N-4

As filed with the Securities and Exchange Commission on October 2, 2008

Registration No. 333-            

811-08158

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Distinct Assets Variable Annuity

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No.              Post-Effective Amendment No.                x

and

REGISTRATION STATEMENT UNDER

THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 8

SEPARATE ACCOUNT VA - 5

(Exact Name of Registrant)

TRANSAMERICA LIFE INSURANCE COMPANY

(Name of Depositor)

4333 Edgewood Road N.E.

Cedar Rapids, IA 52499-0001

(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number: (319) 297-8383

Darin D. Smith, Esq.

Transamerica Life Insurance Company

4333 Edgewood Road, N.E.

Cedar Rapids, IA 52499-4240

(Name and Address of Agent for Service)

Copy to:

Frederick R. Bellamy, Esq.

Sutherland Asbill and Brennan LLP

1275 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2415

Title of Securities Being Registered:  Flexible Premium Variable Annuity Policies

Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of the Registration statement.

Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The Prospectus and Statement of Additional Information for the Distinct Assets^SM are hereby incorporated by reference to the Post-Effective Amendment No. 6 to the Form N-4 Registration Statement (33-71746; 811-08158) filed on April 28, 1998.

DISTINCT ASSETS^SM FROM TRANSAMERICA^®

A VARIABLE ANNUITY

Issued by

Transamerica Life Insurance Company

(Formerly issued by Transamerica Occidental Life Insurance Company)

Supplement Dated October 1, 2008

to the

Prospectus dated May 1, 1998

This supplement updates information in, and should be read in conjunction with, the prospectus dated May 1, 1998, describing the variable annuity contracts (each a “Contract”) that were formerly issued by Transamerica Occidental Life Insurance Company and funded by Separate Account VA - 5 (the “Separate Account”). You can obtain a copy of the prospectus for your Contract by calling us at (800) 525-6205 or writing us at: Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001.

MERGER

On October 1, 2008, Transamerica Occidental Life Insurance Company (“Transamerica Occidental”) merged into its affiliate Transamerica Life Insurance Company (“Transamerica Life”). Upon consummation of the merger, Transamerica Occidental’s separate corporate existence ceased by operation of law, and Transamerica Life assumed legal ownership of all of the assets of Transamerica Occidental, including the Separate Account and its assets. As a result of the merger, Transamerica Life also became responsible for all liabilities and obligations of Transamerica Occidental, including those created under the Contracts. The Contracts have thereby become variable annuity contracts funded by a separate account of Transamerica Life, and each Contract owner has thereby become a contract owner of Transamerica Life. Thus, all references to Transamerica Occidental Life Insurance Company in the May 1, 1998 prospectus (and the related statement of additional information also dated May 1, 1998) should be replaced by references to Transamerica Life Insurance Company.

Please note that the merger will not affect the provisions of, or your rights under, your Contract, will not cause you to incur any additional income tax, and will not cause you to be charged any additional fees or expenses. You may contact Transamerica Life Insurance Company at (800) 525-6205 if you have any questions about the merger.

It is anticipated that, on or about October 2, 2008, Life Investors Insurance Company of America also will merge into its affiliate Transamerica Life.

The following hereby amends and to the extent inconsistent replaces, the corresponding Fee Table and Examples beginning on page 3 of the Prospectus:

ANNUITY CONTRACT FEE TABLE AND EXPENSE EXAMPLES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the contract. The first table describes the fees and expenses that you will pay at the time that you buy the contract, surrender the contract, or transfer cash value between investment choices. State premium taxes may also be deducted, and excess interest adjustments may be made to amounts surrendered or applied to annuity payment options from cash value from the general account.

Contractowner Transaction Expenses(1):
Sales Load		None
Surrender Fee		None
Transfer Fee(2)	$	0 - $10
Special Service Fee	$	0 - $25

The next table describes the fees and expenses that you will pay periodically during the time that you own the contract, not including portfolio fees and expenses.

Annual Contract Fee(3)	$	25
Variable Account Annual Expenses (as a percentage of average Variable Account assets):
Mortality and Expense Risk Charge		0.85	%
Administrative Expense Charge(4)		0.15	%
Other Fees and Expenses of the Variable Account		0.00	%
Total Variable Account Annual Expenses		0.85	%

The next item shows the lowest and highest total operating expenses charged by the underlying fund portfolios for the year ended December 31, 2007 (before any fee waiver or expense reimbursements). Expenses may be higher or lower in future years. More detail concerning each portfolio’s fees and expenses is contained in the prospectus for each portfolio.

Total Portfolio Annual Operating Expenses:	Lowest		Highest
Expenses that are deducted from portfolio assets, including management fees, distribution and/or service 12b-1 fees, and other expenses.	0.44	%	1.25	%

This Example is intended to help you compare the cost of investing in the contract with the cost of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and portfolio fees and expenses.

The Example assumes that you invest $10,000 in the contract for the time periods indicated. The Example also assumes that your investment has a 5% return each year, the highest fees and expenses of any of the portfolios for the year ended December 31, 2007, and the base contract. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Example	1 Year		3 Years		5 Years		10 Years
If the contract is surrendered at the end of the applicable time period.	$	216	$	666	$	1,142	$	2,458
If the contract is annuitized at the end of the applicable time period or if you do not surrender your contract.	$	216	$	666	$	1,142	$	2,458

Please remember that the Example is an illustration and does not represent past or future expenses. Your actual expenses may be lower or higher than those reflected in the Example. Similarly, your rate of return may be more or less than the 5% assumed in the Example.

For information concerning compensation paid for the sale of the contracts, see “Distributor of the Contracts.”

⁽¹⁾ The Contract Owner Transaction Expenses apply to each Contract, regardless of how Account Value is allocated between the Variable Account and the Fixed Account. The Variable Account Annual Expenses do not apply to the Fixed Account.

⁽²⁾ There is a $10 (or 2% of the amount of the transfer, whichever is less) fee for each transfer in excess of 10 in any Contract Year.

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⁽³⁾ This is a maximum annual charge. The Annual Contract Charge is the lesser of $25 or 2% of Account Value.

⁽⁴⁾ There is currently no Administrative Expense Charge.

The following hereby amends, and to the extent inconsistent replaces, the corresponding CONDENSED FINANCIAL INFORMATIION beginning on page 6 of the prospectus:

CONDENSED FINANCIAL INFORMATION

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 in the Statement of Additional Information.

The following table sets forth certain information regarding the Sub-Accounts for the period from commencement of business operation of these Sub-Accounts on December 31, 1998, through December 31, 2007.

Financial statements for the Variable Account and Transamerica and reports of the independent registered public accounting firm are available in the Statement of Additional Information.

Subaccount	Year	Beginning AUV		Ending AUV		# Units
American Century VP Balanced Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	22.674452 20.860062 20.047549 18.417521 15.548354 17.337684 18.128000 18.779047 17.207887 14.990013	$ $ $ $ $ $ $ $ $ $	23.591925 22.674452 20.860062 20.047549 18.417521 15.548354 17.337684 18.128000 18.779047 17.207887	16,790.875 16,110.149 17,832.919 17,571.712 14,460.844 9,392.924 10,346.658 12,122.000 14,055.452 2,987.583
American Century VP Capital Appreciation Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	19.585715 16.850277 13.921495 13.050382 10.924531 13.981708 19.603000 18.131449 11.114123 11.455641	$ $ $ $ $ $ $ $ $ $	23.314868 19.585715 16.850277 13.921495 13.050382 10.924531 13.981708 19.603000 18.131449 11.114123	40,458.657 45,105.520 50,637.636 44,985.233 51,985.323 66,276.460 69,807.818 73,450.000 56,163.850 68,559.884
AIM V.I. Core Equity Fund Subaccount Inception Date April 28, 2006	2007 2006	$ $	1.085426 1.000000	$ $	1.163582 1.085426	1,803,981.772 1,957,155.875
AIM V.I. High Yield Fund Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	19.160393 17.449221 17.131854 15.582502 12.568304 12.841557 15.224000 17.384570 16.055477 15.964873	$ $ $ $ $ $ $ $ $ $	19.234304 19.160393 17.449221 17.131854 15.582502 12.568304 12.841557 15.224000 17.384570 16.055477	24,465.202 25,525.754 28,146.512 33,815.908 35,568.307 47,016.271 70,904.565 83,745.000 106,108..004 124,136.955
Columbia Small Company Growth Fund, Variable Series Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	20.636391 18.515313 18.179537 16.446371 11.508257 15.329089 17.183000 18.319034 12.426924 15.213550	$ $ $ $ $ $ $ $ $ $	23.215356 20.636391 18.515313 18.179537 16.446371 11.508257 15.329089 17.183000 18.319034 12.426924	35,556.678 40,526.938 44,675.608 57,467.250 72,119.608 77,943.342 88,150.491 100,593.000 104,386.838 137,959.683

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Subaccount	Year	Beginning AUV		Ending AUV		# Units
Federated American Leaders Fund II Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	33.034099 28.520383 27.386674 25.159629 19.870518 25.116849 26.446000 26.051299 24.657712 21.116485	$ $ $ $ $ $ $ $ $ $	29.588542 33.034099 28.520383 27.386674 25.159629 19.870518 25.116849 26.446000 26.051299 24.657712	54,784.591 61,121.355 66,749.114 72,202.638 77,295.211 86,528.694 96,360.985 105,511.000 136,028.149 209,339.131
Federated Fund for U.S. Government Securities II Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	17.629014 17.071992 16.874539 16.425420 16.182201 14.965740 14.102000 12.815401 13.002259 12.179971	$ $ $ $ $ $ $ $ $ $	18.578332 17.629014 17.071992 16.874539 16.425420 16.182201 14.965738 14.102000 12.815401 13.002259	34,423.125 34,875.939 38,959.243 42,468.781 44,604.765 53,630.186 59,862.936 54,129.000 60,056.255 88,400.796
Janus Aspen Large Cap Growth Portfolio Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	25.116928 22.742167 21.992091 21.220892 16.246050 22.294540 29.875000 35.259225 24.696206 18.359290	$ $ $ $ $ $ $ $ $ $	28.662571 25.116928 22.742167 21.992091 21.220892 16.246050 22.294540 29.875000 35.259225 24.696206	81,979.492 96,778.652 103,582.633 120,191.486 142,246.964 183,816.679 208,042.025 242,329.000 274,877.650 278,956.456
ING JPMorgan Emerging Markets Equity Portfolio Subaccount Inception Date December 2, 2005	2007 2006 2005	$ $ $	1.386330 1.026643 1.00000	$ $ $	1.908024 1.386330 1.026643	457,208.493 538,188.472 499,018.589
Schwab Money Market Portfolio Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	1.432360 1.381483 1.355619 1.354937 1.356420 1.350160 .1313000 1.250217 1.203497 1.154879	$ $ $ $ $ $ $ $ $ $	1.487674 1.432360 1.381483 1.355619 1.354937 1.356420 1.350160 1.313000 1.250217 1.203497	939,796.658 1,050,581.944 939,592.51 722,344.420 918,564.729 1,222,968.839 1,459,856.629 1,523,013.000 2,163,385.047 2,038,177.061
WFAVT Discovery Fund Subaccount Inception Date April 25, 1994	2007 2006 2005 2004 2003 2002 2001 2000 1999 1998	$ $ $ $ $ $ $ $ $ $	32.123158 28.257406 26.319625 22.938340 16.591440 19.017735 18.428000 17.802027 17.083827 16.062387	$ $ $ $ $ $ $ $ $ $	38.961377 32.123158 28.257406 26.319625 22.938340 16.591440 19.017735 18.428000 17.802027 17.083827	33,436.098 34,379.079 41,777.134 41,373.576 46,649.977 57,230.502 56,866.832 57.453.000 64,648.425 97,509.068

The following replaces “Transamerica Occidental Life Insurance Company” beginning on page 8 of the prospectus, and also updates “THE VARIABLE ACCOUNT” beginning on page 8 of the prospectus.

Transamerica Life Insurance Company

Transamerica Life Insurance Company was incorporated under the laws of the State of Iowa on April 19, 1961, under the name NN Investors Life Insurance Company, Inc., and is engaged in the sale of life and health insurance policies and annuity contracts. Transamerica Life Insurance Company is a wholly-owned indirect subsidiary of Transamerica

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Corporation, which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. Transamerica Corporation is a wholly-owned indirect subsidiary of AEGON, N.V. of the Netherlands, the securities of which are publicly traded. AEGON N.V. is a holding company and conducts its business through subsidiary companies engaged primarily in the insurance business. Transamerica Life Insurance Company is licensed in all states, except New York, and in the District of Columbia and Guam.

All obligations arising under the contracts, including the promise to make annuity payments are general corporate obligations of Transamerica Life Insurance Company.

Before October 1, 2008, the contract was issued by Transamerica Occidental Life Insurance Company (“Transamerica Occidental”), an Iowa stock life insurance company incorporated on June 30, 1906, as Occidental Life Insurance Company of California. The contract was funded by Separate Account VA - 5 of Transamerica Occidental, a separate account registered with the SEC as a unit investment trust under the Investment Company Act of 1940, as amended. On October 1, 2008, Transamerica Occidental merged with and into its affiliate Transamerica Life Insurance Company. Upon consummation of the merger, Transamerica Occidental’s separate corporate existence ceased by operation of law, and Transamerica Life Insurance Company assumed legal ownership of all of the assets of Transamerica Occidental, including the variable account and its assets. Pursuant to the merger, therefore, Separate Account VA - 5 of Transamerica Occidental became a separate account of Transamerica Life Insurance Company. As a result of the merger, Transamerica Life Insurance Company also became responsible for all liabilities and obligations of Transamerica Occidental, including those created under the contracts as initially issued by Transamerica Occidental and outstanding on the date of the merger. Each such contract has thereby become a variable annuity contract funded by a separate account of Transamerica Life, and each contract owner thereof has become a contract owner of Transamerica Life Insurance Company.

The following hereby amends and to the extent inconsistent replaces, “The Portfolios” beginning on page 9 of the prospectus:

Market Timing and Disruptive Trading

Statement of Policy. This variable insurance product was not designed for the use of market timers, frequent or disruptive traders (frequent transfers are considered to be disruptive). Such transfers may be harmful to the underlying fund portfolios and increase transaction costs.

Market timing and disruptive trading among the subaccounts or between the subaccounts and the fixed account can cause risks with adverse effects for other contract owners (and beneficiaries and underlying fund portfolios). These risks and harmful effects include:

(1) dilution of the interests of long-term investors in a subaccount if purchases or transfers into or out of an underlying fund portfolio are made at prices that do not reflect an accurate value for the underlying fund portfolio’s investments (some market timers attempt to do this through methods known as “time-zone arbitrage” and “liquidity arbitrage”);

(2) an adverse effect on portfolio management, such as:

(a) impeding a portfolio manager’s ability to sustain an investment objective;

(b) causing the underlying fund portfolio to maintain a higher level of cash than would otherwise be the case; or

(c) causing an underlying fund portfolio to liquidate investments prematurely (or otherwise at an inopportune time) in order to pay withdrawals or transfers out of the underlying fund portfolio; and

(3) increased brokerage and administrative expenses.

These costs are borne by all contract owners invested in those subaccounts, not just those making the transfers.

We have developed policies and procedures with respect to market timing and disruptive trading (which vary for certain subaccounts at the request of the corresponding underlying fund portfolios) and we do not make special arrangements or grant exceptions to accommodate market timing or disruptive trading. As discussed herein, we cannot detect or deter all market timing or potentially disruptive trading. Do not invest with us if you intend to conduct market timing or potentially disruptive trading.

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Detection. We employ various means in an attempt to detect and deter market timing and disruptive trading. However, despite our monitoring we may not be able to detect nor halt all harmful trading. In addition, because other insurance companies (and retirement plans) with different policies and procedures may invest in the underlying fund portfolios, we cannot guarantee that all harmful trading will be detected or that an underlying fund portfolio will not suffer harm from market timing or disruptive trading among subaccounts of variable products issued by these other insurance companies or retirement plans.

Deterrence. If we determine you are engaged in market timing or disruptive trading, we may take one or more actions in an attempt to halt such trading. Your ability to make transfers is subject to modification or restriction if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other contract owners (or others having an interest in the variable insurance products). As described below, restrictions may take various forms, but under our current policies and procedures will include loss of expedited transfer privileges. We consider transfers by telephone, fax, overnight mail, or the Internet to be “expedited” transfers. This means that we would accept only written transfer requests with an original signature transmitted to us only by U.S. mail. We may also restrict the transfer privileges of others acting on your behalf, including your registered representative or an asset allocation or investment advisory service.

We reserve the right to reject any premium payment or transfer request from any person without prior notice, if, in our judgment, (1) the payment or transfer, or series of transfers, would have a negative impact on an underlying fund portfolio’s operations, or (2) if an underlying fund portfolio would reject or has rejected our purchase order or has instructed us not to allow that purchase or transfer, or (3) because of a history of market timing or disruptive trading. We may impose other restrictions on transfers, or even prohibit transfers for any owner who, in our view, has abused, or appears likely to abuse, the transfer privilege on a case-by-case basis. We may, at any time and without prior notice, discontinue transfer privileges, modify our procedures, impose holding period requirements or limit the number, size, frequency, manner, or timing of transfers we permit. Because determining whether to impose any such special restrictions depends on our judgment and discretion, it is possible that some contract owners could engage in disruptive trading that is not permitted for others. We also reserve the right to reverse a potentially harmful transfer if an underlying fund portfolio refuses or reverses our order; in such instances some contract owners may be treated differently than others in that some transfers may be reversed and others allowed. For all of these purposes, we may aggregate two or more variable insurance products that we believe are connected.

In addition to our internal policies and procedures, we will administer your variable insurance product to comply with any applicable state, federal, and other regulatory requirements concerning transfers. We reserve the right to implement, administer, and charge you for any fee or restriction, including redemption fees, imposed by any underlying fund portfolio. To the extent permitted by law, we also reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of any of the underlying fund portfolios.

Under our current policies and procedures, we do not:

• impose redemption fees on transfers; or

• expressly limit the number or size of transfers in a given period except for certain subaccounts where an underlying fund portfolio has advised us to prohibit certain transfers that exceed a certain size.

Redemption fees, transfer limits, and other procedures or restrictions may be more or less successful than ours in deterring market timing or other disruptive trading and in preventing or limiting harm from such trading.

In the absence of a prophylactic transfer restriction (e.g., expressly limiting the number of trades within a given period or their size), it is likely that some level of market timing and disruptive trading will occur before it is detected and steps taken to deter it (although some level of market timing and disruptive trading can occur with a prophylactic transfer restriction). As noted above, we do not impose a prophylactic transfer restriction and, therefore, it is likely that, some level of market timing and disruptive trading will occur before we are able to detect it and take steps in an attempt to deter it.

Please note that the limits and restrictions described herein are subject to our ability to monitor transfer activity. Our ability to detect market timing or disruptive trading may be limited by operational and technological systems, as well as by our ability to predict strategies employed by contract owners (or those acting on their behalf) to avoid detection. As a result, despite our efforts to prevent harmful trading activity among the variable investment choices available under this variable insurance product, there is no assurance that we will be able to detect or deter market timing or disruptive trading by such contract owners or intermediaries acting on their behalf. Moreover, our ability to discourage and restrict market timing or disruptive trading may be limited by decisions of state regulatory bodies and court orders that we cannot predict.

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Furthermore, we may revise our policies and procedures in our sole discretion at any time and without prior notice, as we deem necessary or appropriate (1) to better detect and deter harmful trading that may adversely affect other contract owners, other persons with material rights under the variable insurance products, or underlying fund shareholders generally, (2) to comply with state or federal regulatory requirements, or (3) to impose additional or alternative restrictions on owners engaging in market timing or disruptive trading among the investment choices under the variable insurance product. In addition, we may not honor transfer requests if any variable investment choice that would be affected by the transfer is unable to purchase or redeem shares of its corresponding underlying fund portfolio.

Underlying Fund Portfolio Frequent Trading Policies. The underlying fund portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. Underlying fund portfolios may, for example, assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period of time. The prospectuses for the underlying fund portfolios describe any such policies and procedures. The frequent trading policies and procedures of an underlying fund portfolio may be different, and more or less restrictive, than the frequent trading policies and procedures of other underlying fund portfolios and the policies and procedures we have adopted for our variable insurance products to discourage market timing and disruptive trading. Contract owners should be aware that we may not have the contractual ability or the operational capacity to monitor contract owners’ transfer requests and apply the frequent trading policies and procedures of the respective underlying funds that would be affected by the transfers. Accordingly, contract owners and other persons who have material rights under our variable insurance products should assume that any protection they may have against potential harm from market timing and disruptive trading is the protection, if any, provided by the policies and procedures we have adopted for our variable insurance products to discourage market timing and disruptive trading in certain subaccounts.

Contract owners should be aware that we are required to provide to an underlying fund portfolio or its designee, promptly upon request, certain information about the trading activity of individual contract owners, and to restrict or prohibit further purchases or transfers by specific contract owners identified by an underlying fund portfolio as violating the frequent trading policies established for that portfolio.

Omnibus Orders. Contract owners and other persons with material rights under the variable insurance products also should be aware that the purchase and redemption orders received by the underlying fund portfolios generally are “omnibus” orders from intermediaries such as retirement plans and separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and individual owners of variable insurance products. The omnibus nature of these orders may limit the underlying fund portfolios’ ability to apply their respective frequent trading policies and procedures. We cannot guarantee that the underlying fund portfolios will not be harmed by transfer activity relating to the retirement plans or other insurance companies that may invest in the underlying fund portfolios. These other insurance companies are responsible for their own policies and procedures regarding frequent transfer activity. If their policies and procedures fail to successfully discourage harmful transfer activity, it will affect other owners of underlying fund portfolio shares, as well as the owners of all of the variable annuity or life insurance contracts, including ours, whose variable investment choices correspond to the affected underlying fund portfolios. In addition, if an underlying fund portfolio believes that an omnibus order we submit may reflect one or more transfer requests from owners engaged in market timing and disruptive trading, the underlying fund portfolio may reject the entire omnibus order and thereby delay or prevent us from implementing your request.

The following hereby amends and to the extent inconsistent replaces, CHARGES AND DEDUCTIONS beginning on page 22 of the prospectus:

Revenue We Receive

We (and our affiliates) may directly or indirectly receive payments from the underlying fund portfolios, their advisers, subadvisers, distributors or affiliates thereof, in connection with certain administrative, marketing and other services we (and our affiliates) provide and expenses we incur. We (and/or our affiliates) generally receive two types of payments:

• Administrative, Marketing and Support Service Fees (“Support Fees”). As noted above, an investment adviser, sub-adviser, administrator and/or distributor (or affiliates thereof) of the underlying fund portfolios may

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make payments to us and/or our affiliates, including (our affiliate) Transamerica Capital, Inc. (“TCI”). These payments may be derived, in whole or in part, from the profits the investment advisor or sub-advisor receives from the advisory fee deducted from underlying fund portfolio assets. Contract owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees (see the prospectuses for the underlying funds for more information). The amount of the payments we (or our affiliates) receive is based on a percentage of the assets of the particular underlying fund portfolios attributable to the Contract and to certain other variable insurance products that our affiliates and we issue. These percentages differ and the amounts may be significant. Some advisers or sub-advisers (or other affiliates) pay us more than others.

The following chart provides the maximum percentages of Support Fees that we anticipate will be paid to us on an annual basis:

Incoming Payments to Transamerica and TCI
Fund	Maximum Fee % of assets(1)
American Century Investments Variable Portfolios, Inc.	N/A
AIM Variable Insurance Funds	0.25%
Columbia Funds Variable Insurance Trust	0.35%
Federated Insurance Series	0.25%
Janus Aspen Series	0.25%
ING Investors Trust	N/A
Schwab Annuity Portfolios	N/A
Wells Fargo Advantage Variable Trust Funds	0.25%

⁽¹⁾ Payments are based on a percentage of the average assets of each underlying fund portfolio owned by the subaccounts available under this Contract and under certain other variable insurance products offered by our affiliates and us. We may continue to receive administrative fees on subaccounts that are closed to new investments, depending on the terms of the agreements supporting those payments and on the services we provide.

• Other Payments. TCI also serves as the wholesale distributor for the contracts, and in that capacity directly or indirectly receives additional amounts or different percentages of assets under management from certain advisers and sub-advisers to the underlying fund portfolios (or their affiliates) with regard to variable insurance products or mutual funds that are issued by us and our affiliates. These amounts may be derived, in whole or in part, from the profits the investment adviser or sub-adviser received from the advisory fee deducted from underlying fund portfolio assets. Contract owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees. Certain advisers and sub-advisers of the underlying fund portfolios (or their affiliates):

• may pay TCI amounts up to $75,000 per year to participate in a “preferred sponsor” program that provides such advisers and sub-advisers with access to TCI’s wholesalers at TCI’s national and regional sales conferences as well as internal and external meetings and events that are attended by TCI’s wholesalers and/or other TCI employees.

• may provide our affiliates and/or selling firms with wholesaling services to assist us in the distribution of the contracts.

• May provide us and/or certain affiliates and/or selling firms with occasional gifts, meals, tickets or other compensation as an incentive to market the underlying fund portfolios and cooperate with their promotional efforts. The amounts may be significant and provide the adviser or sub-adviser (or other affiliates) with increased access to us and to our affiliates involved in the distribution of the contracts.

For the calendar year ended December 31, 2007, TCI (and its predecessor as principal underwriter and distributor for the contracts, our affiliate, AFSG Securities Corporation (“AFSG”)) received revenue sharing payments ranging from $2500.00 to $49,350.00 (for a total of $381,768.22) from the following fund managers and/or sub-advisers to participate in TCI’s events: ClearBridge Advisors, LLC, T. Rowe Price Associates Inc., Transamerica Investment Management, LLC, Van Kampen Asset Management, Morgan Stanley Investment Management, Inc., Janus Capital Management, LLC, Jennison Associates LLC, Pacific Investment Management Company LLC, MFS^® Investment Management, American Century Investment Management, Inc., AllianceBernstein L.P., Federated Equity Management Company of Pennsylvania, Federated Investment Management Company, Fidelity Management & Research Company, ING Clarion Real Estate Securities, BlackRock Advisors LLC, BlackRock Investment Management, LLC, Invesco AIM, Inc., Columbia

8

Management Advisors, LLC, J.P. Morgan Investment Management, Inc., OppenheimerFunds, Inc., and RidgeWorth Capital Management, Inc. Please note some of the aforementioned managers and/or subadvisors may not be associated with underlying fund portfolios currently available in this product.

Proceeds from certain of these payments by the underlying fund portfolios, the advisers, the sub-advisers and/or their affiliates may be used for any corporate purpose, including payment of expenses (1) that we and our affiliates incur in promoting, marketing, and administering the contract, and (2) that we incur, in our role as intermediary, in promoting, marketing, and administering the underlying fund portfolios. We and our affiliates may profit from these payments.

For further details about the compensation payments we make in connection with the sale of the Contracts, see “Distribution of the Contracts” below in this prospectus supplement.

The following hereby amends and to the extent inconsistent replaces, “DISTRIBUTION OF THE CONTRACTS” beginning on page 32 of the prospectus:

DISTRIBUTION OF THE CONTRACTS

Distribution and Principal Underwriting Agreement. Our affiliate, TCI, replaced our affiliate AFSG as principal underwriter for and distributor of the Contracts, effective May 1, 2007. We may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the contracts.

Compensation to Broker-Dealers Selling the Contracts. TCI may sell the Contracts by entering into selling agreements with other broker-dealers (“selling firms”) that are licensed under the federal securities laws and state insurance laws; those selling firms may, in turn, sell the Contracts through their registered representatives. We do not pay commissions to selling firms.

The Contracts are no longer sold to new purchasers, but additional purchase payments may be made under existing Contracts. Additional purchase payments should be directed to Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499-0001.

A limited number of affiliated and unaffiliated broker dealers may provide overrides to “wholesale” the contracts, that is, to provide sales support and training to sales representatives at the selling firms. We also provide compensation to a limited number of broker dealers for providing ongoing service in relation to the contracts that have already been purchased.

To the extent permitted by Financial Industry Regulatory Authority (FINRA) rules, TCI may pay (or allow other brokers dealers to provide) promotional incentives or payments in the form of cash or non-cash compensation or reimbursement to some, but not all, selling firms. These arrangements are sometimes referred to as “revenue sharing” arrangements and are described further below.

The registered representative who sells you the contract typically receives a portion of the compensation we (and our affiliates) pay to the selling firms, depending on the agreement between the selling firm and its registered representative and the firm’s internal compensation program. These programs may include other types of cash and non-cash compensation and other benefits. Ask your sales representative for further information about the compensation your sales representative, and the selling firm that employs your sells representative, may receive in connection with your purchase of a contract. Also inquire about any revenue sharing arrangements that we and our affiliates may have with the selling firm, including the conflicts of interests that such arrangements may create.

Special Compensation Paid to Affiliated Firms. We and our affiliates provide paid-in capital to TCI and pay the cost of TCI’s operating and other expenses, including costs for facilities, legal and accounting services, and other internal administrative functions. We and our affiliates also provide TCI with capital payments that are not contingent on sales.

TCI’s registered representatives and supervisors may receive non-cash compensation, such as attendance at conferences, seminars and trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items, payments, loans, loan forgiveness or loan guarantees.

9

Additional Compensation That We and Our Affiliates pay to Selected Selling Firms. TCI, in connection with the sales of contracts, may pay certain selling firms additional cash amounts for “preferred product” treatment of those contracts (excluding the Distinct Assets^SM Contract) in their marketing programs in order to receive enhanced marketing services and increased access to their sales representatives. In exchange for providing TCI with access to their distribution network, such selling firms may receive additional compensation or reimbursement for, among other things, the hiring and training of sales personnel, marketing, sponsoring of conferences, meetings, seminars, events, and/or other services they provide to us and our affiliates. To the extent permitted by applicable law, TCI and other parties may provide the selling firms with occasional gifts, meals, tickets or other non-cash compensation as an incentive to sell the contracts. These special compensation arrangements are not offered to all selling firms and the terms of such arrangements may differ among selling firms. Special compensation arrangements are calculated in different ways by different selling firms and may be based on past or anticipated sales of the contracts and other criteria. For instance, in 2007, TCI, in connection with the sales of our contacts, made flat fee payments to several selling firms ranging from $12,500.00 to $500,000.00, and payments of between 0.10% and 0.25% on the new sales. TCI also paid selling firms special fees based on new sales and/or assets under management.

During 2007, we and/or TCI had such “preferred product” arrangements with the following selling firms:

Centaurus Financial

Citizens Bank

Compass Bancshares

Huntington Investments

LPL Financial

M&T Bank

Merrill Lynch

Raymond James Financial Group

Raymond James and Associates

Smith Barney/Citigroup

Stifel Nicholas

SunTrust

UBS Paineweber Financial Services

US Bancorp

Wachovia Securities/Wachovia Bank

During 2007 in conjunction with TCI, we paid the following amounts to the top ten selling firms (in terms of amounts paid):

Name of Firm	Amounts Paid in 2007
Wachovia Bank/Wachovia Securities	$1,201,395
Merrill Lynch	$   819,400
Smith Barney/Citigroup	$   776,202
LPL Financial	$   690,374
UBS Financial	$   559,021
Raymond James Financial Services	$   396,697
Raymond James and Associates	$   140,344
M&T Bank	$   138,354
Huntington Bank	$     97,938
SunTrust Bank	$     95,000

No specific charge is assessed directly to contract owners or the separate account to cover non-cash compensation, and other incentives or any payments described above. We do intend to recoup sales expenses and incentives we pay, however, through fees and charges deducted under the contract and other corporate revenue.

You should be aware that a selling firm or its sales representatives may receive different compensation or incentives for selling one product over another. In some cases, these payments may create an incentive for the selling firm or its sales representatives to recommend or sell a contract to you. You may wish to take such payments into account when considering and evaluating any recommendation relating to the contracts.

10

The following hereby amends and to the extent inconsistent replaces, “LEGAL MATTERS” beginning on page 33 of the prospectus:

LEGAL MATTERS

Sutherland Asbill & Brennan LLP, of Washington D.C. has provided legal advice to Transamerica relating to certain matters under the federal securities laws.

The following hereby amends, and to the extent inconsistent replaces, the corresponding “ACCOUNTANTS” beginning on page 33 of the prospectus:

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The financial statements of the Separate Account at December 31, 2007 and for the periods disclosed in the financial statements, and the statutory-basis financial statements and schedules of Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company, and Life Investors Insurance Company of America (which, it is anticipated, will merge into its affiliate Transamerica Life Insurance Company, on October 2, 2008), at December 31, 2007 and 2006, and for each of the three years in the period ended December 31, 2007, appearing herein, have been audited by Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa 50309, an Independent Registered Public Accounting Firm, as set forth in their respective reports thereon appearing elsewhere herein, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing.

11

DISTINCT ASSETS^SM FROM TRANSAMERICA^®

A VARIABLE ANNUITY

Issued by

Transamerica Life Insurance Company

(Formerly issued by Transamerica Occidental Life Insurance Company)

Supplement Dated October 1, 2008

to the

Statement of Additional Information dated May 1, 1998

The following hereby amends and to the extent inconsistent replaces, the corresponding DISTRIBUTION OF THE CONTRACTS in the Statement of Additional Information:

DISTRIBUTION OF THE CONTRACTS

We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (“TCI”), for the distribution and sale of the contracts. We may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the contracts.

Effective May 1, 2007 TCI replaced our affiliate AFSG Securities Corporation (“AFSG”) as principal underwriter for the contracts. TCI’s home office is located at 4600 S Syracuse St., Suite 1100, Denver, Colorado 80237-2719. TCI is an indirect, wholly owned subsidiary of AEGON USA. TCI is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and is a member of Financial Industry Regulatory Authority (“FINRA”). TCI is not a member of the Securities Investor Protection Corporation.

The contracts may be offered to the public through broker-dealers (“selling firms”) that are licensed under the federal securities laws; the selling firm and/or its affiliates are also licensed under state insurance laws. The selling firms have entered into written selling agreements with us and with TCI as principal underwriter for the contracts. During fiscal years 2007, 2006, and 2005, TCI paid no amounts in commissions in connection with the sale of the contracts.

We and TCI may pay certain selling firms additional cash amounts for: (1) “preferred product” treatment of the contracts in their marketing programs, which may include marketing services and increased access to their sales representatives; (2) sales promotions relating to the contracts; (3) costs associated with sales conferences and educational seminars for their sales representatives; and (4) other sales expenses incurred by them. We and/or TCI may make bonus payments to certain selling firms based on aggregate sales or persistency standards. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms.

The Contracts are no longer being offered to new purchasers, but additional purchase payments may be made under existing Contacts.

The following hereby amends and to the extent inconsistent replaces, “TRANSAMERICA” in the Statement of Additional Information:

Transamerica Life Insurance Company

Transamerica Life Insurance Company was incorporated under the laws of the State of Iowa on April 19, 1961, under the name NN Investors Life Insurance Company, Inc., and is engaged in the sale of life and health insurance policies and annuity contracts. Transamerica Life Insurance Company is a wholly-owned indirect subsidiary of Transamerica Corporation, which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. Transamerica Corporation is a wholly-owned indirect subsidiary of

AEGON, N.V. of the Netherlands, the securities of which are publicly traded. AEGON N.V. is a holding company and conducts its business through subsidiary companies engaged primarily in the insurance business. Transamerica Life Insurance Company is licensed in all states, except New York, and in the District of Columbia and Guam.

The following hereby amends and to the extent inconsistent replaces, the corresponding FINANCIAL STATEMENTS of the Statement of Additional Information:

FINANCIAL STATEMENTS

The values of your interest in the separate account will be affected solely by the investment results of the selected subaccount(s). Financial statements of certain subaccounts of Separate Account VA - 5, which are available for investment by Distinct Assets^SM From Transamerica^® Variable Annuity contract owners, are contained herein. The statutory-basis financial statements and schedules of Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company, and Life Investors Insurance Company of America (which, it is anticipated, will merge into its affiliate Transamerica Life Insurance Company, on October 2, 2008), which are included in the SAI, should be considered only as bearing on the ability of the Company to meet its obligations under the contracts. They should not be considered as bearing on the safety or investment performance of the assets held in the separate account.

The following hereby supplements and replaces the financial statements contained in the Statement of Additional Information for Separate Account VA - 5.

2

Unaudited Pro Forma Condensed Financial Information

The following schedules show financial information after giving effect to the merger of Transamerica Occidental Life Insurance Company into Transamerica Life Insurance Company as if that merger had occurred on an earlier date (which we refer to as “pro forma” information).

In presenting the pro forma balance sheet, we assumed that the merger had occurred by December 31, 2007. In presenting the pro forma income statement information for each of the three years ended December 31, 2007, we assumed that the merger had occurred on January 1, 2005, January 1, 2006, and January 1, 2007, respectively.

The unaudited pro forma condensed financial data are not intended to represent or to be indicative of our consolidated results of operations or financial position that we would have reported had the merger occurred as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies.

The unaudited pro forma condensed financial data should be read in conjunction with the historical financial statements and accompanying notes of Transamerica Occidental Life Insurance Company and Transamerica Life Insurance Company, which are included in this Statement of Additional Information in this registration statement on Form N-4.

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

As of December 31, 2007

		TOLIC		TLIC		Elimination				TLIC Dec 31, 2007 Total
ASSETS
1.	Bonds	$	16,471,095,521	$	28,499,852,882	$	0			$	44,970,948,403
2.	Stocks:
	2.1      Preferred stocks		554,862,947		1,329,680,509						1,884,543,456
	2.2      Common stocks		2,227,768,280		260,304,528		(1,685,599,498	)	A		802,473,310
3.	Mortgage loans on real estate:
	3.1      First liens		4,545,013,789		6,038,593,884						10,583,607,673
	3.2      Other than first liens		0		0						0
4.	Real estate
	4.1      Properties occupied by the company		0		6,160,325						6,160,325
	4.2      Properties held for production of income		186,207		2,463,189						2,649,396
	4.3      Properties held for sale		8,812,169		20,268,161						29,080,330
5.	Cash, cash equivalents and short-term investments		574,047,643		1,182,364,444		(42,500,000	)	C		1,713,912,087
6.	Contract loans (including $0 premium notes)		390,493,955		92,977,680						483,471,635
7.	Other invested assets		1,832,339,752		2,152,611,049						3,984,950,801
8.	Receivable for securities		1,799,374		55,362,935						57,162,309
9.	Aggregate write-ins for invested assets		0		0						0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		26,606,419,637		39,640,639,586		(1,728,099,498	)			64,518,959,725
11.	Title plants less $........0 charged off (for Title insurers only)		0		0		0				0
12.	Investment income due and accrued		295,138,837		767,992,938						1,063,131,775
13.	Premiums and considerations:
	13.1     Uncollected premiums and agents’ balances in course of collection		120,328,047		6,629,403						126,957,450
	13.2     Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		123,325,884		14,193,127						137,519,011
	13.3.  Accrued retrospective premiums		0		0						0
14.	Reinsurance:
	14.1    Amounts recoverable from reinsurers		67,100,681		4,763,923						71,864,604
	14.2    Funds held by or deposited with reinsured companies		57,060,075		70,000						57,130,075
	14.3    Other amounts receivable under reinsurance contracts		194,609,658		243,730						194,853,388
15.	Amounts receivable relating to uninsured plans		0		0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		0						0
16.2	Net deferred tax asset		132,025,702		139,589,476						271,615,178
17.	Guaranty funds receivable or on deposit		323,361		3,496,937						3,820,298
18.	Electronic data processing equipment and software		0		0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0						0
21.	Receivable from parent, subsidiaries and affiliates		169,099,032		69,693,839		(35,319,836	)	C		203,473,035
22.	Health care ($0) and other amounts receivable		0		0						0
23.	Aggregate write-ins for other than invested assets		469,782,109		101,887,416						571,669,525
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		28,235,213,023		40,749,200,375		(1,763,419,334	)			67,220,994,064
25.	From Separate Accounts Statement		2,776,744,947		32,759,905,182		0				35,536,650,129
26.	Total (Lines 24 and 25)	$	31,011,957,970	$	73,509,105,557	$	(1,763,419,334	)		$	102,757,644,193
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
Accounts receivable		$	58,214,391	$	78,782,393	$	0			$	136,996,784
Reinsurance deposit receivable			120,581,750		0						120,581,750
Modco Asset			107,558,829		0						107,558,829
Estimated premium tax offsets related to the provision for future GFA			0		7,029,975						7,029,975
Goodwill from assumption reinsurance with subsidiary			69,719,253		0						69,719,253
General Agent Pension fund			76,748,178		0						76,748,178
Investment broker receivables			2,029,029		7,250,726						9,279,755
Investment receivables			34,930,679		8,824,322						43,755,001
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	469,782,109	$	101,887,416	$	0			$	571,669,525

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

As of December 31, 2007

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2007 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,715,170,945		$	23,185,076,188		$	0			$	35,900,247,133
2.	Aggregate reserve for accident and health contracts		219,556,406			896,257,764							1,115,814,170
3.	Liability for deposit-type contracts		9,198,790,890			5,962,782,893							15,161,573,783
4.	Contract claims:
	4.1      Life		282,711,435			33,849,123							316,560,558
	4.2      Accident and health		47,080,205			43,078,282							90,158,487
5.	Policyholders’ dividends and coupons due and unpaid		101,647			6,127							107,774
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1      Dividends apportioned for payment to December 31, 2005		10,045,885			548,983							10,594,868
	6.2      Dividends not yet apportioned		0			0							0
	6.3      Coupons and similar benefits		0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		6,084,553			1,986,883							8,071,436
9.	Contract liabilities not included elsewhere:
	9.1      Surrender values on canceled contracts		0			0							0
	9.2      Provision for experience rating refunds		18,038,966			12,077,405							30,116,371
	9.3      Other amounts payable on reinsurance		80,302,979			37,532,947							117,835,926
	9.4      Interest Maintenance Reserve		236,189,340			176,159,947							412,349,287
10.	Commissions to agents due or accrued		4,242,900			13,124,143							17,367,043
11.	Commissions and expense allowances payable on reinsurance assumed		84,744,662			22,179							84,766,841
12.	General expenses due or accrued		25,441,746			32,903,886							58,345,632
13.	Transfers to Separate Accounts due or accrued		(78,921,306	)		(472,791,102	)						(551,712,408	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		24,093,685			24,404,591							48,498,276
15.1.	Current federal and foreign income taxes		68,806,798			111,200,474							180,007,272
15.2.	Net deferred tax liability		0			0							0
16.	Unearned investment income		10,082,051			89,998,484							100,080,535
17.	Amounts withheld or retained by company as agent or trustee		53,454,095			59,819,779							113,273,874
18.	Amounts held for agents’ account, including agents’ credit balance		5,899,676			3,107,218							9,006,894
19.	Remittances and items not allocated		183,471,609			135,840,492							319,312,101
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0							0
21.	Liability for benefits for employees and agents if not included above		79,755,255			0							79,755,255
22.	Borrowed money and interest thereon		0			0							0
23.	Dividends to stockholders declared and unpaid		0			0							0
24.	Miscellaneous liabilities:
	24.1    Asset valuation reserve		548,657,355			816,294,536							1,364,951,891
	24.2    Reinsurance in unauthorized companies		48,805,499			15,612,246							64,417,745
	24.3    Funds held under reinsurance treaties with unauthorized reinsurers		236,452,209			6,940,284,362							7,176,736,571
	24.4    Payable to parent, subsidiaries and affiliates		158,861,026			251,087,408			(77,819,836	)	C		332,128,598
	24.5    Drafts outstanding		0			0							0
	24.6    Liability for amounts held under uninsured accident and health plans		0			0							0
	24.7    Funds held under coinsurance		14,695,237			68,460,817							83,156,054
	24.8    Payable for securities		21,599,643			133,302,829							154,902,472
	24.9    Capital notes and interest thereon		0			0							0
25.	Aggregate write-ins for liabilities		419,521,995			187,472,626							606,994,621
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,723,737,386			38,759,501,510			(77,819,836	)			63,405,419,060
27.	From Separate Accounts Statement		2,690,282,323			32,759,854,549			0				35,450,136,872
28.	Total liabilities (Line 26 and 27)	$	27,414,019,709		$	71,519,356,059		$	(77,819,836	)		$	98,855,555,932
DETAILS OF LIABILITIES WRITE-INS (Line 25)
Deferred derivative gain/loss		$	34,151,375		$	0		$	0			$	34,151,375
Derivatives			39,691,781			174,390,920							214,082,701
Funding & municipal reverse repurchase agreement			270,370,204			127,332,670							397,702,874
Securities lending liability			76,850,608			0							76,850,608
Case level liability			0			20,560,978							20,560,978
Amounts incurred related to separate account reinsurance agreements			(1,541,973	)		(135,361,547	)						(136,903,520	)
Provision for liquidity guarantees			0			549,605							549,605
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	419,521,995		$	187,472,626		$	0			$	606,994,621
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,801,463		$	3,169,550		$	(16,971,013	)	A/B	$	0
30.	Preferred capital stock		13,793,325			1,302,550			(13,793,325	)	B		1,302,550
31.	Aggregate write-ins for other than special surplus funds		0			0							0
32.	Surplus notes		0			0							0
33.	Gross paid in and contributed surplus		1,672,352,407			1,437,881,244			(647,653,496	)	A/B		2,462,580,156
34.	Aggregate write-ins for special surplus funds		0			0							0
35.	Unassigned funds (surplus)		1,897,991,066			1,178,796,154			(1,007,181,665	)	A		2,069,605,555
36.	Less treasury stock, at cost:
	36.1 Common shares		0			0							0
	36.2 Preferred shares		0			631,400,000							631,400,000
37.	Surplus (Total lines 31+32+33+34+35-36)		3,570,343,473			1,985,277,398			(1,654,835,161	)			3,900,785,711
38.	Totals of Lines 29, 30 and 37		3,597,938,261			1,989,749,498			(1,685,599,498	)			3,902,088,261
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	31,011,957,970		$	73,509,105,557		$	(1,763,419,334	)		$	102,757,644,193
													(0	)

* This balance sheet is a consolidation of the December 31, 2007 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company and Transamerica Life Insurance Company.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

For Year Ending December 31, 2007

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2007 Total
1	Premiums and annuity considerations for life and accident and health contracts	$	2,141,476,715		$	5,464,048,598		$	0			$	7,605,525,313
2	Considerations for supplementary contracts with life contingencies		2,249,072			15,880,918							18,129,990
3	Net investment income		1,399,174,410			2,293,195,690							3,692,370,100
4	Amortization of Interest Maintenance Reserve (IMR)		20,514,274			14,770,752							35,285,026
5	Separate Accounts net gain from operations excluding unrealized gains or losses		0			1,001							1,001
6	Commissions and expense allowances on reinsurance ceded		50,454,233			55,684,458							106,138,691
7	Reserve adjustments on reinsurance ceded		(116,343,582	)		1,246,064,488							1,129,720,906
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		20,373,287			418,290,862							438,664,149
8.2	Charges and fees for deposit-type contracts		0			70,178							70,178
8.3	Aggregate write-ins for miscellaneous income		48,600,570			358,165,135							406,765,705
9	Totals (Lines 1 to 8.3)		3,566,498,979			9,866,172,080			0				13,432,671,059
10	Death benefits		919,055,481			143,572,323							1,062,627,804
11	Matured endowments (excluding guaranteed annual pure endowments)		733,803			5,000							738,803
12	Annuity benefits		558,322,804			1,106,015,973							1,664,338,777
13	Disability benefits and benefits under accident and health contracts		36,021,536			129,402,208							165,423,744
14	Coupons, guaranteed annual pure endowments and similar benefits		294,991			0							294,991
15	Surrender benefits and withdrawals for life contracts		949,303,022			8,253,614,972							9,202,917,994
16	Group conversions		0			0							0
17	Interest and adjustments on contract or deposit-type contract funds		522,225,095			308,633,389							830,858,484
18	Payments on supplementary contracts with life contingencies		788,640			11,329,893							12,118,533
19	Increase in aggregate reserves for life and accident and health contracts		179,024,519			(3,812,586,391	)						(3,633,561,872	)
20	Totals (Lines 10 to 19)		3,165,769,891			6,139,987,367			0				9,305,757,258
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		295,370,354			443,352,341							738,722,695
22	Commissions and expense allowances on reinsurance assumed		440,757,712			8,908,124							449,665,836
23	General insurance expenses		271,424,231			268,194,532							539,618,763
24	Insurance taxes, licenses and fees, excluding federal income taxes		55,354,643			39,076,280							94,430,923
25	Increase in loading on deferred and uncollected premiums		(740,961	)		(1,928,632	)						(2,669,593	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(285,933,858	)		1,649,322,749							1,363,388,891
27	Aggregate write-ins for deductions		(294,395,170	)		1,251,486,141							957,090,971
28	Totals (Lines 20 to 27)		3,647,606,842			9,798,398,902			0				13,446,005,744
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(81,107,863	)		67,773,178			0				(13,334,685	)
30	Dividends to policyholders		14,928,629			533,716							15,462,345
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(96,036,492	)		67,239,462			0				(28,797,030	)
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		53,910,554			55,469,797							109,380,351
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)		(149,947,046	)		11,769,665			0				(138,177,381	)
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		51,961,527			229,722,404			0				281,683,931
35	Net income (Line 33 plus Line 34)	$	(97,985,519	)	$	241,492,069		$	0			$	143,506,550
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,892,148,063		$	2,042,778,170		$	(486,810,337	)	A	$	4,448,115,896
37	Net income (Line 35)		(97,985,519	)		241,492,069							143,506,550
38	Change in net unrealized capital gains (losses)		622,460,069			122,039,227			(520,371,328	)	A		224,127,968
39	Change in net unrealized foreign exchange capital gain (loss)		(1,178,693	)		6,860,909							5,682,216
40	Change in net deferred income tax		3,469,371			(6,995,750	)						(3,526,379	)
41	Change in nonadmitted assets and related items		49,561,249			51,328,586							100,889,835
42	Change in liability for reinsurance in unauthorized companies		(17,324,610	)		(15,612,246	)						(32,936,856	)
43	Change in reserve on account of change in valuation basis, (increase) or decrease		(12,676,668	)		(1,735,513	)						(14,412,181	)
44	Change in asset valuation reserve		(15,025,583	)		(13,282,538	)						(28,308,121	)
45	Change in treasury stock		0			(573,400,000	)						(573,400,000	)
46	Surplus (contributed to) withdrawn from Separate Accounts during period		0			1,001							1,001
47	Other changes in surplus in Separate Accounts Statement		11,706,314			(65,415	)						11,640,899
48	Change in surplus notes		0			0							0
49	Cumulative effect of changes in accounting principles		0			0							0
50	Capital changes:
50.1	Paid in		0			0			(30,764,338	)	A/B		(30,764,338	)
50.2	Transferred from surplus (Stock Dividend)		0			0							0
50.3	Transferred to surplus		0			0							0
51	Surplus adjustment:
51.1	Paid in		(1,522,262	)		112,850			(647,653,496	)	A/B		(649,062,908	)
51.2	Transferred to capital (Stock Dividend)		0			0							0
51.3	Transferred from capital		0			0							0
51.4	Change in surplus as a result of reinsurance		364,306,530			187,828,148							552,134,678
52	Dividends to stockholders		(200,000,000	)		(51,600,000	)						(251,600,000	)
53	Aggregate write-ins for gains and losses in surplus		0			0							0
54	Net change in capital and surplus (Lines 37 through 53)		705,790,198			(53,028,672	)		(1,198,789,161	)			(546,027,635	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	3,597,938,261		$	1,989,749,498		$	(1,685,599,498	)		$	3,902,088,261
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	37,317,517		$	104,222,957		$	0			$	141,540,474
	Foreign currency translation adjustment		(59,811	)		0							(59,811	)
	Receivable for deposit accounting of reinsurance treaty		7,625,686			0							7,625,686
	Amoritization of goodwill		1,433,396			0							1,433,396
	Consideration on received reinsurance transaction		2,283,782			253,942,178							256,225,960
	TOTAL WRITE-INS FOR LINE 8.3	$	48,600,570		$	358,165,135		$	0			$	406,765,705
DETAILS OF WRITE-INS (Line 27)
	Consideration paid on reinsurance transaction	$	0		$	607,720,860		$	0			$	607,720,860
	Experience refunds		(44,728,866	)		2,826,905			0				(41,901,961	)
	Fines and penalties		277,149			317,371							594,520
	Funds withheld ceded investment income		8,943,792			557,486,733							566,430,525
	Reinsurance transaction-Modco interest adjustment		(258,887,245	)		66,113,752							(192,773,493	)
	Change in case liability		0			20,560,978							20,560,978
	Change in provision for liquidity guarantees		0			(3,540,458	)						(3,540,458	)
	TOTAL WRITE-INS FOR LINE 27	$	(294,395,170	)	$	1,251,486,141		$	0			$	957,090,971
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	0		$	0		$	0			$	—
	Correction to an error		0			0							0
	Contributed surplus related to stock appreciation rights plan of indirect parent		0			0							0
	TOTAL WRITE-INS FOR LINE 53	$	0		$	0		$	0			$	0

Eliminations due to merger of TOLIC into TLIC on 10/1/08

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)	3,169,550
	Excess paid for TLIC stock beyond par value	675,248,283
	Total cost of TLIC stock	678,417,833
	TOLIC’s value in TLIC as of 12/31/07	1,685,599,498
	TOLIC’s value in TLIC as of 12/31/06	1,165,228,170
	Unrealized gain as of 12/31/07	1,007,181,665
	Unrealized gain as of 12/31/06	486,810,337
DR	Pg 3, Ln 29 - Common Capital Stock	3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus	675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain — Pg 3, Ln 35 - Unassigned surplus	520,371,328
DR	Pg 4, Ln 36 - C&S as of 12/31/06 — Pg 3, Ln 35 - Unassigned surplus	486,810,337
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock			1,685,599,498
B - Reflect cancellation of TOLIC’s common stock held by TIHI and preferred stock held by TA Corp:
	TIHI owned 1,104,117 shares of common stock at $12.50 par value	13,801,463
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	13,793,325
		27,594,788
TIHI:
DR	Pg 3, ln 29 - Common Capital Stock	13,801,463
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus			13,801,463
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock	13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)			13,793,325
TOLIC stock shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge TOLIC into TLIC, TIHI shall receive TLIC Common Stock equal in value to the fair market value of the TOLIC Common Stock that is deemed cancelled and TA Corp shall receive Series B Preferred Stock from TLIC equal in value to the fair market value of the TOLIC Voting Preferred Stock that is deemed cancelled.
C - Reverse intercompany recievables/payables between TOLIC and TLIC outstanding:
DR	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	77,819,836
CR	Pg 2, Ln 5 - Cash, cash equivalents and short-term investments			42,500,000
CR	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates			35,319,836
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock	(1,685,599,498	)
	Pg 2, Ln 5 - Cash, cash equivalents and short-term investments	(42,500,000	)
	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates	(35,319,836	)
	Total Asset Adjustment	(1,728,099,498	)
	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	(77,819,836	)
	Pg 3, ln 29 - Common Capital Stock	(16,971,013	)
	Pg 3, ln 30 - Preferred Capital Stock	(13,793,325	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus	(647,653,496	)
	Pg 3, Ln 35 - Unassigned	(1,007,181,665	)
	Total Equity Adjustment	(1,685,599,498	)
	Total Equity & Liability Adjustment	(1,763,419,334	)
	Pg 4, Ln 36 - C&S as of 12/31/06	(486,810,337	)
	Pg 4, Ln 38 - Chg in net unrealized capital gain	(520,371,328	)
	Pg 4, Ln 41 - Change in non-admitted assets	—
	Pg 4, Ln 50.1 - Capital paid in	(30,764,338	)
	Pg 4, Ln 51.1 - Surplus paid in	(647,653,496	)
	Total Unassigned Adjustment	(1,685,599,498	)

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

As of December 31, 2006

		TOLIC		TLIC		Elimination				TLIC Dec 31, 2006 Total
ASSETS
1.	Bonds	$	16,762,581,664	$	32,604,471,993	$	0			$	49,367,053,657
2.	Stocks:
	2.1      Preferred stocks		727,952,578		1,690,179,269						2,418,131,847
	2.2      Common stocks		1,716,705,647		475,377,594		(1,165,227,935	)	A		1,026,855,306
3.	Mortgage loans on real estate:
	3.1      First liens		4,332,561,859		5,760,667,026						10,093,228,885
	3.2      Other than first liens		0		0						0
4.	Real estate
	4.1      Properties occupied by the company		0		6,237,324						6,237,324
	4.2      Properties held for production of income		186,207		2,466,437						2,652,644
	4.3      Properties held for sale		8,684,731		21,508,271						30,193,002
5.	Cash, cash equivalents and short-term investments		280,874,752		1,214,965,122						1,495,839,874
6.	Contract loans (including $ 0 premium notes)		387,464,911		130,144,075						517,608,986
7.	Other invested assets		1,580,243,337		1,543,091,168						3,123,334,505
8.	Receivable for securities		70,258,897		6,651,022						76,909,919
9.	Aggregate write-ins for invested assets		0		0		0				0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		25,867,514,583		43,455,759,301		(1,165,227,935	)			68,158,045,949
11.	Title plants less $....0 charged off (for Title insurers only)		0		0		0				0
12.	Investment income due and accrued		308,325,607		853,243,642						1,161,569,249
13.	Premiums and considerations:
	13.1    Uncollected premiums and agents’ balances in course of collection		196,261,210		4,715,867						200,977,077
	13.2    Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		128,295,432		15,728,356						144,023,788
	13.3.  Accrued retrospective premiums		0		0						0
14.	Reinsurance:
	14.1    Amounts recoverable from reinsurers		32,452,595		1,546,723						33,999,318
	14.2    Funds held by or deposited with reinsured companies		54,749,174		70,000						54,819,174
	14.3    Other amounts receivable under reinsurance contracts		109,461,662		1,296,984						110,758,646
15.	Amounts receivable relating to uninsured plans		0		0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		0						0
16.2	Net deferred tax asset		99,886,396		108,342,046						208,228,442
17.	Guaranty funds receivable or on deposit		341,840		3,931,107						4,272,947
18.	Electronic data processing equipment and software		0		0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0						0
21.	Receivable from parent, subsidiaries and affiliates		506,949,329		503,880,836		(156,125,732	)	C		854,704,433
22.	Health care ($0) and other amounts receivable		0		0						0
23.	Aggregate write-ins for other than invested assets		464,162,158		106,007,386		0				570,169,544
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		27,768,399,986		45,054,522,248		(1,321,353,667	)			71,501,568,567
25.	From Separate Accounts Statement		2,575,661,321		28,875,012,600		0				31,450,673,921
26.	Total (Lines 24 and 25)	$	30,344,061,307	$	73,929,534,848	$	(1,321,353,667	)		$	102,952,242,488
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
	Accounts receivable	$	44,374,258	$	65,267,826	$	0			$	109,642,084
	Reinsurance deposit receivable		112,956,064		0						112,956,064
	Modco Asset		98,998,390		0						98,998,390
	Estimated premium tax offsets related to the provision for future GFA		0		7,043,040						7,043,040
	Goodwill from assumption reinsurance with subsidiary		78,993,433		0						78,993,433
	General Agent Pension fund		73,035,576		0						73,035,576
	Investment broker receivables		5,786,537		19,941,048						25,727,585
	Investment receivables		50,017,900		13,755,472						63,773,372
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	464,162,158	$	106,007,386	$	0			$	570,169,544

