BUSINESS ADDRESS* TRANSAMERICA FINANCIAL RESOURCES ---------------------------------------------------------------- Ron F. Wagley Chairman of the Board and Director Sandra C. Brown Director, President and Chief Operating Officer Karen MacDonald Director Kenneth Kilbane Director William Tate Director Dan Caneva Vice President Item 27. Number of Certificate Owners As of December 31, 2000 there were 30,622 Owners of Contracts. Item 28. Indemnification The Iowa Code (Sections 490.850 et. seq.) provides for permissive indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The code also specifies procedures for determining when indemnification payments can be made. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in connection with the securities being registered), the Depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be goverened by the final adjudication of such issue. Dan Trivers Vice President Monica Suryapranata Treasurer Susan Vivino Assistant Secretary *The Principal business address for each officer and director is 1150 South Olive, Los Angeles, CA 90015. Transamerica Securities Sales Corporation and Transamerica Financial Resources, co-underwriters, received $40,610,303.06 from the Registrant for the year ending December 31, 2000, for its services in distributing the policies. No other commission or compensation was received by the co-underwriters, directly or indirectly, from the Registrant during the fiscal year. Transamerica Securities Sales Corporation, the principal underwriter, is also the underwriter for: Transamerica Investors, Inc.; Transamerica Variable Insurance Fund, Inc.; Transamerica Occidental Life Insurance Company's Separate Accounts: VA-2L; VA-2NL; VUL-1; VUL-2; VUL-3 and VL; Transamerica Life Insurance and Annuity Company's Separate Accounts VA-1; VA-6 and VA-7; and Transamerica Life Insurance Company of New York VA-2LNY; VA-2NLNY; VA-5NLNY; and VA-6NY. The Underwriter is wholly-owned by Transamerica Insurance Corporation of California, a wholly-owned subsidiary of Transamerica Corporation, a subsidiary of AEGON, N.V. Item 30. Location and Accounts and Records All accounts and records required to be maintained by Section 31(a) of the 1940 Act and the rules under it are maintained by Transamerica or the Service Office at their administrative offices. Item 31. Management Services All management contracts are discussed in Parts A or B. Items 32. Undertakings (a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes that it will include either (1) as part of any application to purchase a Certificate or an Individual Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to Transamerica at the address or phone number listed in the Prospectus. (d) Registrant represents that it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(i) and 27(d) of the Investment Company Act of 1940, in connection with redeemability restrictions on Section 403(b) policies, and that paragraphs numbered (1) through (4) of that letter will be complied with. (e) Transamerica hereby represents that the fees and the charges deducted under the Contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Transamerica. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant hereby certifies that this Amendment to the Registration Statement meets the requirements for effectiveness pursuant to paragraph (b) of Rule 485 and has caused this Registration Statement to be signed on its behalf, by the undersigned in the City of Cedar Rapids, State of Iowa on this 26th day of April, 2001. SEPARATE ACCOUNT VA-2L TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (DEPOSITOR) /s/ Frank A. Camp -------------------------------- Frank A. Camp Vice President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
Signatures Titles Date ---------- ------ ---- * Director ____________, 2001 ------------------------ Patrick S. Baird * Director ____________, 2001 ------------------------ Paul E. Rutledge III * Director and Chief Operating Officer ____________, 2001 ------------------------ Karen MacDonald * Director ____________, 2001 ------------------------ Ron F. Wagley * Director ____________, 2001 ------------------------ Brenda K. Clancy * Director ____________, 2001 ------------------------ James W. Dederer * Director ____________, 2001 ------------------------ George A. Foegele * Director ____________, 2001 ------------------------ Douglas C. Kolsrud * Director ____________, 2001 ------------------------ Richard N. Latzer * Director ____________, 2001 ------------------------ Gary U. Rolle'
* Director _________, 2001 ------------------------ Craig D. Vermie * Chief Financial Officer _________, 2001 ------------------------ Bruce Clark /s/ Frank A. Camp Attorney-in-Fact pursuant to powers of April 26, 2001 ------------------------ ---------- *By: Frank A. Camp attorney filed herewith, and in his own capacity as Vice President.
Registration No. 33-49998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ EXHIBITS TO FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FOR DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE _______________ EXHIBIT INDEX ------------- Exhibit No. Description of Exhibit Page No.* ----------- ---------------------- --------- (8)(g)(1) Form of Fund Participation Agreement (Dreyfus) (8)(j) Form of Participation Agreement (Transamerica) (10)(a) Consent of Independent Auditors (10)(b) Opinion and Consent of Actuary (15) Powers of Attorney ______________________ * Page numbers included only in manually executed original.