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

As of December 31, 2006

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2006 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,552,586,605		$	27,079,068,369		$	0			$	39,631,654,974
2.	Aggregate reserve for accident and health contracts		190,439,558			812,961,117							1,003,400,675
3.	Liability for deposit-type contracts		9,230,956,687			7,085,285,142							16,316,241,829
4.	Contract claims:
	4.1      Life		227,838,913			35,142,878							262,981,791
	4.2      Accident and health		74,552,208			39,502,288							114,054,496
5.	Policyholders’ dividends and coupons due and unpaid		92,744			6,393							99,137
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1      Dividends apportioned for payment to December 31, 2005		10,034,341			536,067							10,570,408
	6.2      Dividends not yet apportioned		0			0							0
	6.3      Coupons and similar benefits		0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		4,952,877			2,103,609							7,056,486
9.	Contract liabilities not included elsewhere:
	9.1      Surrender values on canceled contracts		0			0							0
	9.2      Provision for experience rating refunds		17,896,716			11,186,840							29,083,556
	9.3      Other amounts payable on reinsurance		133,993,269			9,746,446							143,739,715
	9.4      Interest Maintenance Reserve		228,881,905			159,355,848							388,237,753
10.	Commissions to agents due or accrued		3,146,576			16,636,229							19,782,805
11.	Commissions and expense allowances payable on reinsurance assumed		72,917,943			0							72,917,943
12.	General expenses due or accrued		38,396,805			22,906,246							61,303,051
13 .	Transfers to Separate Accounts due or accrued		(71,838,094	)		(482,081,615	)						(553,919,709	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		19,941,708			29,511,344							49,453,052
15.1.	Current federal and foreign income taxes		66,302,847			20,922,654							87,225,501
15.2.	Net deferred tax liability		0			0							0
16.	Unearned investment income		15,840,242			103,497,911							119,338,153
17.	Amounts withheld or retained by company as agent or trustee		39,564,607			67,882,591							107,447,198
18.	Amounts held for agents’ account, including agents’ credit balance		16,803,932			1,080,462							17,884,394
19.	Remittances and items not allocated		180,032,663			167,888,989							347,921,652
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0							0
21.	Liability for benefits for employees and agents if not included above		75,778,184			0							75,778,184
22.	Borrowed money and interest thereon		312,668,680			493,335,650							806,004,330
23.	Dividends to stockholders declared and unpaid		0			0							0
24.	Miscellaneous liabilities:
	24.1    Asset valuation reserve		533,631,772			803,011,998							1,336,643,770
	24.2    Reinsurance in unauthorized companies		31,480,889			0							31,480,889
	24.3    Funds held under reinsurance treaties with unauthorized reinsurers		174,398,042			5,884,895,649							6,059,293,691
	24.4    Payable to parent, subsidiaries and affiliates		157,228,320			230,656,261			(156,125,732	)	C		231,758,849
	24.5    Drafts outstanding		0			0							0
	24.6    Liability for amounts held under uninsured accident and health plans		0			0							0
	24.7    Funds held under coinsurance		14,682,614			66,074,566							80,757,180
	24.8    Payable for securities		1,358,662			90,397,550							91,756,212
	24.9    Capital notes and interest thereon		0			0							0
25.	Aggregate write-ins for liabilities		596,446,018			260,347,643			0				856,793,661
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,951,008,233			43,011,859,125			(156,125,732	)			67,806,741,626
27.	From Separate Accounts Statement		2,500,905,011			28,874,897,553			0				31,375,802,564
28.	Total liabilities (Line 26 and 27)	$	27,451,913,244		$	71,886,756,678		$	(156,125,732	)		$	99,182,544,190
DETAILS OF LIABILITIES WRITE-INS (Line 25)
	Deferred derivative gain/loss	$	36,394,375		$	0		$	0			$	36,394,375
	Derivatives		34,389,187			157,036,930							191,426,117
	Municipal reverse repurchase agreement		455,262,336			156,180,401							611,442,737
	Securities lending liability		72,131,594			0							72,131,594
	Amounts incurred related to separate account reinsurance agreements		(1,731,474	)		(56,959,751	)						(58,691,225	)
	Provision for liquidity guarantees		0			4,090,063							4,090,063
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	596,446,018		$	260,347,643		$	0			$	856,793,661
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,801,463		$	3,169,550		$	(10,209,113	)	A/B/D	$	6,761,900
30.	Preferred capital stock		13,793,325			1,302,550			(12,927,425	)	B/D		2,168,450
31.	Aggregate write-ins for other than special surplus funds		0			0							0
32.	Surplus notes		0			0							0
33.	Gross paid in and contributed surplus		1,673,874,669			1,437,768,394			(655,281,296	)	A/B/D		2,456,361,768
34.	Aggregate write-ins for special surplus funds		0			0							0
35.	Unassigned funds (surplus)		1,190,678,606			658,537,676			(486,810,102	)	A		1,362,406,180
36.	Less treasury stock, at cost:
	36.1    Common shares		0			0							0
	36.2    Preferred shares		0			58,000,000							58,000,000
37.	Surplus (Total lines 31+32+33+34+35-36)		2,864,553,275			2,038,306,070			(1,142,091,398	)			3,760,767,948
38.	Totals of Lines 29, 30 and 37		2,892,148,063			2,042,778,170			(1,165,227,935	)			3,769,698,298
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	30,344,061,307		$	73,929,534,848		$	(1,321,353,667	)		$	102,952,242,488
													(0	)

* This balance sheet is a consolidation of the December 31, 2006 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company and Transamerica Life Insurance Company.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company and Transamerica Occidental Life Insurance Company

For Year Ending December 31, 2006

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2006 Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	1,963,450,184		$	4,898,100,892		$	0			$	6,861,551,076
2	Considerations for supplementary contracts with life contingencies		721,615			11,684,477							12,406,092
3	Net investment income		1,376,785,455			2,376,911,350							3,753,696,805
4	Amortization of Interest Maintenance Reserve (IMR)		21,348,694			21,795,120							43,143,814
5	Separate Accounts net gain from operations excluding unrealized gains or losses		124,869			(2,100	)						122,769
6	Commissions and expense allowances on reinsurance ceded		(337,912,739	)		187,362,953							(150,549,786	)
7	Reserve adjustments on reinsurance ceded		(179,964,354	)		1,234,063,701							1,054,099,347
8	Miscellaneous Income:
	8.1      Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		22,237,353			369,935,745							392,173,098
	8.2      Charges and fees for deposit-type contracts		0			82,844							82,844
	8.3      Aggregate write-ins for miscellaneous income		1,128,918,537			93,688,498							1,222,607,035
9	Totals (Lines 1 to 8.3)		3,995,709,614			9,193,623,480			0				13,189,333,094
10	Death benefits		842,926,755			115,216,706							958,143,461
11	Matured endowments (excluding guaranteed annual pure endowments)		817,405			0							817,405
12	Annuity benefits		575,850,069			1,150,495,630							1,726,345,699
13	Disability benefits and benefits under accident and health contracts		31,935,438			113,547,063							145,482,501
14	Coupons, guaranteed annual pure endowments and similar benefits		296,311			0							296,311
15	Surrender benefits and withdrawals for life contracts		911,212,326			7,291,737,852							8,202,950,178
16	Group conversions		0			0							0
17	Interest and adjustments on contract or deposit-type contract funds		482,615,737			308,799,178							791,414,915
18	Payments on supplementary contracts with life contingencies		824,969			28,393,846							29,218,815
19	Increase in aggregate reserves for life and accident and health contracts		1,122,286,031			(3,732,972,401	)						(2,610,686,370	)
20	Totals (Lines 10 to 19)		3,968,765,041			5,275,217,874			0				9,243,982,915
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		325,580,603			427,951,350							753,531,953
22	Commissions and expense allowances on reinsurance assumed		341,087,035			7,467,419							348,554,454
23	General insurance expenses		233,280,302			253,635,985							486,916,287
24	Insurance taxes, licenses and fees, excluding federal income taxes		46,292,981			41,256,338							87,549,319
25	Increase in loading on deferred and uncollected premiums		(4,104,109	)		(347,984	)						(4,452,093	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(221,422,238	)		2,417,520,893							2,196,098,655
27	Aggregate write-ins for deductions		(230,113,221	)		416,041,471							185,928,250
28	Totals (Lines 20 to 27)		4,459,366,394			8,838,743,346			0				13,298,109,740
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(463,656,780	)		354,880,134			0				(108,776,646	)
30	Dividends to policyholders		14,297,883			557,281							14,855,164
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(477,954,663	)		354,322,853			0				(123,631,810	)
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		10,624,371			136,412,051							147,036,422
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)		(488,579,034	)		217,910,802			0				(270,668,232	)
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		27,241,898			114,487,577			0				141,729,475
35	Net income (Line 33 plus Line 34)	$	(461,337,136	)	$	332,398,379		$	0			$	(128,938,757	)
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,132,653,000		$	2,418,045,214		$	(229,077,631	)	A	$	4,321,620,583
37	Net income (Line 35)		(461,337,136	)		332,398,379							(128,938,757	)
38	Change in net unrealized capital gains (losses)		868,313,628			105,009,753			(257,732,471	)	A		715,590,910
39	Change in net unrealized foreign exchange capital gain (loss)		1,371,641			(3,601,764	)						(2,230,123	)
40	Change in net deferred income tax		88,455,087			91,020,729							179,475,816
41	Change in nonadmitted assets and related items		(61,645,473	)		(98,041,129	)						(159,686,602	)
42	Change in liability for reinsurance in unauthorized companies		(9,082,141	)		17,263,978							8,181,837
43	Change in reserve on account of change in valuation basis, (increase) or decrease		0			0							0
44	Change in asset valuation reserve		(153,971,050	)		(139,820,742	)						(293,791,792	)
45	Change in treasury stock		0			(58,000,000	)						(58,000,000	)
46	Surplus (contributed to) withdrawn from Separate Accounts during period		449,869			17,907							467,776
47	Other changes in surplus in Separate Accounts Statement		5,042,846			60,329							5,103,175
48	Change in surplus notes		(200,000,000	)		(575,000,000	)						(775,000,000	)
49	Cumulative effect of changes in accounting principles		303,856			(1,665,036	)						(1,361,180	)
50	Capital changes:
	50.1    Paid in		8,125			0			(23,136,538	)	A/B/D		(23,128,413	)
	50.2    Transferred from surplus (Stock Dividend)		0			0							0
	50.3    Transferred to surplus		0			0							0
51	Surplus adjustment:
	51.1    Paid in		5,595,501			1,008,412			(655,281,296	)	A/B/D		(648,677,383	)
	51.2    Transferred to capital (Stock Dividend)		0			0							0
	51.3    Transferred from capital		0			0							0
	51.4    Change in surplus as a result of reinsurance		735,081,660			4,640,038							739,721,698
52	Dividends to stockholders		(54,068,236	)		(69,803,167	)						(123,871,403	)
53	Aggregate write-ins for gains and losses in surplus		(5,023,114	)		19,245,269							14,222,155
54	Net change in capital and surplus (Lines 37 through 53)		759,495,063			(375,267,044	)		(936,150,304	)			(551,922,285	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	2,892,148,063		$	2,042,778,170		$	(1,165,227,935	)		$	3,769,698,298
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	26,027,168		$	93,688,498		$	0			$	119,715,666
	Foreign currency translation adjustment		(2,529,101	)		0							(2,529,101	)
	Reinsurance premium on inforce transaction		141,417,787			0							141,417,787
	Receivable for deposit accounting of reinsurance treaty		7,141,664			0							7,141,664
	Amoritization of goodwill		1,433,396			0							1,433,396
	Consideration on reinsurance transaction		955,427,623			0							955,427,623
	TOTAL WRITE-INS FOR LINE 8.3	$	1,128,918,537		$	93,688,498		$	0			$	1,222,607,035
DETAILS OF WRITE-INS (Line 27)
	Experience refunds	$	(23,921,643	)	$	(322,717	)	$	0			$	(24,244,360	)
	Fines and penalties		(50,399	)		389,189							338,790
	Recapture commission expense allowance		56,734,000			0							56,734,000
	Funds withheld ceded investment income		28,655,467			295,277,359							323,932,826
	Reinsurance transaction-Modco interest adjustment		(303,163,986	)		87,204,477							(215,959,509	)
	Interest on surplus notes		11,633,340			33,446,433							45,079,773
	Change in provision for liquidity guarantees		0			46,730							46,730
	TOTAL WRITE-INS FOR LINE 27	$	(230,113,221	)	$	416,041,471		$	0			$	185,928,250
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	(8,125	)	$	0		$	0			$	(8,125	)
	Correction to an error		0			20,480,332							20,480,332
	Contributed surplus related to stock appreciation rights plan of indirect parent		(5,014,989	)		(1,235,063	)						(6,250,052	)
	TOTAL WRITE-INS FOR LINE 53	$	(5,023,114	)	$	19,245,269		$	0			$	14,222,155

Note: Eliminations would all be on Investment and Corporate centers

4Q06 - Eliminations due to merger of TOLIC into TLIC on 10/1/08

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)	3,169,550
	Excess paid for TLIC stock beyond par value	675,248,283
	Total cost of TLIC stock	678,417,833
	TOLIC’s value in TLIC as of 12/31/06	1,165,227,935
	TOLIC’s value in TLIC as of 12/31/05 per audit (TLIC valuation issue)	907,495,464
	Unrealized gain as of 12/31/06	486,810,102
	Unrealized gain as of 12/31/05	229,077,631
DR	Pg 3, Ln 29 - Common Capital Stock	3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus	675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain – Pg 3, Ln 35 - Unassigned surplus	257,732,471
DR	Pg 4, Ln 36 - C&S as of 12/31/05 – Pg 3, Ln 35 - Unassigned surplus	229,077,631
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock
B - Reflect cancellation of TOLIC’s common stock held by TSC (TIHI) and preferred stock held by TA Corp:
	TSC (TIHI) owned 1,104,117 shares of common stock at $12.50 par value	13,801,463
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	13,793,325
		27,594,788
TSC:
DR	Pg 3, ln 29 - Common Capital Stock	13,801,463
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock	13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
C - Reverse intercompany recievables/payables between TOLIC and TLIC outstanding:
DR	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	156,125,732
CR	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates
D - Issue common and preferred shares of TLIC to previous owners of TOLIC (TSC (TIHI) and TA Corp)
	TSC (TIHI) granted 676,190 shares of common stock at $10.00 par value	6,761,900
	TA Corp granted 86,590 shares of preferred stock at $10.00 par value	865,900
		7,627,800
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	6,761,900
CR	Pg 3, ln 29 - Common Capital Stock, Pg 4, ln 50.1 Capital paid in
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	865,900
CR	Pg 3, ln 30 - Preferred Capital Stock, Pg 4, ln 50.1 Capital paid in
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock	(1,165,227,935	)
	Pg 2, Ln 5 - Cash, cash equivalents and short-term investments	—
	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates	(156,125,732	)
	Total Asset Adjustment	(1,321,353,667	)
	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	(156,125,732	)
	Pg 3, ln 29 - Common Capital Stock	(10,209,113	)
	Pg 3, ln 30 - Preferred Capital Stock	(12,927,425	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus	(655,281,296	)
	Pg 3, Ln 35 - Unassigned	(486,810,102	)
	Total Equity Adjustment	(1,165,227,935	)
	Total Equity & Liability Adjustment	(1,321,353,667	)
	Pg 4, Ln 36 - C&S as of 12/31/06	(229,077,631	)
	Pg 4, Ln 38 - Chg in net unrealized capital gain	(257,732,471	)
	Pg 4, Ln 41 - Change in non-admitted assets	—
	Pg 4, Ln 50.1 - Capital paid in	(23,136,538	)
	Pg 4, Ln 51.1 - Surplus paid in	(655,281,296	)
	Total Unassigned Adjustment	(1,165,227,935	)

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

As of December 31, 2005

		TOLIC		TLIC		Elimination				TLIC Dec 31, 2005 Total
ASSETS
1.	Bonds	$	17,972,060,581	$	35,851,714,885	$	0			$	53,823,775,466
2.	Stocks:
	2.1      Preferred stocks		130,724,790		338,422,802						469,147,592
	2.2      Common stocks		767,234,495		342,262,663		(907,495,464	)	A		202,001,694
3.	Mortgage loans on real estate:
	3.1      First liens		4,375,864,331		5,770,722,690						10,146,587,021
	3.2      Other than first liens		0		0						0
4.	Real estate
	4.1      Properties occupied by the company		0		6,464,646						6,464,646
	4.2      Properties held for production of income		186,207		5,234,691						5,420,898
	4.3      Properties held for sale		14,354,895		22,822,187						37,177,082
5.	Cash, cash equivalents and short-term investments		355,844,407		326,027,406						681,871,813
6.	Contract loans (including $0 premium notes)		386,594,732		123,221,330						509,816,062
7.	Other invested assets		1,207,896,207		1,116,749,339						2,324,645,546
8.	Receivable for securities		0		13,473,730						13,473,730
9.	Aggregate write-ins for invested assets		0		0						0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		25,210,760,645		43,917,116,369		(907,495,464	)			68,220,381,550
11.	Title plants less $.... 0 charged off (for Title insurers only)		0		0		0				0
12.	Investment income due and accrued		309,474,806		847,090,841						1,156,565,647
13.	Premiums and considerations:
	13.1    Uncollected premiums and agents’ balances in course of collection		191,686,732		5,403,724						197,090,456
	13.2    Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		144,169,255		15,750,455						159,919,710
	13.3.  Accrued retrospective premiums		0		0						0
14.	Reinsurance:
	14.1    Amounts recoverable from reinsurers		17,021,218		3,175,821						20,197,039
	14.2    Funds held by or deposited with reinsured companies		80,379,976		70,000						80,449,976
	14.3    Other amounts receivable under reinsurance contracts		36,670,484		748,971						37,419,455
15.	Amounts receivable relating to uninsured plans		0		0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		112,500,463						112,500,463
16.2	Net deferred tax asset		99,060,310		116,391,484						215,451,794
17.	Guaranty funds receivable or on deposit		296,480		5,091,655						5,388,135
18.	Electronic data processing equipment and software		0		0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0						0
21.	Receivable from parent, subsidiaries and affiliates		328,020,174		54,260,790						382,280,964
22.	Health care ($0) and other amounts receivable		0		0						0
23.	Aggregate write-ins for other than invested assets		442,061,294		187,274,680		0				629,335,974
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		26,859,601,374		45,264,875,253		(907,495,464	)			71,216,981,163
25.	From Separate Accounts Statement		2,827,671,194		23,662,197,968		0				26,489,869,162
26.	Total (Lines 24 and 25)	$	29,687,272,568	$	68,927,073,221	$	(907,495,464	)		$	97,706,850,325
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
	Accounts receivable	$	110,900,038	$	50,442,160	$	0			$	161,342,198
	Company owned life insurance		0		0						0
	Reinsurance deposit receivable		105,814,400		0						105,814,400
	Accounts receivable from reinsurers		19,934,644		0						19,934,644
	Modco Asset		80,637,416		0						80,637,416
	Estimated premium tax offsets related to the provision for future GFA		0		7,075,346						7,075,346
	Prepaid reinsurance payable		0		0						0
	Goodwill from assumption reinsurance with subsidiary		0		0						0
	General Agent Pension fund		71,631,949		0						71,631,949
	Investment broker receivables		997,072		121,623,396						122,620,468
	Investment receivables		52,145,775		8,133,778						60,279,553
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	442,061,294	$	187,274,680	$	0			$	629,335,974

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

As of December 31, 2005

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2005 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,383,294,403		$	30,910,479,787		$	0			$	43,293,774,190
2.	Aggregate reserve for accident and health contracts		165,926,306			714,373,268							880,299,574
3.	Liability for deposit-type contracts		9,365,106,343			7,755,652,331							17,120,758,674
4.	Contract claims:
	4.1      Life		225,949,410			37,337,273							263,286,683
	4.2      Accident and health		84,744,646			40,207,188							124,951,834
5.	Policyholders’ dividends and coupons due and unpaid		103,485			6,525							110,010
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1      Dividends apportioned for payment to December 31, 2005		11,939,649			501,342							12,440,991
	6.2      Dividends not yet apportioned		0			0							0
	6.3      Coupons and similar benefits		0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		3,846,456			2,054,100							5,900,556
9.	Contract liabilities not included elsewhere:
	9.1      Surrender values on canceled contracts		0			0							0
	9.2      Provision for experience rating refunds		25,723,941			9,591,332							35,315,273
	9.3      Other amounts payable on reinsurance		69,934,026			0							69,934,026
	9.4      Interest Maintenance Reserve		250,907,860			214,961,532							465,869,392
10.	Commissions to agents due or accrued		3,730,580			14,846,086							18,576,666
11.	Commissions and expense allowances payable on reinsurance assumed		61,366,261			101,152							61,467,413
12.	General expenses due or accrued		52,941,785			25,318,499							78,260,284
13.	Transfers to Separate Accounts due or accrued		(26,414,344	)		(443,973,999	)						(470,388,343	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		15,259,330			27,925,744							43,185,074
15.1.	Current federal and foreign income taxes		88,932,972			0							88,932,972
15.2.	Net deferred tax liability		0			0							0
16.	Unearned investment income		13,017,774			89,761,551							102,779,325
17.	Amounts withheld or retained by company as agent or trustee		69,021,233			61,578,437							130,599,670
18.	Amounts held for agents’ account, including agents’ credit balance		17,471,351			678,975							18,150,326
19.	Remittances and items not allocated		174,680,475			104,925,439							279,605,914
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0							0
21.	Liability for benefits for employees and agents if not included above		71,631,949			0							71,631,949
22.	Borrowed money and interest thereon		0			8,492,040							8,492,040
23.	Dividends to stockholders declared and unpaid		0			0							0
24.	Miscellaneous liabilities:
	24.1    Asset valuation reserve		379,660,721			663,191,256							1,042,851,977
	24.2    Reinsurance in unauthorized companies		22,398,748			17,263,976							39,662,724
	24.3    Funds held under reinsurance treaties with unauthorized reinsurers		416,379,304			2,230,200,396							2,646,579,700
	24.4    Payable to parent, subsidiaries and affiliates		0			0							0
	24.5    Drafts outstanding		0			0							0
	24.6    Liability for amounts held under uninsured accident and health plans		0			0							0
	24.7    Funds held under coinsurance		23,030,533			63,231,098							86,261,631
	24.8    Payable for securities		18,739,178			104,110,532							122,849,710
	24.9    Capital notes and interest thereon		0			0							0
25.	Aggregate write-ins for liabilities		807,212,594			194,070,990			0				1,001,283,584
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,796,536,969			42,846,886,850			0				67,643,423,819
27.	From Separate Accounts Statement		2,758,082,599			23,662,141,157			0				26,420,223,756
28.	Total liabilities (Line 26 and 27)	$	27,554,619,568		$	66,509,028,007		$	0			$	94,063,647,575
DETAILS OF LIABILITIES WRITE-INS (Line 25)
Deferred derivative gain/loss		$	4,634,997		$	0		$	0			$	4,634,997
Derivatives			17,010,581			108,922,906							125,933,487
Municipal reverse repurchase agreement			715,011,969			66,072,177							781,084,146
Securities lending liability			67,555,047			0							67,555,047
Interest payable on surplus notes			3,000,000			8,625,000							11,625,000
Due to reinsurer			0			6,407,574							6,407,574
Provision for liquidity guarantees			0			4,043,333							4,043,333
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	807,212,594		$	194,070,990		$	0			$	1,001,283,584
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,793,338		$	3,169,550		$	(10,200,988	)	A/B/C	$	6,761,900
30.	Preferred capital stock		13,793,325			1,302,550			(12,927,425	)	B/C		2,168,450
31.	Aggregate write-ins for other than special surplus funds		0			0							0
32.	Surplus notes		200,000,000			575,000,000							775,000,000
33.	Gross paid in and contributed surplus		1,668,279,168			1,436,759,982			(655,289,421	)	A/B/C		2,449,749,730
34.	Aggregate write-ins for special surplus funds		0			0							0
35.	Unassigned funds (surplus)		236,787,169			401,813,132			(229,077,631	)	A		409,522,670
36.	Less treasury stock, at cost:
	36.1    Common shares		0			0							0
	36.2    Preferred shares		0			0							0
37.	Surplus (Total lines 31+32+33+34+35-36)		2,105,066,337			2,413,573,114			(884,367,052	)			3,634,272,400
38.	Totals of Lines 29, 30 and 37		2,132,653,000			2,418,045,214			(907,495,464	)			3,643,202,750
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	29,687,272,568		$	68,927,073,221		$	(907,495,464	)		$	97,706,850,325
													(0	)

* This balance sheet is a consolidation of the December 31, 2006 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company, Life Investors Insurance Company of America and Transamerica Life Insurance Company.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

For Year Ending December 31, 2005

		TOLIC			TLIC			Elimination				TLIC Dec 31, 2005 Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	2,041,050,195		$	5,081,584,434		$	0			$	7,122,634,629
2	Considerations for supplementary contracts with life contingencies		55,528			23,633,189							23,688,717
3	Net investment income		1,317,882,884			2,390,053,691							3,707,936,575
4	Amortization of Interest Maintenance Reserve (IMR)		22,025,108			39,487,939							61,513,047
5	Separate Accounts net gain from operations excluding unrealized gains or losses		(4,313	)		320							(3,993	)
6	Commissions and expense allowances on reinsurance ceded		64,089,325			105,759,084							169,848,409
7	Reserve adjustments on reinsurance ceded		(184,963,889	)		(219,020,868	)						(403,984,757	)
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		25,227,928			276,683,877							301,911,805
8.2	Charges and fees for deposit-type contracts		0			85,108							85,108
8.3	Aggregate write-ins for miscellaneous income		448,729,150			62,658,327			0				511,387,477
9	Totals (Lines 1 to 8.3)		3,734,091,916			7,760,925,101			0				11,495,017,017
10	Death benefits		724,677,322			118,905,769							843,583,091
11	Matured endowments (excluding guaranteed annual pure endowments)		734,211			(33,781	)						700,430
12	Annuity benefits		592,315,997			1,079,364,879							1,671,680,876
13	Disability benefits and benefits under accident and health contracts		32,324,159			102,075,397							134,399,556
14	Coupons, guaranteed annual pure endowments and similar benefits		244,496			0							244,496
15	Surrender benefits and withdrawals for life contracts		841,439,984			5,415,085,313							6,256,525,297
16	Group conversions		0			0							0
17	Interest and adjustments on contract or deposit-type contract funds		326,692,708			274,037,126							600,729,834
18	Payments on supplementary contracts with life contingencies		872,466			27,231,395							28,103,861
19	Increase in aggregate reserves for life and accident and health contracts		747,808,752			(1,842,463,361	)		0				(1,094,654,609	)
20	Totals (Lines 10 to 19)		3,267,110,095			5,174,202,737			0				8,441,312,832
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		524,311,111			418,098,971							942,410,082
22	Commissions and expense allowances on reinsurance assumed		309,106,072			7,335,477							316,441,549
23	General insurance expenses		256,497,950			242,493,185							498,991,135
24	Insurance taxes, licenses and fees, excluding federal income taxes		52,308,720			27,899,406							80,208,126
25	Increase in loading on deferred and uncollected premiums		(14,285,097	)		(620,940	)						(14,906,037	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(256,274,192	)		1,365,516,404							1,109,242,212
27	Aggregate write-ins for deductions		(172,850,951	)		231,821,323			0				58,970,372
28	Totals (Lines 20 to 27)		3,965,923,708			7,466,746,563			0				11,432,670,271
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(231,831,792	)		294,178,538			0				62,346,746
30	Dividends to policyholders		15,289,613			454,687							15,744,300
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(247,121,405	)		293,723,851			0				46,602,446
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		168,714,463			4,301,974							173,016,437
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)		(415,835,868	)		289,421,877			0				(126,413,991	)
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		36,470,901			9,222,807							45,693,708
35	Net income (Line 33 plus Line 34)	$	(379,364,967	)	$	298,644,684		$	0			$	(80,720,283	)
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,742,060,503		$	2,570,611,210		$	(199,340,622	)	A	$	5,113,331,091
37	Net income (Line 35)		(379,364,967	)		298,644,684							(80,720,283	)
38	Change in net unrealized capital gains (losses)		(441,555,847	)		44,453,539			(29,737,009	)	A		(426,839,317	)
39	Change in net unrealized foreign exchange capital gain (loss)		78,059			0							78,059
40	Change in net deferred income tax		(55,352,984	)		29,719,209							(25,633,775	)
41	Change in nonadmitted assets and related items		96,536,289			(1,716,641	)						94,819,648
42	Change in liability for reinsurance in unauthorized companies		26,662,033			(17,011,463	)						9,650,570
43	Change in reserve on account of change in valuation basis, (increase) or decrease		14,328,047			0							14,328,047
44	Change in asset valuation reserve		(104,592,539	)		(146,776,227	)						(251,368,766	)
45	Change in treasury stock		0			0							0
46	Surplus (contributed to) withdrawn from Separate Accounts during period		120,688			39,990,320							40,111,008
47	Other changes in surplus in Separate Accounts Statement		9,407,549			(39,791,208	)						(30,383,659	)
48	Change in surplus notes		0			0							0
49	Cumulative effect of changes in accounting principles		17,933,672			(6,668,241	)						11,265,431
50	Capital changes:
50.1	Paid in		0			0			(23,128,413	)	A/B/C		(23,128,413	)
50.2	Transferred from surplus (Stock Dividend)		0			0							0
50.3	Transferred to surplus		0			0							0
51	Surplus adjustment:
51.1	Paid in		0			(348,051,000	)		(655,289,421	)	A/B/C		(1,003,340,421	)
51.2	Transferred to capital (Stock Dividend)		0			0							0
51.3	Transferred from capital		0			0							0
51.4	Change in surplus as a result of reinsurance		503,268,508			(5,982,031	)						497,286,477
52	Dividends to stockholders		(300,000,000	)		0							(300,000,000	)
53	Aggregate write-ins for gains and losses in surplus		3,123,989			623,063							3,747,052
54	Net change in capital and surplus (Lines 37 through 53)		(609,407,503	)		(152,565,996	)		(708,154,842	)			(1,470,128,341	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	2,132,653,000		$	2,418,045,214		$	(907,495,464	)		$	3,643,202,750
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	32,969,597		$	62,658,327		$	0			$	95,627,924
	Foreign currency translation adjustment		(19,419	)		0							(19,419	)
	Reinsurance premium on inforce transaction		(103,946,153	)		0							(103,946,153	)
	Receivable for deposit accounting of reinsurance treaty		105,814,400			0							105,814,400
	Consideration on reinsurance transaction		413,910,725			0							413,910,725
	TOTAL WRITE-INS FOR LINE 8.3	$	448,729,150		$	62,658,327		$	0			$	511,387,477
DETAILS OF WRITE-INS (Line 27)
	Experience refunds	$	(20,839,052	)	$	1,327,910		$	0			$	(19,511,142	)
	Fines and penalties		21,525			16,639							38,164
	Reinsurance reserve recapture		0			812,752							812,752
	Funds withheld ceded investment income		26,698,803			96,407,900							123,106,703
	Reinsurance transaction-Modco interest adjustment		(190,732,227	)		99,108,422							(91,623,805	)
	Interest on surplus notes		12,000,000			34,531,722							46,531,722
	Foreign currency translation adjustment		0			0							0
	Change in liability for employee benefits		0			(45,476	)						(45,476	)
	Change in provision for liquidity guarantees		0			(338,546	)						(338,546	)
	TOTAL WRITE-INS FOR LINE 27	$	(172,850,951	)	$	231,821,323		$	0			$	58,970,372
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	0		$	0		$	0			$	0
	Correction to an error		0			0							0
	Contributed surplus related to stock appreciation rights plan of indirect parent		3,123,989			623,063							3,747,052
	TOTAL WRITE-INS FOR LINE 53	$	3,123,989		$	623,063		$	0			$	3,747,052

4Q05 - Eliminations due to merger of TOLIC into TLIC on 10/1/08

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)	3,169,550
	Excess paid for TLIC stock beyond par value	675,248,283
	Total cost of TLIC stock	678,417,833
	TOLIC’s value in TLIC as of 12/31/05 per audit (TLIC valuation issue)	907,495,464
	TOLIC’s value in TLIC (TALIAC) as of 12/31/04	877,758,455
	Unrealized gain as of 12/31/05	229,077,631
	Unrealized gain as of 12/31/04	199,340,622
DR	Pg 3, Ln 29 - Common Capital Stock	3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus	675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain — Pg 3, Ln 35 - Unassigned surplus	29,737,009
DR	Pg 4, Ln 36 - C&S as of 12/31/05 — Pg 3, Ln 35 — Unassigned surplus	199,340,622
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock
B - Reflect cancellation of TOLIC’s common stock held by TSC (TIHI) and preferred stock held by TA Corp:
	TSC owned 1,103,467 shares of common stock at $12.50 par value	13,793,338
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	13,793,325
		27,586,663
TSC:
DR	Pg 3, ln 29 - Common Capital Stock	13,793,338
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock	13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
C - Issue common and preferred shares of TLIC to previous owners of TOLIC (TSC and TA Corp)
	TSC (TIHI) granted 676,190 shares of common stock at $10.00 par value	6,761,900
	TA Corp granted 86,590 shares of preferred stock at $10.00 par value	865,900
		7,627,800
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	6,761,900
CR	Pg 3, ln 29 - Common Capital Stock, Pg 4, ln 50.1 Capital paid in
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	865,900
CR	Pg 3, ln 30 - Preferred Capital Stock, Pg 4, ln 50.1 Capital paid in
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock	(907,495,464	)
	Pg 2, Ln 23 - Write-in — Company owned life insurance	—
	Total Asset Adjustment	(907,495,464	)
	Pg 3, Ln 1 - Aggregate reserve for life contracts	—
	Total Liability Adjustment	—
	Pg 3, ln 29 - Common Capital Stock	(10,200,988	)
	Pg 3, ln 30 - Preferred Capital Stock	(12,927,425	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus	(655,289,421	)
	Pg 3, Ln 35 - Unassigned	(229,077,631	)
	Total Equity Adjustment	(907,495,464	)
	Total Equity & Liability Adjustment	(907,495,464	)
	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance	—
	Pg 4, Ln 19 - Inrease in aggregate reserves for life and accident and health contracts	—
	Total Net Income	—
	Pg 4, Ln 36 - C&S as of 12/31/06	(199,340,622	)
	Pg 4, Ln 37 - Net Income	—
	Pg 4, Ln 38 - Chg in net unrealized capital gain	(29,737,009	)
	Pg 4, Ln 41 - Change in non-admitted assets	—
	Pg 4, Ln 50.1 - Capital paid in	(23,128,413	)
	Pg 4, Ln 51.1 - Surplus paid in	(655,289,421	)
	Total Unassigned Adjustment	(907,495,464	)

Unaudited Pro Forma Condensed Financial Information

The following schedules show financial information after giving effect to the mergers of Life Investors Insurance Company of America and Transamerica Occidental Life Insurance Company into Transamerica Life Insurance Company as if those mergers had occurred on an earlier date (which we refer to as “pro forma” information).

In presenting the pro forma balance sheet, we assumed that the mergers had occurred by December 31, 2007. In presenting the pro forma income statement information for each of the three years ended December 31, 2007, we assumed that the mergers had occurred on January 1, 2005, January 1, 2006, and January 1, 2007, respectively.

The unaudited pro forma condensed financial data are not intended to represent or to be indicative of our consolidated results of operations or financial position that we would have reported had the mergers occurred as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies.

The unaudited pro forma condensed financial data should be read in conjunction with the historical financial statements and accompanying notes of Life Investors Insurance Company of America, Transamerica Occidental Life Insurance Company, and Transamerica Life Insurance Company, which are included in this Statement of Additional Information in this registration statement on Form N-4.

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

and Life Investors Insurance Company of America

As of December 31, 2007

		TOLIC		LIICA			TLIC		Elimination				TLIC Dec 31, 2007 Total
ASSETS
1.	Bonds	$	16,471,095,521	$	6,976,787,445		$	28,499,852,882	$	0			$	51,947,735,848
2.	Stocks:
	2.1       Preferred stocks		554,862,947		145,648,034			1,329,680,509						2,030,191,490
	2.2       Common stocks		2,227,768,280		12,382,045			260,304,528		(1,685,599,498	)	A		814,855,355
3.	Mortgage loans on real estate:
	3.1       First liens		4,545,013,789		1,080,994,130			6,038,593,884						11,664,601,803
	3.2       Other than first liens		0		0			0						0
4.	Real estate
	4.1       Properties occupied by the company		0		71,309,002			6,160,325						77,469,327
	4.2       Properties held for production of income		186,207		37,275,908			2,463,189						39,925,304
	4.3       Properties held for sale		8,812,169		693,481			20,268,161						29,773,811
5.	Cash, cash equivalents and short-term investments		574,047,643		157,173,685			1,182,364,444		(60,900,000	)	E		1,852,685,772
6.	Contract loans (including $ 0 premium notes)		390,493,955		207,383,207			92,977,680						690,854,842
7.	Other invested assets		1,832,339,752		249,165,460			2,152,611,049						4,234,116,261
8.	Receivable for securities		1,799,374		849,084			55,362,935						58,011,393
9.	Aggregate write-ins for invested assets		0		0			0						0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		26,606,419,637		8,939,661,481			39,640,639,586		(1,746,499,498	)			73,440,221,206
11.	Title plants less $......0 charged off (for Title insurers only)		0		0			0		0				0
12.	Investment income due and accrued		295,138,837		93,437,711			767,992,938						1,156,569,486
13.	Premiums and considerations:
	13.1     Uncollected premiums and agents’ balances in course of collection		120,328,047		(511,278	)		6,629,403						126,446,172
	13.2     Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		123,325,884		28,212,751			14,193,127						165,731,762
	13.3.   Accrued retrospective premiums		0		0			0						0
14.	Reinsurance:
	14.1     Amounts recoverable from reinsurers		67,100,681		6,888,631			4,763,923						78,753,235
	14.2     Funds held by or deposited with reinsured companies		57,060,075		0			70,000						57,130,075
	14.3     Other amounts receivable under reinsurance contracts		194,609,658		562			243,730						194,853,950
15.	Amounts receivable relating to uninsured plans		0		0			0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		0			0						0
16.2	Net deferred tax asset		132,025,702		65,663,340			139,589,476						337,278,518
17.	Guaranty funds receivable or on deposit		323,361		580,105			3,496,937						4,400,403
18.	Electronic data processing equipment and software		0		0			0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0			0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0			0						0
21.	Receivable from parent, subsidiaries and affiliates		169,099,032		105,565,050			69,693,839		(62,722,047	)	E		281,635,874
22.	Health care ($0) and other amounts receivable		0		0			0						0
23.	Aggregate write-ins for other than invested assets		469,782,109		283,386,232			101,887,416		(134,210,826	)	D		720,844,931
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		28,235,213,023		9,522,884,585			40,749,200,375		(1,943,432,371	)			76,563,865,612
25.	From Separate Accounts Statement		2,776,744,947		505,064,943			32,759,905,182		0				36,041,715,072
26.	Total (Lines 24 and 25)	$	31,011,957,970	$	10,027,949,528		$	73,509,105,557	$	(1,943,432,371	)		$	112,605,580,684
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0		$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0		$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
Accounts receivable		$	58,214,391	$	9,308,500		$	78,782,393	$	0			$	146,305,284
Company owned life insurance			0		269,910,412			0		(134,210,826	)	D		135,699,586
Reinsurance deposit receivable			120,581,750		0			0						120,581,750
Modco Asset			107,558,829		0			0						107,558,829
Estimated premium tax offsets related to the provision for future GFA			0		2,569,573			7,029,975						9,599,548
Goodwill from assumption reinsurance with subsidiary			69,719,253		0			0						69,719,253
General Agent Pension fund			76,748,178		0			0						76,748,178
Investment broker receivables			2,029,029		0			7,250,726						9,279,755
Investment receivables			34,930,679		1,597,747			8,824,322						45,352,748
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	469,782,109	$	283,386,232		$	101,887,416	$	(134,210,826	)		$	720,844,931

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

and Life Investors Insurance Company of America

As of December 31, 2007

		TOLIC			LIICA			TLIC			Elimination				TLIC Dec 31, 2007 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,715,170,945		$	6,317,025,786		$	23,185,076,188		$	(134,210,826	)	D	$	42,083,062,093
2.	Aggregate reserve for accident and health contracts		219,556,406			1,936,157,947			896,257,764							3,051,972,117
3.	Liability for deposit-type contracts		9,198,790,890			172,945,108			5,962,782,893							15,334,518,891
4.	Contract claims:
	4.1       Life		282,711,435			37,240,224			33,849,123							353,800,782
	4.2       Accident and health		47,080,205			86,284,014			43,078,282							176,442,501
5.	Policyholders’ dividends and coupons due and unpaid		101,647			188,611			6,127							296,385
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1       Dividends apportioned for payment		10,045,885			1,935,433			548,983							12,530,301
	6.2       Dividends not yet apportioned		0			0			0							0
	6.3       Coupons and similar benefits		0			0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		6,084,553			4,936,985			1,986,883							13,008,421
9.	Contract liabilities not included elsewhere:
	9.1       Surrender values on canceled contracts		0			0			0							0
	9.2       Provision for experience rating refunds		18,038,966			4,045,883			12,077,405							34,162,254
	9.3       Other amounts payable on reinsurance		80,302,979			17,540,201			37,532,947							135,376,127
	9.4       Interest Maintenance Reserve		236,189,340			53,009,815			176,159,947							465,359,102
10.	Commissions to agents due or accrued		4,242,900			17,192,911			13,124,143							34,559,954
11.	Commissions and expense allowances payable on reinsurance assumed		84,744,662			0			22,179							84,766,841
12.	General expenses due or accrued		25,441,746			55,805,831			32,903,886							114,151,463
13 .	Transfers to Separate Accounts due or accrued		(78,921,306	)		(8,158,431	)		(472,791,102	)						(559,870,839	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		24,093,685			16,761,182			24,404,591							65,259,458
15.1.	Current federal and foreign income taxes		68,806,798			28,170,196			111,200,474							208,177,468
15.2.	Net deferred tax liability		0			0			0							0
16.	Unearned investment income		10,082,051			1,213,079			89,998,484							101,293,614
17.	Amounts withheld or retained by company as agent or trustee		53,454,095			54,927,019			59,819,779							168,200,893
18.	Amounts held for agents’ account, including agents’ credit balance		5,899,676			2,684,995			3,107,218							11,691,889
19.	Remittances and items not allocated		183,471,609			9,178,406			135,840,492							328,490,507
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0			0							0
21.	Liability for benefits for employees and agents if not included above		79,755,255			0			0							79,755,255
22.	Borrowed money and interest thereon		0			0			0							0
23.	Dividends to stockholders declared and unpaid		0			0			0							0
24.	Miscellaneous liabilities:
	24.1     Asset valuation reserve		548,657,355			180,815,663			816,294,536							1,545,767,554
	24.2     Reinsurance in unauthorized companies		48,805,499			2,486,536			15,612,246							66,904,281
	24.3     Funds held under reinsurance treaties with unauthorized reinsurers		236,452,209			45,074,354			6,940,284,362							7,221,810,925
	24.4     Payable to parent, subsidiaries and affiliates		158,861,026			54,663,750			251,087,408			(123,622,047	)	D		340,990,137
	24.5     Drafts outstanding		0			0			0							0
	24.6     Liability for amounts held under uninsured accident and health plans		0			0			0							0
	24.7     Funds held under coinsurance		14,695,237			6,456,560			68,460,817							89,612,614
	24.8     Payable for securities		21,599,643			8,476,343			133,302,829							163,378,815
	24.9     Capital notes and interest thereon		0			0			0							0
25.	Aggregate write-ins for liabilities		419,521,995			(6,648,035	)		187,472,626							600,346,586
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,723,737,386			9,100,410,366			38,759,501,510			(257,832,873	)			72,325,816,389
27.	From Separate Accounts Statement		2,690,282,323			505,064,943			32,759,854,549			0				35,955,201,815
28.	Total liabilities (Line 26 and 27)	$	27,414,019,709		$	9,605,475,309		$	71,519,356,059		$	(257,832,873	)		$	108,281,018,204
DETAILS OF LIABILITIES WRITE-INS (Line 25)
Deferred derivative gain/loss		$	34,151,375		$	0		$	0		$	0			$	34,151,375
Derivatives			39,691,781			653,849			174,390,920							214,736,550
Municipal reverse repurchase agreement			270,370,204			0			127,332,670							397,702,874
Securities lending liability			76,850,608			0			0							76,850,608
Case level liability			0			0			20,560,978							20,560,978
Amounts incurred related to separate account reinsurance agreements			(1,541,973	)		(9,551,884	)		(135,361,547	)						(146,455,404	)
Interest payable on surplus notes			0			2,250,000			0							2,250,000
Provision for liquidity guarantees			0			0			549,605							549,605
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	419,521,995		$	(6,648,035	)	$	187,472,626		$	0			$	600,346,586
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,801,463		$	1,685,910		$	3,169,550		$	(18,656,923	)	A/B/C	$	0
30.	Preferred capital stock		13,793,325			1,250,000			1,302,550			(15,043,325	)	B/C		1,302,550
31.	Aggregate write-ins for other than special surplus funds		0			0			0							0
32.	Surplus notes		0			150,000,000			0							150,000,000
33.	Gross paid in and contributed surplus		1,672,352,407			236,007,130			1,437,881,244			(644,717,586	)	A/B/C		2,701,523,196
34.	Aggregate write-ins for special surplus funds		0			0			0							0
35.	Unassigned funds (surplus)		1,897,991,066			33,531,179			1,178,796,154			(1,007,181,665	)	A		2,103,136,734
36.	Less treasury stock, at cost:
	36.1     Common shares		0			0			0							0
	36.2     Preferred shares		0			0			631,400,000							631,400,000
37.	Surplus (Total lines 31+32+33+34+35-36)		3,570,343,473			419,538,309			1,985,277,398			(1,651,899,251	)			4,323,259,930
38.	Totals of Lines 29, 30 and 37		3,597,938,261			422,474,219			1,989,749,498			(1,685,599,498	)			4,324,562,480
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	31,011,957,970		$	10,027,949,528		$	73,509,105,557		$	(1,943,432,371	)		$	112,605,580,684
																(0	)

* This balance sheet is a consolidation of the December 31, 2007 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company , Transamerica Life Insurance Company and Life Investors Insurance Company of America.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

For Year Ending December 31, 2007

		TOLIC			LIICA			TLIC			Elimination				TLIC Dec 31, 2007 Total
1	Premiums and annuity considerations for life and accident and health contracts	$	2,141,476,715		$	649,355,631		$	5,464,048,598		$	0			$	8,254,880,944
2	Considerations for supplementary contracts with life contingencies		2,249,072			3,806,501			15,880,918							21,936,491
3	Net investment income		1,399,174,410			519,953,214			2,293,195,690							4,212,323,314
4	Amortization of Interest Maintenance Reserve (IMR)		20,514,274			6,773,775			14,770,752							42,058,801
5	Separate Accounts net gain from operations excluding unrealized gains or losses		—			0			1,001							1,001
6	Commissions and expense allowances on reinsurance ceded		50,454,233			26,503,415			55,684,458							132,642,106
7	Reserve adjustments on reinsurance ceded		(116,343,582	)		156,087,276			1,246,064,488							1,285,808,182
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees
	from Separate Accounts		20,373,287			1,187,879			418,290,862							439,852,028
8.2	Charges and fees for deposit-type contracts		0			0			70,178							70,178
8.3	Aggregate write-ins for miscellaneous income		48,600,570			158,109,757			358,165,135			(4,986,107	)	D		559,889,355
9	Totals (Lines 1 to 8.3)		3,566,498,979			1,521,777,448			9,866,172,080			(4,986,107	)			14,949,462,400
10	Death benefits		919,055,481			142,352,351			143,572,323							1,204,980,155
11	Matured endowments (excluding guaranteed annual pure endowments)		733,803			19,368			5,000							758,171
12	Annuity benefits		558,322,804			73,973,016			1,106,015,973							1,738,311,793
13	Disability benefits and benefits under accident and health contracts		36,021,536			192,775,061			129,402,208							358,198,805
14	Coupons, guaranteed annual pure endowments and similar benefits		294,991			0			0							294,991
15	Surrender benefits and withdrawals for life contracts		949,303,022						8,253,614,972							9,202,917,994
16	Group conversions		0			0			0							0
17	Interest and adjustments on contract or deposit-type contract funds		522,225,095			12,740,280			308,633,389							843,598,764
18	Payments on supplementary contracts with life contingencies		788,640			10,503,489			11,329,893							22,622,022
19	Increase in aggregate reserves for life and accident and health contracts		179,024,519			(282,924,028	)		(3,812,586,391	)		(4,986,107	)	D		(3,921,472,007	)
20	Totals (Lines 10 to 19)		3,165,769,891			149,439,537			6,139,987,367			(4,986,107	)			9,450,210,688
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		295,370,354			151,185,372			443,352,341							889,908,067
22	Commissions and expense allowances on reinsurance assumed		440,757,712			5,247,636			8,908,124							454,913,472
23	General insurance expenses		271,424,231			137,172,128			268,194,532							676,790,891
24	Insurance taxes, licenses and fees, excluding federal income taxes		55,354,643			37,949,473			39,076,280							132,380,396
25	Increase in loading on deferred and uncollected premiums		(740,961	)		(610,457	)		(1,928,632	)						(3,280,050	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(285,933,858	)		135,085,264			1,649,322,749							1,498,474,155
27	Aggregate write-ins for deductions		(294,395,170	)		225,774,395			1,251,486,141							1,182,865,366
28	Totals (Lines 20 to 27)		3,647,606,842			841,243,348			9,798,398,902			(4,986,107	)			14,282,262,985
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(81,107,863	)		680,534,100			67,773,178			0				667,199,415
30	Dividends to policyholders		14,928,629			1,954,570			533,716							17,416,915
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(96,036,492	)		678,579,530			67,239,462			0				649,782,500
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		53,910,554			77,825,003			55,469,797							187,205,354
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)		(149,947,046	)		87,017,347			11,769,665			0				462,577,146
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		51,961,527			32,114,918			229,722,404			0				313,798,849
35	Net income (Line 33 plus Line 34)	$	(97,985,519	)	$	119,132,265		$	241,492,069		$	0			$	776,375,995
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,892,148,063		$	633,891,809		$	2,042,778,170		$	(486,810,337	)	A	$	5,082,007,705
37	Net income (Line 35)		(97,985,519	)		119,132,265			241,492,069			0				776,375,995
38	Change in net unrealized capital gains (losses)		622,460,069			57,021,984			122,039,227			(520,371,328	)	A		281,149,952
39	Change in net unrealized foreign exchange capital gain (loss)		(1,178,693	)		9,385,532			6,860,909							15,067,748
40	Change in net deferred income tax		3,469,371			147,058,467			(6,995,750	)						143,532,088
41	Change in nonadmitted assets and related items		49,561,249			(131,793,805	)		51,328,586							(30,903,970	)
42	Change in liability for reinsurance in unauthorized companies		(17,324,610	)		330,486			(15,612,246	)						(32,606,370	)
43	Change in reserve on account of change in valuation basis, (increase) or decrease		(12,676,668	)		(2,178,864	)		(1,735,513	)						(16,591,045	)
44	Change in asset valuation reserve		(15,025,583	)		(72,500,139	)		(13,282,538	)						(100,808,260	)
45	Change in treasury stock		0			0			(573,400,000	)						(573,400,000	)
46	Surplus (contributed to) withdrawn from Separate Accounts during period		0			0			1,001							1,001
47	Other changes in surplus in Separate Accounts Statement		11,706,314			0			(65,415	)						11,640,899
48	Change in surplus notes		0			0			0							0
49	Cumulative effect of changes in accounting principles		0			0			0							0
50	Capital changes:
50.1	Paid in		0			0			0			(33,700,248	)			(33,700,248	)
50.2	Transferred from surplus (Stock Dividend)		0			0			0							0
50.3	Transferred to surplus		0			0			0							0
51	Surplus adjustment:
51.1	Paid in		(1,522,262	)		(274,101,730	)		112,850			(644,717,586	)			(920,228,728	)
51.2	Transferred to capital (Stock Dividend)		0			0			0							0
51.3	Transferred from capital		0			0			0							0
51.4	Change in surplus as a result of reinsurance		364,306,530			66,228,214			187,828,148							618,362,892
52	Dividends to stockholders		(200,000,000	)		(130,000,000	)		(51,600,000	)						(381,600,000	)
53	Aggregate write-ins for gains and losses in surplus		0			0			0							0
54	Net change in capital and surplus (Lines 37 through 53)		705,790,198			(211,417,590	)		(53,028,672	)		(1,198,789,161	)			(243,708,045	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	3,597,938,261		$	422,474,219		$	1,989,749,498		$	(1,685,599,498	)		$	4,838,299,660
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	37,317,517		$	13,384		$	104,222,957		$	0			$	141,553,858
	Income earned on company owned life insurance		0			10,085,039			0							10,085,039
	Reinsurance transaction - Modco interest adjustment		0			3,346,270			0			(4,986,107	)	D		(1,639,837	)
	Foreign currency translation adjustment		(59,811	)		0			0							(59,811	)
	Reinsurance premium on inforce transaction		0			0			0							0
	Receivable for deposit accounting of reinsurance treaty		7,625,686			0			0							7,625,686
	Amoritization of goodwill		1,433,396			0			0							1,433,396
	Consideration on reinsurance transaction		2,283,782			144,665,064			253,942,178							400,891,024
	TOTAL WRITE-INS FOR LINE 8.3	$	48,600,570		$	158,109,757		$	358,165,135		$	(4,986,107	)		$	559,889,355
DETAILS OF WRITE-INS (Line 27)
	Consideration paid on reinsurance transaction	$	0		$	0		$	607,720,860		$	0			$	607,720,860
	Experience refunds		(44,728,866	)		754,946		$	2,826,905							(41,147,015	)
	Fines and penalties		277,149			5,075			317,371							599,595
	Recapture commission expense allowance		0			0			0							0
	Funds withheld ceded investment income		8,943,792			16,426,984			557,486,733							582,857,509
	Reinsurance transaction-Modco interest adjustment		(258,887,245	)		38,399,116			66,113,752							(154,374,377	)
	Change in case liability		0			0			20,560,978							20,560,978
	Interest on surplus notes		0			9,001,200			0							9,001,200
	Modco reinsurance premium paid		0			173,147,401			0							173,147,401
	Reinsurance transaction - Modco reserve adjustment reinsurance assumed		0			(900,117	)		0							(900,117	)
	Foreign currency translation adjustment		0			(11,060,210	)		0							(11,060,210	)
	Change in provision for liquidity guarantees		0			0			(3,540,458	)						(3,540,458	)
	TOTAL WRITE-INS FOR LINE 27	$	(294,395,170	)	$	225,774,395		$	1,251,486,141		$	0			$	1,182,865,366
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	0		$	0		$	0		$	0			$	0
	Correction to an error		0			0			0							0
	Contributed surplus related to stock appreciation rights plan of indirect parent		0			0			0							0
	TOTAL WRITE-INS FOR LINE 53	$	0		$	0		$	0		$	0			$	0

Note: Eliminations would all be on Investment and Corporate centers

Eliminations due to merger of TOLIC and LIICA into TLIC on 10/1 and 10/2/08, respectively

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)		3,169,550
	Excess paid for TLIC stock beyond par value		675,248,283
	Total cost of TLIC stock		678,417,833
	TOLIC’s value in TLIC as of 12/31/07		1,685,599,498
	TOLIC’s value in TLIC as of 12/31/06		1,165,228,170
	Unrealized gain as of 12/31/07		1,007,181,665
	Unrealized gain as of 12/31/06		486,810,337
DR	Pg 3, Ln 29 - Common Capital Stock		3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus		675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain — Pg 3, Ln 35 - Unassigned surplus		520,371,328
DR	Pg 4, Ln 36 - C&S as of 12/31/06 — Pg 3, Ln 35 - Unassigned surplus		486,810,337
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock				1,685,599,498
B - Reflect cancellation of TOLIC’s common stock held by TIHI and preferred stock held by TA Corp:
	TIHI owned 1,104,117 shares of common stock at $12.50 par value		13,801,463
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	0	13,793,325
			27,594,788
TIHI:
DR	Pg 3, ln 29 - Common Capital Stock		13,801,463
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus				13,801,463
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock		13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)				13,793,325
TOLIC stock shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge TOLIC into TLIC, TIHI shall receive TLIC Common Stock equal in value to the fair market value of the TOLIC Common Stock that is deemed cancelled and TA Corp shall receive Series B Preferred Stock from TLIC equal in value to the fair market value of the TOLIC Voting Preferred Stock that is deemed cancelled.
C - Reflect cancellation of LIICA’s common and preferred stock held by AEGON USA, Inc.:
	AEGON USA, Inc. owned 679,802 shares of common stock at $2.48 par value		1,685,910
	AEGON USA, Inc. owned 504,033 shares of preferred stock at $2.48 par value		1,250,000
			2,935,910
AEGON USA, Inc. common stock:
DR	Pg 3, ln 29 - Common Capital Stock		1,685,910
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus				1,685,910
AEGON USA, Inc. preferred stock:
DR	Pg 3, ln 30 - Preferred Capital Stock		1,250,000
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)				1,250,000
LIICA’s common and preferred shares shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge LIICA into TLIC, AEGON USA shall receive TIHI common stock equal in value to the fair market value of the LIICA common stock that is deemed cancelled.
D - Reverse LOLI contracts issued by TLIC to LIICA:
DR	Pg 3, Ln 1 - Aggregate reserve for life contracts		134,210,826
CR	Pg 2, Ln 23 - Write -in — Company owned life insurance				134,210,826
DR	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance		4,986,107
CR	Pg 4, Ln 19 - Increase in aggregate reserves for life and accident and health contracts				4,986,107
E - Reverse intercompany receivables/payables between TLIC, TOLIC and LIICA outstanding:
DR	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates		123,622,047
CR	Pg 2, Ln 5 - Cash, cash equivalents and short-term investments				60,900,000
CR	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates				62,722,047
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock		(1,685,599,498	)
	Pg 2, Ln 5 - Cash, cash equivalents and short-term investments		(60,900,000	)
	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates		(62,722,047	)
	Pg 2, Ln 23 - Write -in — Company owned life insurance		(134,210,826	)
	Total Asset Adjustment		(1,943,432,371	)
	Pg 3, Ln 1 - Aggregate reserve for life contracts		(134,210,826	)
	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates		(123,622,047	)
	Total Liability Adjustment		(257,832,873	)
	Pg 3, ln 29 - Common Capital Stock		(18,656,923	)
	Pg 3, ln 30 - Preferred Capital Stock		(15,043,325	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus		(644,717,586	)
	Pg 3, Ln 35 - Unassigned		(1,007,181,665	)
	Total Equity Adjustment		(1,685,599,498	)
	Total Equity & Liability Adjustment		(1,943,432,371	)
	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance		(4,986,107	)
	Pg 4, Ln 19 - Increase in aggregate reserves for life and accident and health contracts		(4,986,107	)
	Total Net Income		—
	Pg 4, Ln 36 - C&S as of 12/31/06		(486,810,337	)
	Pg 4, Ln 37 - Net Income		—
	Pg 4, Ln 38 - Chg in net unrealized capital gain		(520,371,328	)
	Pg 4, Ln 41 - Change in non-admitted assets		—
	Pg 4, Ln 50.1 - Capital paid in		(33,700,248	)
	Pg 4, Ln 51.1 - Surplus paid in		(644,717,586	)
	Total Unassigned Adjustment		(1,685,599,498	)

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

and Life Investors Insurance Company of America

As of December 31, 2006

		TOLIC		LIICA		TLIC		Elimination				TLIC Dec 31, 2006 Total
ASSETS
1.	Bonds	$	16,762,581,664	$	7,364,291,793	$	32,604,471,993	$	0			$	56,731,345,450
2.	Stocks:
	2.1      Preferred stocks		727,952,578		150,936,799		1,690,179,269						2,569,068,646
	2.2      Common stocks		1,716,705,647		15,477,768		475,377,594		(1,165,227,935	)	A		1,042,333,074
3.	Mortgage loans on real estate:
	3.1      First liens		4,332,561,859		1,074,000,024		5,760,667,026						11,167,228,909
	3.2      Other than first liens		0		0		0						0
4.	Real estate
	4.1      Properties occupied by the company		0		70,957,387		6,237,324						77,194,711
	4.2      Properties held for production of income		186,207		33,925,890		2,466,437						36,578,534
	4.3      Properties held for sale		8,684,731		4,695,869		21,508,271						34,888,871
5.	Cash, cash equivalents and short-term investments		280,874,752		293,004,616		1,214,965,122						1,788,844,490
6.	Contract loans (including $ 0 premium notes)		387,464,911		203,982,779		130,144,075						721,591,765
7.	Other invested assets		1,580,243,337		313,812,735		1,543,091,168						3,437,147,240
8.	Receivable for securities		70,258,897		74,828		6,651,022						76,984,747
9.	Aggregate write-ins for invested assets		0		0		0						0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		25,867,514,583		9,525,160,488		43,455,759,301		(1,165,227,935	)			77,683,206,437
11.	Title plants less $.... 0 charged off (for Title insurers only)		0		0		0		0				0
12.	Investment income due and accrued		308,325,607		101,753,247		853,243,642						1,263,322,496
13.	Premiums and considerations:
	13.1    Uncollected premiums and agents’ balances in course of collection		196,261,210		2,348,177		4,715,867						203,325,254
	13.2    Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		128,295,432		30,102,791		15,728,356						174,126,579
	13.3.  Accrued retrospective premiums		0		0		0						0
14.	Reinsurance:
	14.1    Amounts recoverable from reinsurers		32,452,595		7,320,813		1,546,723						41,320,131
	14.2    Funds held by or deposited with reinsured companies		54,749,174		0		70,000						54,819,174
	14.3    Other amounts receivable under reinsurance contracts		109,461,662		2,247		1,296,984						110,760,893
15.	Amounts receivable relating to uninsured plans		0		0		0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		0		0						0
16.2	Net deferred tax asset		99,886,396		58,416,907		108,342,046						266,645,349
17.	Guaranty funds receivable or on deposit		341,840		898,680		3,931,107						5,171,627
18.	Electronic data processing equipment and software		0		0		0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0		0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0		0						0
21.	Receivable from parent, subsidiaries and affiliates		506,949,329		104,656,178		503,880,836		(197,408,079	)	E		918,078,264
22.	Health care ($0) and other amounts receivable		0		0		0						0
23.	Aggregate write-ins for other than invested assets		464,162,158		288,852,823		106,007,386		(129,861,806	)	D		729,160,561
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		27,768,399,986		10,119,512,351		45,054,522,248		(1,492,497,820	)			81,449,936,765
25.	From Separate Accounts Statement		2,575,661,321		186,704,196		28,875,012,600		0				31,637,378,117
26.	Total (Lines 24 and 25)	$	30,344,061,307	$	10,306,216,547	$	73,929,534,848	$	(1,492,497,820	)		$	113,087,314,882
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0	$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0	$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
Accounts receivable		$	44,374,258	$	16,977,701	$	65,267,826	$	0			$	126,619,785
Company owned life insurance			0		260,462,460		0		(129,861,806	)	D		130,600,654
Reinsurance deposit receivable			112,956,064		0		0						112,956,064
Modco Asset			98,998,390		0		0						98,998,390
Estimated premium tax offsets related to the provision for future GFA			0		2,591,012		7,043,040						9,634,052
Prepaid reinsurance payable			0		298		0						298
Goodwill from assumption reinsurance with subsidiary			78,993,433		0		0						78,993,433
General Agent Pension fund			73,035,576		0		0						73,035,576
Investment broker receivables			5,786,537		6,192,285		19,941,048						31,919,870
Investment receivables			50,017,900		2,629,067		13,755,472						66,402,439
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	464,162,158	$	288,852,823	$	106,007,386	$	(129,861,806	)		$	729,160,561

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

As of December 31, 2006

		TOLIC			LIICA			TLIC			Elimination				TLIC Dec 31, 2006 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,552,586,605		$	6,797,410,467		$	27,079,068,369		$	(129,861,806	)	D	$	46,299,203,635
2.	Aggregate reserve for accident and health contracts		190,439,558			1,736,518,431			812,961,117							2,739,919,106
3.	Liability for deposit-type contracts		9,230,956,687			179,016,187			7,085,285,142							16,495,258,016
4.	Contract claims:
	4.1      Life		227,838,913			33,305,402			35,142,878							296,287,193
	4.2      Accident and health		74,552,208			119,571,338			39,502,288							233,625,834
5.	Policyholders’ dividends and coupons due and unpaid		92,744			150,608			6,393							249,745
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1      Dividends apportioned for payment to December 31, 2005		10,034,341			2,054,941			536,067							12,625,349
	6.2      Dividends not yet apportioned		0			0			0							0
	6.3      Coupons and similar benefits		0			0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		4,952,877			4,268,817			2,103,609							11,325,303
9.	Contract liabilities not included elsewhere:
	9.1      Surrender values on canceled contracts		0			0			0							0
	9.2      Provision for experience rating refunds		17,896,716			3,290,937			11,186,840							32,374,493
	9.3      Other amounts payable on reinsurance		133,993,269			15,673,503			9,746,446							159,413,218
	9.4      Interest Maintenance Reserve		228,881,905			56,002,456			159,355,848							444,240,209
10.	Commissions to agents due or accrued		3,146,576			18,628,005			16,636,229							38,410,810
11.	Commissions and expense allowances payable on reinsurance assumed		72,917,943			—			0							72,917,943
12.	General expenses due or accrued		38,396,805			24,987,943			22,906,246							86,290,994
13.	Transfers to Separate Accounts due or accrued		(71,838,094	)		(9,044,678	)		(482,081,615	)						(562,964,387	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		19,941,708			14,057,070			29,511,344							63,510,122
15.1.	Current federal and foreign income taxes		66,302,847			22,490,708			20,922,654							109,716,209
15.2.	Net deferred tax liability		0			0			0							0
16.	Unearned investment income		15,840,242			1,254,356			103,497,911							120,592,509
17.	Amounts withheld or retained by company as agent or trustee		39,564,607			80,583,371			67,882,591							188,030,569
18.	Amounts held for agents’ account, including agents’ credit balance		16,803,932			2,758,041			1,080,462							20,642,435
19.	Remittances and items not allocated		180,032,663			10,318,963			167,888,989							358,240,615
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0			0							0
21.	Liability for benefits for employees and agents if not included above		75,778,184			0			0							75,778,184
22.	Borrowed money and interest thereon		312,668,680			21,789,862			493,335,650							827,794,192
23.	Dividends to stockholders declared and unpaid		0			0			0							0
24.	Miscellaneous liabilities:
	24.1    Asset valuation reserve		533,631,772			108,315,524			803,011,998							1,444,959,294
	24.2    Reinsurance in unauthorized companies		31,480,889			2,817,022			0							34,297,911
	24.3    Funds held under reinsurance treaties with unauthorized reinsurers		174,398,042			42,433,055			5,884,895,649							6,101,726,746
	24.4    Payable to parent, subsidiaries and affiliates		157,228,320			117,070,450			230,656,261			(197,408,079	)	E		307,546,952
	24.5    Drafts outstanding		0			0			0							0
	24.6    Liability for amounts held under uninsured accident and health plans		0			0			0							0
	24.7    Funds held under coinsurance		14,682,614			5,804,376			66,074,566							86,561,556
	24.8    Payable for securities		1,358,662			74,657,588			90,397,550							166,413,800
	24.9    Capital notes and interest thereon		0			0			0							0
25.	Aggregate write-ins for liabilities		596,446,018			(564,201	)		260,347,643			0				856,229,460
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,951,008,233			9,485,620,542			43,011,859,125			(327,269,885	)			77,121,218,015
27.	From Separate Accounts Statement		2,500,905,011			186,704,196			28,874,897,553			0				31,562,506,760
28.	Total liabilities (Line 26 and 27)	$	27,451,913,244		$	9,672,324,738		$	71,886,756,678		$	(327,269,885	)		$	108,683,724,775
DETAILS OF LIABILITIES WRITE-INS (Line 25)
	Deferred derivative gain/loss	$	36,394,375		$	0		$	0		$	0			$	36,394,375
	Derivatives		34,389,187			940,234			157,036,930							192,366,351
	Municipal reverse repurchase agreement		455,262,336			0			156,180,401							611,442,737
	Securities lending liability		72,131,594			0			0							72,131,594
	Interest payable on surplus notes		0			2,250,000			0							2,250,000
	Amounts incurred related to separate account reinsurance agreements		(1,731,474	)		(3,754,435	)		(56,959,751	)						(62,445,660	)
	Provision for liquidity guarantees		0			0			4,090,063							4,090,063
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	596,446,018		$	(564,201	)	$	260,347,643		$	0			$	856,229,460
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,801,463		$	1,685,910		$	3,169,550		$	(11,895,023	)	A/B/C/F	$	6,761,900
30.	Preferred capital stock		13,793,325			1,250,000			1,302,550			(14,177,425	)	B/C/F		2,168,450
31.	Aggregate write-ins for other than special surplus funds		0			0			0							0
32.	Surplus notes		0			150,000,000			0							150,000,000
33.	Gross paid in and contributed surplus		1,673,874,669			510,108,860			1,437,768,394			(652,345,386	)	A/B/C/F		2,969,406,538
34.	Aggregate write-ins for special surplus funds		0			0			0							0
35.	Unassigned funds (surplus)		1,190,678,606			(29,152,961	)		658,537,676			(486,810,102	)	A		1,333,253,219
36.	Less treasury stock, at cost:
	36.1    Common shares		0			0			0							0
	36.2    Preferred shares		0			0			58,000,000							58,000,000
37.	Surplus (Total lines 31+32+33+34+35-36)		2,864,553,275			630,955,899			2,038,306,070			(1,139,155,488	)			4,394,659,757
38.	Totals of Lines 29, 30 and 37		2,892,148,063			633,891,809			2,042,778,170			(1,165,227,935	)			4,403,590,107
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	30,344,061,307		$	10,306,216,547		$	73,929,534,848		$	(1,492,497,820	)		$	113,087,314,882
																(0	)

* This balance sheet is a consolidation of the December 31, 2006 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company, Life Investors Insurance Company of America and Transamerica Life Insurance Company.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

For Year Ending December 31, 2006

		TOLIC			LIICA			TLIC			Elimination				TLIC Dec 31, 2006 Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	1,963,450,184		$	657,372,084		$	4,898,100,892		$	0			$	7,518,923,160
2	Considerations for supplementary contracts with life contingencies		721,615			4,741,987			11,684,477							17,148,079
3	Net investment income		1,376,785,455			526,157,374			2,376,911,350							4,279,854,179
4	Amortization of Interest Maintenance Reserve (IMR)		21,348,694			9,435,498			21,795,120							52,579,312
5	Separate Accounts net gain from operations excluding unrealized gains or losses		124,869			4,193			(2,100	)						126,962
6	Commissions and expense allowances on reinsurance ceded		(337,912,739	)		82,767,843			187,362,953							(67,781,943	)
7	Reserve adjustments on reinsurance ceded		(179,964,354	)		(181,776,369	)		1,234,063,701							872,322,978
8	Miscellaneous Income:
	8.1      Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		22,237,353			325,259			369,935,745							392,498,357
	8.2      Charges and fees for deposit-type contracts		0			0			82,844							82,844
	8.3      Aggregate write-ins for miscellaneous income		1,128,918,537			24,754,396			93,688,498			(4,856,452	)	D		1,242,504,979
9	Totals (Lines 1 to 8.3)		3,995,709,614			1,123,782,265			9,193,623,480			(4,856,452	)			14,308,258,907
10	Death benefits		842,926,755			170,097,428			115,216,706							1,128,240,889
11	Matured endowments (excluding guaranteed annual pure endowments)		817,405			8,704			0							826,109
12	Annuity benefits		575,850,069			88,695,980			1,150,495,630							1,815,041,679
13	Disability benefits and benefits under accident and health contracts		31,935,438			250,669,701			113,547,063							396,152,202
14	Coupons, guaranteed annual pure endowments and similar benefits		296,311			0			0							296,311
15	Surrender benefits and withdrawals for life contracts		911,212,326			662,604,761			7,291,737,852							8,865,554,939
16	Group conversions		0			0			0							0
17	Interest and adjustments on contract or deposit-type contract funds		482,615,737			5,653,872			308,799,178							797,068,787
18	Payments on supplementary contracts with life contingencies		824,969			13,589,189			28,393,846							42,808,004
19	Increase in aggregate reserves for life and accident and health contracts		1,122,286,031			(645,595,108	)		(3,732,972,401	)		(4,856,452	)	D		(3,261,137,930	)
20	Totals (Lines 10 to 19)		3,968,765,041			545,724,527			5,275,217,874			(4,856,452	)			9,784,850,990
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		325,580,603			158,112,766			427,951,350							911,644,719
22	Commissions and expense allowances on reinsurance assumed		341,087,035			14,949,410			7,467,419							363,503,864
23	General insurance expenses		233,280,302			112,001,506			253,635,985							598,917,793
24	Insurance taxes, licenses and fees, excluding federal income taxes		46,292,981			27,378,505			41,256,338							114,927,824
25	Increase in loading on deferred and uncollected premiums		(4,104,109	)		(502,588	)		(347,984	)						(4,954,681	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(221,422,238	)		86,791,265			2,417,520,893							2,282,889,920
27	Aggregate write-ins for deductions		(230,113,221	)		67,683,109			416,041,471			0				253,611,359
28	Totals (Lines 20 to 27)		4,459,366,394			1,012,138,500			8,838,743,346			(4,856,452	)			14,305,391,788
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(463,656,780	)		111,643,765			354,880,134			0				2,867,119
30	Dividends to policyholders		14,297,883			2,115,938			557,281							16,971,102
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(477,954,663	)		109,527,827			354,322,853			0				(14,103,983	)
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		10,624,371			15,102,876			136,412,051							162,139,298
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) (Line 31 minus Line 32)		(488,579,034	)		94,424,951			217,910,802			0				(176,243,281	)
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		27,241,898			7,657,745			114,487,577							149,387,220
35	Net income (Line 33 plus Line 34)	$	(461,337,136	)	$	102,082,696		$	332,398,379		$	0			$	(26,856,061	)
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,132,653,000		$	568,053,644		$	2,418,045,214		$	(229,077,631	)	A	$	4,889,674,227
37	Net income (Line 35)		(461,337,136	)		102,082,696			332,398,379							(26,856,061	)
38	Change in net unrealized capital gains (losses)		868,313,628			(232,877,120	)		105,009,753			(257,732,471	)	A		482,713,790
39	Change in net unrealized foreign exchange capital gain (loss)		1,371,641			1,125,912			(3,601,764	)						(1,104,211	)
40	Change in net deferred income tax		88,455,087			80,627,805			91,020,729							260,103,621
41	Change in nonadmitted assets and related items		(61,645,473	)		(77,269,854	)		(98,041,129	)						(236,956,456	)
42	Change in liability for reinsurance in unauthorized companies		(9,082,141	)		(713,896	)		17,263,978							7,467,941
43	Change in reserve on account of change in valuation basis, (increase) or decrease		0			0			0							0
44	Change in asset valuation reserve		(153,971,050	)		52,356,093			(139,820,742	)						(241,435,699	)
45	Change in treasury stock		0			0			(58,000,000	)						(58,000,000	)
46	Surplus (contributed to) withdrawn from Separate Accounts during period		449,869			33,194			17,907							500,970
47	Other changes in surplus in Separate Accounts Statement		5,042,846			(35,574	)		60,329							5,067,601
48	Change in surplus notes		(200,000,000	)		0			(575,000,000	)						(775,000,000	)
49	Cumulative effect of changes in accounting principles		303,856			(6,127,392	)		(1,665,036	)						(7,488,572	)
50	Capital changes:
	50.1    Paid in		8,125			0			0			(26,072,448	)	A/B/C/F		(26,064,323	)
	50.2    Transferred from surplus (Stock Dividend)		0			0			0							0
	50.3    Transferred to surplus		0			0			0							0
51	Surplus adjustment:
	51.1    Paid in		5,595,501			154,916,794			1,008,412			(652,345,386	)	A/B/C/F		(490,824,679	)
	51.2    Transferred to capital (Stock Dividend)		0			0			0							0
	51.3    Transferred from capital		0			0			0							0
	51.4    Change in surplus as a result of reinsurance		735,081,660			(462,468	)		4,640,038							739,259,230
52	Dividends to stockholders		(54,068,236	)		0			(69,803,167	)						(123,871,403	)
53	Aggregate write-ins for gains and losses in surplus		(5,023,114	)		(7,818,025	)		19,245,269							6,404,130
54	Net change in capital and surplus (Lines 37 through 53)		759,495,063			65,838,165			(375,267,044	)		(936,150,304	)			(486,084,120	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	2,892,148,063		$	633,891,809		$	2,042,778,170		$	(1,165,227,935	)		$	4,403,590,107
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	26,027,168		$	380,385		$	93,688,498		$	0			$	120,096,051
	Foreign currency translation adjustment		(2,529,101	)		0			0							(2,529,101	)
	Reinsurance premium on inforce transaction		141,417,787			0			0							141,417,787
	Reinsurance transaction - Modco interest adjustment		0			14,521,857			0							14,521,857
	Income earned on company owned life insurance		0			9,852,154			0			(4,856,452	)	D		4,995,702
	Receivable for deposit accounting of reinsurance treaty		7,141,664			0			0							7,141,664
	Amoritization of goodwill		1,433,396			0			0							1,433,396
	Consideration on reinsurance transaction		955,427,623			0			0							955,427,623
	TOTAL WRITE-INS FOR LINE 8.3	$	1,128,918,537		$	24,754,396		$	93,688,498		$	(4,856,452	)		$	1,242,504,979
DETAILS OF WRITE-INS (Line 27)
	Experience refunds	$	(23,921,643	)	$	1,716,251		$	(322,717	)	$	0			$	(22,528,109	)
	Fines and penalties		(50,399	)		180,687			389,189							519,477
	Recapture commission expense allowance		56,734,000			0			0							56,734,000
	Funds withheld ceded investment income		28,655,467			8,044,101			295,277,359							331,976,927
	Reinsurance transaction - Modco interest adjustment		(303,163,986	)		48,516,574			87,204,477							(167,442,935	)
	Reinsurance transaction - Modco reserve adjustment		0			(1,580,993	)		0							(1,580,993	)
	Interest on surplus notes		11,633,340			9,001,200			33,446,433							54,080,973
	Foreign currency translation adjustment		0			1,805,289			0							1,805,289
	Change in provision for liquidity guarantees		0			0			46,730							46,730
	TOTAL WRITE-INS FOR LINE 27	$	(230,113,221	)	$	67,683,109		$	416,041,471		$	0			$	253,611,359
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	(8,125	)	$	0		$	0		$	0			$	(8,125	)
	Correction to an error		0			0			20,480,332							20,480,332
	Contributed surplus related to stock appreciation rights plan of indirect parent		(5,014,989	)		(7,818,025	)		(1,235,063	)						(14,068,077	)
	TOTAL WRITE-INS FOR LINE 53	$	(5,023,114	)	$	(7,818,025	)	$	19,245,269		$	0			$	6,404,130

4Q06 - Eliminations due to merger of TOLIC and LIICA into TLIC on 10/1 and 10/2/08, respectively

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)	3,169,550
	Excess paid for TLIC stock beyond par value	675,248,283
	Total cost of TLIC stock	678,417,833
	TOLIC’s value in TLIC as of 12/31/06	1,165,227,935
	TOLIC’s value in TLIC as of 12/31/05 per audit (TLIC valuation issue)	907,495,464
	Unrealized gain as of 12/31/06	486,810,102
	Unrealized gain as of 12/31/05	229,077,631
DR	Pg 3, Ln 29 - Common Capital Stock	3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus	675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain — Pg 3, Ln 35 - Unassigned surplus	257,732,471
DR	Pg 4, Ln 36 - C&S as of 12/31/05 — Pg 3, Ln 35 - Unassigned surplus	229,077,631
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock
B - Reflect cancellation of TOLIC’s common stock held by TSC and preferred stock held by TA Corp:
	TSC owned 1,104,117 shares of common stock at $12.50 par value	13,801,463
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	13,793,325
		27,594,788
TSC:
DR	Pg 3, ln 29 - Common Capital Stock	13,801,463
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock	13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
C - Reflect cancellation of LIICA’s common and preferred stock held by AEGON USA, Inc.:
	AEGON USA, Inc. owned 679,802 shares of common stock at $2.48 par value	1,685,910
	AEGON USA, Inc. owned 504,033 shares of preferred stock at $2.48 par value	1,250,000
		2,935,910
AEGON USA, Inc. common stock:
DR	Pg 3, ln 29 - Common Capital Stock	1,685,910
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
AEGON USA, Inc. preferred stock:
DR	Pg 3, ln 30 - Preferred Capital Stock	1,250,000
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
LIICA’s common and preferred shares shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge LIICA into TLIC, AEGON USA shall receive TIHI common stock equal in value to the fair market value of the LIICA common stock that is deemed cancelled.
D - Reverse LOLI contracts issued by TLIC to LIICA:
DR	Pg 3, Ln 1 - Aggregate reserve for life contracts	129,861,806
CR	Pg 2, Ln 23 - Write-in — Company owned life insurance
DR	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance	4,856,452
CR	Pg 4, Ln 19 - Inrease in aggregate reserves for life and accident and health contracts
E - Reverse intercompany recievables/payables between TOLIC and TLIC outstanding:
DR	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	197,408,079
CR	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates
F - Issue common and preferred shares of TLIC to previous owners of TOLIC (TIHI and TA Corp)
	TIHI granted 676,190 shares of common stock at $10.00 par value	6,761,900
	TA Corp granted 86,590 shares of preferred stock at $10.00 par value	865,900
		7,627,800
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	6,761,900
CR	Pg 3, ln 29 - Common Capital Stock, Pg 4, ln 50.1 Capital paid in
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	865,900
CR	Pg 3, ln 30 - Preferred Capital Stock, Pg 4, ln 50.1 Capital paid in
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock	(1,165,227,935	)
	Pg 2, Ln 21 - Receivable from parent, subsidiaries and affiliates	(197,408,079	)
	Pg 2, Ln 23 - Write-in — Company owned life insurance	(129,861,806	)
	Total Asset Adjustment	(1,492,497,820	)
	Pg 3, Ln 1 - Aggregate reserve for life contracts	(129,861,806	)
	Pg 3, Ln 24.4 - Payable to parent, subsidiaries and affiliates	(197,408,079	)
	Total Liability Adjustment	(327,269,885	)
	Pg 3, ln 29 - Common Capital Stock	(11,895,023	)
	Pg 3, ln 30 - Preferred Capital Stock	(14,177,425	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus	(652,345,386	)
	Pg 3, Ln 35 - Unassigned	(486,810,102	)
	Total Equity Adjustment	(1,165,227,935	)
	Total Equity & Liability Adjustment	(1,492,497,820	)
	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance	(4,856,452	)
	Pg 4, Ln 19 - Inrease in aggregate reserves for life and accident and health contracts	(4,856,452	)
	Total Net Income	—
	Pg 4, Ln 36 - C&S as of 12/31/06	(229,077,631	)
	Pg 4, Ln 37 - Net Income	—
	Pg 4, Ln 38 - Chg in net unrealized capital gain	(257,732,471	)
	Pg 4, Ln 41 - Change in non-admitted assets	—
	Pg 4, Ln 50.1 - Capital paid in	(26,072,448	)
	Pg 4, Ln 51.1 - Surplus paid in	(652,345,386	)
	Total Unassigned Adjustment	(1,165,227,935	)

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

As of December 31, 2005

		TOLIC		LIICA			TLIC		Elimination				TLIC Dec 31, 2005 Total
ASSETS
1.	Bonds	$	17,972,060,581	$	7,812,590,556		$	35,851,714,885	$	0			$	61,636,366,022
2.	Stocks:
	2.1      Preferred stocks		130,724,790		25,588,686			338,422,802						494,736,278
	2.2      Common stocks		767,234,495		13,799,025			342,262,663		(907,495,464	)	A		215,800,719
3.	Mortgage loans on real estate:
	3.1      First liens		4,375,864,331		1,173,964,389			5,770,722,690						11,320,551,410
	3.2      Other than first liens		0		0			0						0
4.	Real estate
	4.1      Properties occupied by the company		0		64,869,278			6,464,646						71,333,924
	4.2      Properties held for production of income		186,207		38,788,914			5,234,691						44,209,812
	4.3      Properties held for sale		14,354,895		4,564,208			22,822,187						41,741,290
5.	Cash, cash equivalents and short-term investments		355,844,407		100,372,898			326,027,406						782,244,711
6.	Contract loans (including $ 0 premium notes)		386,594,732		149,213,790			123,221,330						659,029,852
7.	Other invested assets		1,207,896,207		276,026,700			1,116,749,339						2,600,672,246
8.	Receivable for securities		0		512,195			13,473,730						13,985,925
9.	Aggregate write-ins for invested assets		0		0			0						0
10.	Subtotals, cash and invested assets (Lines 1 to 9)		25,210,760,645		9,660,290,639			43,917,116,369		(907,495,464	)			77,880,672,189
11.	Title plants less $.... 0 charged off (for Title insurers only)		0		0			0		0				0
12.	Investment income due and accrued		309,474,806		104,033,410			847,090,841						1,260,599,057
13.	Premiums and considerations:
	13.1    Uncollected premiums and agents’ balances in course of collection		191,686,732		(900,571	)		5,403,724						196,189,885
	13.2    Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		144,169,255		29,562,607			15,750,455						189,482,317
	13.3.  Accrued retrospective premiums		0		0			0						0
14.	Reinsurance:
	14.1    Amounts recoverable from reinsurers		17,021,218		6,379,336			3,175,821						26,576,375
	14.2    Funds held by or deposited with reinsured companies		80,379,976		0			70,000						80,449,976
	14.3    Other amounts receivable under reinsurance contracts		36,670,484		2,851			748,971						37,422,306
15.	Amounts receivable relating to uninsured plans		0		0			0						0
16.1	Current federal and foreign income tax recoverable and interest thereon		0		0			112,500,463						112,500,463
16.2	Net deferred tax asset		99,060,310		49,424,111			116,391,484						264,875,905
17.	Guaranty funds receivable or on deposit		296,480		1,052,287			5,091,655						6,440,422
18.	Electronic data processing equipment and software		0		0			0						0
19.	Furniture and equipment, including health care delivery assets ($0)		0		0			0						0
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0		0			0						0
21.	Receivable from parent, subsidiaries and affiliates		328,020,174		22,100,000			54,260,790						404,380,964
22.	Health care ($0) and other amounts receivable		0		0			0						0
23.	Aggregate write-ins for other than invested assets		442,061,294		305,189,028			187,274,680		(125,005,354	)	D		809,519,648
24.	Total assets excluding Separate Accounts business (Lines 10 to 23)		26,859,601,374		10,177,133,698			45,264,875,253		(1,032,500,818	)			81,269,109,507
25.	From Separate Accounts Statement		2,827,671,194		17,017,468			23,662,197,968		0				26,506,886,630
26.	Total (Lines 24 and 25)	$	29,687,272,568	$	10,194,151,166		$	68,927,073,221	$	(1,032,500,818	)		$	107,775,996,137
DETAILS OF ASSET WRITE-INS (Line 9)
		$	0	$	0		$	0	$	0			$	0
TOTAL OF ASSETS WRITE-INS FOR LINES 9		$	0	$	0		$	0	$	0			$	0
DETAILS OF ASSET WRITE-INS (Line 23)
	Accounts receivable	$	110,900,038	$	20,806,598		$	50,442,160	$	0			$	182,148,796
	Company owned life insurance		0		250,610,306			0		(125,005,354	)	D		125,604,952
	Reinsurance deposit receivable		105,814,400		0			0						105,814,400
	Accounts receivable from reinsurers		19,934,644		0			0						19,934,644
	Modco Asset		80,637,416		0			0						80,637,416
	Estimated premium tax offsets related to the provision for future GFA		0		2,612,873			7,075,346						9,688,219
	Prepaid reinsurance payable		0		0			0						0
	Goodwill from assumption reinsurance with subsidiary		0		0			0						0
	General Agent Pension fund		71,631,949		0			0						71,631,949
	Investment broker receivables		997,072		30,455,790			121,623,396						153,076,258
	Investment receivables		52,145,775		703,461			8,133,778						60,983,014
TOTAL OF ASSETS WRITE-INS FOR LINES 23		$	442,061,294	$	305,189,028		$	187,274,680	$	(125,005,354	)		$	809,519,648

Proforma Unaudited Consolidated Statutory Balance Sheet

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

As of December 31, 2005

		TOLIC			LIICA			TLIC			Elimination				TLIC Dec 31, 2005 Total
LIABILITIES
1.	Aggregate reserve for life contracts	$	12,383,294,403		$	7,284,916,121		$	30,910,479,787		$	(125,005,354	)	D	$	50,453,684,957
2.	Aggregate reserve for accident and health contracts		165,926,306			1,568,449,549			714,373,268							2,448,749,123
3.	Liability for deposit-type contracts		9,365,106,343			117,074,248			7,755,652,331							17,237,832,922
4.	Contract claims:
	4.1      Life		225,949,410			30,210,686			37,337,273							293,497,369
	4.2      Accident and health		84,744,646			110,369,102			40,207,188							235,320,936
5.	Policyholders’ dividends and coupons due and unpaid		103,485			15,257			6,525							125,267
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1      Dividends apportioned for payment to December 31, 2005		11,939,649			1,174,087			501,342							13,615,078
	6.2      Dividends not yet apportioned		0			0			0							0
	6.3      Coupons and similar benefits		0			0			0							0
7.	Amount provisionally held for deferred dividend policies not included in Line 6		0			0			0							0
8.	Premiums and annuity considerations for life and accident and health contracts received in advance less discount		3,846,456			4,539,901			2,054,100							10,440,457
9.	Contract liabilities not included elsewhere:
	9.1      Surrender values on canceled contracts		0			0			0							0
	9.2      Provision for experience rating refunds		25,723,941			1,577,361			9,591,332							36,892,634
	9.3      Other amounts payable on reinsurance		69,934,026			0			0							69,934,026
	9.4      Interest Maintenance Reserve		250,907,860			83,110,624			214,961,532							548,980,016
10.	Commissions to agents due or accrued		3,730,580			21,081,049			14,846,086							39,657,715
11.	Commissions and expense allowances payable on reinsurance assumed		61,366,261			0			101,152							61,467,413
12.	General expenses due or accrued		52,941,785			18,031,624			25,318,499							96,291,908
13.	Transfers to Separate Accounts due or accrued		(26,414,344	)		(5,526,555	)		(443,973,999	)						(475,914,898	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes		15,259,330			19,008,283			27,925,744							62,193,357
15.1.	Current federal and foreign income taxes		88,932,972			10,364,233			0							99,297,205
15.2.	Net deferred tax liability		0			0			0							0
16.	Unearned investment income		13,017,774			1,280,990			89,761,551							104,060,315
17.	Amounts withheld or retained by company as agent or trustee		69,021,233			65,916,204			61,578,437							196,515,874
18.	Amounts held for agents’ account, including agents’ credit balance		17,471,351			13,253,028			678,975							31,403,354
19.	Remittances and items not allocated		174,680,475			41,878,024			104,925,439							321,483,938
20.	Net adjustment in assets and liabilities due to foreign exchange rates		0			0			0							0
21.	Liability for benefits for employees and agents if not included above		71,631,949			0			0							71,631,949
22.	Borrowed money and interest thereon		0			0			8,492,040							8,492,040
23.	Dividends to stockholders declared and unpaid		0			0			0							0
24.	Miscellaneous liabilities:
	24.1    Asset valuation reserve		379,660,721			157,649,413			663,191,256							1,200,501,390
	24.2    Reinsurance in unauthorized companies		22,398,748			2,103,125			17,263,976							41,765,849
	24.3    Funds held under reinsurance treaties with unauthorized reinsurers		416,379,304			40,569,385			2,230,200,396							2,687,149,085
	24.4    Payable to parent, subsidiaries and affiliates		0			10,400,504			0							10,400,504
	24.5    Drafts outstanding		0			0			0							0
	24.6    Liability for amounts held under uninsured accident and health plans		0			0			0							0
	24.7    Funds held under coinsurance		23,030,533			6,172,521			63,231,098							92,434,152
	24.8    Payable for securities		18,739,178			48,436,791			104,110,532							171,286,501
	24.9    Capital notes and interest thereon		0			0			0							0
25.	Aggregate write-ins for liabilities		807,212,594			19,999,797			194,070,990			0				1,021,283,381
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)		24,796,536,969			9,672,055,352			42,846,886,850			(125,005,354	)			77,190,473,817
27.	From Separate Accounts Statement		2,758,082,599			16,986,088			23,662,141,157			0				26,437,209,844
28.	Total liabilities (Line 26 and 27)	$	27,554,619,568		$	9,689,041,440		$	66,509,028,007		$	(125,005,354	)		$	103,627,683,661
DETAILS OF LIABILITIES WRITE-INS (Line 25)
Deferred derivative gain/loss		$	4,634,997		$	0		$	0		$	0			$	4,634,997
Derivatives			17,010,581			411,200			108,922,906							126,344,687
Municipal reverse repurchase agreement			715,011,969			0			66,072,177							781,084,146
Securities lending liability			67,555,047			0			0							67,555,047
Interest payable on surplus notes			3,000,000			2,250,000			8,625,000							13,875,000
Due to reinsurer			0			17,318,597			6,407,574							23,726,171
Gurantee fund assessment payable			0			20,000			0							20,000
Amounts incurred related to separate account reinsurance agreements			0			0			—							0
Provision for liquidity guarantees			0			0			4,043,333							4,043,333
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25		$	807,212,594		$	19,999,797		$	194,070,990		$	0			$	1,021,283,381
SURPLUS AND OTHER FUNDS
29.	Common capital stock	$	13,793,338		$	1,250,000		$	3,169,550		$	(11,450,988	)	A/B/C/E	$	6,761,900
30.	Preferred capital stock		13,793,325			1,250,000			1,302,550			(14,177,425	)	B/C/E		2,168,450
31.	Aggregate write-ins for other than special surplus funds		0			0			0							0
32.	Surplus notes		200,000,000			150,000,000			575,000,000							925,000,000
33.	Gross paid in and contributed surplus		1,668,279,168			316,237,408			1,436,759,982			(652,789,420	)	A/B/C/E		2,768,487,138
34.	Aggregate write-ins for special surplus funds		0			0			0							0
35.	Unassigned funds (surplus)		236,787,169			36,372,318			401,813,132			(229,077,631	)	A		445,894,988
36.	Less treasury stock, at cost:
	36.1 Common shares		0			0			0							0
	36.2 Preferred shares		0			0			0							0
37.	Surplus (Total lines 31+32+33+34+35-36)		2,105,066,337			502,609,726			2,413,573,114			(881,867,051	)			4,139,382,126
38.	Totals of Lines 29, 30 and 37		2,132,653,000			505,109,726			2,418,045,214			(907,495,464	)			4,148,312,476
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)	$	29,687,272,568		$	10,194,151,166		$	68,927,073,221		$	(1,032,500,818	)		$	107,775,996,137
																(0	)

* This balance sheet is a consolidation of the December 31, 2006 NAIC Annual Statement balance sheets for Transamerica Occidental Life Insurance Company, Life Investors Insurance Company of America and Transamerica Life Insurance Company.

Proforma Unaudited Consolidated Statutory Income Statement

Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company

    and Life Investors Insurance Company of America

For Year Ending December 31, 2005

		TOLIC		LIICA		TLIC		Elimination			TLIC Dec 31, 2005 Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	2,041,050,195	$	724,260,049	$	5,081,584,434	$	0		$	7,846,894,678
2	Considerations for supplementary contracts with life contingencies		55,528		5,520,035		23,633,189					29,208,752
3	Net investment income		1,317,882,884		556,997,383		2,390,053,691					4,264,933,958
4	Amortization of Interest Maintenance Reserve (IMR)		22,025,108		13,070,705		39,487,939					74,583,752
5	Separate Accounts net gain from operations excluding unrealized gains or losses		(4,313)		—		320					(3,993)
6	Commissions and expense allowances on reinsurance ceded		64,089,325		77,665,247		105,759,084					247,513,656
7	Reserve adjustments on reinsurance ceded		(184,963,889)		(202,418,073)		(219,020,868)					(606,402,830)
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees
	from Separate Accounts		25,227,928		115,340		276,683,877					302,027,145
8.2	Charges and fees for deposit-type contracts		0		0		85,108					85,108
8.3	Aggregate write-ins for miscellaneous income		448,729,150		22,722,075		62,658,327		(4,860,504)	D		529,249,048
9	Totals (Lines 1 to 8.3)		3,734,091,916		1,197,932,761		7,760,925,101		(4,860,504)			12,688,089,274
10	Death benefits		724,677,322		156,396,809		118,905,769					999,979,900
11	Matured endowments (excluding guaranteed annual pure endowments)		734,211		0		(33,781)					700,430
12	Annuity benefits		592,315,997		84,237,760		1,079,364,879					1,755,918,636
13	Disability benefits and benefits under accident and health contracts		32,324,159		251,905,204		102,075,397					386,304,760
14	Coupons, guaranteed annual pure endowments and similar benefits		244,496		0		0					244,496
15	Surrender benefits and withdrawals for life contracts		841,439,984		610,184,776		5,415,085,313					6,866,710,073
16	Group conversions		0		0		0					0
17	Interest and adjustments on contract or deposit-type contract funds		326,692,708		3,423,676		274,037,126					604,153,510
18	Payments on supplementary contracts with life contingencies		872,466		13,930,198		27,231,395					42,034,059
19	Increase in aggregate reserves for life and accident and health contracts		747,808,752		(378,292,259)		(1,842,463,361)		(4,860,504)	D		(1,477,807,372)
20	Totals (Lines 10 to 19)		3,267,110,095		741,786,164		5,174,202,737		(4,860,504)			9,178,238,492
21	Commissions on premiums, annuity considerations and deposit-type contract funds (direct business only)		524,311,111		191,337,394		418,098,971					1,133,747,476
22	Commissions and expense allowances on reinsurance assumed		309,106,072		13,005,274		7,335,477					329,446,823
23	General insurance expenses		256,497,950		111,767,551		242,493,185					610,758,686
24	Insurance taxes, licenses and fees, excluding federal income taxes		52,308,720		27,858,258		27,899,406					108,066,384
25	Increase in loading on deferred and uncollected premiums		(14,285,097)		194,292		(620,940)					(14,711,745)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(256,274,192)		511,249		1,365,516,404					1,109,753,461
27	Aggregate write-ins for deductions		(172,850,951)		68,008,735		231,821,323		0			126,979,107
28	Totals (Lines 20 to 27)		3,965,923,708		1,154,468,917		7,466,746,563		(4,860,504)			12,582,278,684
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		(231,831,792)		43,463,844		294,178,538		0			105,810,590
30	Dividends to policyholders		15,289,613		1,258,431		454,687					17,002,731
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		(247,121,405)		42,205,413		293,723,851		0			88,807,859
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		168,714,463		(12,832,652)		4,301,974					160,183,785
33	Net gain from operations after dividends to policyholders and federal income taxes and before realized
	capital gains or (losses) (Line 31 minus Line 32)		(415,835,868)		55,038,065		289,421,877		0			(71,375,926)
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		36,470,901		9,356,471		9,222,807					55,050,179
35	Net income (Line 33 plus Line 34)	$	(379,364,967)	$	64,394,536	$	298,644,684	$	0		$	(16,325,747)
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	2,742,060,503	$	606,261,189	$	2,570,611,210	$	(199,340,622)	A	$	5,719,592,280
37	Net income (Line 35)		(379,364,967)		64,394,536		298,644,684					(16,325,747)
38	Change in net unrealized capital gains (losses)		(441,555,847)		(7,392,718)		44,453,539		(29,737,009)	A		(434,232,035)
39	Change in net unrealized foreign exchange capital gain (loss)		78,059		(2,976,852)		0					(2,898,793)
40	Change in net deferred income tax		(55,352,984)		(26,483,029)		29,719,209					(52,116,804)
41	Change in nonadmitted assets and related items		96,536,289		12,147,334		(1,716,641)					106,966,982
42	Change in liability for reinsurance in unauthorized companies		26,662,033		(1,576,599)		(17,011,463)					8,073,971
43	Change in reserve on account of change in valuation basis, (increase) or decrease		14,328,047		6,998,672		0					21,326,719
44	Change in asset valuation reserve		(104,592,539)		(20,853,681)		(146,776,227)					(272,222,447)
45	Change in treasury stock		0		0		0					0
46	Surplus (contributed to) withdrawn from Separate Accounts during period		120,688		0		39,990,320					40,111,008
47	Other changes in surplus in Separate Accounts Statement		9,407,549		1,863		(39,791,208)					(30,381,796)
48	Change in surplus notes		—		0		0					0
49	Cumulative effect of changes in accounting principles		17,933,672		0		(6,668,241)					11,265,431
50	Capital changes:
50.1	Paid in		0		0		0		(25,628,413)	A/B/C/E		(25,628,413)
50.2	Transferred from surplus (Stock Dividend)		0		0		0					0
50.3	Transferred to surplus		0		0		0					0
51	Surplus adjustment:
51.1	Paid in		0		(60,000,000)		(348,051,000)		(652,789,420)	A/B/C/E		(1,060,840,420)
51.2	Transferred to capital (Stock Dividend)		0		0		0					0
51.3	Transferred from capital		0		0		0					0
51.4	Change in surplus as a result of reinsurance		503,268,508		(739,014)		(5,982,031)					496,547,463
52	Dividends to stockholders		(300,000,000)		(70,000,000)		0					(370,000,000)
53	Aggregate write-ins for gains and losses in surplus		3,123,989		5,328,025		623,063					9,075,077
54	Net change in capital and surplus (Lines 37 through 53)		(609,407,503)		(101,151,463)		(152,565,996)		(708,154,842)			(1,571,279,804)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	2,132,653,000	$	505,109,726	$	2,418,045,214	$	(907,495,464)		$	4,148,312,476
DETAILS OF WRITE-INS (Line 8.3)
	Miscellanous income	$	32,969,597	$	922,578	$	62,658,327	$	0		$	96,550,502
	Foreign currency translation adjustment		(19,419)		0		0					(19,419)
	Reinsurance premium on inforce transaction		(103,946,153)		0		0					(103,946,153)
	Reinsurance transaction - Modco interest adjustment		0		12,033,440		0					12,033,440
	Income earned on company owned life insurance		0		9,766,057		0		(4,860,504)	D		4,905,553
	Receivable for deposit accounting of reinsurance treaty		105,814,400		0		0					105,814,400
	Amoritization of goodwill		0		0		0					0
	Consideration on reinsurance transaction		413,910,725		0		0					413,910,725
	TOTAL WRITE-INS FOR LINE 8.3	$	448,729,150	$	22,722,075	$	62,658,327	$	(4,860,504)		$	529,249,048
DETAILS OF WRITE-INS (Line 27)
	Experience refunds	$	(20,839,052)	$	176,183	$	1,327,910	$	0		$	(19,334,959)
	Fines and penalties		21,525		392,809		16,639					430,973
	Reinsurance reserve recapture		0		0		812,752					812,752
	Funds withheld ceded investment income		26,698,803		2,494,952		96,407,900					125,601,655
	Reinsurance transaction - Modco interest adjustment		(190,732,227)		59,142,537		99,108,422					(32,481,268)
	Reinsurance transaction - Modco reserve adjustment		0		147,994		0					147,994
	Interest on surplus notes		12,000,000		9,001,200		34,531,722					55,532,922
	Foreign currency translation adjustment		0		(3,346,940)		0					(3,346,940)
	Change in liability for employee benefits		0		0		(45,476)					(45,476)
	Change in provision for liquidity guarantees		0		0		(338,546)					(338,546)
	TOTAL WRITE-INS FOR LINE 27	$	(172,850,951)	$	68,008,735	$	231,821,323	$	0		$	126,979,107
DETAILS OF WRITE-INS (Line 53)
	Non life subsidiary transaction	$	0	$	0	$	0	$	0		$	0
	Correction to an error		0		0		0					0
	Contributed surplus related to stock appreciation rights plan of indirect parent		3,123,989		5,328,025		623,063					9,075,077
	TOTAL WRITE-INS FOR LINE 53	$	3,123,989	$	5,328,025	$	623,063	$	0		$	9,075,077

4Q05 - Eliminations due to merger of TOLIC and LIICA into TLIC on 10/1 and 10/2/08, respectively

A - Back-off TOLIC’s ownership of TLIC’s common shares:
	Original par paid for TLIC stock (316,955 shares w/par value of $10)	3,169,550
	Excess paid for TLIC stock beyond par value	675,248,283
	Total cost of TLIC stock	678,417,833
	TOLIC’s value in TLIC as of 12/31/05 per audit (TLIC valuation issue)	907,495,464
	TOLIC’s value in TLIC (TALIAC) as of 12/31/04	877,758,455
	Unrealized gain as of 12/31/05	229,077,631
	Unrealized gain as of 12/31/04	199,340,622
DR	Pg 3, Ln 29 - Common Capital Stock	3,169,550
DR	Pg 3, Ln 33 - Gross Pd-in & Contributed Surplus	675,248,283
DR	Pg 4, Ln 38 - Chg in net unrealized capital gain – Pg 3, Ln 35 - Unassigned surplus	29,737,009
DR	Pg 4, Ln 36 - C&S as of 12/31/05 – Pg 3, Ln 35 - Unassigned surplus	199,340,622
CR	Pg 2, Ln 2.2 - Investment in TLIC common stock
B - Reflect cancellation of TOLIC’s common stock held by TSC (TIHI) and preferred stock held by TA Corp:
	TSC owned 1,103,467 shares of common stock at $12.50 par value	13,793,338
	TA Corp owned 1,103,466 shares of preferred stock at $12.50 par value	13,793,325
		27,586,663
TSC:
DR	Pg 3, ln 29 - Common Capital Stock	13,793,338
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
TA Corp:
DR	Pg 3, ln 30 - Preferred Capital Stock	13,793,325
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
C - Reflect cancellation of LIICA’s common and preferred stock held by AEGON USA, Inc.:
	AEGON USA, Inc. owned 504,032 shares of common stock at $2.48 par value	1,250,000
	AEGON USA, Inc. owned 504,033 shares of preferred stock at $2.48 par value	1,250,000
		2,500,000
AEGON USA, Inc. common stock:
DR	Pg 3, ln 29 - Common Capital Stock	1,250,000
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus
AEGON USA, Inc. preferred stock:
DR	Pg 3, ln 30 - Preferred Capital Stock	1,250,000
CR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus (not housed here though)
LIICA’s common and preferred shares shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge LIICA into TLIC, AEGON USA shall receive TIHI common stock equal in value to the fair market value of the LIICA common stock that is deemed cancelled.
D - Reverse LOLI contracts issued by TLIC to LIICA:
DR	Pg 3, Ln 1 - Aggregate reserve for life contracts	125,005,354
CR	Pg 2, Ln 23 - Write -in – Company owned life insurance
DR	Pg 4, Ln 8.3 - Write-in – Income earned on company owned life insurance	4,860,504
CR	Pg 4, Ln 19 - Inrease in aggregate reserves for life and accident and health contracts
E - Issue common and preferred shares of TLIC to previous owners of TOLIC (TSC and TA Corp)
	TSC (TIHI) granted 676,190 shares of common stock at $10.00 par value	6,761,900
	TA Corp granted 86,590 shares of preferred stock at $10.00 par value	865,900
		7,627,800
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	6,761,900
CR	Pg 3, ln 29 - Common Capital Stock, Pg 4, ln 50.1 Capital paid in
DR	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus, Pg 4, Ln 51.1 - Surplus paid in	865,900
CR	Pg 3, ln 30 - Preferred Capital Stock, Pg 4, ln 50.1 Capital paid in
Overview of entries by statutory financial lines:
	Pg 2, Ln 2.2 - Investment in TLIC common stock	(907,495,464	)
	Pg 2, Ln 23 - Write -in — Company owned life insurance	(125,005,354	)
	Total Asset Adjustment	(1,032,500,818	)
	Pg 3, Ln 1 - Aggregate reserve for life contracts	(125,005,354	)
	Total Liability Adjustment	(125,005,354	)
	Pg 3, ln 29 - Common Capital Stock	(11,450,988	)
	Pg 3, ln 30 - Preferred Capital Stock	(14,177,425	)
	Pg 3, ln 33 - Gross Pd-in & Contributed Surplus	(652,789,420	)
	Pg 3, Ln 35 - Unassigned	(229,077,631	)
	Total Equity Adjustment	(907,495,464	)
	Total Equity & Liability Adjustment	(1,032,500,818	)
	Pg 4, Ln 8.3 - Write-in — Income earned on company owned life insurance	(4,860,504	)
	Pg 4, Ln 19 - Inrease in aggregate reserves for life and accident and health contracts	(4,860,504	)
	Total Net Income	—
	Pg 4, Ln 36 - C&S as of 12/31/06	(199,340,622	)
	Pg 4, Ln 37 - Net Income	—
	Pg 4, Ln 38 - Chg in net unrealized capital gain	(29,737,009	)
	Pg 4, Ln 41 - Change in non-admitted assets	—
	Pg 4, Ln 50.1 - Capital paid in	(25,628,413	)
	Pg 4, Ln 51.1 - Surplus paid in	(652,789,420	)
	Total Unassigned Adjustment	(907,495,464	)

FINANCIAL STATEMENTS AND SCHEDULES –

STATUTORY BASIS

Life Investors Insurance Company of America

Years Ended December 31, 2007, 2006 and 2005

Life Investors Insurance Company of America

Financial Statements and Schedules– Statutory Basis

Years Ended December 31, 2007, 2006 and 2005

Contents

Report of Independent Registered Public Accounting Firm	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	5
Statements of Changes in Capital and Surplus – Statutory Basis	6
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	64
Schedule III – Supplementary Insurance Information	65
Schedule IV – Reinsurance	66

	Ernst & Young LLP Suite 3000 801 Grand Avenue Des Moines, Iowa 50309-2764
	Tel: 515 243 2727 www.ey.com

Report of Independent Registered Public Accounting Firm

The Board of Directors

Life Investors Insurance Company of America

We have audited the accompanying statutory-basis balance sheets of Life Investors Insurance Company of America (an indirect wholly-owned subsidiary of AEGON N.V.) as of December 31, 2007 and 2006, 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, 2007. Our audit also included the statutory-basis financial schedules required by Regulation S-X, Article 7. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits 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 U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles are also 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 U.S. generally accepted accounting principles, the financial position of Life Investors Insurance Company of America at December 31, 2007 and 2006, or the results of its operations or its cash flow for the three years in the period ended December 31, 2007.

A member firm of Ernst & Young Global Limited

1

However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Life Investors Insurance Company of America at December 31, 2007 and 2006, and the results of its operations and its cash flow for each of the three years in the period ended December 31, 2007, 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.

As discussed in Note 3 to the financial statements, in 2006 Life Investors Insurance Company of America changed its accounting for investments in certain low income housing tax credit properties. Also, as discussed in Note 3 to the financial statements, in 2005 Life Investors Insurance Company of America changed its accounting for investment in subsidiary, controlled and affiliated entities as well as its accounting for transfers and servicing of financial assets and extinguishments of liabilities.

/s/ Ernst & Young LLP

August 5, 2008

2

Life Investors Insurance Company of America

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2007		2006
Admitted assets
Cash and invested assets:
Bonds	$	6,976,787	$	7,364,292
Preferred stocks		145,648		150,937
Common stocks:
Affiliated entities (cost: 2007 – $99,513; 2006 – $97,545)		7,488		4,911
Unaffiliated (cost: 2007 – $2,352; 2006 – $7,273)		4,894		10,567
Mortgage loans on real estate		1,080,994		1,074,000
Real estate, at cost less accumulated depreciation (2007 – $34,762; 2006 – $31,833):
Home office properties		71,309		70,957
Investment properties		37,276		33,926
Properties held for sale		693		4,696
Policy loans		207,383		203,983
Cash, cash equivalents and short-term investments		157,174		293,005
Receivable for securities		849		75
Other invested assets		249,166		313,812
Total cash and invested assets		8,939,661		9,525,161
Premiums deferred and uncollected		27,702		32,451
Accrued investment income		93,438		101,753
Cash surrender value of life insurance policies		269,910		260,462
Receivable from parent, subsidiaries and affiliates		105,565		104,656
Net deferred income tax asset		65,663		58,417
Reinsurance balances recoverable		6,889		7,323
Other admitted assets		14,057		29,290
Separate account assets		505,065		186,704
Total admitted assets	$	10,027,950	$	10,306,217

3

	December 31
	2007			2006
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life	$	3,373,446		$	3,426,772
Annuity		2,943,580			3,370,639
Accident and health		1,936,158			1,736,518
Policy and contract claim reserves:
Life		37,240			33,305
Accident and health		86,284			119,571
Liability for deposit type contracts		172,945			179,016
Other policyholders’ funds		7,061			6,475
Remittances and items not allocated		9,178			10,319
Asset valuation reserve		180,816			108,316
Interest maintenance reserve		53,010			56,002
Funds held under coinsurance and other reinsurance treaties		51,531			48,237
Reinsurance in unauthorized companies		2,487			2,817
Payable for securities		8,476			74,658
Federal and foreign income taxes payable		28,170			22,491
Payable to affiliates		54,664			117,070
Transfers from separate accounts due or accrued		(8,158	)		(9,045	)
Amounts withheld or retained		54,927			80,583
Borrowed money		—			21,790
Other liabilities		108,596			80,087
Separate account liabilities		505,065			186,704
Total liabilities		9,605,476			9,672,325
Capital and surplus:
Common stock, $2.48 per share par value, 1,164,315 shares authorized, 679,802 issued and outstanding		1,686			1,686
Preferred stock, $2.48 per share par value, 504,033 shares authorized, issued and outstanding		1,250			1,250
Surplus notes		150,000			150,000
Paid-in surplus		236,007			510,109
Unassigned surplus (deficit)		33,531			(29,153	)
Total capital and surplus		422,474			633,892
Total liabilities and capital and surplus	$	10,027,950		$	10,306,217

See accompanying notes.

4

Life Investors Insurance Company of America

Statements of Operations – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
							Restated
Revenues
Premiums and other considerations, net of reinsurance:
Life	$	210,431		$	197,757		$	286,769
Annuity		22,804			26,718			41,098
Accident and health		419,927			437,639			435,747
Net investment income		519,953			526,157			579,755
Amortization of interest maintenance reserve		6,774			9,435			13,941
Commissions and expense allowances on reinsurance ceded		26,503			82,768			77,676
Income from fees associated with investment management, administration and contract guarantees for separate accounts		1,188			325			115
Reinsurance transaction – modco reserve adjustment on reinsurance ceded		161,885			(181,776	)		(202,418	)
Consideration received on reinsurance recaptured		144,665			—			—
Other		13,446			24,759			22,733
		1,527,576			1,123,782			1,255,416
Benefits and expenses
Benefits paid or provided for:
Life benefits		142,352			170,097			169,730
Accident and health benefits		192,775			250,670			252,521
Surrender benefits		513,737			662,605			622,249
Other benefits		97,237			107,948			104,284
Increase (decrease) in aggregate reserves for policies and contracts:
Life		(53,326	)		(29,145	)		(27,394	)
Annuity		(429,238	)		(784,279	)		(552,055	)
Accident and health		199,640			167,829			207,339
		663,177			545,725			776,674
Insurance expenses:
Commissions		156,433			173,062			204,360
General insurance expenses		137,172			112,002			115,864
Taxes, licenses and fees		37,950			27,379			28,408
Net transfers to separate accounts		140,883			86,791			511
Modco reinsurance premium paid		173,147			—			—
Other expenses		52,017			67,179			68,010
		697,602			466,413			417,153
Total benefits and expenses		1,360,779			1,012,138			1,193,827
Gain from operations before dividends to policyholders, federal income tax expense and net realized capital gains on investments		166,797			111,644			61,589
Dividends to policyholders		1,955			2,116			2,194
Gain from operations before federal income tax expense and net realized capital gains on investments		164,842			109,528			59,395
Federal income tax expense (benefit)		77,825			15,103			(4,749	)
Gain from operations before net realized capital gains on investments		87,017			94,425			64,144
Net realized capital gains on investments (net of related federal income taxes and amounts transferred to/from interest maintenance reserve)		32,115			7,658			11,292
Net income	$	119,132		$	102,083		$	75,436

See accompanying notes.

5

Life Investors Insurance Company of America

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Thousands)

	Common Stock			Preferred Stock		Surplus Notes		Paid-in Surplus			Unassigned Surplus (Deficit)			Total Capital and Surplus
Balance at January 1, 2005
As originally presented:
Life Investors Insurance Company of America	$	1,250		$	1,250	$	150,000	$	378,726		$	75,035		$	606,261
Academy Life Insurance Company		2,500			—		—		36,891			13,844			53,235
Merger adjustment		(2,064	)		—		—		2,064			—			—
Balance at January 1, 2005, as restated		1,686			1,250		150,000		417,681			88,879			659,496
Net income		—			—		—		—			75,436			75,436
Change in net unrealized capital gains/losses, net of tax		—			—		—		—			1,050			1,050
Change in non-admitted assets		—			—		—		—			11,027			11,027
Change in asset valuation reserve		—			—		—		—			(21,831	)		(21,831	)
Change in surplus in separate accounts		—			—		—		—			2			2
Change in liability for reinsurance in unauthorized companies		—			—		—		—			(1,576	)		(1,576	)
Dividends to stockholder		—			—		—		(60,000	)		(70,000	)		(130,000	)
Change in reserve on account of change in valuation basis		—			—		—		—			6,999			6,999
Change in deferred income tax asset		—			—		—		—			(37,138	)		(37,138	)
Reinsurance transactions		—			—		—		—			(739	)		(739	)
Contributed surplus related to stock appreciation rights plans of indirect parent		—			—		—		5,328			—			5,328
Balance at December 31, 2005, as restated		1,686			1,250		150,000		363,009			52,109			568,054
Change in accounting principal		—			—		—		—			(6,127	)		(6,127	)
Net income		—			—		—		—			102,083			102,083
Change in net unrealized capital gains/losses, net of tax		—			—		—		—			(232,877	)		(232,877	)
Change in net unrealized foreign capital gains/losses, net of tax		—			—		—		—			1,126			1,126
Change in non-admitted assets, as restated		—			—		—		—			(227,559	)		(227,559	)
Change in asset valuation reserve		—			—		—		—			52,355			52,355
Change in surplus in separate accounts		—			—		—		—			(3	)		(3	)
Change in liability for reinsurance in unauthorized companies		—			—		—		—			(714	)		(714	)
Capital contribution		—			—		—		145,000			—			145,000
Change in deferred income tax asset, as restated		—			—		—		—			230,917			230,917
Reinsurance transactions		—			—		—		—			(463	)		(463	)
Tax benefit on stock options exercised		—			—		—		9			—			9
Contributed surplus related to stock appreciation rights plans of indirect parent		—			—		—		2,091			—			2,091
Balance at December 31, 2006	$	1,686		$	1,250	$	150,000	$	510,109		$	(29,153	)	$	633,892

6

Life Investors Insurance Company of America

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

(Dollars in Thousands)

	Common Stock		Preferred Stock		Surplus Notes		Paid-in Surplus			Unassigned Surplus (Deficit)			Total Capital and Surplus
Balance at December 31, 2006	$	1,686	$	1,250	$	150,000	$	510,109		$	(29,153	)	$	633,892
Net income		—		—		—		—			119,132			119,132
Change in net unrealized capital gains/losses, net of tax		—		—		—		—			57,022			57,022
Change in net unrealized foreign capital gains/losses, net of tax		—		—		—		—			9,386			9,386
Change in non-admitted assets		—		—		—		—			18,496			18,496
Change in asset valuation reserve		—		—		—		—			(72,500	)		(72,500	)
Change in liability for reinsurance in unauthorized companies		—		—		—		—			330			330
Dividends to stockholders		—		—		—		—			(130,000	)		(130,000	)
Change in reserve on account of change in valuation basis		—		—		—		—			(2,179	)		(2,179	)
Return of capital		—		—		—		(270,000	)		—			(270,000	)
Change in deferred income tax asset		—		—		—		—			(3,231	)		(3,231	)
Reinsurance transactions		—		—		—		—			66,228			66,228
Tax benefit on stock options exercised		—		—		—		21			—			21
Return of capital related to stock appreciation rights plans of indirect parent		—		—		—		(4,123	)		—			(4,123	)
Balance at December 31, 2007	$	1,686	$	1,250	$	150,000	$	236,007		$	33,531		$	422,474

See accompanying notes.

7

Life Investors Insurance Company of America

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Operating activities
Premiums collected, net of reinsurance	$	659,181		$	660,773		$	759,279
Net investment income		554,244			580,061			625,613
Miscellaneous income (expense)		420,610			(66,367	)		(101,445	)
Benefit and loss related payments		(981,693	)		(1,187,274	)		(1,152,969	)
Net transfers to separate, segregated accounts and protected cell amounts		(134,199	)		(90,309	)		(1,121	)
Commissions, expenses paid and aggregate write-ins for deductions		(542,288	)		(384,777	)		(411,404	)
Dividends paid to policyholders		(2,036	)		(2,114	)		(2,273	)
Federal and foreign income taxes (paid) recovered		(74,553	)		7,068			(7,959	)
Net cash used in operating activities		(100,734	)		(482,939	)		(292,279	)
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds		3,876,177			4,196,395			4,988,857
Stocks		68,854			39,924			45,964
Mortgage loans		200,829			276,566			413,570
Real estate		4,073			11,663			10,371
Other invested assets		175,211			31,652			48,626
Miscellaneous proceeds		20,329			45,471			15,367
Total investment proceeds		4,345,473			4,601,671			5,522,755
Cost of investments acquired:
Bonds		(3,473,487	)		(3,537,494	)		(4,611,376	)
Stocks		(69,781	)		(155,885	)		(18,546	)
Mortgage loans		(207,619	)		(160,679	)		(97,004	)
Real estate		(6,631	)		(11,598	)		(30,951	)
Other invested assets		(33,571	)		(240,139	)		(83,653	)
Miscellaneous applications		(69,206	)		(53	)		(143,350	)
Total cost of investments acquired		(3,860,295	)		(4,105,848	)		(4,984,880	)
Net increase in policy loans		(3,400	)		(1,313	)		(1,341	)
Net cost of investments acquired		(3,863,695	)		(4,107,161	)		(4,986,221	)
Net cash provided by investing activities		481,778			494,510			536,534

8

Life Investors Insurance Company of America

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Financing and miscellaneous activities
Borrowed funds (repaid) received	$	(21,685	)	$	19,799		$	(55,114	)
Net withdrawals on deposit-type contracts and other liabilities		(15,527	)		(13,249	)		(13,267	)
Dividends and return of capital to stockholders		(400,000	)		—			(130,000	)
Capital contribution		—			145,000			—
Other cash (applied) provided		(79,663	)		1,512			7,156
Net cash (used in) provided by financing and miscellaneous activities		(516,875	)		153,062			(191,225	)
Net (decrease) increase in cash, cash equivalents and short-term investments		(135,831	)		164,633			53,030
Cash, cash equivalents and short-term investments:
Beginning of year		293,005			128,372			75,342
End of year	$	157,174		$	293,005		$	128,372

See accompanying notes.

9

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

December 31, 2007

1. Organization and Summary of Significant Accounting Policies

Organization

Life Investors Insurance Company of America (the Company) is a stock life insurance company and is a wholly-owned subsidiary of AEGON USA, Inc. (AEGON). AEGON is a wholly-owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.

On July 1, 2006, the Company completed a merger with Academy Life Insurance Company (ALIC), which was a wholly-owned subsidiary of an affiliate, Commonwealth General Corporation (Commonwealth). The merger was accounted for in accordance with Statement of Statutory Accounting Principles (SSAP) No. 68, Business Combinations and Goodwill, as a statutory merger. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of ALIC were carried forward to the merged company. ALIC’s outstanding common shares were wholly-owned by Academy Insurance Group as of December 31, 2005. Prior to the merger, several transactions took place which resulted in AEGON owning all of the outstanding common shares of ALIC. As a result of the merger, the Company issued an additional 175,770 shares of common stock to AEGON.

Summarized financial information for the Company and ALIC restated for periods prior to the merger are as follows:

	Six Months Ended June 30 2006		Year Ended December 31 2005
	Unaudited
Revenues:
Company	$	529,226	$	1,197,933
ALIC		29,094		57,483
As restated	$	558,320		1,255,416
Net income:
Company	$	54,545	$	64,395
ALIC		6,257		11,041
As restated	$	60,802	$	75,436

10

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

	June 30 2006		December 31 2005
	Unaudited
Assets:
Company	$	9,869,509	$	10,194,151
ALIC		478,023		473,200
As restated	$	10,347,532	$	10,667,351
Liabilities:
Company	$	9,300,046	$	9,689,041
ALIC		408,695		410,256
As restated	$	9,708,741	$	10,099,297
Capital and surplus:
Company	$	569,463	$	505,110
ALIC		69,328		62,944
As restated	$	638,791	$	568,054

Nature of Business

The Company sells a full line of insurance products, including individual, credit and group coverages under life, annuity and accident and health policies. The Company is licensed in 49 states, the District of Columbia, Puerto Rico and Canada. Sales of the Company’s products are primarily through the general agency system.

Basis of Presentation

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

11

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The accompanying financial statements have been prepared 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 (GAAP). The more significant variances from GAAP are:

Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income for those designated as available-for-sale. Fair value for statutory purposes is based on the price published by the Securities Valuation Office of the NAIC (SVO), if available, whereas fair value for GAAP is based on quoted market prices.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the undiscounted estimated future cash flows. For GAAP purposes, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to fair value. If high credit quality securities are adjusted, the retrospective method is used.

12

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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

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

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

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

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

13

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, 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 bond or mortgage loan. That net deferral is reported as the “interest maintenance reserve” (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the income statement on a pretax basis in the period that the assets giving rise to the gains or losses are sold.

The “asset valuation reserve” (AVR) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.

Subsidiaries: The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP.

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance and certain long-duration accident and health insurance, to the extent recoverable from future policy revenues, would be deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves; for universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality and expense margins.

Non-admitted Assets: Certain assets designated as “non-admitted”, principally deferred income tax assets and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent that those assets are not impaired.

14

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Universal Life and Annuity Policies: Revenues for universal life and annuity policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received, and benefits incurred represent the total of death benefits paid and the change in policy reserves. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk are recorded using deposit accounting, and recorded directly to an appropriate policy reserve account, without recognizing premium income or benefits expense. Interest on these policies is reflected in other benefits. Under GAAP, for universal life policies, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies, premiums received and benefits paid would be recorded directly to the reserve liability.

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

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

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

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

15

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Deferred Income Taxes: Deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross deferred income tax assets expected to be realized within one year of the balance sheet date or 10% of capital and surplus excluding any net deferred income tax assets, electronic data processing equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities. The remaining deferred income tax assets are non-admitted. Deferred income taxes do not include amounts for state taxes. Under GAAP, state taxes are included in the computation of deferred income taxes, a deferred income tax asset is recorded for the amount of gross deferred income tax assets expected to be realized in all future years and a valuation allowance is established for deferred income tax assets not realizable.

Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies.

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

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

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

Other significant accounting practices are as follows:

Investments

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

16

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments, except for those with an NAIC designation of 6, which are valued at the lower of amortized cost or fair value. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except principal-only and interest-only securities, which are valued using the prospective method.

Redeemable preferred stocks that have the characteristics of debt securities and are rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost or fair value. Non-redeemable preferred stock are reported at fair value or lower of cost or fair value as determined by the SVO and related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

Common stocks of unaffiliated companies and mutual funds are carried at fair value as determined by the SVO and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes. Common stocks of affiliated noninsurance subsidiaries are reported based on underlying audited GAAP equity and the net unrealized capital gains (losses) are reported in unassigned surplus.

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

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost.

Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines that the impairment is other than temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

17

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Land is reported at cost. Real estate occupied by the Company is reported at depreciated cost net of encumbrances. Real estate held for the production of income is reported at depreciated cost net of related obligations. Real estate that the Company has the intent to sell is reported at the lower of depreciated cost or fair value, net of related obligations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties.

Policy loans are reported at unpaid principal balances and other “admitted assets” are valued principally at cost.

The Company has minor ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying GAAP equity of the investee. The Company recognized an impairment write-down of $4,556, $992 and $6,777 related to its investments in various partnerships during the year ending December 31, 2007, 2006 and 2005, respectively.

Investments in Low Income Housing Tax Credits (LIHTC) Properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company.

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

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or on real estate where rent is in arrears for more than three months. Further, income is not accrued when collection is uncertain. At December 31, 2006, the Company excluded investment income due and accrued of $132 with respect to such practices. The Company did not exclude any investment income due and accrued during 2007.

The carrying amounts of all investments are reviewed on an ongoing basis for credit deterioration. If this review indicates a decline in fair value that is other than temporary, the carrying amount of the investment is reduced to its fair value, and a specific writedown is taken. Such reductions in carrying amount are recognized as realized losses on investments.

18

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

For dollar reverse repurchase agreements, the Company receives cash collateral in an amount at least equal to the fair value of the securities transferred by the Company in the transaction as of the transaction date. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company.

Derivative Instruments

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

Futures are marked to market on a daily basis and a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements.

A replication transaction is a derivative transaction, generally a credit default swap, entered into in conjunction with a cash instrument that is used to reproduce the investment characteristics of an otherwise permissible investment. For replication transactions, a premium is received by the Company on a periodic basis and recognized in investment income as earned. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment equal to the notional of the contract will be made by the Company and recognized as a capital loss. The Company complies with the specific rules established in AVR for replication transactions.

The Company may sell products with expected benefit payments extending beyond investment assets currently available in the market. Because assets will have to be purchased in the future to fund future liability cash flows, the Company is exposed to the risk of future investments made at lower yields than what is assumed at the time of pricing. Forward-starting interest rate swaps are utilized to lock-in the current forward rate.

19

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The accrual of income for forward-starting interest rate swaps begins at the forward date, rather than at the inception date. These forward-starting swaps meet hedge accounting rules and are carried at cost in the financial statements. Gains and losses realized upon termination of the forward-starting swap are deferred and used to adjust the basis of the asset purchased in the hedged forecasted period. The basis adjustment is then amortized into income as a yield adjustment to the asset over its life.

For forecasted hedge transactions, the deferred gain (loss) is recognized in income as the purchased asset affects income. If the derivative is no longer effective at achieving the desired risk management objective or if the forecasted transaction is no longer probable, hedge accounting will cease and the forward-starting swap will be marked to fair value through unassigned surplus.

The carrying value of derivative instruments is reflected in either the other invested assets or the other liabilities line within the balance sheet, depending upon the net balance of the derivatives as of the end of the reporting period. As of December 31, 2007 and 2006, derivatives in the amount of $654 and $940, respectively, were reflected in the other liabilities line within the financial statements.

Premiums and Annuity Considerations

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

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated by the Company’s divisional actuaries using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business. The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2007 and 2006 was $11,348 and $10,631, respectively.

The Company incurred $5,002 and paid $4,286 of claim adjustment expenses during 2007, of which $1,718 of the paid amount was attributable to insured or covered events of prior years. The Company did not increase or decrease the provision for insured events of prior years.

20

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed cash value, or the amount required by law.

The Company waives deduction of deferred fractional premiums upon death and refunds portions of premiums unearned beyond the date of death. Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. The Company returns any portion of the final premium beyond the date of death.

Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula. On funds not involving life contingencies, tabular interest is equal to the actual interest earned and/or credited to the account, or where the reserve is equal to the present value of future benefits, the interest on the mean reserve for the year implied by the valuation rate of interest.

Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. Generally, mean reserves are determined by computing the regular mean reserve for the plan at the true age and holding, in addition, one-half (1/2) of the extra premium charge for the year. For certain flexible premium and fixed premium universal life insurance products, reserves are calculated utilizing the Commissioner’s Reserve Valuation Method for universal life policies and recognizing any substandard ratings.

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioners’ Standard Ordinary Mortality and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 2 to 6 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.

During 2005, the Company changed the valuation method on a block of group life insurance from using the 1958 Commissioners Standard Ordinary Mortality and American Experience Tables to be on an unearned premium reserve methodology. This caused a decrease in reserves of $6,999, which was credited directly to capital and surplus.

21

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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 unassigned surplus and will be amortized into income over the estimated life of the policies. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively.

Policy and Contract Claim Reserves

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

Separate Accounts

Assets held in trust for purchases of variable universal life 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 reported at fair value. Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the policyholders and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The separate accounts do not have any minimum guarantees and the investment risks associated with fair value changes are borne entirely by the policyholders. The Company received variable contract premiums of $133,210, $19,394 and $3,963, in 2007, 2006 and 2005, respectively. All variable account contracts are subject to discretionary withdrawal by the policyholder at the fair value of the underlying assets less the current surrender charge. Separate account contract holders have no claim against the assets of the general account.

22

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Stock Option Plan and Stock Appreciation Rights Plans

Prior to 2002 and in 2005 through 2007, AEGON N.V. sponsored a stock option plan for eligible employees of the Company. Pursuant to the plan, the option price at the date of grant is equal to the fair value of the stock. Under statutory accounting principles, the Company does not record any expense related to this plan. However, the Company is allowed to record a deduction in the consolidated tax return filed by the Company and certain affiliates. The tax benefit of this deduction has been credited directly to unassigned surplus.

The Company’s employees participate in various stock appreciation rights (SAR) plans issued by the Company’s indirect parent. In accordance with SSAP No. 13, Stock Options and Stock Purchase Plans, the expense related to these plans for the Company’s employees has been charged to the Company, with an offsetting amount credited to paid-in surplus. The Company recorded (income) expense of $(4,958), $1,506 and $5,328 for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, the Company recorded an adjustment to paid-in surplus for the income tax effect related to these plans over and above the amount reflected in the statement of operations in the amount of $856 and $593 for years ended December 31, 2007 and 2006, respectively. There was no recorded adjustment to paid-in surplus for the income tax effect related to these plans for the year ended December 31, 2005.

Reclassifications

Certain reclassifications have been made to the 2005 and 2006 financial statements to conform to the 2007 presentation.

2. Prescribed and Permitted Statutory Accounting Practices

The financial statements of the Company are presented on the basis of accounting practices prescribed by the Insurance Division, Department of Commerce, of the State of Iowa. The Iowa Insurance Division recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under Iowa Insurance Law.

23

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

2. Prescribed and Permitted Statutory Accounting Practices (continued)

The NAIC’s Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed or permitted practices by the State of Iowa. The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to reserve credits with respect to secondary guarantee reinsurance treaties. As prescribed by Iowa Administrative Code 191-17.3(2), the commissioner found that the Company is entitled to take reserve credit for such a reinsurance contract in the amount equal to the portion of total reserves attributable to the secondary guarantee, whereas this type of reinsurance does not meet the specific requirements of SSAP No. 61 – Life, Deposit-Type and Accident and Health Reinsurance (SSAP No. 61) and Appendix A-791 of the NAIC SAP.

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

	2007			2006		2005
Net income, State of Iowa basis	$	119,132		$	102,083	$	75,436
State prescribed practice for secondary guarantee reinsurance		—			—		—
Net income, NAIC SAP	$	119,132		$	102,083	$	75,436
Statutory surplus, State of Iowa basis	$	422,474		$	633,892	$	568,054
State prescribed practice for secondary guarantee reinsurance		(104,706	)		—		—
Statutory surplus, NAIC SAP	$	317,768		$	633,892	$	568,054

24

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

3. Accounting Changes

Effective January 1, 2006, the Company adopted SSAP No. 93, Accounting for Low Income Housing Tax Credit Property Investments. This statement established statutory accounting principles for investments in federal and certain state sponsored Low Income Housing Tax Credit (LIHTC) properties. SSAP No. 93 states that LIHTC investments shall be initially recorded at cost and amortized based on the proportion of tax benefits received in the current year to the total estimated tax benefits to be allocated to the investor. Prior to 2006, the Company’s investments in LIHTC investments were reported in accordance with SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies and SSAP No. 88, Investments in Subsidiary, Controlled and Affiliated Entities and carried at audited GAAP equity. The cumulative effect is the difference between the audited GAAP equity amount at December 31, 2005 and the amortized cost assuming the new accounting principles had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle that reduced unassigned surplus by $6,127 at January 1, 2006.

Effective January 1, 2005, the Company adopted SSAP No. 88. According to SSAP No. 88, noninsurance subsidiaries are carried at audited GAAP equity. Prior to 2005, the Company’s investments in noninsurance subsidiaries were reported in accordance with SSAP No. 46, Investments in Subsidiary, Controlled and Affiliated entities, and carried at statutory equity. The cumulative effect is the difference between the amount of capital and surplus that would have been reported on January 1, 2005 if the new accounting principles had been applied retroactively for prior periods. This change of accounting principle had no impact on unassigned funds (surplus) as of January 1, 2005.

Effective January 1, 2005, the Company adopted SSAP No. 91, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SSAP No. 91 addresses, among other things, the criteria that must be met in order to account for certain asset transfers as sales rather than collateralized borrowings. Transfers impacted by SSAP No. 91 that the Company engages in include securities lending, repurchase and reverse repurchase agreements and dollar reverse repurchase agreements. In accordance with SSAP No. 91, if specific criteria are met, reverse repurchase agreements and dollar reverse repurchase agreements are accounted for as collateralized borrowings, and repurchase agreements are accounted for as collateralized lending. The cumulative effect of the adoption of this SSAP is the difference between the amount of capital and surplus that would have been reported on January 1, 2005 if the new accounting principle had been applied retroactively for prior periods. This change of accounting principle had no impact on unassigned surplus as of January 1, 2005.

25

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

4. Fair Values of Financial Instruments

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

Cash, Cash Equivalents and Short-term Investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values.

Investment Securities: Fair values for investment securities are based on unit prices published by the SVO or, in the absence of SVO published unit prices or when amortized cost is used by the SVO as the unit price, quoted market prices by other third party organizations, where available.

For fixed maturity securities (including redeemable preferred stock) 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 the expected future cash flows using current market rates applicable to the coupon rate, credit and maturity of the investments. For equity securities that are not actively traded, estimated fair values are based on values of issues of comparable yield and quality.

Mortgage Loans on Real Estate and Policy Loans: The fair values for mortgage loans on real estate are estimated utilizing discounted cash flow analyses, using interest rates reflective of current market conditions and the risk characteristics of the loans. The fair value of policy loans is assumed to equal their carrying amount.

Interest Rate and Credit Default Swaps: Estimated fair value of interest rate and credit default swaps are based upon the pricing differential for similar swap agreements.

Separate Account Assets and Liabilities: The fair value of separate account assets and liabilities are based on quoted market prices.

Investment Contracts: Fair values for the Company’s liabilities under investment-type insurance contracts with defined maturities 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. For investment contracts with no defined maturity, fair value is estimated to be the present surrender value.

26

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

4. Fair Values of Financial Instruments (continued)

Surplus Notes and Borrowed Money: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values.

Receivable for Securities and Payable for Securities: The carrying amounts reported in the statutory-basis balance sheet for these instruments approximate their fair value.

Fair values for the Company’s insurance contracts other than investment-type contracts (including separate accounts universal life liabilities) are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk, 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 unaffiliated financial instruments:

	December 31
	2007					2006
	Carrying Amount			Fair Value		Carrying Amount		Fair Value
Admitted assets
Cash, cash equivalents and short-term investments	$	103,874		$	103,874	$	293,005	$	293,005
Bonds		6,976,787			6,945,592		7,364,292		7,405,587
Preferred stocks		145,648			137,371		150,937		161,712
Common stocks, other than affiliates		4,894			4,894		10,567		10,567
Mortgage loans on real estate		1,080,994			1,116,019		1,074,000		1,126,078
Policy loans		207,383			207,383		203,983		203,983
Interest rate swaps		(654	)		152,009		940		119,563
Credit default swaps		—			14		—		74
Separate account assets		505,065			505,065		186,704		186,704
Liabilities
Investment contract liabilities		3,085,226			3,075,552		3,532,781		3,523,668
Borrowed money		—			—		21,790		21,790
Surplus notes		150,000			150,000		150,000		150,000

27

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments

At December 31, 2007 and 2006, investments in common stock affiliated entities were as follows:

	2007				2006
Affiliate	Cost		Carrying Amount		Cost		Carrying Amount
Common:
LIICA Re II, Inc.	$	80,000	$	—	$	80,000	$	—
Life Investors Alliance LLC		13,250		—		13,250		—
Garnet Assurance Corp.		1		—		1		—
Real Estate Alternatives Portfolio 3A		6,262		7,488		4,294		4,911
	$	99,513	$	7,488	$	97,545	$	4,911

The Company made an investment of $172,000 in LIICA Holdings, LLC, a wholly-owned subsidiary, on December 27, 2006. This investment is considered an other invested asset on the balance sheet and was carried at no value as of December 31, 2007 and 2006.

The carrying amounts and estimated fair values of investments in bonds and preferred stocks were as follows:

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses Less Than 12 Months		Estimated Fair Value
December 31, 2007
Bonds:
United States Government and agencies	$	192,415	$	6,604	$	57	$	36	$	198,926
State, municipal and other government		130,847		7,556		5,600		732		132,071
Public utilities		555,176		11,383		3,824		1,721		561,014
Industrial and miscellaneous		4,197,784		85,266		33,426		49,907		4,199,717
Mortgage and other asset-backed securities		1,900,565		13,319		18,973		41,047		1,853,864
		6,976,787		124,128		61,880		93,443		6,945,592
Preferred stocks		145,648		1,585		772		9,090		137,371
	$	7,122,435	$	125,713	$	62,652	$	102,533	$	7,082,963

28

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses Less Than 12 Months		Estimated Fair Value
December 31, 2006
Bonds:
United States Government and agencies	$	415,384	$	4,075	$	4,363	$	1,495	$	413,601
State, municipal and other government		128,442		10,529		6,093		824		132,054
Public utilities		560,025		12,838		5,892		988		565,983
Industrial and miscellaneous		4,176,381		102,001		46,532		11,864		4,219,986
Mortgage and other asset-backed securities		2,084,060		11,794		18,974		2,917		2,073,963
		7,364,292		141,237		81,854		18,088		7,405,587
Preferred stocks		150,937		11,684		605		304		161,712
	$	7,515,229	$	152,921	$	82,459	$	18,392	$	7,567,299

The Company held bonds at December 31, 2007 with a carrying amount of $14,234 and amortized cost of $14,296 that have an NAIC rating of 6 and which are not considered to be other than temporarily impaired. These bonds are carried at the lower of amortized cost or fair value, and any write-down to fair value has been recorded directly to unassigned surplus.

At December 31, 2007 and 2006, respectively, for securities that have been in a continuous unrealized loss position for greater than or equal to twelve months, the Company held 453 and 665 securities with a carrying amount of $1,694,224 and $2,591,365 and an unrealized loss of $62,652 and $82,459 with an average price of 96.3 and 96.8 (NAIC market value/amortized cost). Of this portfolio, 94.6% and 94.0% were investment grade with associated unrealized losses of $52,508 and $68,874, respectively.

At December 31, 2007 and 2006, respectively, for securities in an unrealized loss position less than twelve months, the Company held 551 and 425 securities with a carrying amount of $1,975,479 and $1,715,245 and an unrealized loss of $102,533 and $18,392 with an average price of 94.8 and 98.9. (NAIC market value/amortized cost). Of this portfolio, 86.4% and 92.5% were investment grade with associated unrealized losses of $85,908 and $14,417, respectively.

29

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The Company closely monitors below investment grade holdings and those investment grade issuers where the Company has concerns. The Company also regularly monitors industry sectors. Securities in unrealized loss positions that are considered other than temporary are written down to fair value. The Company considers relevant facts and circumstances in evaluating whether the impairment is other than temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in affect at the date of acquisition; and (2) the Company’s decision to sell a security prior to its maturity at an amount below its carrying amount. Additionally, financial condition, near term prospects of the issuer, nationally recognized credit rating changes and cash from trends and underlying levels of collateral (for asset-backed securities only) are monitored. The Company will record a charge to the statement of operations to the extent that these securities are subsequently determined to be other than temporarily impaired.

At December 31, 2007, the Company’s banking sub-sector portfolio reported $14,705 in unrealized losses and had a carrying value of $366,373. The absolute exposure to the banking sector is significant, but the Company’s securities in this sector are generally highly rated. Because of the banking sector’s size, the absolute dollar amount of unrealized losses is large, but the overall market value as a percent of book value on all securities in an unrealized loss position is 94%. While the sector has some exposure to the sub prime market, the issuers are highly diversified and any impact is not expected to be material to their credit profile.

At December 31, 2007, the Company’s basic industry sector portfolio reported $9,011 in unrealized losses and had a carrying value of $134,055. While the performance of some of the individual credits and sub-sectors was somewhat below expectations, overall valuations remain largely stable. Since the securities in an unrealized loss position are trading close to par, the market is indicating there is little or no risk of default. The unrealized losses are more a reflection of interest rate movements, general market volatility and duration rather than credit related concerns. The Company evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of December 31, 2007.

30

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

At December 31, 2007 the consumer cyclical sector portfolio reported $9,391 in unrealized losses and had a carrying value of $207,221. The consumer cyclical sub-sector covers a range of industries including autos, home construction, lodging, media and retailers. These industries include some of the largest credit issuers in the market. As a result, the Company’s exposure is large. In addition, many of the consumer sectors have been the target of leveraged buyouts and merger and acquisition activity, which has led to credit deterioration. The more significant of these sub-sectors from an unrealized loss perspective are retailers, automotive and home construction.

Since the securities with unrealized losses are trading so close to par, the market is indicating there is little or no risk of default. The unrealized losses are more a reflection of interest rate movements, general market volatility and duration rather than credit-related concerns. The Company evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of December 31, 2007.

At December 31, 2007, the Company’s non-captive finance sub-sector portfolio reported $14,391 in unrealized losses and had a carrying value of $175,462. Since the securities with unrealized losses are trading so close to par, the market is indicating there is little or no risk of default. The unrealized losses are more a reflection of interest rate movements, general market volatility and duration rather than credit-related concerns. The Company evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of December 31, 2007.

Sub-prime mortgages are loans to homebuyers who have weak or impaired credit histories, are loans that are non-conforming or are loans that are second in priority. The Company’s businesses in the United States do not sell or buy sub-prime mortgages directly. The Company’s position is related to asset-backed securities (ABS). These securities are pools of mortgages that have been securitized and offered to investors as asset-backed securities, where the mortgages are collateral. Most of the underlying mortgages within the pool have FICO scores below 660. Therefore, the ABS has been classified by the Company as a sub-prime mortgage position. Also included in the Company’s total sub-prime mortgage position are ABS with second lien mortgages as collateral. The second lien mortgages may not necessarily have sub-prime FICO scores; however, the Company has included these ABS in its sub-prime position as they are the second priority in terms of repayment. The Company does not have any “direct” residential mortgages to sub-prime borrowers outside of the ABS structures.

31

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The Company considers ABS in an unrealized loss position for impairment when there has been an adverse change in estimated cash flows from the cash flows previously projected at purchase, which is in accordance with SSAP No. 43, Loan-backed and Structured Securities. The Company did not impair any of its sub-prime mortgage positions in 2007 or 2006.

The following table provides the actual cost, carrying amount and fair value by asset class of the Company’s sub-prime mortgage position at December 31, 2007:

	Actual Cost		Carrying Amount		Fair Value
Residential Mortgage Backed Securities	$	350,063	$	349,915	$	324,369
Collateralized Debt Obligations		800		800		800
	$	350,863	$	350,715	$	325,169

At December 31, 2007, the Company’s commercial mortgage backed securities portfolio had a carrying amount of $378,741 and reported $14,072 in unrealized losses. The fundamentals of the commercial mortgage backed securities market are, on average, strong but are starting to show some signs of deterioration in some markets. The lending market remains virtually frozen as lenders continue to tighten their lending standards. A lack of liquidity in the market combined with a broad re-pricing of risk has led to increased credit spreads across the credit classes. The introduction of the 20% and 30% credit enhanced super senior AAA classes provides an offset to these negative fundamentals. Of the total commercial mortgage backed securities, $104,989 of carrying amount and $4,698 of unrealized losses are attributable to Lehman Brothers and UBS origination platform (“LBUBS”) deal shelf, which is collateralized by diversified mortgages. The unrealized losses are a function of the absolute size of the LBUBS holdings and not due to credit related concerns. The Company believes that the underlying investments are well underwritten and have performed relatively better than other comparable commercial mortgage backed securities structures. The unrealized loss on LBUBS is not credit driven, but rather a reflection of the move in interest rates and credit spreads relative to where these deals were originally priced.

As the unrealized losses on the Company’s commercial mortgage-backed securities are attributable to credit spread widening and not fundamental credit problems with the issuer or collateral, the Company does not consider the underlying investments to be impaired as of December 31, 2007.

32

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The estimated fair value of bonds and preferred stocks with gross unrealized losses at December 31, 2007 and 2006 were as follows:

	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2007
Bonds:
United States Government and agencies	$	13,693	$	2,758	$	16,451
State, municipal and other government		27,187		19,773		46,960
Public utilities		115,911		105,539		221,450
Industrial and miscellaneous		904,577		1,092,515		1,997,092
Mortgage and other asset-backed securities		555,767		564,429		1,120,196
		1,617,135		1,785,014		3,402,149
Preferred stocks		14,437		87,932		102,369
	$	1,631,572	$	1,872,946	$	3,504,518

	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2006
Bonds:
United States Government and agencies	$	181,966	$	110,632	$	292,598
State, municipal and other government		14,450		15,866		30,316
Public utilities		184,153		94,784		278,937
Industrial and miscellaneous		1,373,657		862,374		2,236,031
Mortgage and other asset-backed securities		730,370		584,755		1,315,125
		2,484,596		1,668,411		4,153,007
Preferred stocks		24,310		28,443		52,753
	$	2,508,906	$	1,696,854	$	4,205,760

33

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The carrying amounts and estimated fair values of bonds at December 31, 2007, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Carrying Amount		Estimated Fair Value
Due in one year or less	$	325,213	$	323,307
Due one through five years		2,090,814		2,103,521
Due five through ten years		1,451,636		1,442,254
Due after ten years		1,208,559		1,222,646
		5,076,222		5,091,728
Mortgage and other asset-backed securities		1,900,565		1,853,864
	$	6,976,787	$	6,945,592

A detail of net investment income is presented below:

	Year Ended December 31
	2007			2006			2005
Income:
Bonds	$	421,409		$	443,351		$	468,191
Preferred stock		9,520			9,852			1,770
Common stock		226			105			217
Mortgage loans on real estate		83,326			88,032			117,527
Real estate		17,529			16,469			13,504
Policy loans		13,097			12,363			12,358
Derivatives		847			722			(787	)
Cash, cash equivalents and short-term investments		11,659			3,904			1,733
Other		651			(6,048	)		7,417
Gross investment income		558,264			568,750			621,930
Less investment expenses		(38,311	)		(42,593	)		(42,175	)
Net investment income	$	519,953		$	526,157		$	579,755

34

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

Proceeds from sales and maturities of bonds and preferred stocks and related gross realized gains and losses were as follows:

	Year Ended December 31
	2007			2006			2005
Proceeds	$	3,936,559		$	4,326,042		$	5,007,229
Gross realized gains	$	48,457		$	22,450		$	46,917
Gross realized losses		(35,826	)		(64,595	)		(46,830	)
Net realized gains (losses)	$	12,631		$	(42,145	)	$	87

Gross realized losses for the years ended December 31, 2007, 2006 and 2005 include $3,302, $3,454 and $11,823, respectively, related to losses recognized on other than temporary declines in fair values of debt securities.

Gross unrealized gains and gross unrealized losses on unaffiliated common stocks are as follows:

	December 31
	2007			2006
Unrealized gains	$	2,609		$	3,295
Unrealized losses		(67	)		(1	)
Net unrealized gains	$	2,542		$	3,294

The changes in net unrealized capital gains (losses) on investments were as follows:

	Year Ended December 31
	2007			2006			2005
Bonds	$	20,012		$	4,079		$	170
Common stocks		(143	)		(78,708	)		(2,606	)
Other invested assets		52,545			(150,876	)		(7,882	)
Change in unrealized capital gains (losses)	$	72,414		$	(225,505	)	$	(10,318	)

35

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

At December 31, 2007, investments with an aggregate carrying amount of $7,951 were on deposit with certain state regulatory authorities or were restrictively held in bank custodial accounts for the benefit of such state regulatory authorities, as required by statute.

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

	Year Ended December 31
	2007			2006			2005
Bonds	$	11,746		$	(42,251	)	$	(34	)
Preferred stocks		885			106			121
Common stocks		(9,589	)		(2,057	)		3,316
Mortgage loans on real estate		–			3			8,670
Real estate		70			4,138			4,867
Cash, cash equivalents and short-term investments		(2,208	)		–			1,048
Derivatives		69			4,421			(390	)
Other invested assets		38,885			16,001			20,631
		39,858			(19,639	)		38,229
Tax effect		3,962			6,042			(13,033	)
Transfer to (from) interest maintenance reserve		3,781			21,255			(13,904	)
Net realized capital gains on investments	$	32,115		$	7,658		$	11,292

The maximum and minimum lending rates for commercial mortgages during 2007 were 6.78% and 5.86%, respectively. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 80%. There were no mortgage loans that were non-income producing for the 180 day period prior to December 31, 2007. The Company has a mortgage or deed of trust on the property thereby creating a lien which gives it the right to take possession of the property (among other things) if the borrower fails to perform according to the terms of the loan documents. The Company requires all mortgage loans to carry fire insurance equal to the value of the underlying property.

36

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

No loans were foreclosed or acquired by deed and transferred to real estate during 2007 or 2006. There were no impaired mortgage loans held as of December 31, 2007 and 2006. At December 31, 2007 and 2006, the Company held a mortgage loan loss reserve in the AVR of $63,871 and $35,494, respectively. At December 31, 2007 and 2006, the mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:

Geographic Distribution					Property Type Distribution
	December 31					December 31
	2007		2006			2007		2006
Pacific	32	%	30	%	Industrial	29	%	27	%
South Atlantic	21		22		Office	27		27
Mountain	12		14		Retail	19		19
E. North Central	10		12		Apartment	14		15
Middle Atlantic	10		5		Other	6		6
W. South Central	5		7		Agriculture	5		6
E. South Central	4		5
W. North Central	4		3
New England	2		2

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. The company recognized interest income on impaired loans of $297 for the year ended December 31, 2005. Interest income in the amount of $340 was recognized on a cash basis for the year ended December 31, 2005. There was no interest income on impaired loans recognized nor was there any interest income recognized on a cash basis for the year ended December 31, 2007 or 2006.

At December 31, 2006 and 2005, the Company had recorded investments in restructured securities of $11,031 and $2,024. The capital gains taken as a direct result of the restructures in 2006 were $4,803. There were no capital gains taken as a direct result of the restructures in 2005. The Company has often impaired a security prior to the restructure date. These impairments are not included in the calculation of restructure related losses and are accounted for as a realized loss, reducing the cost basis of the security involved. The Company did not record any investments in restructured securities at December 31, 2007.

37

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

At December 31, 2007, 2006 and 2005, the Company had no loans for which impairments have been recognized in accordance with SSAP No. 36, Troubled Debt Restructuring. There were no realized losses during the years ended December 31, 2007, 2006 and 2005 related to such restructurings. There are no commitments to lend additional funds to debtors owing receivables.

The Company has an investment in Invenergy TN, LLC, a partnership which owns a 27 MW wind generating facility in Anderson County, Tennessee. This investment generates tax credits based on the amount of electricity produced from the wind turbines. Based on the project’s actual performance and a revised wind study, it was determined that the investment will not perform to the levels originally expected. For the year ending December 31, 2007, an impairment of $4,556 was recorded for the Invenergy TN LLC partnership. The impairment was determined by comparing the current book value to the fair value as supplied by a third party. The fair value was determined by discounting future cash flows, expected future tax credits and income tax benefits of losses from the investment. Since the decline in fair value was determined to other than temporary, the partnership was written down to the fair value amount. For the year ending December 31, 2006, no impairment was recorded for the Invenergy TN LLC partnership.

For the year ending December 31, 2007, the Company has 14 LIHTCs. The remaining years of unexpired tax credits ranged from 4 to 12 and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from 6 to 17 years. The amount of contingent equity commitments expected to be paid during the years 2008 to 2019 is $10,566. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

The Company uses interest rate swaps to reduce market risk in interest rates and to alter interest rate exposures arising from mismatches between assets and liabilities. An interest rate swap is an arrangement whereby two parties (counterparties) enter into an agreement to exchange periodic interest payments. The dollar amount the counterparties pay each other is an agreed-upon period interest rate multiplied by an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The Company also uses cross currency swaps to reduce market risk in foreign currencies and to alter exchange exposure arising from mismatches between assets and liabilities. A notional currency exchange occurs at the beginning and end of the contract. During the life of the swap, the counterparties exchange fixed or floating interest payments in its swapped currency. All swap transactions are entered into pursuant to master agreements providing for a single net payment to be made by one counterparty at each due date.

38

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges, consequently, when the value of the 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) which is mitigated by active measuring and monitoring.

The Company may sell products with expected benefit payments extending beyond investment assets currently available in the market. Because assets will have to be purchased in the future to fund future liability cash flows, the Company is exposed to the risk of future investments made at lower yields than what is assumed at the time of pricing. Forward-starting interest rate swaps are utilized to lock-in the current forward rate.

A replication transaction is a derivative transaction entered into in conjunction with a cash instrument to reproduce the investment characteristics of an otherwise permissible investment. The Company replicates investment grade corporate bonds by combining a AAA rated security as a cash component with a credit default swap which, in effect, converts the high quality asset in a lower rated investment grade asset. The benefits of using the swap market to replicate credit include possible enhanced relative values as well as ease of executing larger transactions in a shortened time frame. At December 31, 2007 and 2006, the Company had replicated assets with a fair value of $8,044 and $7,987, respectively, and credit default swaps with a fair value of $14 and $74, respectively. During the years ended December 31, 2007, 2006 and 2005, the Company did not recognize any capital losses related to replication transactions.

The Company issues products providing the customer a return based on the S&P 500 and NASDAQ 1000 indices. The Company uses S&P 500 and NASDAQ 1000 future contracts and/or options to hedge the liability option risk associated with these products. The Company recognized expense from options contracts in the amount of $15 for the year ended December 31, 2005. The Company did not recognize any expense from options contracts for the years ended December 31, 2007 or 2006.

39

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The Company is exposed to credit related losses in the event of nonperformance by counterparties to financial instruments, but it does not expect any counterparty to fail to meet their obligations given their high credit rating of ‘A’ or better. The credit exposure of interest rate swaps and currency swaps is represented by the fair value of contracts, aggregated at a counterparty level, with a positive fair value at the reporting date. The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets on the Company’s behalf. The posted amount is equal to the difference between the net positive fair value of the contracts and an agreed upon threshold that is based on the credit rating of the counterparty. Inversely, if the net fair value of all contracts with this counterparty is negative, the Company is required to post assets instead. As of December 31, 2007 and 2006, the fair value of all contracts, aggregated at a counterparty level, with a positive fair value amounted to $152,247 and $119,595, respectively. At December 31, 2007 and 2006, the fair value of all contracts, aggregated at a counterparty level, with a negative fair value amount to $239 and $55, respectively.

At December 31, 2007 and 2006, the Company’s outstanding financial instruments with on and off-balance sheet risks, shown in notional amounts, are summarized as follows:

	Notional Amount
	2007		2006
Derivative securities:
Interest rate swaps – receive fixed – pay fixed	$	5,911	$	—
Interest rate swaps – receive fixed – pay floating		2,453,000		1,794,000
Interest rate swaps – receive floating – pay floating		—		5,686
Interest rate swaps – receive floating – pay fixed		144,456		249,431
Swaption – receive floating – pay fixed		—		2,500

The Company utilizes futures contracts to hedge against changes in market conditions. Initial margin deposits are made by cash deposits or segregation of specific securities as may be required by the exchange on which the transaction was conducted. Pursuant to the contracts, the Company agrees to receive from or pay to the broker, an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the Company as a variation margin receivable or payable on futures contracts. During the period the futures contracts are open, daily changes in the values of the contracts are recognized as realized gains (losses) since they are effectively settled daily through the variation account. When a futures contract closes, the Company recognizes a final daily realized gain or loss which

40

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

effectively closes the transaction and, if any, the Company’s cost basis. The Company recognized net realized gains from futures contracts in the amount of $47, $971 and $43 for the years ended December 31, 2007, 2006 and 2005, respectively.

Open futures contracts at December 31, 2007 and 2006 are as follows:

Number of Contracts	Contract Type	Opening Market Value	Year-End Market Value
December 31, 2007:
40	S&P 500 March 2008 Futures	$ 14,902	$ 14,772
December 31, 2006:
39	S&P 500 March 2007 Futures	$13,897	$13,927

The Company’s use of futures contracts may expose the Company to certain risks. Risks include the possibility of an illiquid market and the change in the value of the contracts may not correlate with changes in the value of the securities being hedged. Unexpected adverse price movements could cause the Company’s hedging strategy to be unsuccessful and result in losses.

The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions is 24 years. For the year ended December 31, 2007, none of the Company’s cash flow hedges have been discontinued, as it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship.

For the year ended December 31, 2006, the Company recorded $(64) for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized loss. The Company did not record anything during the year ended December 31, 2007 for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. The Company did not recognize any unrealized gains or losses during 2007, 2006 or 2005 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

41

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance

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

Premiums earned reflect the following reinsurance assumed and ceded amounts:

	Year Ended December 31
	2007			2006			2005
Direct premiums	$	957,263		$	858,942		$	876,065
Reinsurance assumed – non affiliates		3,978			3,768			4,685
Reinsurance assumed – affiliates		27,733			79,605			80,391
Reinsurance ceded – non affiliates		(143,817	)		(149,834	)		(164,576	)
Reinsurance ceded – affiliates		(191,995	)		(130,367	)		(32,951	)
Net premiums earned	$	653,162		$	662,114		$	763,614

The Company received reinsurance recoveries in the amount of $125,343, $139,648 and $144,206, during 2007, 2006 and 2005, respectively. At December 31, 2007, 2006 and 2005, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $17,734, $15,884 and $15,308, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2007, 2006 and 2005 of $602,947, $394,648 and $265,825, respectively.

During 2006, the Company entered into a reinsurance agreement with Transamerica Ireland Reinsurance (TIRI), an affiliate, to retrocede an inforce block of term life business effective January 1, 2006. The initial commission expense allowance received of $1,000 less ceded reserves of $574 resulted in an initial transaction gain of $426 pre-tax ($277 net of tax). This gain was credited directly to unassigned surplus. During both 2007 and 2006, the Company has amortized $28 into earnings related to this transaction with a corresponding charge to unassigned surplus.

On April 1, 2007 the Company entered into a recapture agreement with Veterans Life Insurance Company (VLIC), an affiliate, whereby VLIC recaptured all liabilities ceded to the Company under an October 1, 2001 modified coinsurance agreement. The recapture consideration received was $76,086 and the reserves recaptured by VLIC were $173,147. The Company paid a recapture premium of $173,147. The resulting pre-tax gain of $76,086 has been included in the Statement of Operations.

42

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

On October 1, 2007 the Company recaptured various fixed deferred annuity plans that were ceded to Monumental Life Insurance Company (MLIC), an affiliate, under a July 1, 1990 agreement. The recapture premium received was $53,085 and the commission expense allowance paid was $384, for a net consideration received of $52,701. Reserves recaptured were $53,085. The resulting pretax loss of $384 was included in the Statement of Operations.

During 2007, the Company amended its 50% reinsurance treaty with Canadian Premier Life Insurance Company, an affiliate. The Company will reinsure up to 85% of its business effective November 1, 2007. The Company received a ceding commission of $2,910 ($1,892 net of tax). This gain was credited directly to unassigned surplus.

Effective December 31, 2007, TIRe recaptured all inforce business that was retroceded to the Company. The difference between the life and claim reserves released of $369 and $34, respectively, and the return of assets related to this business of $284 was included in the Statement of Operations. In addition, the Company entered into an agreement to recapture obligations and benefits related to certain universal life insurance contracts that were previously ceded to TIRe. The Company assumed assets of $19,047 associated with this business and paid recapture considerations of $1,250. Reserves recaptured included life reserves of $2,865 and claim reserves of $323. As a result, a pre-tax gain of $14,608 was included in the Statement of Operations. In addition, the unamortized pre-tax ceded gain held by the Company in unassigned surplus resulting from the original reinsurance transaction was released into income in the amount of $4,632 ($3,011 net of tax). Prior to this transaction, the Company had amortized $1,053, $712 and $739 on a pre-tax basis and $684, $463 and $480 on a net of tax basis into earnings for 2007, 2006 and 2005, respectively, with a corresponding charge to unassigned surplus. The Company had held collateral in the form of letters of credit.

Also effective December 31, 2007, the Company recaptured all inforce universal life business that was previously reinsured to TIRI, an affiliate. The Company paid recapture fee of $4,004 and recovered miscellaneous assets of $1,985. Life and claims reserves were recaptured in the amount of $40,482 and $120, respectively. This transaction resulted in a net pre-tax loss of $42,622 which is included in the Statement of Operations.

The Company subsequently entered into a reinsurance agreement with Transamerica Life Insurance Company (TLIC), an affiliate, on December 31, 2007 to cede certain universal life business. Universal life secondary guarantee reserves ceded were $104,707, resulting in a pre-tax gain of $104,707 ($68,059, net of tax) that has been credited directly to unassigned surplus.

43

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

During 2007, the Company obtained letters of credit of $3,948 for the benefit of affiliated and nonaffiliated companies that have reinsured business to the Company where the ceding company’s state of domicile does not recognize the Company as an authorized reinsurer.

7. Accident and Health Claim Liability

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated by the Company using statistical claim development models to develop best estimates for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business.

Unpaid claims include amounts for losses and related adjustment expenses and are estimates of the ultimate net costs of all losses, reported and unreported. These estimates are subject to the impact of future changes in claim severity, frequency and other factors.

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

	Unpaid Claims Liability Beginning of Year		Claims Incurred			Claims Paid		Unpaid Claims Liability End of Year
Year ended December 31, 2007
2007	$	—	$	251,754		$	77,748	$	174,006
2006 and prior		447,339		(18,813	)		148,315		280,211
		447,339	$	232,941		$	226,063		454,217
Active life reserve		1,408,750							1,568,225
Total accident and health reserves	$	1,856,089						$	2,022,442
	Unpaid Claims Liability Beginning of Year		Claims Incurred			Claims Paid		Unpaid Claims Liability End of Year
Year ended December 31, 2006
2006	$	—	$	281,808		$	83,985	$	197,823
2005 and prior		429,226		(22,175	)		157,535		249,516
		429,226	$	259,633		$	241,520		447,339
Active life reserve		1,249,886							1,408,750
Total accident and health reserves	$	1,679,112						$	1,856,089

44

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Accident and Health Claim Liability (continued)

The Company’s unpaid claims reserve decreased by $18,813 and $22,175 for the years ended December 31, 2007 and 2006, respectively, for health claims that occurred prior to those balance sheet dates. The decrease in 2007 and 2006 resulted primarily from variances in the estimated frequency of claims and claim severity.

8. Income Taxes

The main components of deferred tax amounts are as follows:

	December 31
	2007		2006
			Restated
Deferred income tax assets:
Deferred intercompany losses	$	6,392	$	6,392
Non-admitted assets		11,677		12,338
Miscellaneous accruals		27,728		17,114
Tax basis deferred acquisition costs		84,492		83,578
Reserves		139,340		137,538
Partnerships		6,334		10,076
Credit carryforwards		32,123		29,377
807(f) assets		4,923		4,493
Unrealized capital losses		20,090		16,924
Other		13,168		13,196
Total deferred income tax assets		346,267		331,026
Non-admitted deferred tax assets		216,538		233,023
Admitted deferred tax assets		129,729		98,003
Deferred income tax liabilities:
Unrealized capital gains		23,398		5,392
Deferred intercompany gain		7,015		7,015
Partnerships		25,264		19,571
Foreign currency adjustment		3,969		3,969
807(f) liabilities		3,830		3,349
Other		590		290
Total deferred income tax liabilities		64,066		39,586
Net admitted deferred tax asset	$	65,663	$	58,417

45

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

The change in net deferred income tax assets and liabilities are as follows:

	December 31
	2007		2006		Change
			Restated
Total deferred tax assets	$	346,267	$	331,026	$	15,241
Total deferred tax liabilities		64,066		39,586		24,480
Net deferred tax asset	$	282,201	$	291,440		(9,239	)
Tax effect of unrealized gains (losses)						6,008
Change in net deferred income tax					$	(3,231	)
	December 31
	2006		2005		Change
	Restated
Total deferred tax assets	$	331,026	$	272,389	$	58,637
Total deferred tax liabilities		39,586		205,621		(166,035	)
Net deferred tax asset	$	291,440	$	66,768		224,672
Tax effect of unrealized gains (losses)						6,245
Change in net deferred income tax					$	230,917

Non-admitted deferred tax assets increased by $16,485 and $217,942 for 2007 and 2006, respectively.

46

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

Federal income tax expense differs from the amount computed by applying the statutory federal income tax rate to gain (loss) from operations before federal income tax expense and net realized capital gains (losses) on investments for the following reasons:

	Year Ended December 31
	2007			2006			2005
Income tax expense (benefit) on operational gains and capital gains (losses) on investments computed at the federal statutory rate (35%)	$	71,645		$	31,461		$	34,169
Deferred acquisition costs – tax basis		915			(2,628	)		(4,147	)
Depreciation		1,673			(999	)		(999	)
Dividends received deduction		(112	)		(113	)		(127	)
Investment income items		(18,441	)		(7,577	)		(2,895	)
Tax credits		(11,913	)		(26,997	)		(15,680	)
Prior year under accrual		12,874			5,638			16,507
Tax reserve valuation		1,752			9,748			1,951
Amortization of IMR		(2,371	)		(3,302	)		(4,879	)
Limited partnership book/tax difference		(1,956	)		697			(5,735	)
Reinsurance transactions		23,180			(162	)		(259	)
LOLI		(3,806	)		(3,448	)		(3,418	)
Other		8,347			6,743			1,282
Federal income tax expense on operations and capital gains (losses) on investments		81,787			9,061			15,770
Less tax expense (benefit) on capital gains (losses)		3,962			(6,042	)		20,519
Total federal income tax expense (benefit)	$	77,825		$	15,103		$	(4,749	)

The total statutory income taxes are computed as follows:

	Year Ended December 31
	2007		2006			2005
Federal income tax expense on operations and capital gains (losses) on investments	$	81,787	$	9,061		$	15,770
Change in net deferred income taxes, restated		3,231		(230,917	)		37,138
Total statutory income taxes	$	85,018	$	(221,856	)	$	52,908

47

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

For federal income tax purposes, the Company joins in a consolidated income tax return filing with its parent and other affiliated companies. Under the terms of a tax sharing agreement between the Company and its affiliates, the Company computes federal income tax expense as if it were filing a separate income tax return, except that tax credits and net operating loss carryforwards are determined on the basis of the consolidated group. Additionally, the alternative minimum tax is computed for the consolidated group and the resulting tax, if any, is allocated back to the separate companies on the basis of the separate companies’ alternative minimum taxable income. In addition, any operating loss or capital loss carryforwards are calculated for the life and nonlife subgroups on a consolidated basis. At December 31, 2006 and 2005, the consolidated returns had no loss carryforwards. At December 31, 2007 the life subgroup had $71,230 of general business credit carryforwards and $25,067 of foreign tax credit carryforwards which originated in 2006 and 2007. A tax return has not yet been filed for 2007.

Income taxes incurred during 2007 and 2005 for the consolidated group in which the Company is included that will be available for recoupment in the event of future net losses is $59,076 and $286,973, respectively. There were no income taxes incurred during 2006 for the consolidated group in which the Company is included that will be available for recoupment in the event of future net losses.

The amount of tax contingencies calculated for the Company as of December 31, 2007 is $20,085. As of December 31, 2006 the amount of tax contingencies calculated was $19,336. The total tax contingencies represent the amount that, if recognized, would affect the effective income tax rate in future periods. It is reasonably possible that a portion of the tax contingencies may decrease within twelve months of the reporting date. This possibility arises from a controversy currently at the IRS appellate division that may be settled within the next 12 months. At this time, an estimate of this possible decrease cannot be made. The Company classifies interest and penalties related to income taxes as interest expense and penalty expense, respectively. The Company’s interest expense related to income taxes is $3,893 and $2,245 for December 31, 2007 and December 31, 2006, respectively. The Company recorded no liabilities for penalties.

The Company’s federal income tax returns have been examined and closing agreements have been executed with the Internal Revenue Service through 2000. The examination for the years 2001 through 2004 has been completed and resulted in tax return adjustments that are currently being appealed. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions. An examination is under way for 2005 and 2006.

48

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes

Participating life insurance policies were issued by the Company which entitle policyholders to a share in the earnings of the participating policies, provided that a dividend distribution, which is determined annually based on mortality and persistency experience of the participating policies, is authorized by the Company. Participating insurance constituted approximately 1% of ordinary life insurance in force at December 31, 2007 and 2006.

For the years ended 2007, 2006 and 2005, premiums for life participating policies were $7,806, $8,153 and $8,309, respectively. The Company accounts for its policyholder dividends based on dividend scales and experience of the policies. The Company paid dividends in the amount of $1,955, $2,116 and $2,194 to policyholders during 2007, 2006 and 2005, respectively, and did not allocate any additional income to such policyholders.

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

	December 31
	2007				2006				2005
	Amount		Percent of Total		Amount		Percent of Total		Amount		Percent of Total
Subject to discretionary withdrawal:
With market value adjustment	$	285,983	9	%	$	310,217	8	%	$	340,640	8	%
At book value less current surrender charge of 5% or more		115,218	4			190,736	5			113,106	2
Total with adjustment or at market value		401,201	13			500,953	13			453,746	10
At book value without adjustment (minimal or no charge or adjustment)		2,656,562	82			3,060,016	82			3,896,058	86
Not subject to discretionary withdrawal		160,551	5			166,340	5			177,630	4
Total annuity reserves and deposit fund liabilities - before reinsurance		3,218,314	100	%		3,727,309	100	%		4,527,434	100	%
Less reinsurance ceded		24,232				81,717				88,838
Net annuity reserves and deposit fund liabilities	$	3,194,082			$	3,645,592			$	4,438,596

49

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

Separate and variable accounts held by the Company relate to individual variable life insurance policies. The benefits provided on the policies are determined by the performance and/or market value of the investments held in the separate account. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. The assets of these are carried at market value. The life insurance policies typically provide a guaranteed minimum death benefit. Information regarding the separate accounts of the Company as of and for the years ended December 31, 2007 and 2006 is as follows:

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2007	$	—	$	—	$	133,210	$	133,210
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	263,352	$	263,352
Amortized cost		—		—		—		—
Total at December 31, 2007	$	—	$	—	$	263,352	$	263,352
Reserves for separate accounts by withdrawal characteristics at December 31, 2007:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—
At fair value		—		—		263,352		263,352
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—
Not subject to discretionary withdrawal		—		—		—		—
Total separate account liabilities at December 31, 2007	$	—	$	—	$	263,352	$	263,352

50

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2006	$	—	$	—	$	19,394	$	19,394
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	106,014	$	106,014
Amortized cost		—		—		—		—
Total at December 31, 2006	$	—	$	—	$	106,014	$	106,014
Reserves for separate accounts by withdrawal characteristics at December 31, 2006:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—
At fair value		—		—		106,014		106,014
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—
Not subject to discretionary withdrawal		—		—		—		—
Total separate account liabilities at December 31, 2006	$	—	$	—	$	106,014	$	106,014

51

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2005	$	—	$	—	$	3,963	$	3,963
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	11,459	$	11,459
Amortized cost		—		—		—		—
Total at December 31, 2005	$	—	$	—	$	11,459	$	11,459
Reserves for separate accounts by withdrawal characteristics at December 31, 2005:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—
At fair value		—		—		11,459		11,459
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—
Not subject to discretionary withdrawal		—		—		—		—
Total separate account liabilities at December 31, 2005	$	—	$	—	$	11,459	$	11,459

52

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

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

	Year Ended December 31
	2007			2006			2005
Transfers as reported in the summary of operations of the separate accounts statement:
Transfers to separate accounts	$	133,210		$	19,394		$	3,963
Transfers from separate accounts		(7,672	)		(67,396	)		3,452
Net transfers to separate accounts		140,882			86,790			511
Miscellaneous reconciling adjustments		1			1			—
Transfers as reported in the summary of operations of the life, accident and health annual statement	$	140,883		$	86,791		$	511

A reclassification was made to the amounts previously reported to the Insurance Division, Department of Commerce, State of Iowa in the 2007 Annual Statement, to move $5,798 from net transfers to (from) separate accounts to reserve adjustments on reinsurance ceded within the Statement of Operations, which also affected the reconciliation of net transfers to or from separate accounts as reflected in the notes to financials. This reclassification had no impact on net income.

Reserves on the Company’s traditional life products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy’s paid-through date to the policy’s next anniversary date. At December 31, 2007 and 2006, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loadings, are as follows:

53

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Gross			Loading			Net
December 31, 2007
Life and annuity:
Ordinary direct first year business	$	1,282		$	413		$	869
Ordinary direct renewal business		31,874			(2,118	)		33,992
Group life direct business		2,899			104			2,795
Credit life direct business		(4,231	)		—			(4,231	)
Reinsurance ceded		(6,782	)		—			(6,782	)
Total life and annuity		25,042			(1,601	)		26,643
Accident and health:
Direct		1,164			—			1,164
Reinsurance ceded		(106	)		—			(106	)
Total accident and health		1,058			—			1,058
	$	26,100		$	(1,601	)	$	27,701
December 31, 2006
Life and annuity:
Ordinary direct first year business	$	5,864		$	878		$	4,986
Ordinary direct renewal business		30,317			(2,017	)		32,334
Group life direct business		2,651			148			2,503
Credit life direct business		(2,726	)		—			(2,726	)
Reinsurance ceded		(7,357	)		—			(7,357	)
Total life and annuity		28,749			(991	)		29,740
Accident and health:
Direct		2,786			—			2,786
Reinsurance ceded		(75	)		—			(75	)
Total accident and health		2,711			—			2,711
	$	31,460		$	(991	)	$	32,451

54

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Heath Contracts. At December 31, 2007 and 2006, the Company had insurance in force aggregating $4,980,094 and $6,184,922, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Insurance Division, Department of Commerce, of the State of Iowa. The Company established policy reserves of $92,162 and $45,082 to cover these deficiencies at December 31, 2007 and 2006, respectively.

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

10. Securities Lending

The Company participates in an agent managed securities lending program. The Company receives collateral equal to 100/102 percent of the fair market value of the loaned government/other domestic securities, respectively, as of the transaction date. If the fair value of the collateral is at any time less than 100/102 percent of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 100/102 percent of the fair value of the loaned government/other securities, respectively. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105 percent of the fair market value of the loaned security.

At December 31, 2007 and 2006, respectively, securities in the amount of $406,071 and $652,946 were on loan under security lending agreements. At December 31, 2007, the collateral the Company received from securities lending was in the form of cash.

55

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

11. Capital and Surplus

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 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 2008, without the prior approval of insurance regulatory authorities, is $87,017.

On September 26, 2007 the Company paid $400,000 to its Parent Company, AEGON. This payment consisted of a return of additional paid-in capital of $270,000, an ordinary common stock dividend of $94,400 and an extraordinary dividend of $35,600. No dividends were paid in 2006. The Company received capital contributions of $145,000 from its Parent Company in 2006. The Company did not receive any capital contributions from its Parent in 2007.

On December 27, 2006, the Company made an investment of $80,000 for the formation of LIICA Re II, a Vermont-domiciled pure captive subsidiary. The Company made a $172,000 capital contribution to LIICA Holdings, LLC on December 27, 2006 and received a return of capital on September 26, 2007 in the amount of $37,000 from LIICA Holdings, LLC.

The Company paid $130,000 in cash dividends to its parent in 2005. The 2005 dividend consisted of an ordinary dividend of $21,000, an extraordinary dividend of $49,000 and a return of capital of $60,000. No dividends were paid in 2006. The Company received a capital contribution of $145,000 from its Parent Company in 2006.

Life/health insurance companies are subject to certain risk-based capital (RBC) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus to be maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2007, the Company meets the RBC requirements.

On September 30, 2002, the Company received $150,000 from AEGON in exchange for surplus notes. These notes are due 20 years from the date of issuance at an interest rate of 6%, and are subordinate and junior in right of payment to all obligations and liabilities of the Company. In the event of liquidation of the Company, the holders of the issued and outstanding preferred stock shall be entitled to priority only with respect to accumulated but unpaid dividends before the holder of the surplus notes and full payment of the surplus notes shall be made before the holders of common stock become entitled to any distribution of the remaining assets of the Company. Additional information related to the surplus notes at December 31, 2007, 2006 and 2005 is as follows:

For Year Ending	Balance Outstanding		Interest Paid		Total Interest Paid		Accrued Interest
2007	$	150,000	$	9,000	$	45,000	$	2,250
2006	$	150,000	$	9,000	$	36,000	$	2,250
2005	$	150,000	$	9,000	$	27,000	$	2,250

56

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

11. Capital and Surplus (continued)

The Company has 504,033 shares of preferred stock issued and outstanding at December 31, 2007 and 2006. The par value of the preferred stock is $2.48 per share and the liquidation value is equal to $777.73 per share. This per share liquidation value shall be adjusted proportionally to reflect any resulting increase or decrease in the number of outstanding shares of preferred stock. Holders of the preferred shares shall be entitled to receive dividends equal to the amount of income generated from a segregated pool of assets, including cash, cash equivalents, mortgages and debt securities and these dividends are cumulative in nature. Holders of the shares of preferred stock have no right to cause mandatory or optional redemption of the shares. As of December 31, 2006, cumulative unpaid dividends relating to the preferred shares were $26,563. There were no cumulative unpaid dividends relating to the preferred shares as of December 31, 2007.

12. Retirement and Compensation Plans

The Company’s employees participate in a qualified defined benefit plan sponsored by AEGON. The Company has no legal obligation for the plan. The Company recognizes pension expense equal to its allocation from AEGON. The pension expense is allocated among the participating companies based on International Accounting Standards 19 (IAS 19), Accounting for Employee Benefits expense as a percent of salaries. The benefits are based on years of service and the employee’s compensation during the highest five consecutive years of employment. Pension expense aggregated $6,740, $5,482 and $5,088, for the years ended December 31, 2007, 2006 and 2005, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974.

57

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

12. Retirement and Compensation Plans (continued)

The Company’s employees also participate in a contributory defined contribution plan sponsored by AEGON which is qualified under Section 401(k) of the Internal Revenue Code. Employees of the Company who customarily work at least 1,000 hours during each calendar year and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to twenty-five percent of their salary to the plan. The Company will match an amount up to three percent of the participant’s salary. Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974. Expense related to this plan was $4,388, $3,856 and $3,428, for the years ended December 31, 2007, 2006 and 2005, respectively.

AEGON sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The plans are noncontributory, and benefits are based on years of service and the employee’s compensation level. The plans are unfunded and nonqualified under the Internal Revenue Service Code. In addition, AEGON has established incentive deferred compensation plans for certain key employees of the Company. The Company’s allocation of expense for these plans for each of the years ended December 31, 2007, 2006 and 2005 was negligible. AEGON also sponsors an employee stock option plan/stock appreciation rights for individuals employed and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued or funded as deemed appropriate by management of AEGON and the Company.

In addition to pension benefits, the Company participates in plans sponsored by AEGON that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $555, $423 and $499, for the years ended December 31, 2007, 2006 and 2005, respectively, related to these plans.

58

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

13. Related Party Transactions

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

The Company is party to a cost sharing agreement between AEGON USA, Inc. companies, providing for services needed. The Company is also party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the Advisor serves as the administrator and advisor for the Company’s mortgage loan operations. AEGON USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company.

As a party to these agreements, the Company receives data processing, investment advisory and management, marketing and administration services from certain affiliates. During 2007, 2006 and 2005, the Company paid $162,888, $162,603 and $172,720, respectively, for such services, which approximates their costs to the affiliates. In addition, the Company provides office space, marketing and administrative services to certain affiliates. During 2007, 2006 and 2005, the Company received $300,512, $290,700 and $292,210, respectively, for these services, which approximates their costs to the Company.

Payables to, and receivables from affiliates bear interest at the 30-day commercial paper rate. At December 31, 2007 and 2006, the Company reported $50,901 and $12,414 as net amounts due to affiliates, respectively. Terms of settlement require that these amounts are settled within 90 days. During 2007, 2006 and 2005, the Company (received) paid net interest of $(237), $516 and $377, respectively, (from) to affiliates.

At December 31, 2007 and 2006, the Company has two notes payable to Commonwealth General Corporation, an affiliate, of $10 each, bearing interest at 6% and due on December 31, 2030. At December 31, 2007, the Company had short-term notes receivable from AEGON, MLIC, and TLIC, all affiliates, of $10,600, $24,300 and $18,400, respectively, bearing interest at 4.75%. The AEGON and MLIC notes are due notes are due on December 27, 2008. The TLIC note is due on December 30, 2008.

During 1999, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2007 and 2006, the cash surrender value of these policies was $134,211 and $129,862, respectively.

59

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

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

At December 31, 2006, securities with a book value of $21,494, and a fair value of $21,651 were subject to dollar reverse repurchase agreements. These securities have maturity dates ranging from 2035 to 2036 and have a weighted average interest rate of 5.8%. The Company had an outstanding liability for borrowed money in the amount of $21,790 as of December 31, 2006, due to participation in dollar reverse repurchase agreements. The Company did not participate in dollar reverse repurchase agreements at December 31, 2007.

During 2006, the Company sold $7,749 of agent balances without recourse to an affiliated company. Prior to July 1, 2006, agent debit balances were sold without recourse to ADB Corporation, LLC (ADB), an affiliate company. The Company did not realize a gain or loss as a result of the sales. As of July 1, 2006, the Company no longer sells agent debit balances and as a result retains such balances as non-admitted receivables. Receivables in the amount of $8,234 and $12,246 were non-admitted as of December 31, 2007 and 2006, respectively.

In the course of the Company’s asset management, securities are sold and reacquired within 30 days of the sale date to enhance the Company’s yield on its investment portfolio. The details by NAIC designation 3 or below of securities sold during 2007 and reacquired within 30 days of the sale date are:

	Number of Transactions	Book Value of Securities Sold		Cost of Securities Repurchased		Loss
Bonds:
NAIC 5	3	$	2,773	$	2,402	$	320

60

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

15. Commitments and Contingencies

The Company is a party to legal proceedings incidental to its business. Although such litigation sometimes includes substantial demands for compensatory and punitive damages, in addition to contract liability, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

The Company has guaranteed that Transamerica Financial Life Insurance Company, an affiliate, will maintain capital and surplus amounts in excess of the statutory minimum requirements of $3,000. At December 31, 2007, Transamerica Financial Life Insurance Company had capital and surplus of $813,295. The Company has recorded no liability for this guarantee.

The Company has provided a guarantee for the performance of a noninsurance subsidiary that was involved in a guaranteed sale of investments in low-income housing tax credit partnerships. These partnerships are partially owned by a noninsurance subsidiary of the Company for which a third party is the primary investor. The balance of the investor’s capital accounts covered by this transaction is $4,549 at December 31, 2007. The nature of the obligation is to provide the investor with a minimum guaranteed annual and cumulative return on their contributed capital. The Company is not at risk for changes in tax law or the investor’s inability to fully utilize the tax benefits. Accordingly, the Company believes the chance of having to make material payments under the guarantee is remote.

The Company has contingent commitments of $30,913 and $65,938, as of December 31, 2007 and 2006, respectively, for joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $10,566 and $27,119, respectively.

The Company pledged assets as collateral for derivative transactions in the amount of $2,780 and $3,041 at December 31, 2007 and 2006, respectively. In conjunction with derivative transactions, cash in the amount of $63,936 and $80,144 and securities in the amount of $26,725 and $32,674 were posted to the Company as of December 31, 2007 and 2006, respectively, which were not included in the financial statements of the Company.

At December 31, 2007 and 2006, the net amount of securities being acquired on a “to be announced” (TBA) basis was $1,016 and $70,348, respectively.

The Company has private placement commitments outstanding as of December 31, 2007 and 2006 of $5,000 and $8,700, respectively.

61

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

15. Commitments and Contingencies (continued)

In the normal course of business, the Company has obtained letters of credit of $3,948 for the benefit of non-affiliated companies that have reinsured business to the Company where the ceding company’s state of domicile does not recognize the Company as an authorized reinsurer.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company, except where right of offset against other taxes paid is allowed by law; amounts available for future offsets are recorded as an asset on the Company’s balance sheet. The future obligation has been based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $4,986 and $5,177 at December 31, 2007 and 2006, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense was $571, $503 and $460, for the years ended December 31, 2007, 2006 and 2005, respectively.

16. Leases

The Company owns several properties that are leased to others. Future minimum lease payments receivable under non-cancelable leasing arrangements as of December 31, 2007 are as follows:

2008	$	5,054
2009		3,354
2010		3,005
2011		2,359
2012		1,403
Thereafter		5,778

17. Subsequent Events

On June 2, 2008, AEGON made a capital contribution to the Company in the amount of $408,438 in exchange for 427,831 shares of common stock. On June 3, 2008, the Company purchased its outstanding Series A preferred stock from AEGON for $392,000, and paid accumulated accrued dividends of $16,438.

62

Life Investors Insurance Company of America

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

17. Subsequent Events (continued)

Effective July 1, 2008, the Company entered into a reinsurance agreement with Canadian Premier, an affiliate, to reinsure on an assumption basis all of the insurance policies and assign all of its insurance obligations of its Canadian branch.

The Company is scheduled to merge into Transamerica Life Insurance Company, an affiliate, on October 2, 2008.

18. Event (Unaudited) Subsequent to the Date of the Report of Independent Public Accounting Firm

On June 16, 2008, the board of directors of the Company approved the merger of the Company into Transamerica Life Insurance Company (TLIC), an affiliated company, subject to regulatory approval. It is anticipated the merger will occur on October 2, 2008. As a result of the merger, TLIC will assume ownership of all assets, and responsibility for all liabilities of the Company.

63

Statutory-Basis Financial

Statement Schedules

Life Investors Insurance Company of America

Summary of Investments – Other Than Investments in Related Parties

December 31, 2007

SCHEDULE I

Type of Investment	Cost (1)		Market Value		Amount at Which Shown in the Balance Sheet
Fixed maturities
Bonds:
United States Government and government agencies and authorities	$	260,390	$	266,874	$	260,390
States, municipalities and political subdivisions		236,348		233,019		236,348
Foreign governments		85,518		91,964		85,518
Public utilities		555,176		561,014		555,176
All other corporate bonds		5,839,355		5,792,721		5,839,355
Preferred stocks		145,648		137,371		145,648
Total fixed maturities		7,122,435		7,082,963		7,122,435
Equity securities
Common stocks:
Public utilities		—		—		—
Banks, trust and insurance		424		435		435
Industrial, miscellaneous and all other		1,928		4,459		4,459
Total common stocks		2,352		4,894		4,894
Mortgage loans on real estate		1,080,994				1,080,994
Real estate		109,278				109,278
Policy loans		207,383				207,383
Other long-term investments		249,166				249,166
Cash, cash equivalents and short-term investments		157,174				157,174
Total investments	$	8,928,782			$	8,931,324

(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.

64

Life Investors Insurance Company of America

Supplementary Insurance Information

December 31, 2007

SCHEDULE III

	Future Policy Benefits and Expenses		Unearned Premiums		Policy and Contract Liabilities		Premium Revenue		Net Investment Income*		Benefits, Claims Losses and Settlement Expenses			Other Operating Expenses*		Premiums Written
Year ended December 31, 2007
Individual life	$	2,644,969	$	—	$	22,582	$	154,696	$	170,058	$	150,685		$	374,815
Individual health		1,580,963		129,113		67,582		301,154		103,718		295,834			117,034	$	345,938
Group life and health		916,810		13,503		33,333		174,508		56,619		181,187			131,082		219,838
Annuity		2,943,580		—		27		22,804		189,558		35,471			68,876
	$	8,086,322	$	142,616	$	123,524	$	653,162	$	519,953	$	663,177		$	691,807
Year ended December 31, 2006
Individual life	$	2,708,451	$	—	$	21,725	$	124,485	$	166,698	$	171,165		$	205,410
Individual health		1,432,572		128,383		98,740		311,478		90,872		323,888			113,835	$	348,227
Group life and health		879,796		14,088		32,366		199,433		52,227		194,062			64,335		227,969
Annuity		3,370,639		—		45		26,718		216,360		(143,390	)		82,833
	$	8,391,458	$	142,471	$	152,876	$	662,114	$	526,157	$	545,725		$	466,413
Year ended December 31, 2005
Individual life	$	2,753,940	$	—	$	20,062	$	207,266	$	177,631	$	244,311		$	88,332
Individual health		1,293,458		122,983		86,523		303,044		84,391		365,782			137,880	$	342,921
Group life and health		838,937		15,288		37,225		212,206		52,481		198,642			74,262		243,837
Annuity		4,154,918		—		77		41,098		265,252		(32,061	)		116,679
	$	9,041,253	$	138,271	$	143,887	$	763,614	$	579,755	$	776,674		$	417,153

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

65

Life Investors Insurance Company of America

Reinsurance

December 31, 2007

SCHEDULE IV

	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year ended December 31, 2007
Life insurance in force	$	56,646,000	$	26,059,136	$	582,871	$	31,169,735	2	%
Premiums:
Individual life	$	367,382	$	226,006	$	13,319	$	154,695	9
Individual health		345,938		53,500		8,716		301,154	3
Group life and health		219,838		54,300		8,971		174,509	5
Annuity		24,105		2,006		705		22,804	3
	$	957,263	$	335,812	$	31,711	$	653,162	5	%
Year ended December 31, 2006
Life insurance in force	$	53,958,644	$	25,127,949	$	2,538,338	$	31,369,033	8	%
Premiums:
Individual life	$	253,009	$	170,476	$	41,952	$	124,485	34	%
Individual health		348,227		48,423		11,674		311,478	4
Group life and health		227,969		57,791		29,255		199,433	15
Annuity		29,737		3,510		491		26,718	2
	$	858,942	$	280,200	$	83,372	$	662,114	13	%
Year ended December 31, 2005
Life insurance in force	$	55,599,689	$	24,195,573	$	2,864,494	$	34,268,610	8	%
Premiums:
Individual life	$	239,432	$	72,140	$	39,975	$	207,267	19	%
Individual health		342,921		51,601		11,724		303,044	4
Group life and health		243,837		63,822		32,190		212,205	15
Annuity		49,874		9,964		1,188		41,098	3
	$	876,064	$	197,527	$	85,077	$	763,614	11	%

66

FINANCIAL STATEMENTS AND SCHEDULES – STATUTORY BASIS

Transamerica Occidental Life Insurance Company

Years Ended December 31, 2007, 2006 and 2005

Transamerica Occidental Life Insurance Company

Financial Statements and Schedules – Statutory Basis

Years Ended December 31, 2007, 2006 and 2005

Contents

Report of Independent Registered Public Accounting Firm	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	5
Statements of Changes in Capital and Surplus – Statutory Basis	7
Statements of Cash Flow – Statutory Basis	9
Notes to Financial Statements – Statutory Basis	11
Statutory-Basis Financial Statement Schedules
Schedule I – Summary of Investments – Other Than Investments in Related Parties	71
Schedule III – Supplementary Insurance Information	72
Schedule IV – Reinsurance	73

•        Ernst & Young LLP           Suite 3000           801 Grand Avenue           Des Moines, IA 50309-2764 •        Phone: (515) 243-2727           www.ey.com

Report of Independent Registered Public Accounting Firm

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, 2007 and 2006, 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, 2007. Our audit also included the statutory-basis financial statement schedules required by Regulation S-X, Article 7. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits 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 U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles 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 U.S. generally accepted accounting principles, the financial position of Transamerica Occidental Life Insurance Company at December 31, 2007 and 2006, or the results of its operations or its cash flow for each of the three years in the period ended December 31, 2007.

A member firm of Ernst & Young Global Limited

1

•        Ernst & Young LLP

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, 2007 and 2006, and the results of its operations and its cash flow for each of the three years in the period ended December 31, 2007, 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.

As discussed in Note 3 to the financial statements, in 2006 Transamerica Occidental Life Insurance Company changed its accounting for investments in certain low income housing tax credit properties. Also, as discussed in Note 3 to the financial statements, in 2005 Transamerica Occidental Life Insurance Company changed its accounting for investment in subsidiary, controlled and affiliated entities.

[GRAPHIC]

March 28, 2008

A member firm of Ernst & Young Global Limited

2

Transamerica Occidental Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2007		2006
Admitted assets
Cash and invested assets:
Bonds:
Affiliated entities	$	264,908	$	273,716
Unaffiliated		16,206,188		16,488,866
Preferred stocks:
Affiliated entities		9,728		9,452
Unaffiliated		545,135		718,501
Common stocks:
Affiliated entities (cost: 2007 – $1,009,764; 2006 – $974,175)		2,051,127		1,460,978
Unaffiliated (cost: 2007 – $162,676; 2006 – $221,815)		176,641		255,727
Mortgage loans on real estate		4,545,014		4,332,562
Real estate, at cost (land)		186		186
Properties held for sale		8,812		8,685
Policy loans		390,494		387,465
Cash, cash equivalents and short-term investments		574,048		556,775
Receivables for securities		1,799		70,259
Other invested assets		1,832,340		1,580,243
Total cash and invested assets		26,606,420		26,143,415
Net deferred income tax asset		132,026		99,886
Due and accrued investment income		295,139		308,326
Premiums deferred and uncollected		243,654		324,557
Reinsurance receivable		318,770		196,663
Receivable from parent, subsidiaries and affiliates		169,099		231,049
Accounts receivable		58,214		44,374
General agents pension fund		76,748		73,036
Reinsurance deposit receivable		120,582		112,956
Goodwill		69,719		78,993
Other admitted assets		144,842		155,145
Separate account assets		2,776,745		2,575,661
Total admitted assets	$	31,011,958	$	30,344,061

3

	December 31
	2007			2006
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life	$	8,099,723		$	7,717,859
Annuity		4,615,448			4,834,728
Accident and health		219,556			190,440
Liability for deposit-type contracts		9,198,791			9,230,957
Policy and contract claim reserves:
Life		282,711			227,839
Accident and health		47,080			74,552
Other policyholders’ funds		16,232			15,080
Municipal reverse repurchase agreements		270,370			455,262
Remittances and items not allocated		263,227			255,811
Borrowed money		—			312,669
Asset valuation reserve		548,657			533,632
Interest maintenance reserve		236,189			228,882
Funds held under coinsurance and other reinsurance treaties		251,147			189,081
Reinsurance in unauthorized reinsurers		48,805			31,481
Commissions and expense allowances payable on reinsurance assumed		84,745			72,918
Federal and foreign income taxes payable		68,807			66,303
Payable to affiliates		158,861			157,228
Payable for securities		21,600			1,359
Securities lending liability		76,851			72,132
Transfers from separate accounts due or accrued		(78,921	)		(71,838	)
Other liabilities		293,859			354,633
Separate account liabilities		2,690,282			2,500,905
Total liabilities		27,414,020			27,451,913
Capital and surplus:
Common stock, $12.50 per share par value 4,000,000 shares authorized, 1,104,117 issued and outstanding		13,802			13,802
Preferred stock, $12.50 per share par value, 1,103,466 shares authorized, 1,103,466 issued and outstanding (total liquidation value -$825,000)		13,793			13,793
Paid-in surplus		1,672,352			1,673,875
Unassigned surplus		1,897,991			1,190,678
Total capital and surplus		3,597,938			2,892,148
Total liabilities and capital and surplus	$	31,011,958		$	30,344,061

See accompanying notes.

4

Transamerica Occidental Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Revenues:
Premiums and other considerations, net of reinsurance:
Life	$	1,648,957		$	1,346,295		$	1,475,919
Annuity		407,215			542,149			515,152
Accident and health		87,554			75,728			50,035
Net investment income		1,399,174			1,376,785			1,317,883
Amortization of interest maintenance reserve		20,515			21,349			22,025
Commissions and expense allowances on reinsurance ceded		50,454			(337,913	)		64,089
Income from fees associated with investment management, administration and contract guarantees for separate accounts		20,373			22,237			25,228
Modified coinsurance reserve adjustment		(116,533	)		(179,964	)		(184,964	)
Consideration on reinsurance recapture		2,284			955,428			413,911
Other income		46,317			173,616			34,814
		3,566,310			3,995,710			3,734,092
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health		955,077			874,862			757,001
Annuity benefits		558,323			575,850			592,316
Surrender benefits		949,303			911,212			841,440
Other benefits		524,042			484,555			328,545
Increase (decrease) in aggregate reserves for policies and contracts:
Life		369,502			1,205,012			750,331
Annuity		(219,594	)		(107,240	)		(31,428	)
Accident and health		29,117			24,514			28,905
		3,165,770			3,968,765			3,267,110
Insurance expenses:
Commissions		736,128			666,668			833,417
General insurance expenses		271,424			233,280			256,498
Taxes, licenses and fees		55,355			46,293			52,309
Net transfer from separate accounts		(286,123	)		(221,422	)		(256,274	)
Modified coinsurance interest adjustment		(258,887	)		(303,164	)		(190,732	)
Other		(36,249	)		68,947			3,596
		481,648			490,602			698,814
Total benefits and expenses		3,647,418			4,459,367			3,965,924
Loss from operations before dividends to policyholders, federal income tax expense and net realized capital gains on investments	$	(81,108	)	$	(463,657	)	$	(231,832	)

5

Transamerica Occidental Life Insurance Company

Statements of Operations – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Dividends to policyholders	$	14,929		$	14,298		$	15,290
Loss from operations before federal income tax expense and net realized capital gains on investments		(96,037	)		(477,955	)		(247,122	)
Federal income tax expense		53,910			10,624			168,714
Loss from operations before net realized capital gains on investments		(149,947	)		(488,579	)		(415,836	)
Net realized capital gains on investments (net of related federal income taxes and amounts transferred from/to interest maintenance reserve)		51,961			27,242			36,471
Net loss	$	(97,986	)	$	(461,337	)	$	(379,365	)

See accompanying notes.

6

Transamerica Occidental Life Insurance Company

Statements of Changes in Capital

and Surplus – Statutory Basis

(Dollars in Thousands)

	Common Stock		Preferred Stock		Surplus Notes			Paid-in Surplus		Unassigned Surplus			Total Capital and Surplus
Balance at January 1, 2005	$	13,793	$	13,793	$	200,000		$	1,670,170	$	844,305		$	2,742,061
Cumulative effect of change in accounting principles		—		—		—			—		44,010			44,010
Net loss		—		—		—			—		(379,365	)		(379,365	)
Change in non-admitted assets		—		—		—			—		96,536			96,536
Change in unrealized capital gains/losses		—		—		—			—		36,624			36,624
Change in asset valuation reserve		—		—		—			—		(104,593	)		(104,593	)
Change in liability for reinsurance in unauthorized companies		—		—		—			—		26,662			26,662
Change in surplus in separate accounts		—		—		—			—		9,528			9,528
Change in net deferred income tax asset		—		—		—			—		(55,353	)		(55,353	)
Correction of errors		—		—		—			—		(11,748	)		(11,748	)
Change in surplus due to reinsurance		—		—		—			—		503,269			503,269
Dividend to stockholder		—		—		—			—		(300,000	)		(300,000	)
Contributed surplus related to stock appreciation rights plan of indirect parent		—		—		—			3,124		—			3,124
Balance at December 31, 2005		13,793		13,793		200,000			1,673,294		709,875			2,610,755
Cumulative effect of change in accounting principles											303			303
Net loss		—		—		—			—		(461,337	)		(461,337	)
Change in non-admitted assets		—		—		—			—		(42,810	)		(42,810	)
Change in unrealized capital gains/losses		—		—		—			—		391,583			391,583
Change in asset valuation reserve		—		—		—			—		(153,971	)		(153,971	)
Change in liability for reinsurance in unauthorized companies		—		—		—			—		(9,082	)		(9,082	)
Change in surplus in separate accounts		—		—		—			—		5,492			5,492
Change in net deferred income tax asset		—		—		—			—		69,620			69,620
Change in surplus due to reinsurance		—		—		—			—		735,082			735,082
Redemption of surplus note		—		—		(200,000	)		—		—			(200,000	)
Dividend to stockholder		—		—		—			—		(54,068	)		(54,068	)
Dissolution of subsidiary – Ammest		9		—		—			—		(9	)		—
Contributed surplus related to stock appreciation rights plan of indirect parent		—		—		—			581		—			581
Balance at December 31, 2006	$	13,802	$	13,793	$	—		$	1,673,875	$	1,190,678		$	2,892,148

7

Transamerica Occidental Life Insurance Company

Statements of Changes in Capital

and Surplus – Statutory Basis (continued)

(Dollars in Thousands)

	Common Stock		Preferred Stock		Surplus Notes		Paid-in Surplus			Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2006	$	13,802	$	13,793	$	—	$	1,673,875		$	1,190,678		$	2,892,148
Net loss		—		—		—		—			(97,986	)		(97,986	)
Change in non-admitted assets		—		—		—		—			30,726			30,726
Change in unrealized capital gains/losses		—		—		—		—			621,281			621,281
Change in asset valuation reserve		—		—		—		—			(15,025	)		(15,025	)
Change in liability for reinsurance in unauthorized companies		—		—		—		—			(17,324	)		(17,324	)
Change in surplus in separate accounts		—		—		—		—			11,706			11,706
Change in net deferred income tax asset		—		—		—		—			22,304			22,304
Change in surplus due to reinsurance		—		—		—		—			364,307			364,307
Dividend to stockholder		—		—		—		—			(200,000	)		(200,000	)
Change in reserve on account of change in valuation basis		—		—		—		—			(12,676	)		(12,676	)
Return of capital related to stock appreciation rights plan of indirect parent		—		—		—		(1,523	)		—			(1,523	)
Balance at December 31, 2007	$	13,802	$	13,793	$	—	$	1,672,352		$	1,897,991		$	3,597,938

See accompanying notes.

8

Transamerica Occidental Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Operating activities
Premiums collected, net of reinsurance	$	2,230,817		$	1,968,614		$	1,973,281
Net investment income received		1,453,999			1,442,207			1,332,223
Miscellaneous income		21,089			1,186,448			715,533
Benefit and loss related payments		(2,201,432	)		(2,869,880	)		(2,180,095	)
Net transfers from separate accounts		11,522			535,844			691,900
Commissions, expenses paid and aggregate write-ins for deductions		(699,225	)		(744,092	)		(894,807	)
Dividends paid to policyholders		(14,908	)		(16,214	)		(15,867	)
Federal and foreign income taxes paid		(114,998	)		(61,106	)		(102,524	)
Net cash provided by operating activities		686,864			1,441,821			1,519,644
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds		11,186,559			10,378,115			6,826,389
Stocks		580,620			948,031			132,636
Mortgage loans		703,319			875,037			910,676
Real estate and properties held for sale		—			12,884			—
Other invested assets		243,251			174,310			175,925
Miscellaneous proceeds		102,843			16,045			12,679
Total investment proceeds		12,816,592			12,404,422			8,058,305
Cost of investments acquired:
Bonds		(10,923,302	)		(9,795,370	)		(7,580,059	)
Stocks		(317,232	)		(1,089,068	)		(128,267	)
Mortgage loans		(917,522	)		(838,014	)		(2,178,051	)
Real estate and properties held for sale		(127	)		(207	)		(10	)
Other invested assets		(329,048	)		(419,214	)		(273,159	)
Miscellaneous applications		(23	)		(87,870	)		(83,107	)
Total cost of investments acquired		(12,487,254	)		(12,229,743	)		(10,242,653	)
Net (increase) decrease in policy loans		(2,930	)		(1,878	)		718
Net cost of investments acquired		(12,490,184	)		(12,231,621	)		(10,241,935	)
Net cash provided by (used in) investing activities		326,408			172,801			(2,183,630	)

9

Transamerica Occidental Life Insurance Company

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Financing and miscellaneous activities
Repayments of surplus and capital notes	$	—		$	(200,000	)	$	—
Net borrowed funds received (repaid)		(311,251	)		311,251			—
Net deposits on deposit-type contracts and other insurance liabilities		(533,118	)		(584,157	)		1,557,088
Dividends to stockholder		(200,000	)		(54,068	)		(300,000	)
Funds held in reinsurance treaties with unauthorized companies		62,067			(241,981	)		(54,950	)
Funds held under coinsurance		(13	)		(8,348	)		(5,849	)
Transfer due to reinsurance novation to subsidiary		—			(1,004,909	)		—
Other cash provided (applied)		(13,684	)		118,521			(555,152	)
Net cash provided by (used in) financing and miscellaneous activities		(995,999	)		(1,663,691	)		641,137
Net increase (decrease) in cash, cash equivalents and short-term investments		17,273			(49,069	)		(22,849	)
Cash, cash equivalents and short-term investments:
Beginning of year		556,775			605,844			378,693
End of year	$	574,048		$	556,775		$	605,844
Non-cash proceeds:
Mortgage loan transferred to real estate	$	—		$	—		$	14,345
Hybrid schedule reclass	$	13,324		$	584,551		$	—

See accompanying notes.

10

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies

Transamerica Occidental Life Insurance Company (the Company) is a stock life insurance company domiciled in Iowa. As of December 31, 2007, the Company’s common shares were wholly owned by Transamerica International Holdings, Inc. (TIHI), and its preferred shares were wholly owned by Transamerica Corporation (Transamerica). Prior to December 31, 2007, the Company’s common shares were wholly owned by Transamerica Service Company (TSC). Prior to December 29, 2006, the preferred shares of the Company were held by Scottish Equitable Finance Limited (Scottish Equitable). TIHI, Transamerica and Scottish Equitable are indirect wholly-owned subsidiaries of AEGON N.V., a holding company organized under the laws of The Netherlands.

Nature of Business

The Company provides 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 the Company’s products are distributed in 49 states and the District of Columbia, American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands.

Basis of Presentation

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

The accompanying financial statements of the Company have been prepared 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 (GAAP). The more significant variances from GAAP are:

Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in operations for those designated as trading and as a

11

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

separate component of other comprehensive income for those designated as available-for-sale. Fair value for statutory purposes is based on the price published by the Securities Valuation Office of the NAIC (SVO), if available, whereas fair value for GAAP is based on quoted market prices.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the undiscounted estimated future cash flows. For GAAP purposes, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g. CMO, CBO, CDO, CLO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to fair value. If high credit quality securities are adjusted, the retrospective method is used.

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

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

12

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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

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

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

Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, 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 bond or mortgage loan. That net deferral is reported as the “interest maintenance reserve” (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the income statement on a pretax basis in the period that the assets giving rise to the gains or losses are sold.

The “asset valuation reserve” (AVR) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.

Subsidiaries: The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP.

13

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance and certain long duration accident and health insurance, to the extent recoverable from future policy revenues, would be deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves; for universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality and expense margins.

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

Non-Admitted Assets: Certain assets designated as “non-admitted”, primarily deferred tax assets and general agents pension fund and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual, are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent that those assets are not impaired.

Universal Life and Annuity Policies: Revenues for universal life and annuity policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received, and benefits incurred represent the total of surrender and death benefits paid and the change in policy reserves. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk are recorded using deposit accounting and recorded directly to an appropriate policy reserve account, without recognizing premium income or benefits paid. Interest on these policies is reflected in other benefits. Under GAAP, for universal life, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies without significant mortality risk, premiums received and benefits paid would be recorded directly to the reserve liability.

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

14

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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

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

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

Deferred Income Taxes: Deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross deferred income tax assets expected to be realized within one year of the balance sheet date or 10 percent of capital and surplus excluding any net deferred income tax assets, electronic data processing equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities. The remaining deferred income tax assets are non-admitted. Deferred income taxes do not include amounts for state taxes. Under GAAP, state taxes are included in the computation of deferred income taxes, a deferred income tax asset is recorded for the amount of gross deferred income tax assets expected to be realized in all future years and a valuation allowance is established for deferred income tax assets not expected to be realizable.

Goodwill: Goodwill is admitted subject to an aggregate limitation of 10% of the capital and surplus in the most recently filed annual statement excluding electronic data processing equipment, operating system software, net deferred income tax assets and net positive goodwill. Excess goodwill is non-admitted. Goodwill is amortized over ten years. Under GAAP, goodwill is not amortized but is assessed for impairment on an annual basis, or more frequently if circumstances indicate that a possible impairment has occurred.

Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies.

15

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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

Preferred Stock: The preferred stock of the Company, which is mandatorily redeemable, is classified by the Company as capital and surplus. The unconditional obligation requiring the Company to redeem the stock at a specified date would require that the Company classify the stock as a liability for GAAP purposes.

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

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

Other significant accounting practices are as follows:

Investments

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

Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments, except for those with an NAIC designation of 6, which are valued at the lower of amortized cost or fair value. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities, except principal-only and interest-only securities, which are valued using the prospective method.

Investments in both affiliated and unaffiliated redeemable preferred stocks in good standing are reported at cost or amortized cost. Investments in redeemable preferred stocks not in good standing are reported at the lower of cost, amortized cost or fair value as determined by the SVO, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes. Non-redeemable preferred stocks are reported at fair value or lower of cost or fair value as determined by the SVO, and the related net unrealized gains (losses) are reported in unassigned surplus along with any adjustment for federal taxes.

16

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Beginning in 2006, hybrid securities, not classified as debt by the SVO, are reported as preferred stock. Hybrid securities, as defined by the NAIC, are securities designed with characteristics of both debt and equity and provide protection to the issuer’s senior note holders. Reclassifications of securities from bonds to preferred stock have been made by the Company in the amount of $13,324 and $584,551 as of December 31, 2007 and 2006, respectively, due to the SVO identification of such securities. Although the classification has changed, these hybrid securities continue to meet the definition of a bond, in accordance with Statutory Accounting Principles (SSAP) No. 26, Bonds, excluding Loan-backed and Structured Securities and therefore, are reported at amortized cost based upon their NAIC rating. A corresponding reclassification was not made as of December 31, 2005.

Common stocks of unaffiliated companies, which include shares of mutual funds, are reported at fair value as determined by the SVO, and the related unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

The Company’s insurance subsidiaries are reported at their underlying statutory equity plus the admitted portion of goodwill. All other noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in the change in net unrealized capital gains or losses.

There are no restrictions on common or preferred stock.

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

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost.

Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines that the impairment is other than temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

Policy loans are reported at unpaid principal balances.

17

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The Company has minor ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying GAAP equity of the investee. The Company did not recognize any impairment write-downs for its investments in joint ventures or limited partnerships during the years ended December 31, 2007, 2006 or 2005.

Real estate held for the production of income is reported at depreciated cost net of related obligations. Real estate that the Company has the intent to sell is reported at the lower of depreciated cost or fair value, net of related obligations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties.

Investments in Low Income Housing Tax Credit (LIHTC) Properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company.

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

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or on real estate where rent is in arrears for more than three months. Further, income is not accrued when collection is uncertain. At December 31, 2007 and 2006 the Company excluded investment income due and accrued of $1,045 and $58, respectively, with respect to such practices.

Investments are reviewed on an ongoing basis for impairment. If this review indicates a decline in fair value that is other than temporary, the carrying amount of the investment is reduced to its fair value and a specific writedown is taken. Such reductions in carrying amounts are recognized as realized losses on investments.

18

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Derivative Instruments

Swaps that are designated in hedging relationships and meet hedge accounting rules are carried in a manner consistent with the hedged item, generally amortized cost, on the financial statements with any premium or discount amortized into income over the life of the contract. For foreign currency swaps, the foreign currency translation adjustment is recorded as unrealized gain/loss in unassigned surplus. If the swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the hedged instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in unassigned surplus.

Options are marked to fair value in the balance sheet, and the fair value adjustment is recorded in unassigned surplus. Futures are marked to market on a daily basis, and a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements.

Capped floating rate commercial mortgage loans and interest rate caps that meet hedge accounting rules are carried at amortized cost in the financial statements. Gains or losses upon an early termination would be reflected in the IMR similar to the hedged instrument.

A replication transaction is a derivative transaction, generally a credit default swap, entered into in conjunction with a cash instrument that is used to reproduce the investment characteristics of an otherwise permissible investment. For replication transactions, a premium is received by the Company on a periodic basis and recognized in investment income as earned. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment equal to the notional of the contract will be made by the Company and recognized as a capital loss. The Company complies with the specific rules established in AVR for replication transactions.

19

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The Company utilizes forward-starting swaps as hedges for forecasted asset purchases. The accrual of income for forward-starting interest rate swaps begins at the forward date, rather than at the inception date. These forward-starting swaps meet hedge accounting rules and are carried at cost in the financial statements. Gains and losses realized upon termination of the forward-starting swap are deferred and used to adjust the basis of the asset purchased in the hedged forecasted period. The basis adjustment is then amortized into income as a yield adjustment to the asset over its life. If the forecasted transaction no longer qualifies for hedge accounting or if the forecasted transaction is no longer probable of occurring, the forward-starting swap will cease to be valued at amortized cost and will be marked to fair value through unassigned surplus.

The Company may issue foreign denominated assets or liabilities and use forward rate agreements to hedge foreign currency risk associated with these products. These forward agreements are marked to fair value based on the current forward rate on the financial statements, and cash payments and/or receipts are recognized as realized gain or losses.

The carrying value of derivative instruments is reflected in either the other invested assets or the derivatives (liability) line within the balance sheet, depending upon the net balance of the derivatives as of the end of the reporting period. As of December 31, 2007 and 2006, derivatives in the amount of $39,692 and $34,389, respectively, were reflected as a liability within the financial statements.

For dollar reverse repurchase agreements, the Company receives cash collateral in an amount at least equal to the fair value of the securities transferred by the Company in the transaction as of the transaction date. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company.

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 fair value. Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the contract owners and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The Company received variable contract premiums of $24,877, $30,023 and $34,812, in 2007, 2006 and 2005, respectively. In addition, the Company received $20,373, $22,237 and $25,228 in 2007, 2006 and 2005, respectively, related to fees associated with investment management, administration and contractual guarantees for separate accounts.

20

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are developed by actuarial methods and are determined based on published tables 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 or guaranteed cash value, or the amount required by law.

The Company waives deduction of deferred fractional premiums upon death and refunds portions of premiums beyond the date of death. Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification.

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

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioners’ Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.25 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.

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.

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

21

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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 balance sheet date. These reserves are estimated using either individual case-basis valuations or statistical analysis techniques. These estimates are subject to the effects of trends in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes available.

Liability for Deposit-Type Contracts

Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include GICs, funding agreements and other annuity contracts. Deposits and withdrawals received on these contracts are recorded as an increase or decrease directly to the liability balance and are not reported as premiums, benefits or changes in reserve in the statement of operations.

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

Municipal Reverse Repurchase Agreements

Municipal reverse repurchase agreements are investment contracts issued to municipalities that pay either a fixed or floating rate of interest on the guaranteed deposit balance. The floating interest rate is based on a market index. The related liabilities are equal to the policyholder deposit and accumulated interest on the contract.

The Company enters into municipal reverse repurchase agreements for which it requires a minimum of 95% of the fair value of the securities transferred to be maintained as collateral.

22

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Premiums and Annuity Considerations

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

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 unassigned surplus and will be amortized into income over the estimated life of the policies. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively. Policy liabilities and accruals are reported in the accompanying financial statements net of reinsurance ceded.

Stock Option Plan and Stock Appreciation Rights Plans

Prior to 2002 and in 2005 through 2007, AEGON N.V. sponsored a stock option plan for eligible employees of the Company. Pursuant to the plan, the option price at the date of grant is equal to the market value of the stock. Under statutory accounting principles, the Company does not record any expense related to this plan. However, the Company is allowed to record a deduction in the consolidated tax return filed by the Company and certain affiliates. The tax benefit of this deduction has been credited directly to unassigned surplus.

The Company’s employees participate in various stock appreciation rights (SAR) plans issued by the Company’s indirect parent. In accordance with SSAP No. 13, Stock Options and Stock Purchase Plans, the expense related to these plans for the Company’s employees has been charged to the Company, with an offsetting amount credited to capital and surplus. The Company recorded an expense (benefit) of $(2,451), $274 and $2,691 for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, the Company recorded an adjustment to paid-in surplus for the income tax effect related to these plans over and above the amount reflected in the statement of operations in the amount of $929, $307 and $433, for years ended December 31, 2007, 2006 and 2005, respectively.

23

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Reclassifications

Certain reclassifications have been made to the 2005 and 2006 financial statements to conform to the 2007 presentation.

2. Prescribed and Permitted Statutory Accounting Practices

The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa. The Insurance Division, Department of Commerce, of the State of Iowa recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting financial condition and results of operations of an insurance company, and for determining its solvency under the Iowa Insurance Law.

The NAIC’s Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed or permitted practices by the State of Iowa. The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to reserve credits with respect to secondary guarantee reinsurance treaties. As prescribed by Iowa Administrative Code 191-17.3(2), the Commissioner found that the Company is entitled to take reserve credit for such a reinsurance contract in the amount equal to the portion of total reserves attributable to the secondary guarantee, whereas this type of reinsurance does not meet the specific requirements of SSAP No. 61, Life, Deposit-Type and Accident and Health Reinsurance and Appendix A-791 of the NAIC SAP.

The Company, with the explicit permission of the Deputy Commissioner of Insurance of the State of Iowa, records the value of its wholly owned foreign life subsidiary, Transamerica Life (Bermuda), Ltd. (TLB), based upon audited statutory equity rather than audited U.S. GAAP equity adjusted to a statutory basis of accounting, utilizing adjustments as outlined in SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities, a replacement of SSAP No. 88, paragraph 9. If TLB was valued based upon GAAP equity adjusted to a statutory basis, surplus would decrease by $16,158 as of December 31, 2007 and increase by $614 as of December 31, 2006.

24

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

2. Prescribed and Permitted Statutory Accounting Practices (continued)

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

	2007			2006			2005
Net loss, State of Iowa basis	$	(97,986	)	$	(461,337	)	$	(379,365	)
State prescribed practice for secondary guarantee reinsurance		—			—			—
State permitted practice for valuation of foreign life subsidiary		—			—			—
Net loss, NAIC SAP	$	(97,986	)	$	(461,337	)	$	(379,365	)
Statutory surplus, State of Iowa basis	$	3,597,938		$	2,892,148		$	2,610,755
State prescribed practice for secondary guarantee reinsurance		(1,708,192	)		(1,239,657	)		(324,210	)
State permitted practice for value of wholly-owned foreign life subsidiary		(16,158	)		614			—
Statutory surplus, NAIC SAP	$	1,873,588		$	1,653,105		$	2,286,545

3. Accounting Changes and Correction of Errors

Effective January 1, 2006, the Company adopted SSAP No. 93, Accounting for Low Income Housing Tax Credit Property Investments. This statement established statutory accounting principles for investments in federal and certain state sponsored Low Income Housing Tax Credit (LIHTC) properties. SSAP No. 93 states that LIHTC investments shall be initially recorded at cost and amortized based on the proportion of tax benefits received in the current year to the total estimated tax benefits to be allocated to the investor. Prior to 2006, the Company’s investments in LIHTC investments were reported in accordance with SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies and SSAP No. 88, Investments in Subsidiary, Controlled and Affiliated Entities and carried at audited GAAP equity. The cumulative effect is the difference between the audited GAAP equity amount at December 31, 2005 and the amortized cost assuming the new accounting principles had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle that increased unassigned surplus by $303 at January 1, 2006.

25

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

3. Accounting Changes and Correction of Errors (continued)

Effective January 1, 2005, the Company adopted SSAP No. 88, Investments in Subsidiary, Controlled and Affiliated Entities. According to SSAP No. 88, noninsurance subsidiaries are carried at audited GAAP equity. Prior to 2005, the Company’s investments in noninsurance entities were reported in accordance with SSAP No. 46 and carried at statutory equity. The cumulative effect is the difference between the amount of capital and surplus that would have been reported on January 1, 2005 if the new accounting principles had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle, which increased unassigned surplus, by $44,010 in 2005.

During 2005, the Company received a “no objection” review from the Insurance Division, Department of Commerce, of the State of Iowa for correction of errors relating to the establishment of an immediate payment of claims liability and the impact of using the appropriate net premium in the valuation of certain traditional reserves.

The net impact to 2005 surplus was composed of the following items:

Increase reserves on traditional life and universal life policies issued prior to January 1, 1995, to include a reserve for Immediate Payment of Claims (previously there was no IPC reserve on this block)	$	(50,380	)
Increase in surplus relating to the use of the appropriate net premium in calculating due and deferred premium		38,632
Net decrease credited directly to unassigned surplus	$	(11,748	)

4. Fair Values of Financial Instruments

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

Cash, Cash Equivalents and Short-term Investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values.

Investment Securities: Fair values for investment securities are based on unit prices published by the SVO or, in the absence of SVO published unit prices or when amortized cost is used by the SVO as the unit price, quoted market prices by other third party organizations, where available.

26

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

4. Fair Values of Financial Instruments (continued)

For fixed maturity securities (including preferred stock) 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 the expected future cash flows using current market rates applicable to the yield, credit quality and maturity of the investments. For equity securities that are not actively traded, estimated fair values are based on values of issues of comparable yield and quality.

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

Policy Loans: The fair value of policy loans is assumed to equal their carrying amount.

Derivative Financial Instruments: The estimated fair values of interest rate floors and caps are based upon the latest quoted market price. The estimated fair value of swaps, including interest rate swaps and swaptions and currency swaps, are based upon the pricing differential as of the balance sheet date for similar swap agreements. The carrying value of these items is included in the liability section of the balance sheet.

Credit Default Swaps: The estimated fair value of credit default swaps are based upon the pricing differential as of the balance sheet date for similar swap agreements.

Separate Accounts: The fair value of separate account assets are based on quoted market prices. The fair value of separate account annuity liabilities approximate the market value of the separate account assets less a provision for the present value of future profits related to the underlying contracts.

Investment Contracts: Fair values for the Company’s liabilities under investment-type insurance contracts, which include guaranteed interest contracts and funding agreements, 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. For investment contracts with no defined maturity, fair value is estimated to be the present surrender value.

Borrowed Money: Fair values for borrowed money are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

27

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

4. Fair Values of Financial Instruments (continued)

Receivable From or Payable to Parents, Subsidiaries and Affiliates: The fair values for short-term notes receivable from and payable to affiliates are assumed to equal their carrying amount.

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

The following sets forth a comparison of the fair values and carrying amounts of the Company’s financial instruments:

	December 31
	2007						2006
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
Admitted assets
Bonds, other than affiliates	$	16,206,188		$	16,203,265		$	16,488,866		$	16,852,177
Preferred stocks, other than affiliates		545,135			519,142			718,501			753,501
Common stocks, other than affiliates		176,641			176,641			255,727			255,727
Mortgage loans on real estate, other than affiliates		4,507,913			4,497,005			4,301,048			4,356,148
Policy loans		390,494			390,494			387,465			387,465
Derivatives:
Floors, caps, options and swaptions		63			63			10			10
Interest rate and currency swaps		(39,755	)		(22,103	)		(34,399	)		(2,852	)
Credit default swaps		—			324,282			—			335,262
Cash, cash equivalents and short-term investments, other than affiliates		171,248			171,248			280,875			280,875
Receivable from parent, subsidiaries and affiliates		169,099			169,099			231,049			231,049
Separate account assets		2,776,745			2,776,745			2,575,661			2,575,661
Liabilities
Investment contract liabilities		11,078,333			11,120,735			11,478,713			11,498,634
Borrowed money		—			—			312,669			312,669
Payable to parent, subsidiaries and affiliates		158,861			158,861			157,228			157,228
Separate account annuity liabilities		2,316,497			2,316,497			2,132,216			2,132,216

28

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments

Investments in common stocks of affiliated entities were as follows:

	December 31
	2007				2006
Affiliate	Cost		Carrying Amount		Cost		Carrying Amount
Wholly owned subsidiaries:
NEF Investment Company	$	1,278	$	—	$	1,278	$	—
Transamerica Life Insurance Company		678,418		1,685,600		678,418		1,165,228
USA Administration Services Inc.		16,161		134		16,161		290
Transamerica Life (Bermuda) Ltd.		169,430		267,825		134,430		189,240
Asia Investments Holdings, LTD		1,164		—		1,164		—
		866,451		1,953,559		831,451		1,354,758
Minority-owned subsidiaries:
Transamerica Financial Life Insurance Company (12.6% of issued and outstanding shares)		141,438		95,326		141,438		104,750
Real Estate Alternatives Portfolio 3A Inc. (10% of issued and outstanding shares)		1,875		2,242		1,286		1,470
	$	1,009,764	$	2,051,127	$	974,175	$	1,460,978

Additionally, the Company holds preferred stock of USA Administration Services Inc. with a carrying value of $1,739 and $1,739 at December 31, 2007 and 2006, respectively.

The Company owns 12.6% of the preferred shares of Transamerica Financial Life Insurance Company with a carrying value of $7,162 at December 31, 2007 and 2006, respectively. The cost of the preferred shares is $7,162.

The Company purchased 17.2% of the outstanding preferred shares of Malibu Loan Fund Ltd. during 2006. At December 31, 2007 and 2006, the carrying value of these shares was $827 and $551, respectively. The cost of the preferred shares is $827 and $551, respectively.

29

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The Company owns 100% of the membership interests for two affiliated limited liability companies, Transamerica Pyramid Properties LLC and Transamerica Realty Investment Properties LLC. At December 31, 2007 and 2006, the Company’s carrying value for these two affiliated entities was $181,377 and $195,001, respectively. The investment in these two entities is included in other invested assets in the accompanying balance sheets. Summarized combined balance sheet information for these two companies is as follows:

	December 31
	2007		2006
Real estate	$	188,403	$	190,751
Other assets		19,204		27,681
Total assets	$	207,607	$	218,432

	December 31
	2007		2006
Current liabilities	$	26,230	$	23,431
Total member’s interest		181,377		195,001
Total liabilities and member’s interest	$	207,607	$	218,432

The carrying amount and estimated fair value of investments in bonds and preferred stock were as follows:

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses less Than 12 Months		Estimated Fair Value
December 31, 2007
Bonds:
United States Government and agencies	$	1,271,337	$	39,736	$	17,525	$	731	$	1,292,817
State, municipal and other government		181,254		19,541		196		121		200,478
Public utilities		1,131,987		48,503		11,314		5,766		1,163,410
Industrial and miscellaneous		8,724,925		308,805		86,428		104,570		8,842,732
Mortgage and other asset- backed securities		4,896,685		33,328		37,754		188,431		4,703,828
		16,206,188		449,913		153,217		299,619		16,203,265
Unaffiliated preferred stocks		545,135		7,368		7,127		26,234		519,142
	$	16,751,323	$	457,281	$	160,344	$	325,853	$	16,722,407

30

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses less Than 12 Months		Estimated Fair Value
December 31, 2006
Bonds:
United States Government and agencies	$	1,512,572	$	22,278	$	17,721	$	2,472	$	1,514,657
State, municipal and other government		268,893		24,368		2,593		284		290,384
Public utilities		1,149,454		62,102		10,402		3,494		1,197,660
Industrial and miscellaneous		8,935,264		424,224		103,261		32,122		9,224,105
Mortgage and other asset- backed securities		4,622,683		40,161		34,041		3,432		4,625,372
		16,488,866		573,133		168,018		41,804		16,852,177
Unaffiliated preferred stocks		718,501		40,300		4,137		1,163		753,501
	$	17,207,367	$	613,433	$	172,155	$	42,967	$	17,605,678

The Company held bonds and preferred stock at December 31, 2007 and 2006, with a carrying value of $3,825 and $7,602, respectively, and amortized cost of $6,941 and $9,062, respectively, that have an NAIC rating of 6 and which are not considered to be other than temporarily impaired. These securities are carried at the lower of amortized cost or fair value, and any write-down to fair value has been recorded directly to unassigned surplus.

At December 31, 2007 and 2006, respectively, for securities that have been in a continuous loss position greater than or equal to twelve months, the Company held 548 and 724 securities with a carrying value of $3,202,354 and $4,597,358 and an unrealized loss of $160,344 and $172,155 with an average price of 95.0 and 96.2 (NAIC market value/amortized cost). Of this portfolio, 95.7% and 95.9% were investment grade with associated unrealized losses of $138,502 and $149,586, respectively.

At December 31, 2007 and 2006, respectively, for securities in an unrealized loss position for less than twelve months, the Company held 774 and 529 securities with a carrying value of $6,422,879 and $3,158,334 and an unrealized loss of $325,853 and $42,967 with an average price of 94.9 and 98.6 (NAIC market value/amortized cost). Of this portfolio, 93.7% and 96.8% were investment grade with associated unrealized losses of $288,209 and $40,183, respectively.

31

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

The Company closely monitors below investment grade holdings and those investment grade issuers and industry sectors where the Company has concerns. Securities in unrealized loss positions that are considered other than temporary are written down to fair value. The Company considers relevant facts and circumstances in evaluating whether the impairment is other than temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; and (2) the Company’s decision to sell a security prior to its maturity at an amount below its carrying amount. Additionally, financial condition, near term prospects of the issuer, nationally recognized credit rating changes and cash flow trends and underlying levels of collateral, for asset-backed securities only, are monitored. The Company will record a charge to the statement of operations to the extent that these securities are subsequently determined to be other than temporarily impaired.

The estimated fair value of bonds and preferred stocks with gross unrealized losses at December 31, 2007 and 2006 is as follows:

	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2007
Bonds:
United States Government and agencies	$	485,907	$	80,743	$	566,650
State, municipal and other government		2,295		9,443		11,738
Public utilities		213,348		214,351		427,699
Industrial and miscellaneous		1,633,992		2,454,039		4,088,031
Mortgage and other asset-backed securities		613,555		3,075,674		3,689,229
		2,949,097		5,834,250		8,783,347
Preferred stocks		92,911		262,777		355,688
	$	3,042,008	$	6,097,027	$	9,139,035

32

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2006
Bonds:
United States Government and agencies	$	795,903	$	296,792	$	1,092,695
State, municipal and other government		52,933		13,303		66,236
Public utilities		265,842		193,440		459,282
Industrial and miscellaneous		2,343,486		1,704,457		4,047,943
Mortgage and other asset-backed securities		828,040		828,576		1,656,616
		4,286,204		3,036,568		7,322,772
Preferred stocks		138,998		78,799		217,797
	$	4,425,202	$	3,115,367	$	7,540,569

The carrying amount and estimated fair value of bonds at December 31, 2007, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Carrying Amount		Estimated Fair Value
Due in one year or less	$	224,842	$	225,134
Due after one year through five years		2,949,237		2,987,245
Due after five years through ten years		3,302,465		3,285,161
Due after ten years		4,832,959		5,001,897
		11,309,503		11,499,437
Mortgage and other asset-backed securities		4,896,685		4,703,828
	$	16,206,188	$	16,203,265

33

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

Sub-prime mortgages are loans to homebuyers who have weak or impaired credit histories, are loans that are non-conforming or are loans that are second in priority. The Company’s businesses in the United States do not sell or buy sub-prime mortgages directly. The Company’s position is related to so-called “asset-backed securities” (ABS). These securities are pools of mortgages that have been securitized and offered to investors as asset-backed securities, where the mortgages are collateral. Most of the underlying mortgages within the pool have FICO scores below 660. Therefore, the ABS has been classified by the Company as a sub-prime mortgage position. Also included in the Company’s total sub-prime mortgage position are ABS with second lien mortgages as collateral. The second lien mortgages may not necessarily have sub-prime FICO scores; however, the Company has included these ABS in its sub-prime position as it’s the second priority in terms of repayment. The Company does not have any “direct” residential mortgages to sub-prime borrowers outside of the ABS structures.

For ABS in an unrealized loss position, the Company considers them for impairment when there has been an adverse change in estimated cash flows from the cash flows previously projected at purchase, which is in accordance with SSAP 43, Loan-backed and Structured Securities. The Company did not impair any of its sub-prime mortgage positions in 2007 or 2006.

The following table provides the actual cost, carrying value and fair value by asset class of the Company’s sub-prime mortgage position at December 31, 2007:

	Actual Cost		Carrying Value		Fair Value
Residential Mortgage Backed Securities	$	484,775	$	485,226	$	434,272
Collateralized Debt Obligations		800		800		800
	$	485,575	$	486,026	$	435,072

The following table provides the actual cost, carrying value and fair value by asset class of the Company’s sub-prime mortgage position at December 31, 2007, which are reported off balance sheet for statutory reporting purposes.

	Actual Cost		Carrying Value		Fair Value
Residential Mortgage Backed Securities	$	786	$	786	$	770

34

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

A detail of net investment income (loss) is presented below:

	Year Ended December 31
	2007			2006			2005
Income:
Bonds	$	1,046,615		$	1,067,740		$	1,042,982
Preferred stocks		41,920			55,905			6,801
Common stocks		30,705			4,280			4,036
Mortgage loans		277,798			268,938			253,439
Real estate		1,230			653			2,519
Policy loans		26,069			25,872			26,548
Cash, cash equivalents and short-term investments		25,574			13,280			8,006
Derivative instruments		(5,337	)		(24,747	)		(38,548	)
Other invested assets		22,718			25,249			66,793
Other		4,257			7,599			7,492
Gross investment income		1,471,549			1,444,769			1,380,068
Less investment expenses		(72,375	)		(67,984	)		(62,185	)
Net investment income	$	1,399,174		$	1,376,785		$	1,317,883

Proceeds from sales and maturities of bonds and preferred stock and related gross realized capital gains and losses were as follows:

	Year Ended December 31
	2007			2006			2005
Proceeds	$	11,484,782		$	11,087,866		$	6,850,357
Gross realized gains	$	120,912		$	88,162		$	94,724
Gross realized losses		(114,009	)		(106,913	)		(48,198	)
Net realized capital gains (losses)	$	6,903		$	(18,751	)	$	46,526

Gross realized losses in 2007, 2006 and 2005 include $30,211, $21,070 and $8,724, respectively, which relate to losses recognized on other than temporary declines in market values of bonds and preferred stocks.

35

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

At December 31, 2007, investments with an aggregate carrying value of $5,763 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.

Net realized capital gains (losses) on investments and change in unrealized capital gains (losses) are summarized below:

	Realized
	Year Ended December 31
	2007			2006			2005
Bonds	$	223		$	(22,320	)	$	45,794
Preferred stocks		6,680			3,569			732
Common stocks		47,562			11,903			15,410
Derivatives		3,337			5,011			(2,370	)
Other invested assets		86,501			56,560			32,705
		144,303			54,723			92,271
Federal income tax effect		(64,520	)		(28,158	)		(28,274	)
Transfer to interest maintenance reserve		(27,822	)		677			(27,526	)
Net realized capital gains on investments	$	51,961		$	27,242		$	36,471
	Change in Unrealized
	Year Ended December 31
	2007			2006			2005
Bonds	$	(1,656	)	$	22,332		$	(20,416	)
Preferred stocks		263			1,178			39
Common stocks		536,642			328,209			38,992
Derivatives		4,245			(15,902	)		27,458
Other invested assets		107,793			94,177			(9,449	)
Change in unrealized capital gains(losses)	$	647,287		$	429,994		$	36,624

36

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

Gross unrealized gains and gross unrealized losses on common stock of unaffiliated entities are as follows:

	December 31
	2007			2006
Unrealized gains	$	15,332		$	35,445
Unrealized losses		(1,366	)		(1,532	)
Net unrealized gains	$	13,966		$	33,913

During 2007, the Company issued mortgage loans with interest rates ranging from 5.55% to 7.76% for commercial loans and 6.67% to 8.67% for agricultural loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 89%. The Company requires all mortgaged properties to carry fire insurance equal to the value of the underlying property.

At December 31, 2007 and 2006, respectively, the Company did not hold any impaired loans with a related allowance for credit losses. There were no impaired mortgage loans held without an allowance for credit losses as of December 31, 2007 and 2006, respectively.

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days), and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. The Company did not recognize any interest income on impaired loans nor did the Company recognize any interest income on a cash basis for the years ended December 31, 2007 or 2006. The Company recognized interest income on impaired loans of $494 for the year ended December 31, 2005. Interest income of $495 was recognized on a cash basis for year ended December 31, 2005.

37

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

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

	Year Ended December 31
	2007		2006		2005
Balance at beginning of period	$	—	$	—	$	9,120
Additions, net charged to operations		—		—		—
Reduction due to write-downs charged against the allowance		—		—		(7,566	)
Recoveries of amounts previously charged off		—		—		(1,554	)
Balance at end of period	$	—	$	—	$	—

During 2005, one loan with a book value of $14,345 was transferred to real estate. No loans were foreclosed or acquired by deed and transferred to real estate during 2007 or 2006. At December 31, 2007 and 2006, the Company held a mortgage loan loss reserve in the AVR of $108,183 and $136,653, respectively.

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

Geographic Distribution					Property Type Distribution
	December 31					December 31
	2007		2006			2007		2006
South Atlantic	27	%	27	%	Office	27	%	27	%
Pacific	21		22		Apartment	25		21
E. North Central	14		13		Retail	20		22
Mountain	12		10		Industrial	17		18
Middle Atlantic	10		13		Other	11		12
W. North Central	6		7
W. South Central	4		3
E. South Central	3		3
New England	3		2

38

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

At December 31, 2007, the Company had recorded investments in restructured securities of $1,576. The capital losses taken as a direct result of restructures in 2007 were $638. The Company did not record any investments in restructured securities at December 31, 2006 and did not take any capital losses as a direct result of restructures for the years ended December 31, 2006 or 2005. The Company often has impaired a security prior to the restructure date. These impairments are not included in the calculation of restructure related losses and are accounted for as a realized loss, reducing the cost basis of the security involved.

There were no investments in loans for which an impairment has been recognized in accordance with SSAP No. 36, Troubled Debt Restructuring, as of December 31, 2007 and 2006. There were no commitments to lend additional funds to debtors owing receivables whose terms have been modified in a troubled debt restructuring for either 2007 or 2006.

At December 31, 2007, the Company had ownership interests in 30 Low Income Housing Tax Credit (LIHTC) properties. The remaining years of unexpired tax credits ranged from 2 to 13 and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from 2 to 17 years. The amount of contingent equity commitments expected to be paid during the years 2008 to 2019 is $15,481.

For the year ended December 31, 2007, an impairment of $4,285 was recorded for MP Shoreline Associates, a LIHTC property. The impairment was determined by comparing the current book value to the fair value. The fair value was determined by discounting the anticipated future cash flows. Since the decline in fair value was determined to be other than temporary, the investment in partnership was written down to fair value.

The Company uses interest rate swaps to reduce market risk in interest rates and to alter interest rate exposures arising from mismatches between assets and liabilities. An interest rate swap is an arrangement whereby two parties (counterparties) enter into an agreement to exchange periodic interest payments. The dollar amount the counterparties pay each other is an agreed-upon period interest rate multiplied by an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The Company also uses cross currency swaps to reduce market risk in foreign currencies and to alter exchange exposure arising from mismatches between assets and liabilities. A notional currency exchange occurs at the

39

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

beginning and end of the contract. During the life of the swap, the counterparties exchange fixed or floating interest payments in its swapped currency. All swap transactions are entered into pursuant to master agreements providing for a single net payment to be made by one counterparty at each due date.

The Company may sell products with expected benefit payments extending beyond investment assets currently available in the market. Because assets will have to be purchased in the future to fund future liability cash flows, the Company is exposed to the risk of future investments made at lower yields than what is assumed at the time of pricing. Forward-starting interest rate swaps are utilized to lock-in the current forward rate.

Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges; consequently, when the value of the 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) which is mitigated by active measuring and monitoring.

Under exchange traded currency futures and options, the Company agrees to purchase a specified number of contracts with other parties and to post a variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The parties with whom the Company enters into exchange traded futures and options are regulated futures commissions merchants who are members of a trading exchange. The Company recognized net realized gains (losses) from futures contracts in the amount of $(1,342), $1,065 and $125 for the years ended December 31, 2007, 2006 and 2005, respectively.

The Company may issue foreign denominated assets or liabilities and uses forward rate agreements to hedge foreign currency risk associated with its foreign denominated assets or liabilities. Cash payments and/or receipts represent the difference between market values and those of the contracts.

40

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

An interest rate floor provides for the receipt of payments in the event interest rates fall below the strike rates in the contract. The floor is designed to generate cash flows to offset the lower cash flows received on assets during low interest rate environments. The Company may also invest in capped floating rate commercial mortgage loans and use interest rate caps to convert the commercial mortgage loan into a pure floating rate asset in order to meet its overall asset/liability strategy. Interest rate caps provide for the receipt of payments when interest rates rise above the strike rates in the contract. A single premium is paid by the Company at the beginning of the interest rate cap/floor contracts.

A replication transaction is a derivative transaction entered into in conjunction with a cash instrument to reproduce the investment characteristics of an otherwise permissible investment. The Company replicates investment grade corporate bonds by combining a AAA rated security as a cash component with a credit default swap which, in effect, converts the high quality asset into a lower rated investment grade asset. Using the swap market to replicate credit quality enables the Company to enhance the relative values while having the ability to execute larger transactions in a shortened time frame. A premium is received by the Company on a periodic basis and recognized in investment income. At December 31, 2007 and 2006, the Company had replicated assets with a fair value of $324,282 and $343,880 and credit default swaps with a fair value of $437 and $3,383, respectively. During the years ended December 31, 2007, 2006 and 2005, the Company has recognized no capital losses related to replication transactions.

The Company issues products providing the customer a return based on the S&P 500 indices. The Company uses S&P 500 index futures contracts and/or options to hedge the liability option risk associated with these products. Options are marked to fair value in the balance sheet and the fair value adjustment is recorded as income in the financial statements. There were no expenses recognized by the Company for the years ended December 31, 2007 or 2006 from option contracts. The Company recognized expense from options contracts in the amount of $121 for the year ended December 31, 2005.

The Company is exposed to credit related losses in the event of nonperformance by counterparties to financial instruments, but it does not expect any counterparty to fail to meet their obligations given their high credit rating of ‘A’ or better. The credit exposure of interest rate swaps and currency swaps is represented by the fair value of contracts, aggregated at a counterparty level, with a positive fair value at the reporting date. The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets on the Company’s behalf. The posted amount is

41

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

equal to the difference between the net positive fair value of the contracts and an agreed upon threshold that is based on the credit rating of the counterparty. Inversely, if the net fair value of all contracts with this counterparty is negative, the Company is required to post assets instead. At December 31, 2007, the fair value of all contracts, aggregated at a counterparty level, with a positive fair value amounted to $65,992. At December 31, 2007, the fair value of all contracts, aggregated at counterparty level, with a negative fair value amount to $88,031.

The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions is 24 years. At December 31, 2007 and 2006, none of the Company’s cash flow hedges have been discontinued because it was no longer probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship.

At December 31, 2007 and 2006, the Company has recorded $17,331 and $14,084, respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized gain (loss).

The Company did not recognize any unrealized gains and losses during 2007 and 2006 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

The Company has pledged securities as collateral for derivative transactions in the amount of $48,037 and $17,797 as of December 31, 2007 and 2006, respectively.

At December 31, 2007 and 2006, the Company’s outstanding financial instruments with on and off balance sheet risks, shown in notional amounts, are summarized as follows:

	Notional Amount
	2007		2006
Derivative securities
Interest rate and currency swaps:
Receive float-pay float	$	198,500	$	313,783
Receive fixed-pay float		4,619,955		3,876,835
Receive float-pay fixed		4,070,816		4,631,642
Receive fixed-pay fixed		94,594		81,195
Caps		145,400		35,000

42

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

5. Investments (continued)

Open futures contracts at December 31, 2007 and 2006, were as follows:

Number of Contracts	Contract Type	Opening Market Value		Year-End Market Value
December 31, 2007
39	S&P 500 March 2008 Futures	$	14,379	$	14,403
December 31, 2006
31	S&P 500 March 2007 Futures	$	11,045	$	11,070

6. Reinsurance

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

43

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

Premiums earned and reserves and claims liability amounts reflect the following reinsurance assumed and ceded amounts:

			Ceded/Retroceded to				Assumed from
	Direct Amount		Affiliated Companies		Unaffiliated Companies		Affiliated Companies		Unaffiliated Companies		Net Amount
Year ended December 31, 2007:
Premium revenue	$	2,038,914	$	987,444	$	849,696	$	218,399	$	1,723,553	$	2,143,726
At December 31, 2007:
Reserves for future policy benefits	$	18,367,525	$	7,542,424	$	3,164,980	$	594,972	$	4,679,634	$	12,934,727
Policy and contract claims payable		207,962		166,964		129,831		1,875		416,750		329,792
	$	18,575,487	$	7,709,388	$	3,294,811	$	596,847	$	5,096,384	$	13,264,519
Year ended December 31, 2006:
Premium revenue	$	2,303,401	$	1,049,122	$	826,156	$	6,348	$	1,529,701	$	1,964,172
At December 31, 2006:
Reserves for future policy benefits	$	17,403,364	$	6,346,320	$	2,838,797	$	331,829	$	4,192,951	$	12,743,027
Policy and contract claims payable		231,217		107,935		173,235		7,943		344,401		302,391
	$	17,634,581	$	6,454,255	$	3,012,032	$	339,772	$	4,537,352	$	13,045,418
Year ended December 31, 2005:
Premium revenue	$	2,566,208	$	1,047,890	$	812,737	$	5,924	$	1,329,601	$	2,041,106
At December 31, 2005:
Reserves for future policy benefits	$	17,166,531	$	5,761,998	$	2,514,348	$	5,445	$	3,653,590	$	12,549,220
Policy and contract claims payable		247,906		94,388		187,255		10,863		333,568		310,694
	$	17,414,437	$	5,856,386	$	2,701,603	$	16,308	$	3,987,158	$	12,859,914

44

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

Effective December 31, 2007, the Company entered into a reinsurance agreement with Transamerica Life Insurance Company (TLIC), an affiliate, to cede certain universal life business that includes certain policies that originated on Transamerica Life (Bermuda) Ltd. (TLB), a direct wholly-owned subsidiary of the Company. Universal life secondary guarantee reserves ceded were $143,515, resulting in a pre-tax gain of $143,515 that has been recorded directly to unassigned surplus on a net of tax basis.

During 2007, the Company entered into an agreement with Transamerica International Re (Bermuda) Ltd. (TIRe), an affiliate, to retrocede certain life insurance policies issued by Seguros Argos, S.A. de C.V., effective January 1, 2007. The Company received consideration of $21,955, resulting in an initial transaction pre-tax gain of $21,955. The net of tax gain was recorded directly to unassigned surplus on a net of tax basis. During 2007, the Company amortized $2,925 on a pre-tax basis into earnings with a corresponding charge to unassigned surplus.

Effective October 1, 2007, the Company recaptured the risks related to specified blocks of policies that were previously retroceded to TIRe. The consideration received was $59,744 and life and claim reserves recaptured were $358,102 and $7,900, respectively. This resulted in a pre-tax loss on the statutory income statement of $306,258. The Company subsequently entered into an indemnity retrocession agreement with Transamerica International Re (Ireland) Ltd (TIRI), an affiliate, to retrocede specific blocks of policies ceded to the Company. The consideration that was given in the transaction was $59,744 and the life and claim reserves ceded were $358,102 and $7,900, respectively. This resulted in a pre-tax gain on a statutory basis of $306,258 that was recorded directly to unassigned surplus on a net of tax basis.

The Company entered into an agreement effective December 30, 2006 to recapture a block of in force term life business that was ceded to Transamerica Pacific Insurance Company, Ltd. The consideration received was $37,614. Reserves recaptured included $223,404 of life reserves and $5,400 of claim reserves resulting in a pre-tax loss of $191,190, which has been included in the statement of operations.

The Company entered into an agreement effective December 30, 2006 to recapture a block of in force universal life business that was ceded to Transamerica Pacific Insurance Company, Ltd. The recapture consideration received was $635,128 for assets held related to the block; the recapture fee paid was $45,334 for a net consideration received of $589,794. Reserves recaptured included $678,272 of life reserves and $927 of claim reserves resulting in a pre-tax loss of $89,405, which has been included in the statement of operations.

45

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

The Company entered into an agreement effective December 31, 2006, to allow TIRI to recapture a retrocession agreement whereby the Company assumed mortality risks on a block of in force universal life business which subsequently allowed the Company to recapture the entire universal life contract ceded to TIRI. The recapture consideration paid was $1,245, and reserves recaptured were $4,562, for a net pre-tax gain of $3,317. Subsequent to the transaction, the Company entered into an agreement to recapture the universal life business ceded to TIRI effective December 31, 2006. The recapture consideration received was $361,986; a recapture fee of $11,400 was paid for a net consideration of $350,586. Reserves recaptured included $804,865 of life reserves and $1,152 of claim reserves, resulting in a pre-tax loss of $455,431, which is included in the statement of operations.

TLB acquired the direct liability to the policyholder through a court order from the Hong Kong Special Administrative Region Court, effective December 31, 2006, for most of the business issued from TOLIC’s branch in Hong Kong. TLB also acquired the direct liability to the policyholder through a court order from the High Court of the Republic of Singapore, effective December 31, 2006 for all business issued from TOLIC’s branch in Singapore. The novation of the contracts was approved by the Iowa Insurance Department and all policyholder liabilities were transferred to TLB. All balances assumed by TLB were reflected as direct adjustments to the balance sheet. As the transfer occurred between affiliated companies no gain or loss was recognized, and the difference between the assets transferred and the statutory liabilities assumed in the amount of $78,993 was recorded as goodwill and will be amortized into operations over the life of the business, not to exceed ten years. Below is a summary of the net policyholder liabilities and assets transferred:

46

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

Invested assets/cash transferred	$	1,004,909
Reinsurance recoverable		178
Due premiums		396
Due premiums ceded		(1,502	)
Deferred premiums		576
Policy loans		7,276
Policyholder life reserves		(928,481	)
Policyholder premium deposit and dividend accumulations		(1,025	)
Life claim reserves		(3,200	)
Advance premiums		(134	)
Net impact of transfer to subsidiary – goodwill	$	78,993

Goodwill in the amount of $9,274 was amortized during 2007 related to this transaction. TLB is valued on a U.S. statutory basis and includes a deferred gain liability of a similar amount to the goodwill reflected in the financials of the Company.

Subsequent to the novation of the Hong Kong and Singapore business the Company entered into a reinsurance agreement to assume certain risks related to the in force block from TLB effective December 31, 2006. The initial premium received was $261,418, reserves assumed included $328,985 of life reserves and $258 of claim reserves, resulting in a pre-tax loss of $67,825, which is included in the statement of operations.

Effective December 31, 2006, the Company entered into a reinsurance agreement with LIICA Re II, Inc., an affiliate, to cede term and universal life business. The initial premium paid was $120,000. Reserves ceded included $212,319 of term life reserves, $834,446 of universal life secondary guarantee reserves, $1,067 of claim reserves and $5,911 of miscellaneous policyholder assets, resulting in a pre-tax gain of $921,921 that was recorded directly to unassigned surplus on a net of tax basis. During 2007, the Company amortized $1,321 on a net of tax basis into earnings with a corresponding charge to unassigned surplus.

Effective December 31, 2006, the Company recaptured a block of in force term life business that was ceded to TIRe. The recapture premium received was $86,705; the commission expense allowance paid was $43,730, for a net consideration received of $42,975. Reserves recaptured included $286,151 of life reserves and $16,892 of claim reserves, resulting in a pre-tax loss of $260,068, which has been included in the statement of operations.

47

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

Subsequent to the recapture, the Company entered into a reinsurance agreement with LIICA Re I, an affiliate, to retrocede term life business effective December 31, 2006. The initial premium paid was $77,479, offset by the commission expense received of $42,022, for a net consideration of $35,457. Reserves ceded included $256,795 of life reserves and $13,146 of claim reserves, resulting in a pre-tax gain of $234,484 that was recorded directly to unassigned surplus on a net of tax basis.

Effective January 1, 2007, the Company recaptured the risks related to specified blocks of policies that were previously retroceded to TIRe. The recapture premium received was $9,677 and the commission expense allowance paid was $15,357 for a net consideration paid of $5,680. Reserves recaptured included $81,657 in life reserves and $457 in claim reserves resulting in a pre-tax loss of $87,793 which has been included in the statement of operations. The Company subsequently entered into an indemnity retrocession agreement with LIICA Re I to retrocede specific blocks of policies ceded to the Company. Net consideration received by the Company was $16,006 and the life and claim reserves ceded were $81,657 and $457, respectively. This resulted in a pre-tax gain of $98,119 that was recorded directly to unassigned surplus on a net of tax basis. During 2007, the Company amortized $7,220 on a net of tax basis into earnings with a corresponding charge to unassigned surplus.

During 2005, the Company executed novation agreements associated with 13 reinsurance treaties originally assumed by TIRe. As a result of the novations, $174,925 of statutory reserves were assumed. Subsequently, the Company entered into a reinsurance agreement to cede these risks back to TIRe. These transactions occurred with no gain or loss in the statement of operations or capital and surplus.

Effective December 31, 2005, the Company recaptured the risks related to the universal life business that was previously ceded to TIRI. The consideration that was given in the transaction was $288,500 and the reserves recaptured were $566,600. This resulted in a pre-tax loss on the statutory income statement of $278,100. In addition, the Company recaptured the risks related to the term business that was ceded to TIRe. The consideration received in the transaction was $125,400, the commission expense allowance paid was $84,000 and the reserves recaptured were $508,200. This resulted in a pre-tax loss on the statutory basis statement of operations of $466,800. The Company subsequently entered into a reinsurance agreement with Stonebridge Reinsurance Company, an affiliate, to cede the term business and the secondary guarantee related to the universal life business. The consideration that was given in the transaction was $103,900, the commission expense allowance received was $67,400 and the reserves

48

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

6. Reinsurance (continued)

ceded were $832,400 ($508,200 term and $324,200 secondary guarantee). This resulted in a pre-tax gain on a statutory basis of $795,900 that was recorded directly to unassigned surplus on a net of tax basis and will be amortized back into earnings based upon contract experience.

During 2001, the Company novated certain traditional life insurance contracts to Transamerica Financial Life Insurance Company (TFLIC), an affiliate, via an assumption reinsurance transaction. Under the terms of this agreement, a significant portion of the future statutory-basis profits from the contracts assumed by TFLIC will be passed through to the Company as an experience rated refund. The Company recorded a deferred liability of $14,281 as a result of this transaction, which has an unamortized balance of $12,848 at December 31, 2007. The accretion of the deferred liability was $1,433 for 2007, 2006 and 2005.

During 2001, the Company entered into a reinsurance transaction with TIRe. Under the terms of this transaction, the Company ceded the obligation of future guaranteed minimum death benefits included in certain of its variable annuity contracts. The gain on the transaction of $28,967 was credited directly to unassigned surplus on a net of tax basis. Subsequent to the initial gain, the Company amortized $1,883 for each of the years ended December 31, 2007 and 2006, into earnings with a corresponding charge to unassigned surplus. At December 31, 2007, the Company holds collateral from this affiliate in the form of letters of credit of $427,484, covering this reinsurance agreement and others.

The Company reports a reinsurance deposit receivable of $120,582 and $112,956 as of December 31, 2007 and 2006, respectively. In 1996, the Company entered into a reinsurance agreement with Berkshire Hathaway where, for a net consideration of $59,716, the Company ceded certain portions of future obligations under single premium annuity contracts originally written by the Company in 1993. Consistent with the requirements of SSAP No. 75, Reinsurance Deposit Accounting, the Company reports the net consideration paid as a deposit. The amount reported is the present value of the future payment streams discounted at the effective yield rate determined at inception.

49

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Income Taxes

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

	December 31
	2007		2006
Deferred income tax assets:
Non-admitted assets	$	33,466	$	32,071
Provision for contingent experience rated refund		7,743		8,139
Derivatives		12,283		3,933
Partnerships		42,950		—
Tax basis deferred acquisitions costs		216,772		204,561
Reserves		237,150		241,052
Unrealized capital losses		28,103		21,572
§807(f) assets		7,084		9,343
Deferred intercompany losses		18,283		18,283
Investment in controlled foreign company		91,874		76,240
Other		37,512		39,450
Total deferred income tax assets		733,220		654,644
Deferred income tax assets non-admitted		256,592		290,618
Admitted deferred income tax assets		476,628		364,026
Deferred income tax liabilities:
Partnerships		196,774		93,379
Agent deferred compensation		23,499		22,476
Real estate		21,737		31,551
§807(f) liabilities		10,590		12,179
Separate account seed money		2,853		2,853
Unrealized capital gains		37,580		44,359
Deferred intercompany gains		20,983		20,857
PGAAP income		24,402		27,648
Other		6,184		8,838
Total deferred income tax liabilities		344,602		264,140
Net admitted deferred income tax asset	$	132,026	$	99,886

50

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Income Taxes (continued)

The change in net deferred income tax assets and deferred income tax assets are as follows:

	December 31
	2007		2006		Change
Total deferred income tax assets	$	733,220	$	654,644	$	78,576
Total deferred income tax liabilities		344,602		264,140		80,462
Net deferred income tax asset	$	388,618	$	390,504		(1,886	)
Tax effect of unrealized gains (losses)						24,190
Change in net deferred income tax					$	22,304

	December 31
	2006		2005		Change
Total deferred income tax assets	$	654,644	$	608,768	$	45,876
Total deferred income tax liabilities		264,140		249,472		14,668
Net deferred income tax asset	$	390,504	$	359,296		31,208
Tax effect of unrealized gains (losses)						38,412
Change in net deferred income tax					$	69,620

Non-admitted deferred income tax assets increased (decreased) $(52,862) and $49,218 for the years ended December 31, 2007 and 2006, respectively.

51

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Income Taxes (continued)

Federal income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate to gain (loss) from operations before federal income tax expense (benefit) and net realized capital gains (losses) on investments for the following reasons:

	Year Ended December 31
	2007			2006			2005
Income tax expense (benefit) on operational gains and capital gains (losses) on investments computed at the federal statutory rate (35%)	$	16,893		$	(148,131	)	$	(54,197	)
Agent deferred compensation		(1,023	)		(1,605	)		236
Controlled foreign corporation income – TA Life Bermuda		15,633			3,483			—
Deferred acquisition costs – tax basis		12,211			35,573			26,033
Dividends received deduction		(2,283	)		(2,073	)		(2,415	)
IMR amortization		(7,180	)		(7,472	)		(7,709	)
Investment income items		7,715			(8,293	)		(31,487	)
Limited partnership book/tax difference		(17,771	)		(15,675	)		(7,185	)
Prior year under (over) accrual		7,061			(36,883	)		94,218
Earnings from affiliated LLC		1,113			2,967			3,520
Reinsurance adjustments		127,507			256,777			176,144
Tax credits		(30,699	)		(29,553	)		(20,784	)
Tax reserve valuation		(4,391	)		(11,637	)		24,666
Other		(6,356	)		1,304			(4,052	)
Federal income tax expense on operations and capital gains (losses) on investments		118,430			38,782			196,988
Less tax (benefit) on capital gains (losses)		64,520			28,158			28,274
Total federal income tax expense	$	53,910		$	10,624		$	168,714

The total statutory income taxes are computed as follows:

	Year Ended December 31
	2007			2006			2005
Federal income tax expense on operations and capital gains (losses) on investments	$	118,430		$	38,782		$	196,988
Change in net deferred income taxes		(22,304	)		(69,620	)		55,353
Total statutory income taxes	$	96,126		$	(30,838	)	$	252,341

52

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Income Taxes (continued)

For federal income tax purposes, the Company joins in a consolidated income tax return filing with other affiliated companies. Under the terms of a tax sharing agreement between the Company and its affiliates, the Company computes federal income tax expense as if it were filing a separate income tax return, except that current credit for tax credits and net operating loss carryforwards are determined on the basis of the consolidated group. Additionally, the alternative minimum tax is computed for the consolidated group and the resulting tax, if any, is allocated back to the separate companies on the basis of the separate companies’ alternative minimum taxable income. A tax return has not yet been filed for 2007.

Income taxes incurred during 2007, 2006 and 2005 for the consolidated group in which the Company is included that will be available for recoupment in the event of future net losses is $327,937, $244,223 and $137,713 respectively.

The amount of tax contingencies calculated for the Company as of December 31, 2007 and December 31, 2006 is $29,410. The total tax contingencies represent the amount that, if recognized, would affect the effective income tax rate in future periods. It is reasonably possible that a portion of the tax contingencies may decrease within twelve months of the reporting date. This possibility arises from a controversy currently at the IRS appellate division that may be settled within the next 12 months. At this time, an estimate of this possible decrease cannot be made. The Company classifies interest and penalties related to income taxes as interest expense and penalty expense, respectively. The Company’s interest expense related to income taxes is $3,448 and $1,612 for December 31, 2007 and December 31, 2006 respectively. The Company recorded no liability for penalties.

The Company’s federal income tax returns have been examined and closing agreements have been executed with the Internal Revenue Service through 2000. The examination for the years 2001 through 2004 has been completed and resulted in tax return adjustments that are currently being appealed. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions. An examination is underway for 2005 and 2006.

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 “policyholders’ surplus account” (PSA). No federal income taxes have been provided for in the financial statements on income deferred in the PSA. A distribution from the PSA in the amount of

53

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

7. Income Taxes (continued)

$117,701 was made in 2005, reducing the balance in the PSA to zero. Due to US tax legislation enacted in October 2004, distributions to shareholders during 2005 and 2006 were deemed to come first out of the PSA and are not taxed. There was no reduction to net earnings due to this distribution.

8. 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, is summarized as follows:

	December 31
	2007					2006
	Amount			Percent		Amount			Percent
Subject to discretionary withdrawal with adjustment:
With market value adjustment	$	2,715,162		14	%	$	3,303,542		17	%
At book value less surrender charge		365,438		2			377,020		2
At fair value		1,881,818		10			2,004,697		11
Total with adjustment or at market value		4,962,418		26			5,685,259		30
Subject to discretionary withdrawal without adjustment		689,184		4			805,485		4
Not subject to discretionary withdrawal provision		13,245,572		70			12,639,876		66
Total annuity reserves and deposit liabilities		18,897,174		100	%		19,130,620		100	%
Less reinsurance ceded		(2,733,627	)				(2,900,660	)
Net annuity reserves and deposit liabilities	$	16,163,547				$	16,229,960

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 fair value changes are borne entirely by the policyholder.

54

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

The Separate Account includes funds related to variable annuities of a nonguaranteed nature. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. The assets and liabilities of the accounts are carried at fair value.

Information regarding the separate accounts of the Company is as follows:

	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonindexed Guaranteed More Than 4%		Nonguaranteed Separate Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2007	$	—	$	853	$	574,226	$	24,240	$	599,319
Reserves for accounts with assets at fair value as of December 31, 2007	$	997	$	97,270	$	635,878	$	1,809,575	$	2,543,720
Reserves by withdrawal characteristics as of December 31, 2007:
At fair value	$	—	$	—	$	—	$	1,765,085	$	1,765,085
Not subject to discretionary withdrawal		997		97,270		635,878		44,490		778,635
	$	997	$	97,270	$	635,878	$	1,809,575	$	2,543,720
Reserves for separate accounts by withdrawal characteristics at December 31, 2007:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—	$	—
At book value without market value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		1,765,085		1,765,085
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		1,765,085		1,765,085
Not subject to discretionary withdrawal		997		97,270		635,878		44,490		778,635
Total separate account liabilities at December 31, 2007	$	997	$	97,270	$	635,878	$	1,809,575	$	2,543,720

55

Transamerica Occidental Life Insurance Company

Notes to Financial Statements - Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonindexed Guaranteed More Than 4%		Nonguaranteed Separate Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2006	$	4,878	$	2,877	$	160,623	$	30,023	$	198,401
Reserves for accounts with assets at fair value as of December 31, 2006	$	30,198	$	194,062	$	237,420	$	1,909,855	$	2,371,535
Reserves by withdrawal characteristics as of December 31, 2006:
At fair value	$	—	$	—	$	—	$	1,870,494	$	1,870,494
Not subject to discretionary withdrawal		30,198		194,062		237,420		39,361		501,041
	$	30,198	$	194,062	$	237,420	$	1,909,855	$	2,371,535
Reserves for separate accounts by withdrawal characteristics at December 31, 2006:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—	$	—
At book value without market value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		1,870,494		1,870,494
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		1,870,494		1,870,494
Not subject to discretionary withdrawal		30,198		194,062		237,420		39,361		501,041
Total separate account liabilities at December 31, 2006	$	30,198	$	194,062	$	237,420	$	1,909,855	$	2,371,535

56

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonindexed Guaranteed More Than 4%		Nonguaranteed Separate Accounts		Total
Premiums, deposits and other considerations for the year ended December 31, 2005	$	1,022	$	201,736	$	84,839	$	34,813	$	322,410
Reserves for accounts with assets at fair value as of December 31, 2005	$	76,476	$	542,004	$	169,358	$	1,942,392	$	2,730,230
Reserves by withdrawal characteristics as of December 31, 2005:
At fair value	$	—	$	—	$	—	$	1,904,124	$	1,904,124
Not subject to discretionary withdrawal		76,476		542,004		169,358		38,268		826,106
	$	76,476	$	542,004	$	169,358	$	1,942,392	$	2,730,230
Reserves for separate accounts by withdrawal characteristics at December 31, 2005:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	—	$	—	$	—	$	—
At book value without market value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		1,904,124		1,904,124
At book value without market value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		1,904,124		1,904,124
Not subject to discretionary withdrawal		76,476		542,004		169,358		38,268		826,106
Total separate account liabilities at December 31, 2005	$	76,476	$	542,004	$	169,358	$	1,942,392	$	2,730,230

57

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

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

	Year Ended December 31
	2007			2006			2005
Transfer as reported in the summary of operations of the separate accounts statement:
Transfers to separate accounts	$	24,877		$	30,023		$	34,812
Transfers from separate accounts		306,751			251,518			290,561
Net transfers from separate accounts		(281,874	)		(221,495	)		(255,749	)
Other reconciling adjustments		(4,249	)		73			(525	)
Net transfers as reported in the statements of operations	$	(286,123	)	$	(221,422	)	$	(256,274	)

A reclassification was made to the amounts previously reported to the Insurance Division, Department of Commerce, State of Iowa in the 2007 Annual Statement, to move $189 from net transfers to separate accounts to reserve adjustments on reinsurance ceded within the Statement of Operations, which also affected the reconciliation of net transfers to or from separate accounts as reflected in the notes to financials. This reclassification had no impact on net income.

Reserves on certain of the Company’s traditional life insurance products are computed using mean reserving methodologies. The Company moved to a continuous reserve methodology from a mean reserve method on certain products. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy’s paid-through date to the policy’s next anniversary date. At December 31, 2007 and 2006, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loadings, are as follows:

	Gross			Loading		Net
December 31, 2007
Life and annuity:
Ordinary first-year business	$	18,461		$	102	$	18,359
Ordinary renewal business		448,991			9,470		439,521
Group life direct business		27,282			—		27,282
Reinsurance ceded		(194,866	)		—		(194,866	)
		299,868			9,572		290,296
Accident and health		(46,642	)		—		(46,642	)
	$	253,226		$	9,572	$	243,654

58

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

	Gross			Loading		Net
December 31, 2006
Life and annuity:
Ordinary first-year business	$	77,441		$	126	$	77,315
Ordinary renewal business		413,485			10,187		403,298
Group life direct business		3,828			—		3,828
Reinsurance ceded		(171,071	)		—		(171,071	)
		323,683			10,313		313,370
Accident and health		11,187			—		11,187
	$	334,870		$	10,313	$	324,557

At December 31, 2007 and 2006, the Company had insurance in force aggregating $333,883,262 and $273,530,416, respectively, in which the gross premiums are less than the net premiums required by the standard valuation standards established by the Insurance Division, Department of Commerce, of the State of Iowa. The Company established policy reserves of $621,198 and $589,996 to cover these deficiencies at December 31, 2007 and 2006, respectively.

At December 31, 2007 and 2006, the Company had variable annuities with minimum guaranteed income benefits as follows:

Year	Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held		Reinsurance Reserve Credit
2007	Minimum Guaranteed Income Benefit	$	1,468,917	$	196,485	$	120,374
2006	Minimum Guaranteed Income Benefit	$	1,612,235	$	335,827	$	208,398

For Variable Annuities with Guaranteed Living Benefits (VAGLB), the Company complies with Actuarial Guideline 39. This guideline defines a two step process for the determination of VAGLB reserves. The first step is to establish a reserve equal to the accumulated VAGLB charges for the policies in question. The second step requires a standalone asset adequacy analysis to determine the sufficiency of these reserves. This step has been satisfied by projecting 30 years into the future along 1,000 stochastic variable return paths using a variety of assumptions as to VAGLB charges, lapse, withdrawal, annuitization and death. The results of this analysis are discounted back to the valuation date and compared to the accumulation of fees reserve to determine if an additional reserve needs to be established.

59

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

8. Policy and Contract Attributes (continued)

At December 31, 2007 and 2006, the Company had variable annuities with minimum guaranteed death benefits as follows:

Year	Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held		Reinsurance Reserve Credit
2007	Minimum Guaranteed Death Benefit	$	10,115,886	$	474,945	$	263,952
2006	Minimum Guaranteed Death Benefit	$	11,245,800	$	608,816	$	350,618

For Variable Annuities with Minimum Guaranteed Death Benefits (MGDB), the Company complies with Actuarial Guideline 34. This guideline requires that MGDBs be projected by assuming an immediate drop in the values of the assets supporting the variable annuity contract, followed by a subsequent recovery at a net assumed return until the maturity of the contract. The immediate drop percentages and gross assumed returns vary by asset class and are defined in the guideline. Mortality is based on the 1994 Variable Annuity MGDB Mortality Table, which is also defined in the guideline.

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated by the Company’s divisional actuaries using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business.

The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2007 and 2006 was $1,286 and $1,274, respectively. The Company incurred $452 and paid $440 of claim adjustment expenses in the current year, of which $376 of the paid amount was attributable to insured or covered events of prior years. The Company did not increase or decrease the provision for insured events of prior years.

The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Health Contracts.

60

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

9. Securities Lending

The Company participates in two agent-managed securities lending programs. Under the first program, the Company receives collateral equal to 102% of the fair market value of the loaned securities as of the transaction date. If the fair value of the collateral is at any time less than 102% of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 102% of the fair value of the loaned securities. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105% of the fair market value of the loaned security. At December 31, 2007 and December 31, 2006, respectively, securities in the amount of $543,195 and $621,756 were on loan under security lending agreements and the collateral the Company received was in the form of cash in this program.

Under the second program, the Company receives collateral equal to 102/105% of the fair market value of the loaned securities as of the transaction date for domestic/international securities, respectively. The counterparty is mandated to deliver additional collateral if the fair value of the collateral is at any time less than 100% of the fair value of the loaned securities. This additional collateral, along with the collateral already held in connection with the lending transaction, must then be at least equal to 102/105% of the fair value of the loaned domestic/international securities, respectively. Except for the amount of $54,132 as of December 31, 2007, the program requirements restrict the collateral from rehypothecation by any party involved in the transaction and has minimum limitations related to credit worthiness, duration and borrower levels. At December 31, 2007 and December 31, 2006, respectively, securities in the amount of $68,642 and $64,801 were on loan under security lending agreements as part of this program. Liabilities are recorded with respect to the cash collateral received in connection with the securities on loan when it is available for the general use of the Company. Liabilities were recorded in the amount of $76,806 and $72,132, at December 31, 2007 and 2006, respectively.

61

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

10. 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 the Company’s statutory surplus as of the preceding December 31, or (b) the Company’s statutory gain from operations before net realized capital gains (losses) on investments for the preceding year. Subject to the availability of unassigned surplus at the time of such dividend, the maximum payment which may be made in 2008, without the prior approval of insurance regulatory authorities, is $357,034.

Life/health insurance companies are subject to certain risk-based capital (RBC) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2007, the Company meets the RBC requirements.

11. Capital Structure

The Company has 1,103,466 shares of preferred stock issued and outstanding. The par value of the preferred stock is $12.50 per share. Holders of the preferred shares shall be entitled to receive dividends equal to the amount of income generated from a segregated pool of assets, including cash, cash equivalents, mortgages and debt securities and these dividends are cumulative in nature. Holders of the shares of preferred stock have no right to cause mandatory or optional redemption of the shares. As of December 31, 2007, cumulative unpaid dividends relating to the preferred shares were $1,596. There were no cumulative unpaid dividends relating to preferred shares at December 31, 2006.

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

During 2006 and 2005, the Company sold $592 and $9,029, respectively, of agent balances without recourse to an affiliated entity. Prior to July 29, 2005, the agent debit balances were sold to Money Services, Inc. (MSI), an affiliated company. Subsequent to July 29, 2005, agent debit balances were sold without recourse to ADB Corporation, LLC (ADB), an affiliate company, and all rights, title and interest in the prior net debit balances owned by MSI prior to July 29, 2005, were fully assigned, without recourse, to ADB. The Company did not realize a gain or loss as a result of the sales. As of July 1, 2006, the Company no longer sells agent debit balances and thus retains such balances as non-admitted receivables. Receivables in the amount of $23,781 and $17,261 were non-admitted as of December 31, 2007 and 2006, respectively.

62

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

12. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities (continued)

The Company has recorded liabilities of $270,370 and $455,262 for municipal reverse repurchase agreements as of December 31, 2007 and 2006, respectively. The reverse repurchase agreements are collateralized securities with book values of $295,517 and $499,775 as of December 31, 2007 and 2006, respectively. These securities have maturity dates that range from 2010 to 2029 and have a weighted average interest rate of 7.60%.

There were no dollar reverse repurchase agreements at December 31, 2007. At December 31, 2006, securities with a book value of $309,458 and a market value of $310,032 were subject to dollar reverse repurchase agreements. The Company has no outstanding liability for borrowed money due to participation in dollar reverse repurchase agreements at December 31, 2007 and $312,669 at December 31, 2006.

13. Pension Plan and Other Postretirement Benefits

The Company’s employees participate in a qualified benefit plan sponsored by AEGON USA, Inc. (AEGON), an affiliate. The Company has no legal obligation for the plan. The Company recognizes pension expense equal to its allocation from AEGON. The pension expense is allocated among the participating companies based on International Accounting Standards 19 (IAS 19), Accounting for Employee Benefits as a percent of salaries. The benefits are based on years of service and the employee’s compensation during the highest five consecutive years of employment. Pension expense aggregated $4,297, $4,142 and $3,616, for the years ended December 31, 2007, 2006 and 2005, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974.

The Company’s employees also participate in a contributory defined contribution plan sponsored by AEGON which is qualified under Section 401(k) of the Internal Revenue Service Code. Employees of the Company who customarily work at least 1,000 hours during each calendar year and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to twenty-five percent of their salary to the plan. The Company will match an amount up to three percent of the participant’s salary.

63

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

13. Pension Plan and Other Postretirement Benefits (continued)

Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974. Benefits expense of $2,491, $2,328 and $2,136 were allocated for the years ended December 31, 2007, 2006 and 2005, respectively.

AEGON sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The plans are noncontributory, and benefits are based on years of service and the employee’s compensation level. The plans are unfunded and nonqualified under the Internal Revenue Service Code. In addition, AEGON has established incentive deferred compensation plans for certain key employees of the Company. The Company’s allocation of expense for these plans for each of the years ended December 31, 2007, 2006 and 2005 was negligible. AEGON also sponsors an employee stock option plan/stock appreciation rights for individuals employed and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued or funded as deemed appropriate by management of AEGON and the Company.

In addition to pension benefits, the Company participates in plans sponsored by AEGON that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $371, $248 and $349 related to these plans for the years ended December 31, 2007, 2006 and 2005, respectively.

64

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

14. Related Party Transactions

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

The Company is party to a cost sharing agreement between AEGON USA, Inc. companies, providing for services needed. The Company is also party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the advisor serves as the administrator and advisor for the Company’s mortgage loan operations. AEGON USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. During 2007, 2006 and 2005, the Company paid $67,022, $71,245 and $62,683, respectively, for these services, which approximates their costs to the affiliates. During 2006, the Company executed an administration service agreement with Transamerica Fund Advisors, Inc. to provide administrative services to the AEGON/Transamerica Series Trust.

On December 19, 2007, the Company paid a $50,627 dividend to its preferred shareholder, Transamerica and a $149,373 dividend to its common shareholder as of that date, TSC. On December 13, 2006, the Company paid a $54,068 dividend to its preferred shareholder as of that date, Scottish Equitable. On December 8, 2005, the Company paid a $193,048 dividend to its common stockholder, TSC, and a $106,952 dividend to its preferred shareholder, Scottish Equitable Finance Limited.

65

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

14. Related Party Transactions (continued)

On December 19, 2006, based on approval from the Insurance Division, Department of Commerce, of the State of Iowa, the Company redeemed the surplus note it held with Transamerica Corporation. During 2002, the Company received $200,000 from Transamerica Corporation in exchange for surplus notes. These notes were due 20 years from the date of issuance and were subordinate and junior in right of payment to all obligations and liabilities of the Company. In the event of liquidation of the Company, full payment of the surplus notes shall be made before the holders of common stock become entitled to any distribution of the remaining assets of the Company. Additional information related to the surplus notes at December 31, 2006 is as follows:

December 31, 2006
Date Issued	Interest Rate		Original Amount of Notes		Current Value		Interest Paid Current Year		Total Interest Paid		Date Redeemed
September 30, 2002	6.0	%	$	200,000	$	0	$	11,633	$	47,633	December 19, 2006

Receivables from and payables to affiliates bear interest at the thirty-day commercial paper rate. At December 31, 2007 and 2006, the Company reported a net amount of receivables from affiliates of $83,638 and $73,821, respectively. Terms of settlement require that these amounts be settled within 90 days. As of December 31, 2007, the Company has five short-term notes receivable. There are notes from the following companies: Transamerica Corporation, in the amount of $56,300 which is due on or before November 28, 2008; two notes from TIRe in the amounts of $8,900 and $100 which are due by December 10, 2008 and December 23, 2008, respectively; AEGON USA, Inc., in the amount of $295,000 which is due on or before December 27, 2008; and Transamerica Life Insurance Company in the amount of 42,500 which is due on or before December 30, 2008. The Transamerica Corporation note bears interest at 4.72%, while the other four notes bear interest at 4.75%. These notes are reported as short-term investments. The Company has two short-term notes payable to Monumental Life Insurance Company of $26,300 and $47,100 outstanding at December 31, 2007. These notes are due by October 22, 2008 and October 23, 2008, respectively, and bear interest at 5.05%. During 2007, 2006 and 2005 the Company received (paid) net interest of $2,053, $(5,414) and $2,033, respectively, to affiliates.

66

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

15. Commitments and Contingencies

The Company has contingent commitments for $339,073 and $491,486 as of December 31, 2007 and 2006, respectively, to provide additional funding for various joint ventures, partnerships, and limited liability companies, which includes LIHTC commitments of $15,481 and $29,312, respectively.

At December 31, 2007 and 2006, the Company has mortgage loan commitments of $108,081 and $289,635, respectively.

At December 31, 2007 and 2006, the Company has private placement commitments outstanding of $59,474 and $70,920, respectively.

The net amount of securities being sold on a “to be announced” (TBA) basis was $116,510 as of December 31, 2007. There were no securities acquired or sold on a TBA basis as of December 31, 2007.

The Company may pledge assets as collateral for transactions involving funding agreements. At December 31, 2007 and 2006, the Company has pledged invested assets with a carrying amount of $163,758 and $144,384, respectively, and fair value of $160,357 and $141,906, respectively, in conjunction with these transactions.

Assets in the amount of $2,767,511 and $2,028,003 as of December 31, 2007 and 2006, respectively, were pledged as collateral in conjunction with funding agreements associated with the Federal Home Loan Bank.

The Company has provided a guarantee for the performance of an affiliated noninsurance entity that was involved in a guaranteed sale of investments in low-income housing tax credit partnerships. These partnerships are majority owned by a noninsurance subsidiary of the Company for which a third party is the primary investor. The balance of the investor’s capital account covered by this transaction is $15,752 as of December 31, 2007. The nature of the obligation is to provide the investor with a minimum guaranteed annual and cumulative return on their contributed capital. The Company is not at risk for changes in tax law or the investor’s inability to fully utilize tax benefits. Accordingly, the Company believes the likelihood of having to make material payments under the guarantee is remote.

67

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

15. Commitments and Contingencies (continued)

The Company serves as guarantor for an affiliate’s guaranties of the principal value of loans made to entities which invest in certain investment funds. There was no notional amount associated with these guarantees as of December 31, 2007. The investment funds’ assets are restricted based on established investment guidelines and are required, upon a decline in value below a formula based threshold, to either replace the assets with fixed income instruments or sell assets and pay down the loan in order to minimize the guarantor’s principal protection liability. There are no expected payments associated with these guarantees.

At December 31, 2007, the Company had entered into multiple agreements with notional amounts of $643,923 for which it was paid a fee to provide credit enhancements and standby liquidity asset purchase agreements. The Company believes the chance of draws or other performance features being exercised under these agreements is minimal.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company, except where right of offset against other taxes paid is allowed by law. Amounts available for future offsets are recorded as an asset on the Company’s balance sheet. The future obligation has been based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $6,174 and $6,175 at December 31, 2007 and 2006, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense (benefit) was $261, $260 and $(11,023), for the years ended December 31, 2007, 2006 and 2005, respectively.

In the normal course of business, the Company has obtained letters of credit of $330,543 for the benefit of non affiliated companies that have reinsured business to the Company where the ceding companies’ state of domicile does not recognize the Company as an authorized reinsurer.

The Company has also provided a guarantee for the obligations of noninsurance affiliates who have accepted assignments of structured settlement payment obligations from other insurers and purchase structured settlement insurance policies from subsidiaries of the Company that match those obligations. There are no expected payments associated with this guarantee.

68

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

15. Commitments and Contingencies (continued)

The Company is party to legal proceedings incidental to its business. Although such litigation sometimes includes substantial demands for compensatory and punitive damages, in addition to contract liability, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

16. Leases

The Company leases office buildings under various noncancelable operating lease agreements. At December 31, 2007, the future minimum aggregate rental commitments are as follows:

Year ending December 31:
2008	$	9,233
2009		9,943
2010		8,798
2011		8,599
2012		6,909
Thereafter		34,165

The Company, both on its own and through its holdings in two LLCs, Transamerica Realty Investment Properties, LLC and Transamerica Pyramid Properties, LLC, owns buildings that are rented out to others. Future minimum lease payment receivables under noncancelable leasing arrangements as of December 31, 2007 are as follows:

Year ending December 31:
2008	$	29,950
2009		26,220
2010		24,360
2011		21,802
2012		14,660
Thereafter		20,408

69

Transamerica Occidental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

17. Reconciliation of Capital and Surplus

The following table reconciles capital and surplus as reported in the Annual Statement filed with the Insurance Division, Department of Commerce, of the State of Iowa to the amounts reported in the accompanying financial statements:

	December 31, 2005
	Total Capital and Surplus
Amounts reported in the Annual Statement	$	2,132,653
Adjustment for affiliated common stock valuation		478,102
Amounts reported herein	$	2,610,755

There were no reconciling items at December 31, 2007 and 2006 for the years then ended.

18. Event (Unaudited) Subsequent to the Date of the Report of Independent Public Accounting Firm

On June 13, 2008, the board of directors of the Company approved the merger of the Company into Transamerica Life Insurance Company (TLIC), an affiliated company, subject to regulatory approval. It is anticipated the merger will occur on October 1, 2008. As a result of the merger, TLIC will assume ownership of all assets, and responsibility for all liabilities of the Company.

70

Statutory-Basis

Financial Statement Schedules

Transamerica Occidental Life Insurance Company

Summary of Investments – Other Than Investments in Related Parties

(Dollars in Thousands)

December  31, 2007

Schedule I

Type of Investment	Cost (1)		Market Value		Amount at Which Shown in the Balance Sheet
Fixed maturities
Bonds:
United States government and government agencies and authorities	$	1,322,063	$	1,343,713	$	1,322,063
States, municipalities and political subdivisions		208,451		221,463		208,451
Foreign governments		120,359		132,860		120,359
Public utilities		1,131,987		1,163,410		1,131,987
All other corporate bonds		13,423,328		13,341,818		13,423,328
Preferred stocks		545,135		519,142		545,135
Total fixed maturities		16,751,323		16,722,406		16,751,323
Equity securities
Common stocks:
Banks, trust and insurance		109,012		109,012		109,012
Industrial, miscellaneous and all other		53,663		67,629		67,629
Total common stocks		162,675		176,641		176,641
Mortgage loans on real estate		4,507,913				4,507,913
Real estate		8,998				8,998
Policy loans		390,494				390,494
Other long-term investments		1,135,575				1,367,797
Cash, cash equivalents and short-term investments		171,248				171,248
Total investments	$	23,128,226			$	23,374,414

(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.

71

Transamerica Occidental Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

December 31, 2007

Schedule III

	Future Policy Benefits and Expenses		Unearned Premiums		Policy and Contract Liabilities			Premium Revenue		Net Investment Income*		Benefits, Claims Losses and Settlement Expenses		Other Operating Expenses*			Premiums Written
Year ended December 31, 2007
Individual life	$	8,059,940	$	—	$	245,323		$	1,572,697	$	529,945	$	1,483,409	$	812,070
Individual health		175,028		33,102		3,450			85,676		12,874		62,322		74,572		$	116,865
Group life and health		50,503		707		70,336			78,138		6,944		53,671		26,429			26,432
Annuity		4,615,448		—		10,682			407,215		849,411		1,566,368		(431,234	)
	$	12,900,919	$	33,809	$	329,791		$	2,143,726	$	1,399,174	$	3,165,770	$	481,837
Year ended December 31, 2006
Individual life	$	7,687,646	$	—	$	214,368		$	1,297,849	$	505,298	$	2,258,824	$	936,437
Individual health		146,729		33,787		19,541			76,429		11,314		53,052		55,324		$	113,640
Group life and health		39,315		822		61,229			47,745		6,708		30,790		27,512			37,488
Annuity		4,834,728		—		7,253			542,149		853,465		1,626,099		(528,671	)
	$	12,708,418	$	34,609	$	302,391		$	1,964,172	$	1,376,785	$	3,968,765	$	490,602
Year ended December 31, 2005
Individual life	$	7,418,637	$	—	$	218,906		$	1,456,551	$	483,189	$	1,710,877	$	934,163
Individual health		124,003		32,135		9,519			47,826		9,419		45,465		35,735		$	110,930
Group life and health		31,642		835		83,040			21,577		6,999		32,978		6,889			36,808
Annuity		4,941,968		—		(771	)		515,152		818,276		1,477,790		(277,973	)
	$	12,516,250	$	32,970	$	310,694		$	2,041,106	$	1,317,883	$	3,267,110	$	698,814

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

72

Transamerica Occidental Life Insurance Company

Reinsurance

(Dollars in Thousands)

December 31, 2007

Schedule IV

	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year ended December 31, 2007
Life insurance in force	$	371,022,644	$	710,707,357	$	568,750,218	$	229,065,505	248	%
Premiums:
Individual life	$	1,761,443	$	1,604,712	$	1,415,966	$	1,572,697	90	%
Individual health		116,865		166,128		134,939		85,676	157	%
Group life and health		26,432		5,045		56,751		78,138	73	%
Annuity		134,173		61,254		334,296		407,215	82	%
	$	2,038,913	$	1,837,139	$	1,941,952	$	2,143,726	91	%
Year ended December 31, 2006
Life insurance in force	$	372,372,922	$	622,857,401	$	470,257,834	$	219,773,355	214	%
Premiums:
Individual life	$	1,865,592	$	1,542,594	$	974,851	$	1,297,849	75	%
Individual health		113, 639		145,878		108,668		76,429	142	%
Group life and health		37,489		15,460		25,716		47,745	54	%
Annuity		361,879		246,544		426,814		542,149	79	%
	$	2,378,599	$	1,950,476	$	1,536,049	$	1,964,172	78	%
Year ended December 31, 2005
Life insurance in force	$	378,985,142	$	529,840,825	$	384,372,793	$	233,517,110	165	%
Premiums:
Individual life	$	2,222,423	$	1,633,313	$	867,441	$	1 ,456,551	61	%
Individual health		110,930		108,162		45,058		47,826	94	%
Group life and health		36,808		19,581		4,350		21,577	20	%
Annuity		196,047		99,571		418,676		515,152	81	%
	$	2,566,208	$	1,860,627	$	1,335,525	$	2,041,106	66	%

73

FINANCIAL STATEMENTS AND SCHEDULES – STATUTORY BASIS

Transamerica Life Insurance Company

Years Ended December 31, 2007, 2006 and 2005

Transamerica Life Insurance Company

Financial Statements and Schedules– Statutory Basis

Years Ended December 31, 2007, 2006 and 2005

Contents

Report of Independent Registered Public Accounting Firm	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	5
Statements of Changes in Capital and Surplus – Statutory Basis	6
Statements of Cash Flow – Statutory Basis	9
Notes to Financial Statements – Statutory Basis	11
Statutory-Basis Financial Statement Schedules
Summary of Investments – Other Than Investments in Related Parties	65
Supplementary Insurance Information	66
Reinsurance	67

•       Ernst & Young LLP           Suite 3000           801 Grand Avenue           Des Moines, IA 50309-2764 •       Phone: (515) 243-2727           www.ey.com

Report of Independent Registered Public Accounting Firm

The Board of Directors

Transamerica Life Insurance Company

We have audited the accompanying statutory-basis balance sheets of Transamerica Life Insurance Company (an indirect wholly owned subsidiary of AEGON N.V.) as of December 31, 2007 and 2006, 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, 2007. Our audit also included the statutory-basis financial statement schedules required by Regulation S-X, Article 7. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits 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 U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles 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 U.S. generally accepted accounting principles, the financial position of Transamerica Life Insurance Company at December 31, 2007 and 2006, or the results of its operations or its cash flow for each of the three years in the period ended December 31, 2007.

A member firm of Ernst & Young Global Limited

1

•       Ernst & Young LLP

However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Transamerica Life Insurance Company at December 31, 2007 and 2006, and the results of its operations and its cash flow for each of the three years in the period ended December 31, 2007, 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.

As discussed in Note 3 to the financial statements, in 2006 Transamerica Life Insurance Company changed its accounting for investments in certain low income housing tax credit properties and in 2005 the Company changed its method of accounting for certain subsidiaries and affiliates.

[GRAPHIC]

March 28, 2008

A member firm of Ernst & Young Global Limited

2

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2007		2006
Admitted assets
Cash and invested assets:
Cash, cash equivalents and short-term investments	$	1,182,364	$	1,552,965
Bonds:
Affiliated entities		512,234		501,180
Unaffiliated		27,987,619		32,103,292
Preferred stocks:
Affiliated entities		1,627		1,085
Unaffiliated		1,328,054		1,689,094
Common stocks:
Affiliated entities (cost: 2007 - $85,125; 2006 - $84,843)		84,902		82,202
Unaffiliated (cost: 2007 - $169,868; 2006 - $366,148)		175,403		393,176
Mortgage loans on real estate		6,038,594		5,760,667
Real estate (net of encumbrances):
Home office properties		6,160		6,237
Properties held for production of income		2,463		2,466
Properties held for sale		20,268		21,508
Policy loans		92,978		130,144
Receivable for securities		55,363		6,651
Other invested assets		2,152,611		1,543,092
Total cash and invested assets		39,640,640		43,793,759
Premiums deferred and uncollected		20,822		20,444
Due and accrued investment income		767,993		853,244
Reinsurance balances recoverable		5,078		2,914
Net deferred income tax asset		139,589		108,342
Receivable from parent, subsidiaries, and affiliates		69,694		165,881
Other admitted assets		105,384		109,938
Separate account assets		32,759,905		28,875,013
Total admitted assets	$	73,509,105	$	73,929,535

3

	December 31
	2007			2006
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life	$	3,887,337		$	4,040,838
Annuity		19,297,739			23,038,230
Accident and health		896,258			812,961
Policy and contract claim reserves:
Life		33,849			35,143
Accident and health		43,078			39,502
Liabilities for deposit-type contracts		5,962,783			7,085,285
Other policyholders’ funds		2,542			2,646
Remittances and items not allocated		135,840			167,889
Borrowed money		—			493,336
Asset valuation reserve		816,295			803,012
Interest maintenance reserve		176,160			159,356
Case level liabilities		20,561			18,865
Other liabilities		439,903			503,931
Reinsurance in unauthorized companies		15,612			—
Funds held under coinsurance and other reinsurance treaties		7,008,745			5,950,970
Transfers from separate accounts due or accrued (including $(469,120) and $(477,683) accrued for expense allowances recognized in reserves, net of reinsured allowances)		(472,791	)		(482,082	)
Federal and foreign income taxes payable (including $175,872 and $50,291 on realized capital gains (losses) at December 31, 2007 and 2006, respectively)		111,200			20,923
Payable for securities		133,303			90,398
Payable to affiliates		251,087			230,656
Separate account liabilities		32,759,855			28,874,898
Total liabilities		71,519,356			71,886,757
Capital and surplus:
Common stock, $10 per share par value, 1,000,000 shares authorized, 316,955 issued and outstanding shares		3,170			3,170
Preferred stock, Series A, $10 per share par value, 42,500 shares authorized and issued (total liquidation value - $58,000); Series B, $10 per share par value, 250,000 shares authorized, 87,755 shares issued and 30,415 shares outstanding as of December 31, 2007 and 87,755 shares issued and outstanding at December 31, 2006 (total liquidation value - $877,550)		1,302			1,302
Treasury stock, Series A Preferred, $10 per share par value, 42,500 shares and Series B Preferred, $10 per share par value, 57,340 shares as of December 31, 2007. Series A Preferred, 10 per share par value, 57,340 shares as of December 31, 2006.		(631,400	)		(58,000	)
Paid-in surplus		1,437,881			1,437,768
Unassigned surplus		1,178,796			658,538
Total capital and surplus		1,989,749			2,042,778
Total liabilities and capital and surplus	$	73,509,105		$	73,929,535

See accompanying notes.

4

Transamerica Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Revenues:
Premiums and other considerations, net of reinsurance:
Life	$	113,191		$	392,558		$	734,878
Annuity		5,168,514			4,322,254			4,191,484
Accident and health		198,224			194,973			178,855
Net investment income		2,293,196			2,376,911			2,390,054
Amortization of interest maintenance reserve		14,771			21,795			39,488
Commissions and expense allowances on reinsurance ceded		55,684			187,363			105,759
Consideration for reinsurance recapture		253,942			—			—
Income from fees associated with investment management, administration and contract guarantees for separate accounts		418,291			369,936			276,684
Reserve adjustments on reinsurance ceded		1,324,466			1,234,064			(219,021	)
Income from administrative service agreement with TFA		48,726			42,513			—
Other income		55,569			51,256			62,744
		9,944,574			9,193,623			7,760,925
Benefits and expenses:
Benefits paid or provided for:
Life		143,572			115,217			118,906
Accident and Health		129,402			113,547			102,075
Surrender benefits		8,253,615			7,291,738			5,415,085
Other benefits		1,425,984			1,487,689			1,380,601
Increase (decrease) in aggregate reserves for policies and contracts:
Life		(153,501	)		32,072			45,992
Annuity		(3,787,437	)		(3,863,633	)		(1,974,994	)
Accident and health		83,297			98,588			86,538
		6,094,932			5,275,218			5,174,203
Insurance expenses:
Commissions		452,260			435,419			425,434
General insurance expenses		268,195			253,636			242,493
Insurance taxes, licenses and fees		39,076			41,256			27,899
Net transfers to separate accounts		1,727,725			2,417,521			1,365,516
Reinsurance reserve recapture		—			—			813
Change in case liability		20,561			18,865			13,640
Consideration paid on reinsurance transaction		607,721			—			—
Other expenses		621,276			396,828			216,748
		3,736,814			3,563,525			2,292,543
Total benefits and expenses		9,831,746			8,838,743			7,466,746
Gain from operations before dividends to policyholders, federal income tax expense and net realized capital gains on investments		112,828			354,880			294,179
Dividends to policyholders		534			557			455
Gain from operations before federal income tax expense and net realized capital gains on investments		112,294			354,323			293,724
Federal income tax expense		71,239			136,412			4,302
Gain from operations before net realized capital gains on investments		41,055			217,911			289,422
Net realized capital gains on investments (net of related federal income taxes and amounts transferred to/from interest maintenance reserve)		229,723			114,487			9,223
Net income	$	270,778		$	332,398		$	298,645

See accompanying notes.

5

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Thousands)

	Common Stock		Preferred Stock		Treasury Stock		Surplus Notes		Paid-in Surplus			Unassigned Surplus			Total Capital and Surplus
Balance at January 1, 2005	$	2,578	$	425	$	—	$	575,000	$	1,787,236		$	205,372		$	2,570,611
Net income		—		—		—		—		—			298,645			298,645
Change in net unrealized capital gains/losses, net of tax		—		—		—		—		—			39,668			39,668
Change in other non-admitted assets				—		—		—					(1,718	)		(1,718	)
Change in asset valuation reserve		—		—		—		—		—			(146,776	)		(146,776	)
Repayment of surplus in separate accounts		—		—		—		—		—			199			199
Change in provision for reinsurance in unauthorized companies		—		—		—		—		—			(17,011	)		(17,011	)
Change in net deferred income tax asset		—		—		—		—		—			34,505			34,505
Cumulative effect of change in accounting principle		—		—		—		—		—			(6,668	)		(6,668	)
Issuance of common stock in connection with statutory merger		592		877		—		—		(1,812	)		343			—
Return of capital		—		—		—				(348,051	)		—			(348,051	)
Reinsurance transactions		—		—		—		—		—			(5,982	)		(5,982	)
Contributed surplus related to stock appreciation rights plan of indirect parent		—		—		—		—		623			—			623
Balance at December 31, 2005	$	3,170	$	1,302	$	—	$	575,000	$	1,437,996		$	400,577		$	2,418,045

6

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus - Statutory Basis

(Dollars in Thousands)

	Common Stock		Preferred Stock		Treasury Stock			Surplus Notes			Paid-in Surplus			Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2005	$	3,170	$	1,302	$	—		$	575,000		$	1,437,996		$	400,577		$	2,418,045
Cumulative effect of change in accounting principle		—		—		—			—			—			(1,665	)		(1,665	)
Net income		—		—		—			—			—			332,398			332,398
Change in net unrealized capital gains/losses, net of tax		—		—		—			—			—			105,010			105,010
Change in net unrealized foreign exchange capital gains/losses, net of tax		—		—		—			—			—			(3,602	)		(3,602	)
Change in other non-admitted assets		—		—		—			—			—			(98,040	)		(98,041	)
Change in asset valuation reserve		—		—		—			—			—			(139,821	)		(139,821	)
Repayment of surplus in separate accounts		—		—		—			—			—			79			79
Change in provision for reinsurance in unauthorized companies		—		—		—			—			—			17,264			17,264
Change in net deferred income tax asset		—		—		—			—			—			91,021			91,021
Reinsurance transactions		—		—		—			—			—			4,640			4,640
Dividend to stockholders		—		—		—			—			—			(69,803	)		(69,803	)
Repurchase of Series A preferred stock		—		—		(58,000	)		—			—			—			(58,000	)
Correction of prior period error		—		—		—			—			—			20,480			20,480
Repayment of surplus notes		—		—		—			(575,000	)		—			—			(575,000	)
Contributed surplus related to stock appreciation rights plan of indirect parent		—		—		—			—			(228	)		—			(228	)
Balance at December 31, 2006	$	3,170	$	1,302	$	(58,000	)	$	—		$	1,437,768		$	658,538		$	2,042,778

7

Transamerica Life Insurance Company

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

(Dollars in Thousands)

	Common Stock		Preferred Stock		Treasury Stock			Surplus Notes		Paid-in Surplus		Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2006	$	3,170	$	1,302	$	(58,000	)	$	—	$	1,437,768	$	658,538		$	2,042,778
Net income		—		—		—			—		—		270,778			270,778
Change in net unrealized capital gains/losses, net of tax		—		—		—			—		—		122,039			122,039
Change in net unrealized foreign exchange capital gains/losses, net of tax		—		—		—			—		—		6,861			6,861
Change in other non-admitted assets		—		—		—			—		—		51,329			51,329
Change in asset valuation reserve		—		—		—			—		—		(13,283	)		(13,283	)
Repayment of surplus in separate accounts		—		—		—			—		—		(64	)		(64	)
Change in provision for reinsurance in unauthorized companies		—		—		—			—		—		(15,612	)		(15,612	)
Change in net deferred income tax asset		—		—		—			—		—		(6,996	)		(6,996	)
Reinsurance transactions		—		—		—			—		—		187,828			187,828
Dividend to stockholders		—		—		—			—		—		(51,600	)		(51,600	)
Change in reserve on account of change in valuation basis		—		—		—			—		—		(1,736	)		(1,736	)
Repurchase of Series B preferred stock		—		—		(573,400	)		—		—		—			(573,400	)
Tax benefit on stock options exercised		—		—		—			—		2		—			2
Correction of prior period error		—		—		—			—		—		(29,286	)		(29,286	)
Contributed surplus related to stock appreciation rights plan of indirect parent		—		—		—			—		111		—			111
Balance at December 31, 2007	$	3,170	$	1,302	$	(631,400	)	$	—	$	1,437,881	$	1,178,796		$	1,989,749

See accompanying notes.

8

Transamerica Life Insurance Company

Statements of Cash Flow - Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Operating activities
Premiums collected, net of reinsurance	$	5,470,210		$	4,910,880		$	5,105,476
Net investment income		2,484,234			2,490,060			2,466,077
Miscellaneous income		2,305,880			1,972,319			259,085
Benefit and loss related payments		(11,509,376	)		(10,395,471	)		(7,792,780	)
Net transfers to separate accounts		(1,720,824	)		(2,326,426	)		(1,199,281	)
Commissions, expenses paid and aggregate write-ins for deductions		(1,998,299	)		(1,155,948	)		(985,993	)
Dividends paid to policyholders		(521	)		(523	)		(584	)
Federal and foreign income taxes paid		(140,792	)		(53,236	)		(175,128	)
Net cash used in operating activities		(5,109,488	)		(4,558,345	)		(2,323,128	)
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds		19,515,825			18,812,848			23,151,411
Common stocks		422,290			200,499			83,756
Preferred stocks		587,261			398,977			361,028
Mortgage loans		992,102			1,271,404			1,303,236
Real estate		1,508			7,004			15,683
Other invested assets		492,895			346,990			284,913
Receivable for securities		42,905			66,568			17,374
Miscellaneous proceeds		5,856			—			11,490
Total investment proceeds		22,060,642			21,104,290			25,228,891
Cost of investments acquired:
Bonds		(15,271,610	)		(16,845,468	)		(20,643,565	)
Common stock		(148,636	)		(361,184	)		(106,718	)
Preferred stock		(179,343	)		(468,081	)		(223,919	)
Mortgage loans		(1,269,740	)		(1,266,019	)		(1,346,022	)
Real estate		(394	)		(2,486	)		(303	)
Other invested assets		(861,354	)		(609,485	)		(396,494	)
Payable for securities		(48,712	)		—			(1,346,713	)
Miscellaneous applications		(5,777	)		(13,718	)		(5,322	)
Total cost of investments acquired		(17,785,566	)		(19,566,441	)		(24,069,056	)
Net decrease (increase) in policy loans		37,166			(6,923	)		(6,969	)
Net cost of investments acquired		(17,748,400	)		(19,573,364	)		(24,076,025	)
Net cash provided by investing activities	$	4,312,242		$	1,530,926		$	1,152,866

9

Transamerica Life Insurance Company

Statements of Cash Flow - Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2007			2006			2005
Financing and miscellaneous activities
Other cash provided:
Borrowed funds received (returned)	$	(491,075	)	$	482,624		$	8,450
Net deposits (withdrawals) on deposit-type contract funds and other liabilities without life or disability contingencies		399,533			542,778			(360,558	)
Funds held under reinsurance treaty with unauthorized reinsurers		1,055,389			3,654,695			973,428
Other sources		87,798			249,848			(74,352	)
Total cash provided		1,051,645			4,929,945			546,968
Other cash applied:
Dividends paid to stockholders		(51,600	)		(42,588	)		—
Repurchase of surplus notes		—			(575,000	)		—
Repurchase of preferred stock		(573,400	)		(58,000	)
Capital distribution		—			—			(348,051	)
Total other cash applied		(625,000	)		(675,588	)		(348,051	)
Net cash provided by financing and miscellaneous activities		426,645			4,254,357			198,917
Net increase (decrease) in cash, cash equivalents and short-term investments		(370,601	)		1,226,938			(971,345	)
Cash, cash equivalents and short-term investments:
Beginning of year		1,552,965			326,027			1,297,372
End of year	$	1,182,364		$	1,552,965		$	326,027
Supplemental disclosure of cash flow information for non-cash transactions:
Dividend paid in non-affiliated stock	$	—		$	27,215		$	—
Noncash proceeds:
Hybrid schedule reclass	$	7,200		$	1,231,903		$	—

See accompanying notes.

10

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

December 31, 2007

1. Organization and Summary of Significant Accounting Policies

Organization

Transamerica Life Insurance Company (the Company) is a stock life insurance company and is owned by AEGON USA, Inc. (100% of preferred shares) and Transamerica Occidental Life Insurance Company (100% of common shares). AEGON USA, Inc. (AEGON) and Transamerica Occidental Life Insurance Company (TOLIC) are both indirect wholly-owned subsidiaries of AEGON N.V., a holding company organized under the laws of The Netherlands.

On October 1, 2005, the Company completed a merger with Transamerica Life Insurance and Annuity Company (TALIAC), which was a wholly-owned subsidiary of an affiliate, TOLIC. The merger was accounted for in accordance with Statutory Accounting Principles (SSAP) No. 68, Business Combinations and Goodwill, as a statutory merger. Prior to the merger of the Company and TALIAC, TALIAC owned 34,295 shares and AEGON owned 223,500 shares in common stock of the Company. TOLIC owned 100% (25,000 shares) of the outstanding common shares of TALIAC prior to the merger. As a result of the merger, the 34,295 outstanding shares of the Company previously held by TALIAC were retired and considered authorized but unissued stock of the merged entity. AEGON exchanged its 223,500 common shares of the Company for 87,755 shares of a newly issued Series B non-voting class of preferred stock of the merged entity, shares equivalent in value to that of the common shares previously held. Also in conjunction with the merger, the TALIAC stock was deemed cancelled by operation of law. In exchange for its agreement to merge TALIAC into the Company, TOLIC received 316,955 shares of the merged entity, which was an equivalent fair value of the TALIAC stock that was deemed cancelled. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of TALIAC were carried forward to the merged company. Total capital and surplus of the Company was reduced by the value of the Company’s stock held by TALIAC prior to the merger in the amount of $171,482.

11

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Summarized financial information for the Company and TALIAC restated for the period prior to the merger is as follows:

	Nine Months Ended September 30 2005
	Unaudited
Revenues:
Company	$	3,371,185
TALIAC		2,857,854
Merger elimination		(51,949	)
As restated	$	6,177,090
Net income:
Company	$	72,538
TALIAC		158,430
Merger elimination		(51,949	)
As restated	$	179,019

Nature of Business

The Company sells individual non-participating whole life, endowment and term contracts, structured settlements, pension products, as well as a broad line of single fixed and flexible premium annuity products and guaranteed interest contracts and funding agreements. In addition, the Company offers group life, universal life and individual and specialty health coverages. The Company is licensed in 49 states and the District of Columbia, Guam, Puerto Rico, and the US Virgin Islands. Sales of the Company’s products are primarily through the Company’s agents and financial institutions.

Basis of Presentation

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

12

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The accompanying financial statements have been prepared 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 (GAAP). The more significant variances from GAAP are:

Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income for those designated as available-for-sale. Fair value for statutory purposes is based on the price published by the Securities Valuation Office of the NAIC (SVO), if available, whereas fair value for GAAP is based on quoted market prices.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the undiscounted estimated future cash flows. Under GAAP, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CCO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If it is determined that a decline in fair value is other than temporary, the cost basis of the security is written down to the fair value. If high credit quality securities are adjusted, the retrospective method is used.

Derivative instruments used in hedging transactions that meet the criteria of an effective hedge are valued and reported in a manner that is consistent with the hedged asset or liability. Embedded derivatives are not accounted for separately from the host contract. Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value and the changes in the fair value are recorded as unrealized gains and losses. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately, an embedded derivative within a contract that is not clearly and closely related to the economic characteristics and risk of the host contract is accounted for separately from

13

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

the host contract and valued and reported at fair value, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of capital and surplus rather than to income as required for fair value hedges.

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

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

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

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

Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, 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 individual bond or mortgage loan sold. That net deferral is reported as the “interest maintenance reserve” (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses would be reported in the income statement on a pretax basis in the period that the assets giving rise to the gains or losses are sold.

14

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The “asset valuation reserve” (AVR) provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.

Subsidiaries: The accounts and operations of the Company’s subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP.

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance and certain long-duration accident and health insurance, to the extent recoverable from future policy revenues, would be deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves; for universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs are amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality and expense margins.

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

Non-admitted Assets: Certain assets designated as “non-admitted”, primarily net deferred tax assets and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual, are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent that those assets are not impaired.

Universal Life and Annuity Policies: Revenues for universal life and annuity policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and benefits incurred represent the total of death benefits paid and the change in policy reserves. Premiums received and benefits incurred for annuity policies without mortality or morbidity risk and for guaranteed interest in group annuity contracts are recorded and for guaranteed interest in group annuity contracts using deposit accounting, and recorded directly to an appropriate policy reserve account, without recognizing premium income or benefits expense. Interest on these policies is reflected in other benefits. Under GAAP, for universal life, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy

15

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

account value and interest credited to the account values and the excess of benefits paid over the policy account value. Under GAAP, for all annuity policies, premiums received and benefits paid would be recorded directly to the reserve liability.

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

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

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

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

Deferred Income Taxes: Deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross deferred income tax assets expected to be realized within one year of the balance sheet date or 10% of capital and surplus excluding any net deferred income tax assets, electronic data processing equipment and operating software, and any net positive goodwill, plus 3) the amount of remaining gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities. The remaining deferred income tax assets are non-admitted. Deferred income taxes do not include amounts for state taxes. Under GAAP, state taxes are included in the computation of deferred income taxes`, a deferred income tax asset is recorded for the amount of gross deferred income tax assets expected to be realized in all future years and a valuation allowance is established for deferred income tax assets not realizable.

16

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

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

Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies.

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

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

Other significant accounting practices are as follows:

Investments

Investments in bonds (except those to which the Securities Valuation Office of the NAIC (SVO) has ascribed an NAIC designation of a 6), are reported at cost using the interest method.

Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments, except for those with an NAIC designation of 6, which are valued at the lower of amortized cost or fair value. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except principal-only and interest-only securities, which are valued using the prospective method.

Redeemable preferred stocks that have characteristics of debt securities and are rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost or fair value. Nonredeemable preferred stocks are reported at fair value or lower of cost or fair value as determined by the Securities Valuation Office of the NAIC (SVO) and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

17

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Beginning in 2006, hybrid securities, not classified as debt by the SVO, are reported as preferred stock. Hybrid securities, as defined by the NAIC, are securities designed with characteristics of both debt and equity and provide protection to the issuer’s senior note holders. Reclassifications of securities from bonds to preferred stock have been made by the Company in the amount of $7,200 and $1,231,903 as of December 31, 2007 and 2006, respectively, due to the SVO identification of such securities. Although the classification has changed, these hybrid securities continue to meet the definition of a bond, in accordance with SSAP No. 26, Bonds, excluding Loan-backed and Structured Securities and therefore, are reported at amortized cost based upon their NAIC rating. A corresponding reclassification was not made as of December 31, 2005.

Common stocks of unaffiliated companies and mutual funds are carried at fair value as determined by the SVO and the related unrealized capital gains or losses are reported in unassigned surplus along with any adjustment for federal income taxes. Common stocks of affiliated noninsurance companies are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in the change in net unrealized capital gains or losses.

The Company is restricted to trading Primus Guaranty, Ltd (Primus) and ACA Capital Holdings, Inc. (ACA), both common stock holdings, due to its ownership interest, which would require special securities filings prior to executing any purchase or sale transactions in regard to these securities. The carrying amount in Primus, which is carried at fair value, as of December 31, 2007 and 2006 was $39,134 and $64,479, respectively. The carrying amount in ACA, which is carried at fair value, as of December 31, 2007 was $629. ACA was not restricted as of December 31, 2006.

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

Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are principally stated at amortized cost.

Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines that the impairment is other than temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

18

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Real estate occupied by the Company is reported at cost less allowances for depreciation. Land is reported at cost. Real estate held for the production of income is reported at depreciated cost net of related obligations. Real estate that the Company has the intent to sell is reported at the lower of depreciated cost or fair value, net of related obligations. Depreciation is computed by the straight-line method over the estimated useful lives of the properties.

Policy loans are reported at unpaid principal balances.

The Company has minor ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying GAAP equity of the investee. The Company did not recognize impairment write-downs for its investments in joint ventures and limited partnerships during the year ended December 31, 2007. The Company recognized impairment write-downs for its investments in joint ventures and limited partnerships in the amount of $2,172 and $2,261, during the years ended December 31, 2006 and 2005, respectively.

Investments in Low Income Housing Tax Credits (LIHTC) Properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company.

Other “admitted assets” are valued principally at cost.

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

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or on real estate where rent is in arrears for more than three months. Further, income is not accrued when collection is uncertain. At December 31, 2007 and 2006, the Company excluded investment income due and accrued of $302 and $1,299, respectively, with respect to such practices.

The carrying amounts of all investments are reviewed on an ongoing basis for credit deterioration. If this review indicates a decline in fair value that is other than temporary, the carrying amount of the investment is reduced to its fair value, and a specific writedown is taken. Such reductions in carrying amount are recognized as realized losses on investments.

19

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The Company enters into municipal reverse repurchase agreements for which it requires a minimum of 95% of the fair value of the securities transferred to be maintained as collateral.

For dollar reverse repurchase agreements, the Company receives cash collateral in an amount at least equal to the market value of the securities transferred by the Company in the transaction as of the transaction date. Cash received as collateral will be invested as needed or used for general corporate purposes of the Company.

Derivative Instruments

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

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

20

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

The Company issues products providing the customer a return based on the S&P 500 and NASDAQ 1000 indices. The Company uses S&P 500 and NASDAQ 1000 futures and/or options to hedge the liability option risk associated with these products. Futures are marked to market on a daily basis and a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements. Options are marked to fair value in the balance sheet and fair value adjustments are recorded in unassigned surplus.

Capped floating rate commercial mortgage loans and interest rate caps that are designated as hedges and meet hedge accounting rules are carried at amortized cost in the financial statements. A gain or loss upon early termination would be reflected in the IMR similar to the underlying instrument.

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

A replication transaction is a derivative transaction, generally a credit default swap, entered into in conjunction with a cash instrument that is used to reproduce the investment characteristics of an otherwise permissible investment. For replication transactions, generally, a premium is received by the Company on a periodic basis and recognized in investment income. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment equal to the notional of the contract will be made by the Company and recognized as a capital loss. The Company complies with the specific rules established in AVR for replication transactions.

The carrying value of derivative instruments is reflected in either the other invested assets or the other liabilities line within the balance sheet, depending upon the net balance of the derivatives as of the end of the reporting period. As of December 31, 2007 and 2006, derivatives in the amount of $174,391 and $157,037, respectively, were reflected in the other liabilities line within the financial statements.

21

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are developed by actuarial methods and are determined based on published tables 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 or guaranteed cash value, or the amount required by the Insurance Division, Department of Commerce, of the State of Iowa.

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958 and 1980 Commissioners’ Standard Ordinary Mortality and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 2.0 to 6.0 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.

The Company waives deduction of deferred fractional premiums upon death and refunds portions of premiums beyond the date of death. Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. The Company returns any portion of the final premium beyond the date of death.

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

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

Annuity reserves also include guaranteed investment contracts (GICs) and funding agreements classified as life-type contracts as defined in Statement of Statutory Accounting Principles (SSAP) No. 50, Classifications and Definitions of Insurance or Managed Care Contracts in Force. These liabilities have annuitization options at

22

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

guaranteed rates and consist of floating interest rate and fixed interest rate contracts. The contract reserves are carried at the greater of the account balance or the value as determined for an annuity with cash settlement option, on a change in fund basis, according to the Commissioners’ Annuity Reserve Valuation Method.

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

Policy and Contract Claim Reserves

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

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 unassigned surplus and are amortized into income over the estimated life of the policies. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively.

Liability for Deposit-Type Contracts

Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include GICs, funding agreements and other annuity contracts. Deposits and withdrawals received on these contracts are recorded as a direct increase or decrease to the liability balance, and are not reflected as premiums, benefits or changes in reserve in the statement of operations.

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

23

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Separate Accounts

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

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

Assets held in trust for purchases of variable universal life and 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 losses with respect to the assets in the separate accounts accrue to the benefit of the policyholders and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The investment risks associated with market value changes of the separate accounts are borne entirely by the policyholders except in cases where minimum guarantees exist. The Company received variable contract premiums of $5,533,742, $4,875,079 and $3,593,932 in 2007, 2006 and 2005, respectively. In addition, the Company received $418,291, $369,936 and $276,684, in 2007, 2006 and 2005, respectively, related to fees associated with investment management, administration, and contractual guarantees for separate accounts.

Premiums and Annuity Considerations

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

24

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

1. Organization and Summary of Significant Accounting Policies (continued)

Stock Option and Stock Appreciation Rights Plans

Prior to 2002 and in 2005 through 2007, AEGON N.V. sponsored a stock option plan for eligible employees of the Company. Pursuant to the plan, the option price at the date of grant is equal to the market value of the stock. Under statutory accounting principles, the Company does not record any expense related to this plan. However, the Company is allowed to record a deduction in the consolidated tax return filed by the Company and certain affiliates. The tax benefit of this deduction has been credited directly to unassigned surplus.

The Company’s employees participate in various stock appreciation rights (SAR) plans issued by the Company’s indirect parent. In accordance with SSAP No. 13, Stock Options and Stock Purchase Plans, the expense related to these plans for the Company’s employees has been charged to the Company, with an offsetting amount credited to paid-in surplus. The Company recorded an expense of $(159), $(272) and $359 for the years ended December 31, 2007, 2006 and 2005 respectively. In addition, the Company recorded an adjustment to paid-in surplus for the income tax effect related to these plans over and above the amount reflected in the statement of operations in the amount of $270, $44 and $264 for years ended December 31, 2007, 2006 and 2005 respectively.

Reclassifications

Certain reclassifications have been made to the 2005 and 2006 financial statements to conform to the 2007 presentation.

25

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

2. Prescribed and Permitted Statutory Accounting Practices

The financial statements of the Company are presented in conformity with accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa. The Insurance Division, Department of Commerce, of the State of Iowa recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting financial condition and results of operations of an insurance company, and for determining its solvency under the Iowa Insurance Law.

The NAIC’s Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed or permitted practices by the State of Iowa. The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to reserve credits with respect to secondary guarantee reinsurance treaties. As prescribed by Iowa Administrative Code 191-17.3(2), the commissioner found that the Company is entitled to take reserve credit for such a reinsurance contract in the amount equal to the portion of total reserves attributable to the secondary guarantee, whereas this type of reinsurance does not meet the specific requirements of SSAP No. 61, Life, Deposit-Type and Accident and Health Reinsurance and Appendix A-791 of the NAIC SAP.

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

	2007			2006		2005
Net income (loss), State of Iowa basis	$	241,492		$	332,398	$	298,645
State prescribed practice for secondary guarantee reinsurance		—			—		—
Net income (loss), NAIC SAP	$	241,492		$	332,398	$	298,645
Statutory surplus, State of Iowa basis	$	1,989,749		$	2,042,778	$	2,418,045
State prescribed practice for secondary guarantee reinsurance		(286,392	)		—		—
Statutory surplus, NAIC SAP	$	1,703,357		$	2,042,778	$	2,418,045

26

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

3. Accounting Changes and Correction of Errors

Effective January 1, 2006, the Company adopted SSAP No. 93, Accounting for Low Income Housing Tax Credit Property Investments. This statement established statutory accounting principles for investments in federal and certain state sponsored Low Income Housing Tax Credit (LIHTC) properties. SSAP No. 93 states that LIHTC investments shall be initially recorded at cost and amortized based on the proportion of tax benefits received in the current year to the total estimated tax benefits to be allocated to the investor. Prior to 2006, the Company’s investments in LIHTC investments were reported in accordance with SSAP No. 48 and SSAP No. 88 and carried at audited GAAP equity. The cumulative effect is the difference between the audited GAAP equity amount at December 31, 2005 and the amortized cost assuming the new accounting principles had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle that reduced unassigned surplus by $1,665 at January 1, 2006.

Effective January 1, 2005, the Company adopted SSAP No. 88, Investments in Subsidiary, Controlled and Affiliated Entities (SCA entities). According to SSAP No. 88, noninsurance subsidiaries are carried at audited GAAP equity. Prior to 2005, the Company’s investments in noninsurance subsidiaries were reported in accordance with SSAP No. 46, Investments in Subsidiary, Controlled and Affiliated Entities, and carried at statutory equity. The cumulative effect is the difference between the amount of capital and surplus that would have been reported on January 1, 2005 if the new accounting principle had been applied retroactively for prior periods. As a result of the change, the Company reported a cumulative effect of a change of accounting principle that reduced unassigned surplus by $6,668 at January 1, 2005.

Effective January 1, 2005, the Company adopted SSAP No. 91, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SSAP No. 91 addresses, among other things, the criteria that must be met in order to account for certain asset transfers as sales rather than collateralized borrowings. Transfers impacted by SSAP No. 91 that the Company engages in include securities lending, repurchase and reverse repurchase agreements and dollar reverse repurchase agreements. In accordance with SSAP No. 91, if specific criteria are met, reverse repurchase agreements and dollar reverse repurchase agreements are accounted for as collateralized borrowings and repurchase agreements are accounted for as collateralized lending. The cumulative effect of the adoption of this SSAP is the difference between the amount of capital and surplus that would have been reported on January 1, 2005 if the new accounting principle had been applied retroactively for prior periods. This change of accounting principle had no impact on unassigned surplus as of January 1, 2005.

27

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

3. Accounting Changes and Correction of Errors (continued)

During 2007, the Company discovered that the cash surrender value used in the calculation of statutory reserves for a specific product did not reflect the three percent guarantee that is a part of the strategy option. As a result, the reserve balance was understated by $45,055 as of and for the year ended 2006. The current year statement of operations reflects a decrease in the change in reserve balance with an offset to unassigned surplus to correct this error.

During 2006, the Company discovered that the Interest Maintenance Reserve (IMR) incorrectly included interest-related realized gains and losses associated with specific assets supporting a block of business in which the policyholders were being credited the daily return on such investments. As a result, the IMR balance was overstated by $20,480 as of and for the year ended 2005. The 2006 financials reflect a reduction in the IMR balance with an offset to unassigned surplus to correct this error.

4. Capital and Surplus

On December 26, 2006, the Company repurchased its 42,500 shares of non-voting Series A preferred shares for $58,000, which is reflected as treasury stock as of December 31, 2006. On December 19, 2007, the Company repurchased 57,340 shares of its Series B preferred shares for $573,400. The par value of each class of preferred stock is $10 per share and the liquidation value of Series A is $1,365 per share and Series B is $10 per share. The per share liquidation values shall be adjusted proportionally to reflect any resulting increase or decrease in the number of outstanding shares of preferred stock. Holders of the Series A preferred shares shall be entitled to receive dividends equal to the amount of income generated from a segregated pool of assets, including cash, cash equivalents, mortgages and debt securities and these dividends are cumulative in nature. Holders of the Series B preferred shares shall be entitled to receive dividends equal to the rate of six percent of the issue price of the Series B preferred Stock. Holders of both series of preferred stock have no right to cause mandatory or optional redemption of the shares. As of December 31, 2007 and 2006, cumulative unpaid dividends relating to the preferred shares were $24,881 and $23,828, respectively.

28

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

4. Capital and Surplus (continued)

The Company paid a preferred stock dividend of $51,600 to its Series B preferred stock shareholder, AEGON, on December 19, 2007. The Company paid a preferred stock dividend of $42,588 to its Series A and Series B preferred shareholder, AEGON, on December 26, 2006. On October 23, 2006, the Company paid a preferred stock dividend to AEGON through a transfer of a non-affiliated investment in common stock with a fair value of $27,215. The Company did not pay a common stock dividend to its parent company during 2007 or 2006. On September 29, 2005, the Company distributed $338,551 to its parent company of record on that date, AEGON, a return of additional paid-in capital. In addition, the Company distributed $9,500 as a return of additional paid-in capital to its preferred shareholder, AEGON, on September 29, 2005.

On December 19, 2006, the Company repaid the surplus notes outstanding in the amount of $575,000 with AEGON with approval from the Iowa Insurance Division.

Life/health insurance companies are subject to certain risk-based capital (RBC) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2007, the Company meets the RBC requirements.

5. Fair Values of Financial Instruments

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

Cash, cash equivalents and short-term investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values.

Investment securities: Fair values for investment securities are based on unit prices published by the SVO or, in the absence of SVO published unit prices or when amortized cost is used by the SVO as the unit price, quoted market prices by other third party organizations, where available.

For fixed maturity securities (including redeemable preferred stock) 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 the expected future cash flows using current market rates applicable to the coupon rate, credit and maturity of the investments. For equity securities that are not actively traded, estimated fair values are based on values of issues of comparable yield and quality.

29

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

5. Fair Values of Financial Instruments (continued)

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

Policy loans: The fair value of policy loans is assumed to equal their carrying amount.

Interest rate caps and swaps: Estimated fair value of interest rate caps are based upon the quoted market price at the balance sheet date. Estimated fair value of swaps, including interest rate and currency swaps, are based upon the pricing differential for similar swap agreements.

Credit default swaps: Estimated fair value of credit default swaps are based upon the pricing differential for similar swap agreements.

Receivable from or payable to parents, subsidiaries, and affiliates: The fair values for short-term notes receivable from and payable to affiliates are assumed to equal their carrying amount.

Separate accounts: The fair value of separate account assets are based on quoted market prices. The fair value of separate account annuity liabilities approximate the market value of the separate account assets less a provision for the present value of future profits related to the underlying contracts.

Investment contracts: Fair values for the Company’s liabilities under investment-type insurance contracts, which include guaranteed interest contracts and funding agreements, 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. For investment contract with no defined maturity, fair value is estimated to be the present surrender value.

Borrowed money: Fair values for borrowed money are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

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

30

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

5. Fair Values of Financial Instruments (continued)

The following sets forth a comparison of the fair values and carrying amounts of the Company’s financial instruments:

	December 31
	2007					2006
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Admitted assets
Cash, cash equivalents and short-term investments	$	1,182,364		$	1,182,364	$	1,552,965		$	1,552,965
Unaffiliated bonds		27,987,619			27,899,563		32,103,292			32,462,380
Unaffiliated preferred stocks		1,328,054			1,243,658		1,689,094			1,773,025
Unaffiliated common stocks		175,403			175,403		393,176			393,176
Mortgage loans on real estate		6,038,594			6,086,856		5,760,667			5,863,158
Policy loans		92,978			92,978		130,144			130,144
Interest rate caps		4,454			4,454		10,793			10,793
Receivable from parents, subsidiaries and affiliates		69,694			69,694		503,881			503,881
Separate account assets		32,759,905			32,759,905		28,875,013			28,875,013
Liabilities
Investment contract liabilities		24,409,453			24,956,387		29,617,295			30,115,504
Swaps		(179,775	)		166,946		(167,913	)		348,111
Borrowed money		—			—		493,336			493,336
Separate account annuity liabilities		24,693,597			24,693,979		22,890,368			22,890,368

6. Investments

The carrying amounts and estimated fair values of non-affiliated investments in bonds and preferred stocks were as follows:

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses Less Than 12 Months		Gross Unrealized Losses 12 Months or More		Estimated Fair Value
December 31, 2007
Bonds:
United States Government and agencies	$	400,772	$	9,166	$	202	$	1,859	$	407,877
State, municipal and other government		654,523		40,467		7,092		7,246		680,652
Public utilities		1,746,365		46,100		6,580		13,849		1,772,036
Industrial and miscellaneous		16,313,521		424,640		166,084		157,223		16,414,854
Mortgage and other asset-backed securities		8,872,438		51,606		219,631		80,269		8,624,144
		27,987,619		571,979		399,589		260,446		27,899,563
Unaffiliated preferred stocks		1,328,054		19,956		87,248		17,104		1,243,658
	$	29,315,673	$	591,935	$	486,837	$	277,550	$	29,143,221

31

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses Less Than 12 Months		Gross Unrealized Losses 12 Months or More		Estimated Fair Value
December 31, 2006
Bonds:
United States Government and agencies	$	423,901	$	2,140	$	876	$	5,701	$	419,464
State, municipal and other government		684,807		61,035		1,710		10,418		733,714
Public utilities		2,159,941		85,344		3,766		20,344		2,221,175
Industrial and miscellaneous		18,867,823		549,897		47,310		211,195		19,159,214
Mortgage and other asset-backed securities		9,966,820		46,050		9,222		74,836		9,928,813
		32,103,292		744,466		62,884		322,494		32,462,380
Unaffiliated preferred stocks		1,689,094		94,679		2,098		8,650		1,773,025
	$	33,792,386	$	839,145	$	64,982	$	331,144	$	34,235,405

The Company held bonds and preferred stock at December 31, 2007 and 2006 with a carrying value of $47,219 and $44,139, respectively, and amortized cost of $58,807 and $56,799, respectively, that have an NAIC rating of 6 and which are not considered to be other than temporarily impaired. These securities are carried at the lower of amortized cost or fair value, and any write-down to fair value has been recorded directly to unassigned surplus.

At December 31, 2007 and 2006, for securities that have been in a continuous loss position for greater than or equal to twelve months, the Company held 1,027 and 1,502 securities with a carrying amount of $6,911,761 and $11,033,069 and an unrealized loss of $277,550 and $331,144 with an average price of 96.0 and 97.0 (NAIC market value/amortized cost), respectively. Of this portfolio, 95.0% and 94.4% were investment grade with associated unrealized losses of $245,901 and $291,095, respectively.

At December 31, 2007 and 2006, for securities in an unrealized loss position less than twelve months, the Company held 1,134 and 808 securities with a carrying amount of $9,766,323 and $5,751,378 and an unrealized loss of $486,837 and $64,982 with an average price of 95.0 and 46.7 (NAIC market value/amortized cost), respectively. Of this portfolio, 90.0% and 96.8% were investment grade with associated unrealized losses of $398,133 and $52,315, respectively.

32

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

The Company closely monitors below investment grade holdings and those investment grade issuers and industry sectors where the Company has concerns. The Company also regularly monitors industry sectors. Securities in unrealized loss positions that are considered other than temporary are written down to fair value. The Company considers relevant facts and circumstances in evaluating whether the impairment is other than temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; and (2) the Company’s decision to sell a security prior to its maturity at an amount below its carrying amount. Additionally, financial condition, near term prospects of the issuer, nationally recognized credit rating changes and cash flow trends and underlying levels of collateral, for asset-backed securities only, are monitored. The Company will record a charge to the statement of operations to the extent that these securities are subsequently determined to be other than temporarily impaired in the period the determination is made.

The estimated fair value of bonds, common stocks and preferred stocks with gross unrealized losses at December 31, 2007 and 2006 is as follows:

	Losses Less Than 12 Months		Losses 12 Months or More		Total
December 31, 2007
Bonds:
United States Government and agencies	$	32,613	$	74,807	$	107,420
State, municipal and other government		121,626		82,427		204,053
Public utilities		287,588		436,534		724,122
Industrial and miscellaneous		4,462,473		3,790,402		8,252,875
Mortgage and other asset-backed securities		3,729,867		2,062,829		5,792,696
		8,634,167		6,446,999		15,081,166
Unaffiliated preferred stocks		645,319		187,211		832,530
Unaffiliated common stocks		45,390		—		45,390
	$	9,324,876	$	6,634,210	$	15,959,086

33

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

	Losses Less Than 12 Months		Losses 12 Months or More		Total
December 31, 2006
Bonds:
United States Government and agencies	$	101,985	$	203,936	$	305,921
State, municipal and other government		107,264		103,700		210,964
Public utilities		325,631		618,315		943,946
Industrial and miscellaneous		3,082,806		6,373,498		9,456,304
Mortgage and other asset-backed securities		1,890,306		3,081,179		4,971,485
		5,507,992		10,380,628		15,888,620
Unaffiliated preferred stocks		178,404		321,295		499,699
Unaffiliated common stocks		75,770		—		75,770
	$	5,762,166	$	10,701,923	$	16,464,089

The carrying amounts and estimated fair values of bonds at December 31, 2007, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Carrying Amount		Estimated Fair Value
Due in one year or less	$	1,274,677	$	1,270,825
Due after one year through five years		9,186,021		9,256,980
Due after five years through ten years		4,757,998		4,760,097
Due after ten years		3,896,485		3,987,517
		19,115,181		19,275,419
Mortgage and other asset-backed securities		8,872,438		8,624,144
	$	27,987,619	$	27,899,563

At December 31, 2007, the Company’s banking sector portfolio reported $138,938 in unrealized losses. The absolute exposure to the banking sector is large and of high quality. Because of the banking sector’s size, the absolute dollar amount of unrealized losses is large, but the overall market value as a percent of book value on all securities in an unrealized loss position is 94%. While the sector has some exposure to the subprime market, the issuers are highly diversified and any impact is not expected to be material to their credit profile.

34

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

There is one individual issuer rated below investment grade in the banking sector. The Company’s exposure to Northern Rock PLC bonds is rated B3 and has unrealized losses of $37,989. Northern Rock PLC, a British mortgage bank, suffered a run on the bank in the fall of 2007. The Bank of England has provided guarantees and liquidity support to stabilize this UK mortgage lender, and its support is expected to continue until a buyer can be found. Given the support provided by the Bank of England, the Company does not consider Northern Rock PLC to be impaired as of December 31, 2007. Subsequent to year end, Northern Rock PLC, failed to find bids that suited the Bank of England’s loan repayment requirements. As a result, Northern Rock PLC has been nationalized. The Company’s bonds continue to remain as listed securities even under what has been described as temporary public ownership, and no impairment appears warranted.

Sub-prime mortgages are loans to homebuyers who have weak or impaired credit histories, are loans that are non-conforming or are loans that are second in priority. The Company’s businesses in the United States do not sell or buy sub-prime mortgages directly. The Company’s position is related to so-called “asset-backed securities” (ABS). These securities are pools of mortgages that have been securitized and offered to investors as asset-backed securities, where the mortgages are collateral. Most of the underlying mortgages within the pool have FICO scores below 660. Therefore, the ABS has been classified by the Company as a sub-prime mortgage position. Also included in the Company’s total sub-prime mortgage position are ABS with second lien mortgages as collateral. The second lien mortgages may not necessarily have sub-prime FICO scores; however, the Company has included these ABS in its sub-prime position as it’s the second priority in terms of repayment. The Company does not have any “direct” residential mortgages to sub-prime borrowers outside of the ABS structures.

For ABS in an unrealized loss position, the Company considers them for impairment when there has been an adverse change in estimated cash flows from the cash flows previously projected at purchase, which is in accordance with SSAP 43, Loan-backed and Structured Securities. The Company did not impair any of its sub-prime mortgage positions in 2007 or 2006.

The following table provides the actual cost, carrying value and fair value by asset class of the Company’s sub-prime mortgage position at December 31, 2007:

	Actual Cost		Carrying Value		Fair Value
Residential Mortgage Backed Securities	$	1,464,313	$	1,463,975	$	1,365,233
Collateralized Debt Obligations		6,579		6,579		6,579
	$	1,470,892	$	1,470,554	$	1,371,812

35

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

The following table provides the actual cost, carrying value and fair value by asset class of the Company’s sub-prime mortgage position at December 31, 2007, which are reported off balance sheet for statutory reporting purposes.

	Actual Cost		Carrying Value		Fair Value
Residential Mortgage Backed Securities	$	21,352	$	21,357	$	20,210

At December 31, 2007, the Company’s residential mortgage backed securities sub-sector, CMO Non Agency-whole loan, reported $78,760 in unrealized losses. The majority of the unrealized loss is attributed to SASCO (Structured Asset Securities Corporation) in the amount of $37,766. The Company owns several securities under the SASCO name, with each deal containing its own unique pool of collateral and representing a separate and distinct trust. The combination of low reset margin, slower prepayment speeds, illiquidity in the market and general level of credit spread widening have pushed the overall market value as a percent of book on those residential mortgage backed securities bonds in an unrealized loss position of 92%. The unrealized loss on SASCO is not credit driven but rather a reflection of the move in interest rates and credit spreads relative to where these deals were originally priced.

A detail of net investment income is presented below:

	Year Ended December 31
	2007			2006			2005
Bonds	$	1,779,152		$	1,908,966		$	2,054,492
Preferred stock		96,000			89,786			23,293
Common stock		5,313			5,404			3,688
Mortgage loans		395,076			389,683			383,849
Real estate		3,573			4,238			4,871
Policy loans		7,684			8,501			9,277
Derivatives		6,734			(6,687	)		(29,658	)
Cash, cash equivalents and short-term investments		76,339			24,043			12,461
Other		19,073			68,733			65,023
Gross investment income		2,388,944			2,492,667			2,527,296
Less investment expenses		(95,748	)		(115,756	)		(137,242	)
Net investment income	$	2,293,196		$	2,376,911		$	2,390,054

36

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

Proceeds from sales and maturities of bonds and preferred stocks and related gross realized gains and losses were as follows:

	Year Ended December 31
	2007			2006			2005
Proceeds	$	20,110,285		$	20,443,729		$	23,512,439
Gross realized gains	$	413,061		$	259,277		$	291,791
Gross realized losses		(194,877	)		(223,665	)		(203,370	)
Net realized gains	$	218,184		$	35,612		$	88,421

Gross realized losses for the years ended December 31, 2007, 2006 and 2005 include $37,211, $21,993 and $42,184, respectively, which relates to losses recognized on other than temporary declines in market value of debt securities.

Net realized capital gains/losses on investments and change in net unrealized capital gains/losses on investments are summarized below:

	Realized
	Year Ended December 31
	2007			2006			2005
Bonds	$	193,427		$	(758	)	$	97,640
Preferred stocks		24,757			36,370			(9,219	)
Common stocks		77,658			(1,982	)		(4,465	)
Mortgage loans on real estate		2,962			385			(3,054	)
Real estate		26			515			2,538
Short-term investments		(5,737	)		(5	)		(7	)
Derivatives		(13,505	)		6,275			(27,493	)
Other invested assets		157,582			110,648			69,851
		437,170			151,448			125,791
Tax effect		(175,872	)		(50,291	)		(53,227	)
Transfer to interest maintenance reserve		(31,575	)		13,330			(63,341	)
Net realized capital gains on investments	$	229,723		$	114,487		$	9,223

37

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

	Change in Unrealized
	Year Ended December 31
	2007			2006			2005
Bonds	$	1,072		$	13,177		$	(112,374	)
Preferred stocks		585			45,805			1,816
Common stocks		(21,486	)		(5,460	)		5,085
Affiliated entities		2,417			7,086			2,619
Other invested assets		161,158			116,799			58,498
Derivative instruments		11,198			(59,193	)		88,809
Change in net unrealized capital gains/(losses)	$	154,944		$	118,214		$	44,453

Gross unrealized gains and gross unrealized losses on unaffiliated common stocks are as follows:

	December 31
	2007			2006
Unrealized gains	$	24,188		$	34,180
Unrealized losses		(18,647	)		(7,153	)
Net unrealized gains	$	5,541		$	27,027

During 2007, the Company issued mortgage loans with interest rates ranging from 5.55% to 9.58% for commercial loans and 6.30% to 9.45% for agricultural loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate at origination was 89%. Mortgage loans with a carrying amount of $18 were non-income producing for the previous 180 days. Accrued interest of $3 and $4 related to these mortgage loans was excluded from investment income at December 31, 2007 and 2006, respectively. The Company has a mortgage or deed of trust on the property thereby creating a lien which gives it the right to take possession of the property (among other things) if the borrower fails to perform according to the terms of the loan documents. The Company requires all mortgaged properties to carry fire insurance equal to the value of the underlying property.

The Company did not recognize any impaired loans with a related allowance for credit losses as of December 31, 2007 or 2006. There were also no impaired mortgage loans held without an allowance for credit losses as of December 31, 2007 or 2006. The average recorded investment in impaired loans during 2006 was $17.

38

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. The Company recognized interest income on impaired loans of $110 for the year ended December 31, 2005. Interest income in the amount of $126 was recognized on a cash basis for the year ended December 31, 2005. There was no interest income on impaired loans recognized nor was there any interest income recognized on a cash basis for years ended December 31, 2007 and 2006.

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

	Year Ended December 31
	2007		2006		2005
Balance at beginning of period	$	—	$	104	$	8,184
Additions, net charged to operations		—		—		838
Reduction due to write-downs charged against the allowance		—		104		7,612
Recoveries in amounts previously charged off		—		—		1,306
Balance at end of period	$	—	$	—	$	104

At December 31, 2007 and 2006, the Company had recorded investments in restructured securities of $672 and $9,644, respectively. The capital gains (losses) taken as a direct result of restructures in 2007 and 2006 were $(75) and $4,198, respectively. There were no capital gains taken as a direct result of restructures in 2005. The Company often has impaired a security prior to the restructure date. These impairments are not included in the calculation of restructure related losses and are accounted for as a realized loss, reducing the cost basis of the security involved.

At December 31, 2007, 2006 and 2005, the Company had no loans for which impairments have been recognized in accordance with SSAP No. 36, Troubled Debt Restructuring. There were no realized losses during the years ended December 31, 2007, 2006 and 2005 related to such restructurings. There are no commitments to lend additional funds to debtors owing receivables.

39

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

At December 31, 2007 and 2006, the Company held a mortgage loan loss reserve in the AVR of $105,211 and $172,414, respectively. The mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:

Geographic Distribution					Property-Type Distribution
	December 31					December 31
	2007		2006			2007		2006
Pacific	22	%	22	%	Office	36	%	35	%
South Atlantic	21		21		Industrial	20		21
Middle Atlantic	17		17		Retail	17		16
Mountain	16		15		Apartment	16		19
E. North Central	9		10		Agriculture	6		4
W. North Central	5		5		Other	4		4
W. South Central	5		5		Medical	1		1
E. South Central	3		3
New England	2		2

For the year ending December 31, 2007, the Company has 36 Low Income Housing Tax Credits. The remaining years of unexpired tax credits ranged from 2 to12 and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from 4 to 16 years. The amount of contingent equity commitments expected to be paid during the years 2008 to 2019 is $15,733. There were no impairment losses, write-downs or reclassifications during the year related to these credits.

The Company uses interest rate swaps to reduce market risk in interest rates and to alter interest rate exposures arising from mismatches between assets and liabilities. An interest rate swap is an arrangement whereby two parties (counterparties) enter into an agreement to exchange periodic interest payments. The dollar amount the counterparties pay each other is an agreed-upon period interest rate multiplied by an underlying notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The Company also uses cross currency swaps to reduce market risk in foreign currencies and to alter exchange exposure arising from mismatches between assets and liabilities. A notional currency exchange occurs at the beginning and end of the contract. During the life of the swap, the counterparties exchange fixed or floating interest payments in its swapped currency. All swap transactions are entered into pursuant to master agreements providing for a single net payment to be made by one counterparty at each due date.

40

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges, consequently, when the value of the 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) which is mitigated by active measuring and monitoring.

The maximum term over which the Company is hedging its exposure to the variability of future cash flows is approximately 24 years for forecasted hedge transactions. For forecasted hedge transactions, the deferred gain (loss) is recognized in income as the purchased asset affects income. If the forecasted transaction no longer qualifies for hedge accounting or if the forecasted transaction is no longer probable, the forward-starting swap will cease to be valued at amortized cost and will be marked to fair value through surplus. For the year ended December 31, 2007, none of the Company’s cash flow hedges has been discontinued, as it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship.

For the years ended December 31, 2007 and 2006, the Company has recorded $5,572 and $(2,256), respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized loss. The Company did not recognize any unrealized gains or losses during 2007 or 2006 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

An interest rate floor provides a receipt of payments in the event interest rates fall below the strike rates in the contract. An interest rate floor is designed to generate cash flows to offset lower cash flows received on assets during low interest rate environments. The Company pays a single premium at the beginning of the contract. These interest rate floors are marked to fair value in the balance sheet and the fair value adjustment is recorded in capital and surplus.

41

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

The Company replicates investment grade corporate bonds by combining a AAA rated security as a cash component with a credit default swap which, in effect, converts the high quality asset to a lower rated investment grade asset. Using the swap market to replicate credit enables the Company to enhance the relative values while having the ability to execute larger transactions in a shortened time frame. At December 31, 2007 and 2006, the Company had replicated assets with a fair value of $198,205 and $170,856, respectively, and credit default swaps with a fair value of $(1,344) and $1,128, respectively. During the years ended December 31, 2007, 2006 and 2005, the Company did not recognize any capital losses related to replication transactions.

The Company is exposed to credit related losses in the event of nonperformance by counterparties to financial instruments, but it does not expect any counterparty to fail to meet their obligations given their high credit rating of ‘A’ or better. The credit exposure of interest rate swaps and currency swaps is represented by the fair value of contracts, aggregated at a counterparty level, with a positive fair value at the reporting date. The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets on the Company’s behalf. The posted amount is equal to the difference between the net positive fair value of the contracts and an agreed upon threshold that is based on the credit rating of the counterparty. Inversely, if the net fair value of all contracts with this counterparty is negative, then the Company is required to post assets instead. As of December 31, 2007, the fair value of all contracts, aggregated at a counterparty level, with a positive and negative fair value amounted to $402,904 and $(230,573), respectively.

At December 31, 2007 and 2006, the Company’s outstanding financial instruments with on and off-balance sheet risks, shown in notional amounts, are summarized as follows:

	Notional Amount
	2007		2006
Derivative securities:
Interest rate and currency swaps:
Receive fixed – pay floating	$	5,641,240	$	6,156,247
Receive floating – pay fixed		5,325,510		6,860,032
Receive fixed – pay fixed		129,869		107,148
Receive floating (uncapped) – pay floating (capped)		3,254,357		4,093,896
Interest rate cap agreement		4,500,000		4,521,900
Interest rate floor agreements		60,800		59,200

42

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

6. Investments (continued)

At December 31, 2007, investments with an aggregate carrying value of $60,914 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.

7. Reinsurance

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

Premiums earned reflect the following reinsurance assumed and ceded amounts:

	Year Ended December 31
	2007			2006			2005
Direct premiums	$	8,481,394		$	7,282,848		$	6,263,720
Reinsurance assumed – non affiliates		28,936			4,025			4,151
Reinsurance assumed – affiliates		46,715			229,506			118,163
Reinsurance ceded – non affiliates		(121,441	)		(99,068	)		(143,292	)
Reinsurance ceded – affiliates		(2,955,675	)		(2,507,526	)		(1,137,525	)
Net premiums earned	$	5,479,929		$	4,909,785		$	5,105,217

The Company received reinsurance recoveries in the amount of $306,393, $266,434 and $207,576, during 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $13,986 and $12,977, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2007 and 2006 of $11,702,802 and $8,260,587, respectively.

The net amount of the reduction in surplus at December 31, 2007 if all reinsurance agreements were cancelled is $21,653.

43

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

7. Reinsurance (continued)

At December 31, 2007 and 2006, amounts recoverable from unaffiliated unauthorized reinsurers of $474 and $1,034, respectively, and reserve credits for reinsurance ceded of $20,287 and $25,221, respectively were associated with a single reinsurer and its affiliates. The Company holds collateral under these reinsurance agreements in the form of trust agreements totaling $21,765 and $27,616 at December 31, 2007 and 2006, respectively, that can be drawn on for amounts that remain unpaid for more than 120 days.

During 2001, the Company entered into a reinsurance transaction with an unaffiliated company to cede certain annuity benefits on an inforce group of contracts. The gain from this transaction of $13,674 was credited directly to unassigned surplus. During 2007, 2006 and 2005, $1,119, $1,403 and $1,437, respectively, of the initial gain were amortized into earnings, with a corresponding charge to unassigned surplus.

During 2001, the Company entered into a reinsurance transaction with Transamerica International Re (Bermuda) Ltd. (TIRE), an affiliate of the Company. Under the terms of this transaction, the Company ceded certain traditional life insurance contracts. The net of tax impact from the cession of inforce business was $33,042, which was credited directly to unassigned surplus. During 2007, 2006 and 2005, the Company has amortized $3,304 per year into earnings with a corresponding charge to unassigned surplus. The Company has a liability for funds held under reinsurance of $376,833, $585,938, and $625,459 at December 31, 2007, 2006, and 2005, respectively.

During 2003, the Company entered into an indemnity reinsurance agreement in which the Company agreed to cede the obligations and benefits related to certain fixed annuity contracts on a coinsurance and modified coinsurance basis. The Company received a ceding commission of $13,386 at the inception of the contract. In addition, the Company released the IMR liability of $19,855 related to the assets backing the ceded contracts because the future investment experience to be transferred to the assuming company will be without adjustment of the IMR that existed at the date of the initial transaction. The resulting gain from the ceding commission and the IMR release has been recorded directly to unassigned surplus on a net of tax basis. During 2007, 2006 and 2005, the Company has amortized $1,538, $2,632 and $985, respectively, into earnings with a corresponding charge to unassigned surplus.

44

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

7. Reinsurance (continued)

During 2006, the Company entered into a reinsurance agreement with Transamerica Ireland Reinsurance, an affiliate, to retrocede an inforce block of universal life business. The initial commission expense allowance received of $148,162 less ceded reserves of $169,062 resulted in an initial transaction gain of $20,900 pre-tax ($13,585 net of tax). The net of tax gain was reclassified to unassigned surplus. During 2007 and 2006, the Company amortized $1,019 and $1,359 into earnings with a corresponding charge to unassigned surplus, respectively.

Effective December 31, 2007, TIRE recaptured all inforce business that was previously retroceded to the Company under the retrocessional agreement effective January 1, 2003. The difference between the life and claim reserves released of $172 and $11, respectively, and consideration paid of $82 was included in the Statement of Operations.

The Company entered into an agreement effective December 31, 2007 to recapture obligations and benefits related to certain universal life insurance contracts that were previously ceded to TIRE in 2003. The Company assumed assets of $4,690 associated with this business and paid recapture consideration of $308. Reserves recaptured included life reserves of $1,070 and claim reserves of $111. As a result, a pre-tax gain of $3,201 was included in the Statement of Operations. In addition, the unamortized pre-tax ceded gain held by the Company in unassigned surplus resulting from the original reinsurance transaction was released into income in the amount of $1,608 ($1,045 net of tax). Prior to this transaction, the Company had amortized $365 and $380 on a pre-tax basis ($237 and $247 on a net of tax basis) into earnings for 2007 and 2006, respectively, with a corresponding charge to unassigned surplus.

Effective December 31, 2007, the Company and Life Investors Insurance Company of America (LIICA), an affiliate of the Company, entered into an indemnity reinsurance agreement to automatically reinsure 100% of the risks attributable to secondary guarantee benefits on certain universal life policies that were originally issued by LIICA, with issue dates ranging from January 1, 2007 through December 31, 2007, and also will be covering policies issued between January 1, 2008 and December 31, 2008. As a result, the Company assumed reserves of $104,707.

45

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

7. Reinsurance (continued)

The Company and Monumental Life Insurance Company (MLIC), an affiliate of the Company, also entered into an indemnity reinsurance agreement effective December 31, 2007, to automatically reinsure 100% of the risks attributable to secondary guarantee benefits on certain universal life policies that were originally issued by MLIC or People’s Benefit Life Insurance Company, which was merged by operation of law into MLIC effective October 1, 2007, with issue dates ranging from January 1, 2007 through December 31, 2007, and also will be covering policies issued between January 1, 2008 and December 31, 2008. As a result, the Company assumed reserves of $26,573.

The Company entered into an indemnity reinsurance agreement effective December 31, 2007, with TOLIC to automatically reinsure 100% of the risks attributable to secondary guarantee benefits on certain universal life policies that were originally issued by TOLIC and assumed by TOLIC on policies originally issued by Transamerica Life (Bermuda) Ltd., an affiliate of the Company, with issue dates ranging from January 1, 2007 through December 31, 2007, and also will be covering policies issued between January 1, 2008 and December 31, 2008. As a result, the Company assumed reserves of $143,515.

Subsequent to the above transactions, also effective December 31, 2007, the Company entered into an indemnity reinsurance agreement with Pine Falls Re, Inc., an affiliate, to automatically reinsure 100% of the risks attributable to secondary guarantee benefits on certain universal life policies that were originally issued by the Company and assumed by the Company from various affiliated entities. Universal life secondary guarantee reserves ceded were $286,392, resulting in a pre-tax gain of $286,392 ($186,154, net of tax) that has been credited directly into unassigned surplus.

On October 1, 2007 the Company recaptured various fixed deferred annuity plans that were ceded to MLIC under a July 1, 1990 agreement. The recapture premium received was $249,642 and the commission expense allowance paid was $3,386, for a net consideration received of $246,256. Reserves recaptured were $249,642. The resulting pretax loss of $3,386 was included in the Statement of Operations.

The Company entered into an indemnity reinsurance agreement with a nonaffiliated company effective July 1, 2007, in which the Company agreed to cede a closed block of fixed and variable deferred annuities on a coinsurance and modified coinsurance basis. The net of tax gain of $10,931 from this transaction was credited directly to unassigned surplus. During 2007 the Company amortized $995 into earnings with a corresponding charge to unassigned surplus.

46

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes

The main components of net deferred income taxes are as follows:

	December 31
	2007		2006
Deferred income tax assets:
Guaranty funds	$	2,984	$	6,350
Non-admitted assets		6,455		6,959
807(f) assets		6,910		6,042
Partnerships		61,354		33,185
Tax basis deferred acquisition costs		265,534		242,335
Reserves		107,173		103,702
Unrealized capital losses		23,150		44,330
Derivatives		75,277		36,455
Deferred intercompany losses		15,139		11,042
Other		13,290		7,690
Total deferred income tax assets		577,266		498,090
Non-admitted deferred tax assets		176,768		251,610
Admitted deferred tax assets		400,498		246,480
Deferred income tax liabilities:
Unrealized capital gains		87,516		112,838
807(f) liability		6,629		6,742
Accrued dividends		443		3,561
Deferred intercompany gains		14,556		13,724
Partnerships		150,914		—
Other		851		1,273
Total deferred income tax liabilities		260,909		138,138
Net admitted deferred tax asset	$	139,589	$	108,342

47

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

The change in net deferred income tax assets and deferred income tax assets are as follows:

	December 31
	2007		2006		Change
Total deferred tax assets	$	577,266	$	498,090	$	79,176
Total deferred tax liabilities		260,909		138,138		122,771
Net deferred tax asset	$	316,357	$	359,952		(43,595	)
Tax effect of unrealized gains (losses)						36,599
Change in net deferred income tax					$	(6,996	)

	December 31
	2006		2005		Change
Total deferred tax assets	$	498,090	$	464,807	$	33,283
Total deferred tax liabilities		138,138		179,070		40,932
Net deferred tax asset	$	359,952	$	285,737		74,215
Tax effect of unrealized gains (losses)						16,806
Change in net deferred income tax					$	91,021

Federal income tax expense differs from the amount computed by applying the statutory federal income tax rate to gain (loss) from operations before federal income tax expense and net realized capital gains (losses) on investments for the following reasons:

48

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

	Year Ended December 31
	2007			2006			2005
Income tax expense (benefit) on operational gains and capital gains (losses) on investments computed at the federal statutory rate (35%)	$	192,312		$	177,020		$	146,830
Deferred acquisition costs – tax basis		25,195			28,780			3,237
Dividends received deduction		(19,606	)		(22,343	)		(22,887	)
IMR amortization		(5,170	)		(7,628	)		(13,821	)
Investment income items		14,361			(7,952	)		42
Limited partnerships book/tax difference		(1,363	)		(3,754	)		(2,477	)
Miscellaneous accruals		2,706			(339	)		(1,664	)
Non-Deductible items		382			433			202
Prior year over (under) accrual		13,036			33,117			(40,480	)
Reinsurance transactions		65,740			1,624			(2,094	)
Tax credits		(38,023	)		(9,115	)		(5,854	)
Tax reserve adjustment		(2,382	)		(285	)		(3,549	)
Other		(77	)		(2,855	)		44
Federal income tax expense on operations and capital gains (losses) on investments		247,111			186,703			57,529
Less tax (benefit) on capital gains (losses)		175,872			50,291			53,227
Total federal income tax expense	$	71,239		$	136,412		$	4,302

The total statutory income taxes are computed as follows:

	Year Ended December 31
	2007		2006			2005
Federal income tax expense on operations and capital gains (losses) on investments	$	247,111	$	186,703		$	57,529
Change in net deferred income taxes		6,996		(91,021	)		(34,505	)
Total statutory income taxes	$	254,107	$	95,682		$	23,024

Effective October 1, 2005, the Company joined in a consolidated income tax return filing with TOLIC. Prior to that date, the Company filed a consolidated tax return with its indirect parent company, AEGON US Holding Corporation. Under the terms of a tax sharing agreement between the Company and its affiliates, the Company computes federal income tax expense as if it were filing a separate income tax return, except that tax credits and net operating loss carryforwards are determined on the basis of the consolidated group. Additionally, the alternative minimum tax is computed for the consolidated group and the resulting tax, if any, is allocated back to the separate companies on the basis of the separate companies’ alternative minimum taxable income.

49

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

8. Income Taxes (continued)

In addition, any operating loss or capital loss carryforwards are calculated for the life and nonlife subgroups on a consolidated basis. At December 31, 2006, the consolidated returns had no loss carryforwards. A tax return has not yet been filed for 2007.

The amount of tax contingencies calculated for the Company as of December 31, 2007 and 2006 is not material to the Company’s financial position. Therefore, the total amount of tax contingencies that, if recognized, would affect the effective income tax rate is immaterial. The Company classifies interest and penalties related to income taxes as interest expense and penalty expense, respectively. The Company’s interest expense related to income taxes as of December 31, 2007 and 2006 was negligible and the Company recorded no liability for penalties.

The Company’s federal income tax returns have been examined by the Internal Revenue Service and closing arguments have been executed through 2000. The examination fieldwork for 2001 through 2004 has been completed and resulted in tax return adjustments that are currently being appealed. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax provisions. An examination is underway for 2005 and 2006.

Income taxes incurred during 2007, 2006 and 2005 for the consolidated group in which the Company is included that will be available for recoupment in the event of future net losses is $324,348, $244,223 and $137,713, respectively.

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 “policyholders’ surplus account” (PSA). No federal income taxes have been provided for in the financial statements on income deferred in the PSA. A distribution from the PSA was made in 2006 in the amount of $20,258, which reduced the balance in the PSA to zero. Due to United States tax legislation enacted in October 2004, distributions to shareholders during 2005 and 2006 are deemed to come first out of the PSA and are not taxed. There was no reduction to net earnings due to this distribution.

50

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes

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

	December 31
	2007				2006
	Amount		Percent of Total		Amount		Percent of Total
Subject to discretionary withdrawal With market value adjustment	$	2,649,492	5	%	$	3,073,540	5	%
At book value less current surrender charge of 5% or more		4,946,290	9			6,661,713	11
At fair value		24,766,862	45			22,471,785	38
Total with adjustment or at market value		32,362,644	59			32,207,038	54
At book value without adjustment (minimal or no charge or adjustment)		12,290,063	23			13,065,825	22
Not subject to discretionary withdrawal		9,938,264	18			14,206,871	24
Total annuity reserves and deposit fund liabilities - before reinsurance		54,590,971	100	%		59,479,734	100	%
Less reinsurance ceded		4,508,540				6,254,160
Net annuity reserves and deposit fund liabilities	$	50,082,431			$	53,225,574

Included in the liability for deposit-type contracts at December 31, 2007 and 2006 are $843,245 and $2,215,320, respectively, of funding agreements issued by an affiliate to special purpose entities in conjunction with non-recourse medium-term note programs. Under these programs, the proceeds from each note series issuance are used to purchase a funding agreement from an affiliated Company which secures that particular series of notes. The funding agreement is reinsured to the Company. In general, the payment terms of the note series match the payment terms of the funding agreement that secures that series. Claims for principal and interest for these funding agreements are afforded equal priority as other policyholders. At December 31, 2007, the contractual maturities were as follows:

Year	Amount
2008	$	—
2009		372,903
2010		55,451
2011		125,294
2012		52,646
Thereafter		236,951

51

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

The Company’s liability for deposit-type contracts includes GIC’s and funding agreements assumed from MLIC, an affiliate. The liabilities assumed are $4,122,609 and $5,805,497 at December 31, 2007 and 2006, respectively.

Separate and variable accounts held by the Company relate to individual variable life insurance policies. The benefits provided on the policies are determined by the performance and/or market value of the investments held in the separate account. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. The assets of these are carried at market value. The life insurance policies typically provide a guaranteed minimum death benefit. Information regarding the separate accounts of the Company as of and for the years ended December 31, 2007 and 2006 is as follows:

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2007	$	14,714	$	—	$	5,528,274	$	5,542,988
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	30,695,300	$	30,695,300
Amortized cost		521,653		—		—		521,653
Total at December 31, 2007	$	521,653	$	—	$	30,695,300	$	31,216,953
Reserves for separate accounts by withdrawal characteristics at December 31, 2007:
Subject to discretionary withdrawal:
With market value adjustment	$	41,480	$	—	$	—	$	41,480
At fair value		—		—		30,695,300		30,695,300
At book value without market value adjustment and with current surrender charge of less than 5%		480,173		—		—		480,173
Not subject to discretionary withdrawal		—		—		—		—
Total separate account liabilities at December 31, 2007	$	521,653	$	—	$	30,695,300	$	31,216,953

52

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2006	$	7,471	$	—	$	4,874,131	$	4,881,602
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	27,230,773	$	27,230,773
Amortized cost		493,802		—		—		493,802
Total at December 31, 2005	$	493,802	$	—	$	27,230,773	$	27,724,575
Reserves for separate accounts by withdrawal characteristics at December 31, 2006:
Subject to discretionary withdrawal:
With market value adjustment	$	37,244	$	—	$	—	$	37,244
At fair value		—		—		27,230,773		27,230,773
At book value without market value adjustment and with current surrender charge of less than 5%		456,558		—		—		456,558
Not subject to discretionary withdrawal		—		—		—		—
Total separate account liabilities at December 31, 2006	$	493,802	$	—	$	27,230,773	$	27,724,575

53

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Nonindexed Guaranteed Less than or equal to 4%		Nonindexed Guaranteed More than 4%		Nonguaranteed Separate Account		Total
Premiums, deposits and other considerations for the year ended December 31, 2005	$	7,756	$	—	$	3,592,608	$	3,600,364
Reserves for separate accounts with assets at:
Fair value	$	—	$	—	$	22,429,774	$	22,429,774
Amortized cost		472,193		136,956		—		609,149
Total at December 31, 2005	$	472,193	$	136,956	$	22,429,774	$	23,038,923
Reserves for separate accounts by withdrawal characteristics at December 31, 2005:
Subject to discretionary withdrawal:
With market value adjustment	$	—	$	136,956	$	—	$	136,956
At fair value		—		—		22,429,774		22,429,774
At book value without market value adjustment and with current surrender charge of less than 5%		436,447		—		—		436,447
Not subject to discretionary withdrawal		35,746		—		—		35,746
Total separate account liabilities at December 31, 2005	$	472,193	$	136,956	$	22,429,774	$	23,038,923

54

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

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

	Year Ended December 31
	2007			2006			2005
Transfers as reported in the summary of operations of the separate accounts statement:
Transfers to separate accounts	$	5,533,742		$	4,875,079		$	3,593,932
Transfers from separate accounts		(3,805,743	)		(2,463,321	)		(2,235,249	)
Net transfers to separate accounts		1,727,999			2,411,758			1,358,683
Miscellaneous reconciling adjustments		(274	)		5,763			6,833
Transfers as reported in the summary of operations of the life, accident and health annual statement	$	1,727,725		$	2,417,521		$	1,365,516

A reclassification was made to the amounts previously reported to the Insurance Division, Department of Commerce, State of Iowa in the 2007 Annual Statement, to move $78,402 from net transfers to separate accounts to reserve adjustments on reinsurance ceded within the Statement of Operations, which also affected the reconciliation of net transfers to or from separate accounts as reflected in the notes to financials. This reclassification had no impact on net income.

At December 31, 2007 and 2006, the Company had separate account annuities with guaranteed benefits as follows:

Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held		Reinsurance Reserve Credit
December 31, 2007
Minimum guaranteed death benefit	$	15,411,880	$	224,163	$	16,502
Minimum guaranteed income benefit		7,936,482		162,120		9,608
Guaranteed premium accumulation fund		53,508		8,212		–
Minimum guaranteed withdrawal benefit		3,483,468		36,448		(10,328	)
December 31, 2006
Minimum guaranteed death benefit	$	14,637,639	$	174,306	$	18,781
Minimum guaranteed income benefit		9,710,748		134,293		8,043
Guaranteed premium accumulation fund		54,534		8,575		–
Minimum guaranteed withdrawal benefit		60,452		440		–

55

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

For Variable Annuities with Guaranteed Living Benefits (VAGLB), which includes minimum guaranteed income, minimum guaranteed withdrawal and guaranteed premium accumulation fund benefits, the Company complies with Actuarial Guideline 39. This guideline defines a two step process for the determination of VAGLB reserves. The first step is to establish a reserve equal to the accumulated VAGLB charges for the policies in question. The second step requires a stand alone asset adequacy analysis to determine the sufficiency of these reserves. This step has been satisfied by projecting 30 years into the future along 1000 stochastic variable return paths using a variety of assumptions as to VAGLB charges, lapse, withdrawal, annuitization, and death. The results of this analysis are discounted back to the valuation date and compared to the accumulation of fees reserve to determine if an additional reserve needs to be established.

For Variable Annuities with Minimum Guaranteed Death Benefits (MGDB), the Company complies with Actuarial Guideline 34. This guideline requires that MGDBs be projected by assuming an immediate drop in the values of the assets supporting the variable annuity contract, followed by a subsequent recovery at a net assumed return until the maturity of the contract. The immediate drop percentages and gross assumed returns vary by asset class and are defined in the guideline. Mortality is based on the 1994 Variable Annuity MGDB Mortality Table, which is also defined in the guideline.

Reserves on the Company’s traditional life products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy’s paid-through date to the policy’s next anniversary date. At December 31, 2007 and 2006, these assets (which are reported as premiums deferred and uncollected) and the amounts of the related gross premiums and loading, are as follows:

	Gross		Loading		Net
December 31, 2007
Life and annuity:
Ordinary direct first year business	$	559	$	399	$	160
Ordinary direct renewal business		21,399		7,100		14,299
Group life direct business		2,665		2,060		605
Total life and annuity		24,623		9,559		15,064
Accident and health – direct		5,758		—		5,758
	$	30,381	$	9,559	$	20,822

56

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

9. Policy and Contract Attributes (continued)

	Gross		Loading		Net
December 31, 2006
Life and annuity:
Ordinary direct first year business	$	4,172	$	2,781	$	1,391
Ordinary direct renewal business		21,163		6,794		14,369
Group life direct business		2,680		1,913		767
Total life and annuity		28,015		11,488		16,527
Accident and health - direct		3,917		—		3,917
	$	31,932	$	11,488	$	20,444

At December 31, 2007 and 2006, the Company had insurance in force aggregating $734,408 and $853,719, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Insurance Division, Department of Commerce, of the State of Iowa. The Company established policy reserves of $121,452 and $24,001 to cover these deficiencies at December 31, 2007 and 2006, respectively.

10. 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 2008, without the prior approval of insurance regulatory authorities, is $198,528.

57

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

11. Retirement and Compensation Plans

The Company’s employees participate in a qualified defined benefit pension plan sponsored by AEGON. The Company has no legal obligation for the plan. The Company recognizes pension expense equal to its allocation from AEGON. The pension expense is allocated among the participating companies based the based on International Accounting Standards 19 (IAS 19), Accounting for Employee Benefits as a percent of salaries. The benefits are based on years of service and the employee’s compensation during the highest five consecutive years of employment. The Company’s allocation of pension expense for each of the years ended December 31, 2007, 2006 and 2005 was $3,310, $2,679 and $2,789, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974.

The Company’s employees also participate in a contributory defined contribution plan sponsored by AEGON which is qualified under Section 401(k) of the Internal Revenue Service Code. Employees of the Company who customarily work at least 1,000 hours during each calendar year and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to twenty-five percent of their salary to the plan. The Company will match an amount up to three percent of the participant’s salary.

Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement and Income Security Act of 1974. Benefits expense of $1,912, $1,683 and $1,515 were allocated for the years ended December 31, 2007, 2006 and 2005, respectively.

AEGON sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The plans are noncontributory, and benefits are based on years of service and the employee’s compensation level. The plans are unfunded and nonqualified under the Internal Revenue Service Code. In addition, AEGON has established incentive deferred compensation plans for certain key employees of the Company. The Company’s allocation of expense for these plans for each of the years ended December 31, 2007, 2006 and 2005 was negligible. AEGON also sponsors an employee stock option plan/stock appreciation rights for individuals employed and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued or funded as deemed appropriate by management of AEGON and the Company.

58

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

11. Retirement and Compensation Plans (continued)

In addition to pension benefits, the Company participates in plans sponsored by AEGON that provide postretirement medical, dental and life insurance benefits to employees meeting certain eligibility requirements. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans, calculated on the pay-as-you-go basis, are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $278, $215 and $273, for the years ended December 31, 2007, 2006 and 2005, respectively.

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

During 2006 and 2005, the Company sold $6,050 and $10,788, respectively, of agent balances without recourse to an affiliated company. Prior to July 29, 2005, the agent debit balances were sold to Money Services, Inc. (MSI), an affiliated company. Subsequent to July 29, 2005, agent debit balances were sold without recourse to ADB Corporation, LLC (ADB), an affiliated company, and all rights, title and interest in the prior net debit balances owned by MSI prior to July 29, 2005, were fully assigned, without recourse, to ADB. The Company did not realize a gain or loss as a result of the sales. As of July 1, 2006, the Company no longer sells agent debit balances and as a result retains such balances as non-admitted receivables. Receivables in the amount of $13,383 and $9,846 were non-admitted as of December 31, 2007 and 2006, respectively.

The Company has recorded liabilities of $127,333 and $156,180 for municipal reverse repurchase agreements as of December 31, 2007 and 2006, respectively. The reverse repurchase agreements are collateralized by securities with book values of $135,974 and $161,711 as of December 31, 2007 and 2006, respectively. These securities have maturity dates that range from 2019 to 2028 and have a weighted average interest rate of 7.63%.

At December 31, 2007, the Company did not participate in dollar reverse repurchase agreements. At December 31, 2006, securities with a book value of $486,968 and a market value of $489,615 were subject to dollar reverse repurchase agreements. The Company has an outstanding liability for borrowed money in the amount of $493,336 as of December 31, 2006 due to participation in dollar reverse repurchase agreements.

59

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

12. Sales, Transfer, and Servicing of Financial Assets, and Extinguishments of Liabilities (continued)

The Company participates in an agent-managed securities lending program. The Company receives collateral equal to 100%/102% of the fair market value of the loaned government/other domestic securities, respectively, as of the transaction date. If the fair value of the collateral is at any time less than 100%/102% of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 100%/102% of the fair value of the loaned government/other domestic securities, respectively. In the event the Company loans a foreign security and the denomination of the currency of the collateral is other than the denomination of the currency of the loaned foreign security, the Company receives and maintains collateral equal to 105% of the fair market value of the loaned security. At December 31, 2007 and 2006, the value of securities loaned amounted to $1,079,702, and $1,501,263, respectively. At December 31, 2007, the collateral the Company received from securities lending was in the form of cash.

13. Related Party Transactions

The Company is party to a common cost allocation service arrangement between AEGON USA, Inc. companies, in which various affiliated companies may perform specified administrative functions in connection with the operation of the Company, in consideration of reimbursement of actual costs of services rendered. The Company is also a party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the Advisor serves as the administrator and advisor for the Company’s mortgage loan operations. AEGON USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. During 2007, 2006 and 2005, the Company paid $89,291, $108,387 and $82,913, respectively, for these services, which approximates their costs to the affiliates. During 2006, the Company executed an administrative service agreement with Transamerica Fund Advisors, Inc. (TFA) to provide administrative services to the AEGON/Transamerica Series Trust. The Company received $48,726 and $42,513 for these services during 2007 and 2006, respectively.

Payables to affiliates bear interest at the thirty-day commercial paper rate. At December 31, 2007 and 2006, the Company reported a net amount of $110,594 and $64,775 due to Parent, Subsidiary and Affiliated Companies, respectively. The 2007 balance excludes $70,800 of short-term intercompany notes payable. The 2006 balance excludes $338,000 of short-term intercompany notes receivable. Terms of the settlement require that these amounts are settled within 90 days.

60

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

13. Related Party Transactions (continued)

At December 31, 2007 the Company had short-term notes receivable of $314,800, $29,700, and $595,600 from Transamerica Corporation, TIRE and AEGON, respectively. The Transamerica Corporation note is due by August 28, 2008 and bears interest at 5.28%. The TIRE and AEGON notes are due by December 10, 2008 and December 27, 2008, respectively. Both of these notes bear interest at 4.75%. These notes are reported as short-term investments. The Company has short-term notes payable to TOLIC, LIICA and Stonebridge Life Insurance Company of $42,500, $18,400 and $9,900 at December 31, 2007. All three notes are due by December 30, 2008 and bear interest at 4.75%. At December 31, 2006 the Company had a short-term note receivable of $338,000 from Transamerica Corporation. The note was due by June 22, 2007. During 2007, 2006 and 2005, the Company paid net interest of $7,774, $5,767 and $14,352, respectively, to affiliates.

At December 31, 2007 and 2006, the Company has a note payable to Commonwealth General Corporation of $10,000, bearing interest at 6% and due on December 31, 2030.

During 1998, the Company issued life insurance policies to certain affiliated companies, covering the lives of certain employees of those affiliates. Aggregate reserves for policies and contracts related to these policies are $264,159 and $255,273 at December 31, 2007 and 2006, respectively.

14. Commitments and Contingencies

The Company has issued synthetic GIC contracts to benefit plan sponsors totaling $5,485,324 as of December 31, 2007. A synthetic GIC is an off-balance sheet fee-based product sold primarily to tax qualified plans. The plan sponsor retains ownership and control of the related plan assets. The Company provides book value benefit responsiveness in the event that qualified plan benefit requests exceed plan cash flows. In certain contracts, the Company agrees to make advances to meet benefit payment needs and earns a market interest rate on these advances. The periodically adjusted contract-crediting rate is the means by which investment and benefit responsive experience is passed through to participants. In return for the book value benefit responsive guarantee, the Company receives a premium that varies based on such elements as benefit responsive exposure and contract size. The Company underwrites the plans for the possibility of having to make benefit payments and also must agree to the investment guidelines to ensure appropriate credit quality and cash flow. Funding requirements to date have been minimal and management does not anticipate any future material funding requirements that would have a material impact on reported financial results.

61

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

14. Commitments and Contingencies (continued)

The Company has also provided a guarantee for the obligations of non-insurance affiliates. These entities accept assignments of structured settlement payment obligations from other insurers and purchases structured settlement insurance policies from subsidiaries of the Company that match those obligations. There are no expected payments associated with this guarantee.

At December 31, 2007, 2006 and 2005, the Company had entered into an agreement with commitment amounts of $21,090, $21,090 and $21,090, respectively, for which it was paid a fee to provide credit enhancement and standby liquidity asset purchase agreements on municipal variable rate demand note facilities. The Company believes the chance of draws or other performance features being exercised under these agreements is minimal.

At December 31, 2007 and 2006, the net amount of securities being acquired (sold) on a “to be announced” (TBA) basis was $38,086 and $(10,668), respectively.

The Company may pledge assets as collateral for derivative transactions. At December 31, 2007 and 2006, the Company has pledged invested assets with a carrying value and market value of $117,615 and $118,526, respectively, in conjunction with these transactions.

Assets in the amount of $1,598,229 and $1,553,519 as of December 31, 2007 and 2006, respectively, were pledged as collateral in conjunction with funding agreements associated with the Federal Home Loan Bank.

The Company has contingent commitments for $706,323 and $649,558 at December 31, 2007 and 2006, respectively, for joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $15,733 and $3,361, respectively.

At December 31, 2007 and 2006 the Company has mortgage loan commitments of $199,312 and $381,650, respectively.

Private placement commitments outstanding were at December 31, 2007 and 2006 were $83,844 and $144,009 respectively.

The Company is a party to legal proceedings incidental to its business. Although such litigation sometimes includes substantial demands for compensatory and punitive damages, in addition to contract liability, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

62

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

14. Commitments and Contingencies (continued)

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company except where right of offset against other taxes paid is allowed by law; amounts available for future offsets are recorded as an asset on the Company’s balance sheet. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The future obligation has been based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. The Company has established a reserve of $3,497 and $3,931 with no offsetting premium tax benefit at December 31, 2007 and 2006, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense was $813, $1,116 and $286 for the years ended December 31, 2007, 2006 and 2005, respectively.

63

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

15. Reconciliation to Statutory Annual Statement

The following is a reconciliation of amounts previously reported to the Insurance Division, Department of Commerce, of the State of Iowa in the 2007 Annual Statement, to those reported in the accompanying statutory-basis financial statements:

	2007
Balance Sheet:
Assets as reported in the Company’s Annual Statement	$	73,509,106
Adjust federal income tax recoverable		–
Assets as reported in the accompanying audited statutory-basis balance sheet	$	73,509,106
Liabilities as reported in the Company’s Annual Statement	$	71,519,356
Adjust federal income taxes payable		–
Liabilities as reported in the accompanying audited statutory-basis balance sheet	$	71,519,356
Capital and surplus as reported in the Company’s Annual Statement	$	1,989,749
Decrease change in aggregate reserves for annuity policies and contracts		45,055
Adjust federal income tax expense		(15,769)
Decrease surplus net of tax – correction of an error		(29,286)
Total capital and surplus as reported in the accompanying audited statutory-basis balance sheet	$	1,989,749
Statements of Income (Operations):
Statutory net income (loss) as reported in the Company’s Annual Statement	$	241,492
Decrease change in aggregate reserves for annuity policies and contracts		45,055
Adjust federal income tax expense		(15,769)
Total statutory net income (loss) per financial statements	$	270,778

The 2007 Annual Statement included an increase in aggregate reserves for annuity policies and contract that should have been recognized through income during 2006. There was no impact to the 2006 or 2005 financial statements due to this change.

16. Event (Unaudited) Subsequent to the Date of the Report of Independent Public Accounting Firm

On June 13, 2008 and June 16, 2008, the board of directors of the Company approved the mergers of TOLIC and Life Investors Insurance Company of America (LIICA), respectively, both affiliated companies, into the Company, subject to regulatory approval. It is anticipated the mergers will occur on October 1, 2008 for TOLIC and October 2, 2008 for LIICA. As a result of the mergers, the Company will assume ownership of all assets, and responsibility for all liabilities of TOLIC and LIICA.

64

Statutory-Basis Financial

Statement Schedules

Transamerica Life Insurance Company

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Thousands)

December 31, 2007

SCHEDULE I

Type of Investment	Cost (1)		Market Value		Amount at Which Shown in the Balance Sheet
Fixed maturities
Bonds:
United States Government and government agencies and authorities	$	447,899	$	455,339	$	447,899
States, municipalities and political subdivisions		1,147,105		1,150,824		1,147,105
Foreign governments		495,284		524,821		495,284
Public utilities		1,746,365		1,772,036		1,746,365
All other corporate bonds		24,150,966		23,996,543		24,150,966
Preferred stocks		1,328,054		1,243,658		1,328,054
Total fixed maturities		29,315,673		29,143,221		29,315,673
Equity securities
Common stocks:
Public utilities		–		–		–
Banks, trust and insurance		68,085		68,012		68,012
Industrial, miscellaneous and all other		101,783		107,391		107,391
Total common stocks		169,868		175,403		175,403
Mortgage loans on real estate		6,038,594				6,038,594
Real estate		28,891				28,891
Policy loans		92,978				92,978
Other long-term investments		2,152,611				2,152,611
Cash, cash equivalents and short-term investments		1,182,364				1,182,364
Total investments	$	38,980,979			$	38,986,514

(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.

65

Transamerica Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

SCHEDULE III

	Future Policy Benefits and Expenses		Unearned Premiums		Policy and Contract Liabilities		Premium Revenue		Net Investment Income*		Benefits, Claims Losses and Settlement Expenses		Other Operating Expenses*		Premiums Written
Year ended December 31, 2007
Individual life	$	3,589,561	$	–	$	24,055	$	56,610	$	274,448	$	84,829	$	1,813,371
Individual health		735,347		11,524		26,983		129,011		51,650		155,934		37,813	$	129,457
Group life and health		443,821		3,342		23,159		125,794		32,405		106,638		72,145		209,854
Annuity		19,297,739		–		2,730		5,168,514		1,934,693		5,792,586		1,813,485
	$	24,066,468	$	14,866	$	76,927	$	5,479,929	$	2,293,196	$	6,139,987	$	3,736,814
Year ended December 31, 2006
Individual life	$	3,757,098	$	–	$	22,168	$	331,370	$	254,197	$	237,374	$	1,991,303
Individual health		654,089		12,108		27,846		132,849		41,169		168,879		39,561	$	132,054
Group life and health		426,975		3,529		20,792		123,312		28,551		91,478		66,974		200,964
Annuity		23,038,230		–		3,839		4,322,254		2,052,994		4,777,487		1,465,687
	$	27,876,392	$	15,637	$	74,645	$	4,909,785	$	2,376,911	$	5,275,218	$	3,563,525
Year ended December 31, 2005
Individual life	$	3,733,738	$	–	$	21,092	$	658,856	$	231,660	$	212,786	$	659,658
Individual health		562,473		11,670		22,345		126,590		32,417		146,318		42,532	$	127,460
Group life and health		411,648		3,611		28,479		128,286		24,716		124,052		52,140		214,013
Annuity		26,901,713		–		5,628		4,191,485		2,101,261		4,691,047		1,538,213
	$	31,609,572	$	15,281	$	77,544	$	5,105,217	$	2,390,054	$	5,174,203	$	2,292,543

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

66

Transamerica Life Insurance Company

Reinsurance

(Dollars in Thousands)

SCHEDULE IV

	Gross Amount		Ceded to Other Companies			Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year ended December 31, 2007
Life insurance in force	$	35,254,514	$	6,996,197		$	93,241	$	28,351,558	0	%
Premiums:
Individual life	$	1,867,637	$	1,814,808		$	3,781	$	56,610	7
Individual health		129,457		446			–		129,011	0
Group life and health		209,854		84,060			–		125,794	0
Annuity		6,274,446		1,177,802			71,870		5,168,514	1
	$	8,481,394	$	3,077,116		$	75,651	$	5,479,929	1	%
Year ended December 31, 2006
Life insurance in force	$	37,877,300	$	6,921,308		$	99,276	$	31,055,268	0	%
Premiums:
Individual life	$	2,005,429	$	1,678,175		$	4,116	$	331,370	1	%
Individual health		132,054		(795	)		–		132,849	0
Group life and health		200,964		77,652			–		123,312	0
Annuity		4,944,401		851,562			229,415		4,322,254	5
	$	7,282,848	$	2,606,594		$	233,531	$	4,909,785	5	%
Year ended December 31, 2005
Life insurance in force	$	44,440,385	$	13,277,543		$	95,282	$	31,258,124	0	%
Premiums:
Individual life	$	901,447	$	246,822		$	4,231	$	658,856	1	%
Individual health		127,460		870			–		126,590	0
Group life and health		214,013		85,727			–		128,286	0
Annuity		5,020,800		947,398			118,083		4,191,485	3
	$	6,263,720	$	1,280,817		$	122,314	$	5,105,217	2	%

67

FINANCIAL STATEMENTS

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Year Ended December 31, 2007

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Financial Statements

Year Ended December 31, 2007

Contents
Report of Independent Registered Public Accounting Firm	1
Financial Statements
Statements of Assets and Liabilities	2
Statements of Operations	5
Statements of Changes in Net Assets	8
Notes to Financial Statements	14

Report of Independent Registered Public Accounting Firm

The Board of Directors and Contract Owners

of Distinct Assets from Transamerica

Transamerica Occidental Life Insurance Company

We have audited the accompanying statements of assets and liabilities of each of the subaccounts of Separate Account VA-5 of Transamerica Occidental Life Insurance Company (comprised of the Federated American Leaders Fund II, Federated Fund for U.S. Government Securities II, AIM V.I. Core Equity, AIM V.I. High Yield, Janus Aspen Large Cap Growth, ING-JPMorgan Emerging Markets Equity, Schwab Money Market, Columbia Small Company Growth, WFAVT Discovery, American Century Investments VP Balanced, and American Century Investments VP Capital Appreciation subaccounts), which are available for investment by contract owners of Distinct Assets from Transamerica, as of December 31, 2007, and the related statements of operations and changes in net assets 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Separate Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007 by correspondence with the mutual funds’ transfer agents. 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 comprising Separate Account VA-5 of Transamerica Occidental Life Insurance Company, which are available for investment by contract owners of the Distinct Assets from Transamerica at December 31, 2007, and the results of their operations and changes in their net assets for the periods indicated thereon, in conformity with U.S. generally accepted accounting principles.

March 21, 2008

A member firm of Ernst & Young Global Limited

1

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Assets and Liabilities

December 31, 2007

	Federated American Leaders Fund II Subaccount		Federated Fund for U.S. Government Securities II Subaccount		Janus Aspen Large Cap Growth Subaccount		ING JPMorgan Emerging Markets Equity Subaccount
Assets
Investment in securities:
Number of shares		94,629.078		55,466.073		88,938.028		32,502.438
Cost	$	1,706,730	$	625,690	$	1,736,868	$	530,221
Investments in mutual funds, at net asset value	$	1,620,996	$	639,524	$	2,349,743	$	872,365
Receivable for units sold		—		—		—		—
Total assets		1,620,996		639,524		2,349,743		872,365
Liabilities
Payable for units redeemed		—		—		—		—
	$	1,620,996	$	639,524	$	2,349,743	$	872,365
Net Assets:
Deferred annuity contracts terminable by owners	$	1,620,996	$	639,524	$	2,349,743	$	872,365
Total net assets	$	1,620,996	$	639,524	$	2,349,743	$	872,365
Accumulation units outstanding		54,785		34,423		81,979		457,208
Accumulation unit value	$	29.588542	$	18.578332	$	28.662571	$	1.908024

See accompanying notes.

2

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Assets and Liabilities

December 31, 2007

	AIM V.I. High Yield Subaccount		AIM V.I. Core Equity Subaccount		Schwab Money Market Subaccount		Columbia Small Company Growth Subaccount
Assets
Investment in securities:
Number of shares		81,982.391		72,108.791		1,398,101.710		56,928.341
Cost	$	499,712	$	1,816,269	$	1,398,102	$	467,431
Investments in mutual funds, at net asset value	$	470,579	$	2,099,087	$	1,398,102	$	825,461
Receivable for units sold		—		—		9		—
Total assets		470,579		2,099,087		1,398,111		825,461
Liabilities
Payable for units redeemed		8		6		—		—
	$	470,571	$	2,099,081	$	1,398,111	$	825,461
Net Assets:
Deferred annuity contracts terminable by owners	$	470,571	$	2,099,081	$	1,398,111	$	825,461
Total net assets	$	470,571	$	2,099,081	$	1,398,111	$	825,461
Accumulation units outstanding		24,465		1,803,982		939,797		35,557
Accumulation unit value	$	19.234304	$	1.163582	$	1.487674	$	23.215356

See accompanying notes.

3

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Assets and Liabilities

December 31, 2007

	WFAVT Discovery Subaccount		American Century Investments VP Balanced Subaccount		American Century Investments VP Capital Appreciation Subaccount
Assets
Investment in securities:
Number of shares		64,779.541		54,043.224		71,688.492
Cost	$	820,663	$	362,124	$	632,963
Investments in mutual funds, at net asset value	$	1,302,717	$	396,137	$	1,145,582
Receivable for units sold		—		—		—
Total assets		1,302,717		396,137		1,145,582
Liabilities
Payable for units redeemed		1		8		—
	$	1,302,716	$	396,129	$	1,145,582
Net Assets:
Deferred annuity contracts terminable by owners	$	1,302,716	$	396,129	$	1,145,582
Total net assets	$	1,302,716	$	396,129	$	1,145,582
Accumulation units outstanding		33,436		16,791		40,459
Accumulation unit value	$	38.961377	$	23.591925	$	28.314868

See accompanying notes.

4

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Operations

Year Ended December 31, 2007

	Federated American Leaders Fund II Subaccount			Federated Fund for U.S. Government Securities II Subaccount			Janus Aspen Large Cap Growth Subaccount			ING JPMorgan Emerging Markets Equity Subaccount
Net investment income (loss)
Income:
Dividends	$	28,068		$	27,016		$	17,766		$	10,257
Expenses:
Administrative, mortality and expense risk charge		16,250			5,293			21,512			7,149
Net investment income (loss)		11,818			21,723			(3,746	)		3,108
Net realized and unrealized capital gains (losses) on investments
Net realized capital gains (losses) on investments:
Realized gain distributions		209,125			—			—			2,024
Proceeds from sales		222,022			20,270			446,384			275,605
Cost of investments sold		239,504			20,509			501,495			163,695
Net realized capital gains (losses) on investments		191,643			(239	)		(55,111	)		113,934
Net change in unrealized appreciation/depreciation of investments:
Beginning of period		312,081			2,616			214,510			179,966
End of period		(85,734	)		13,834			612,875			342,144
Net change in unrealized appreciation/depreciation of investments		(397,815	)		11,218			398,365			162,178
Net realized and unrealized capital gains (losses) on investments		(206,172	)		10,979			343,254			276,112
Increase (decrease) in net assets from operations	$	(194,354	)	$	32,702		$	339,508		$	279,220

See accompanying notes.

5

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Operations

Year Ended December 31, 2007

	AIM V.I. High Yield Subaccount			AIM V.I. Core Equity Subaccount		Schwab Money Market Subaccount		Columbia Small Company Growth Subaccount
Net investment income (loss)
Income:
Dividends	$	35,736		$	23,520	$	66,187	$	—
Expenses:
Administrative, mortality and expense risk charge		4,177			18,237		12,150		7,469
Net investment income (loss)		31,559			5,283		54,037		(7,469	)
Net realized and unrealized capital gains (losses) on investments
Net realized capital gains (losses) on investments:
Realized gain distributions		—			—		—		—
Proceeds from sales		30,727			222,327		433,883		127,495
Cost of investments sold		31,139			192,432		433,883		74,677
Net realized capital gains (losses) on investments		(412	)		29,895		—		52,818
Net change in unrealized appreciation/depreciation of investments:
Beginning of period		72			167,279		—		296,503
End of period		(29,133	)		282,818		—		358,030
Net change in unrealized appreciation/depreciation of investments		(29,205	)		115,539		—		61,527
Net realized and unrealized capital gains (losses) on investments		(29,617	)		145,434		—		114,345
Increase (decrease) in net assets from operations	$	1,942		$	150,717	$	54,037	$	106,876

See accompanying notes.

6

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Statements of Operations

Year Ended December 31, 2007

	WFAVT Discovery Subaccount			American Century Investments VP Balanced Subaccount			American Century Investments VP Capital Appreciation Subaccount
Net investment income (loss)
Income:
Dividends	$	—		$	7,577		$	—
Expenses:
Administrative, mortality and expense risk charge		11,013			3,347			8,876
Net investment income (loss)		(11,013	)		4,230			(8,876	)
Net realized and unrealized capital gains (losses) on investments
Net realized capital gains (losses) on investments:
Realized gain distributions		—			18,448			—
Proceeds from sales		204,685			24,728			141,480
Cost of investments sold		107,708			22,572			70,877
Net realized capital gains (losses) on investments		96,977			20,604			70,603
Net change in unrealized appreciation/depreciation of investments:
Beginning of period		315,857			44,755			189,511
End of period		482,054			34,013			512,619
Net change in unrealized appreciation/depreciation of investments		166,197			(10,742	)		323,108
Net realized and unrealized capital gains (losses) on investments		263,174			9,862			393,711
Increase (decrease) in net assets from operations	$	252,161		$	14,092		$	384,835

See accompanying notes.

7

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	Federated American Leaders Fund II Subaccount						Federated Fund for U.S. Government Securities II Subaccount
	2007			2006			2007			2006
Operations
Net investment income (loss)	$	11,818		$	11,984		$	21,723		$	21,974
Net realized capital gains (losses) on investments		191,643			229,330			(239	)		(1,638	)
Net change in unrealized appreciation/depreciation of investments		(397,815	)		41,795			11,218			(1,368	)
Increase (decrease) in net assets from operations		(194,354	)		283,109			32,702			18,968
Contract transactions
Net contract purchase payments		130			—			1			—
Transfer payments from (to) other subaccounts or general account		(58,591	)		16,059			7,000			(74	)
Contract terminations, withdrawals, and other deductions		(145,278	)		(183,789	)		(15,007	)		(69,178	)
Increase (decrease) in net assets from contract transactions		(203,739	)		(167,730	)		(8,006	)		(69,252	)
Net increase (decrease) in net assets		(398,093	)		115,379			24,696			(50,284	)
Net assets:
Beginning of the period		2,019,089			1,903,710			614,828			665,112
End of the period	$	1,620,996		$	2,019,089		$	639,524		$	614,828

See accompanying notes.

8

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	Janus Aspen Large Cap Growth Subaccount						ING JPMorgan Emerging Markets Equity Subaccount
	2007			2006			2007			2006
Operations
Net investment income (loss)	$	(3,746	)	$	(8,240	)	$	3,108		$	(1,839	)
Net realized capital gains (losses) on investments		(55,111	)		(87,232	)		113,934			21,195
Net change in unrealized appreciation/depreciation of investments		398,365			332,542			162,178			166,346
Increase (decrease) in net assets from operations		339,508			237,070			279,220			185,702
Contract transactions
Net contract purchase payments		455			—			—			—
Transfer payments from (to) other subaccounts or general account		(91,185	)		(48,454	)		(39,854	)		84,252
Contract terminations, withdrawals, and other deductions		(329,817	)		(113,528	)		(113,108	)		(36,161	)
Increase (decrease) in net assets from contract transactions		(420,547	)		(161,982	)		(152,962	)		48,091
Net increase (decrease) in net assets		(81,039	)		75,088			126,258			233,793
Net assets:
Beginning of the period		2,430,782			2,355,694			746,107			512,314
End of the period	$	2,349,743		$	2,430,782		$	872,365		$	746,107

See accompanying notes.

9

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	AIM V.I. High Yield Subaccount						AIM V.I. Core Equity Subaccount
	2007			2006			2007			2006 (1)
Operations
Net investment income (loss)	$	31,559		$	36,515		$	5,283		$	(158	)
Net realized capital gains (losses) on investments		(412	)		908			29,895			2,806
Net change in unrealized appreciation/depreciation of investments		(29,205	)		7,433			115,539			167,279
Increase (decrease) in net assets from operations		1,942			44,856			150,717			169,927
Contract transactions
Net contract purchase payments		130			1			—			—
Transfer payments from (to) other subaccounts or general account		(3,739	)		(6	)		(12,970	)		2,043,563
Contract terminations, withdrawals, and other deductions		(16,845	)		(46,903	)		(163,014	)		(89,142	)
Increase (decrease) in net assets from contract transactions		(20,454	)		(46,908	)		(175,984	)		1,954,421
Net increase (decrease) in net assets		(18,512	)		(2,052	)		(25,267	)		2,124,348
Net assets:
Beginning of the period		489,083			491,135			2,124,348			—
End of the period	$	470,571		$	489,083		$	2,099,081		$	2,124,348

See accompanying notes.

10

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	Schwab Money Market Subaccount						Columbia Small Company Growth Subaccount
	2007			2006			2007			2006
Operations
Net investment income (loss)	$	54,037		$	48,548		$	(7,469	)	$	(7,355	)
Net realized capital gains (losses) on investments		—			—			52,818			28,467
Net change in unrealized appreciation/depreciation of investments		—			—			61,527			72,168
Increase (decrease) in net assets from operations		54,037			48,548			106,876			93,280
Contract transactions
Net contract purchase payments		—			—			325			—
Transfer payments from (to) other subaccounts or general account		17,477			265,970			(1,426	)		(11,880	)
Contract terminations, withdrawals, and other deductions		(178,215	)		(107,737	)		(116,644	)		(72,253	)
Increase (decrease) in net assets from contract transactions		(160,738	)		158,233			(117,745	)		(84,133	)
Net increase (decrease) in net assets		(106,701	)		206,781			(10,869	)		9,147
Net assets:
Beginning of the period		1,504,812			1,298,031			836,330			827,183
End of the period	$	1,398,111		$	1,504,812		$	825,461		$	836,330

See accompanying notes.

11

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	WFAVT Discovery Subaccount						American Century Investments VP Balanced Subaccount
	2007			2006			2007			2006
Operations
Net investment income (loss)	$	(11,013	)	$	(9,898	)	$	4,230		$	4,014
Net realized capital gains (losses) on investments		96,977			102,148			20,604			24,326
Net change in unrealized appreciation/depreciation of investments		166,197			55,425			(10,742	)		3,433
Increase (decrease) in net assets from operations		252,161			147,675			14,092			31,773
Contract transactions
Net contract purchase payments		260			1,000			—			—
Transfer payments from (to) other subaccounts or general account		141,140			(111,888	)		38,163			(30,625	)
Contract terminations, withdrawals, and other deductions		(195,210	)		(112,935	)		(21,415	)		(7,855	)
Increase (decrease) in net assets from contract transactions		(53,810	)		(223,823	)		16,748			(38,480	)
Net increase (decrease) in net assets		198,351			(76,148	)		30,840			(6,707	)
Net assets:
Beginning of the period		1,104,365			1,180,513			365,289			371,996
End of the period	$	1,302,716		$	1,104,365		$	396,129		$	365,289

See accompanying notes.

12

Separate Account VA-5 of Transamerica Occidental Life

Ins Co. - Distinct Assets from Transamerica

Statements of Changes in Net Assets

Yrs Ended Dec. 31, 2007 and 2006, except as noted

	American Century Investments VP Capital Appreciation Subaccount
	2007			2006
Operations
Net investment income (loss)	$	(8,876	)	$	(7,493	)
Net realized capital gains (losses) on investments		70,603			48,780
Net change in unrealized appreciation/depreciation of investments		323,108			80,851
Increase (decrease) in net assets from operations		384,835			122,138
Contract transactions
Net contract purchase payments		—			—
Transfer payments from (to) other subaccounts or general account		10,000			(23,505	)
Contract terminations, withdrawals, and other deductions		(132,677	)		(68,467	)
Increase (decrease) in net assets from contract transactions		(122,677	)		(91,972	)
Net increase (decrease) in net assets		262,158			30,166
Net assets:
Beginning of the period		883,424			853,258
End of the period	$	1,145,582		$	883,424

See accompanying notes.

13

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

1. Organization and Summary of Significant Accounting Policies

Organization

Separate Account VA-5 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 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 multiple investment subaccounts. Each subaccount invests exclusively in the corresponding Portfolio (the Portfolio) of a fund (each a Series Fund and collectively the Series Funds). Each Series Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. Activity in these investment subaccounts is available to contract owners of Distinct Assets from Transamerica.

Subaccount Investment by Fund:

Federated Insurance Series:

Federated American Leaders Fund II

Federated Fund for U.S. Government Securities II

AIM Variable Insurance Funds:

AIM V.I. Core Equity Fund

AIM V.I. High Yield Fund

Janus Aspen Series:

Janus Aspen Large Cap Growth Portfolio

ING Investors Trust

ING JPMorgan Emerging Markets Equity Portfolio

Schwab Annuity Portfolios:

Schwab Money Market Portfolio

Columbia Funds Variable Insurance Trust - Class A Shares

Columbia Small Company Growth Fund

Wells Fargo Advantage Variable Trust Funds

WFAVT Discovery FundSM

American Century Investments Variable Portfolios, Inc.:

American Century Investments VP Balanced Fund - Class I

American Century Investments VP Capital Appreciation - Class I

14

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

1. Organization and Summary of Significant Accounting Policies (continued)

Each period reported on reflects a full twelve month period except as follows:

Subaccount	Inception Date
AIM V.I. Core Equity Fund	May 01, 2006
ING JPMorgan Emerging Markets Equity Portfolio	December 03, 2005
AIM V.I. High Yield	May 01, 2004

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 on December 31, 2007.

Realized capital gains and losses from the sales of shares in the Series Funds are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell in executed) and divided income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the Series Funds are included in the Statements of Operations.

Dividend Income

Dividends received from the Series Funds investments are reinvested to purchase additional mutual fund shares.

15

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

2. Investments

The aggregate cost of purchases and proceeds from sales of investments for the year ended December 31, 2007 were as follows:

	Purchases		Sales
Federated Insurance Series:
Federated American Leaders Fund II	$	239,226	$	222,022
Federated Fund for U.S. Government Securities II		33,987		20,270
AIM Variable Insurance Funds:
AIM V.I. Core Equity Fund		51,626		222,327
AIM V.I. High Yield Fund		41,832		30,727
Janus Aspen Series:
Janus Aspen Large Cap Growth Portfolio		22,100		446,384
ING Investors Trust
ING JPMorgan Emerging Markets Equity Portfolio		127,766		275,605
Schwab Annuity Portfolios:
Schwab Money Market Portfolio		326,814		433,883
Columbia Funds Variable Insurance Trust - Class A Shares
Columbia Small Company Growth Fund		2,281		127,495
Wells Fargo Advantage Variable Trust Funds
WFAVT Discovery FundSM		139,863		204,685
American Century Investments Variable Portfolios, Inc.:
American Century Investments VP Balanced Fund - Class I		64,155		24,728
American Century Investments VP Capital Appreciation - Class I		9,927		141,480

16

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

3. Accumulation Units Outstanding

A summary of changes in accumulation units outstanding follows:

	Federated American Leaders Fund II Subaccount		Federated Fund for U.S. Government Securities II Subaccount		Janus Aspen Large Cap Growth Subaccount		ING JPMorgan Emerging Markets Equity Subaccount		AIM V.I. High Yield Subaccount
Units outstanding at January 1, 2006	66,749		38,959		103,583		499,019		28,147
Units purchased	—		—		—		—		—
Units redeemed and transferred	(5,628	)	(4,083	)	(6,804	)	39,169		(2,621	)
Units outstanding at December 31, 2006	61,121		34,876		96,779		538,188		25,526
Units purchased	4		—		17		—		6
Units redeemed and transferred	(6,340	)	(453	)	(14,817	)	(80,980	)	(1,067	)
Units outstanding at December 31, 2007	54,785		34,423		81,979		457,208		24,465
	AIM V.I. Core Equity Subaccount(1)		Schwab Money Market Subaccount		Columbia Small Company Growth Subaccount		WFAVT Discovery Subaccount		American Century Investments VP Balanced Subaccount
Units outstanding at January 1, 2006	—		939,593		44,676		41,777		17,833
Units purchased	—		—		—		33		—
Units redeemed and transferred	1,957,156		110,989		(4,149	)	(7,431	)	(1,723	)
Units outstanding at December 31, 2006	1,957,156		1,050,582		40,527		34,379		16,110
Units purchased	—		—		14		7		—
Units redeemed and transferred	(153,174	)	(110,785	)	(4,984	)	(950	)	681
Units outstanding at December 31, 2007	1,803,982		939,797		35,557		33,436		16,791

17

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

3. Accumulation Units Outstanding

	American Century Investments VP Capital Appreciation Subaccount
Units outstanding at January 1, 2006	50,638
Units purchased	—
Units redeemed and transferred	(5,532	)
Units outstanding at December 31, 2006	45,106
Units purchased	—
Units redeemed and transferred	(4,647	)
Units outstanding at December 31, 2007	40,459

18

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

4. Financial Highlights

Subaccount	Year Ended		Units	Unit Fair Value		Net Assets		Investment Income Ratio*		Expense Ratio**		Total Return***
Federated American Leaders Fund II
	12/31/2007		54,785	$	29.59	$	1,620,996	1.48	%	0.85	%	(10.43	)%
	12/31/2006		61,121		33.03		2,019,089	1.47		0.85		15.83
	12/31/2005		66,749		28.52		1,903,710	1.51		0.85		4.14
	12/31/2004		72,203		27.39		1,977,390	1.41		0.85		8.85
	12/31/2003		77,295		25.16		1,944,719	1.53		0.85		26.62
Federated Fund for U.S. Government Securities II
	12/31/2007		34,423		18.58		639,524	4.34		0.85		5.38
	12/31/2006		34,876		17.63		614,828	4.30		0.85		3.26
	12/31/2005		38,959		17.07		665,112	3.96		0.85		1.17
	12/31/2004		42,469		16.87		716,641	4.42		0.85		2.73
	12/31/2003		44,605		16.43		732,652	3.71		0.85		1.50
Janus Aspen Large Cap Growth
	12/31/2007		81,979		28.66		2,349,743	0.71		0.85		14.12
	12/31/2006		96,779		25.12		2,430,782	0.49		0.85		10.44
	12/31/2005		103,583		22.74		2,355,694	0.33		0.85		3.41
	12/31/2004		120,191		21.99		2,643,262	0.14		0.85		3.63
	12/31/2003		142,247		21.22		3,018,607	0.08		0.85		30.62
ING JPMorgan Emerging Markets Equity
	12/31/2007		457,208		1.91		872,365	1.23		0.85		37.63
	12/31/2006		538,188		1.39		746,107	0.53		0.85		35.04
	12/31/2005	(1)	499,019		1.03		512,314	—		0.85		2.66
AIM V.I. High Yield
	12/31/2007		24,465		19.23		470,571	7.30		0.85		0.39
	12/31/2006		25,526		19.16		489,083	8.41		0.85		9.81
	12/31/2005		28,147		17.45		491,135	8.63		0.85		1.85
	12/31/2004	(1)	33,816		17.13		579,329	3.00		0.85		9.94
AIM V.I. Core Equity
	12/31/2007		1,803,982		1.16		2,099,081	1.10		0.85		7.20
	12/31/2006	(1)	1,957,156		1.09		2,124,348	0.62		0.85		8.54
Schwab Money Market
	12/31/2007		939,797		1.49		1,398,111	4.60		0.85		3.86
	12/31/2006		1,050,582		1.43		1,504,812	4.54		0.85		3.68
	12/31/2005		939,593		1.38		1,298,031	2.67		0.85		1.91
	12/31/2004		722,334		1.36		979,210	0.87		0.85		0.05
	12/31/2003		918,565		1.35		1,244,597	0.74		0.85		(0.11	)

19

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

4. Financial Highlights (continued)

Subaccount	Year Ended	Units	Unit Fair Value		Net Assets		Investment Income Ratio*		Expense Ratio**		Total Return***
Columbia Small Company Growth
	12/31/2007	35,557	$	23.22	$	825,461	—	%	0.85	%	12.50	%
	12/31/2006	40,527		20.64		836,330	—		0.85		11.46
	12/31/2005	44,676		18.52		827,183	—		0.85		1.85
	12/31/2004	57,467		18.18		1,044,728	—		0.85		10.54
	12/31/2003	72,120		16.45		1,186,106	—		0.85		42.91
WFAVT Discovery
	12/31/2007	33,436		38.96		1,302,716	—		0.85		21.29
	12/31/2006	34,379		32.12		1,104,365	—		0.85		13.68
	12/31/2005	41,777		28.26		1,180,513	—		0.85		7.36
	12/31/2004	41,374		26.32		1,088,937	—		0.85		14.74
	12/31/2003	46,650		22.94		1,070,073	—		0.85		38.25
American Century Investments VP Balanced
	12/31/2007	16,791		23.59		396,129	1.94		0.85		4.05
	12/31/2006	16,110		22.67		365,289	1.90		0.85		8.70
	12/31/2005	17,833		20.86		371,996	1.87		0.85		4.05
	12/31/2004	17,572		20.05		352,270	1.55		0.85		8.85
	12/31/2003	14,461		18.42		266,333	1.89		0.85		18.45
American Century Investments VP Capital Appreciation
	12/31/2007	40,459		28.31		1,145,582	—		0.85		44.57
	12/31/2006	45,106		19.59		883,424	—		0.85		16.23
	12/31/2005	50,638		16.85		853,258	—		0.85		21.04
	12/31/2004	44,985		13.92		626,262	—		0.85		6.68
	12/31/2003	51,985		13.05		678,428	—		0.85		19.46

* These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying Series Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying Series Fund in which the subaccounts invest. These ratios are annualized for periods less than one year.

** These ratios represent the annualized contract expenses of the Mutual Fund Account, consisting primarily of mortality and expense charges. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying Series Fund are excluded.

4. Financial Highlights (continued)

*** These amounts represent the total return for the period indicated, including changes in the value of the underlying Series Fund, and reflect deductions for all items included in the expense ratio. The total return

20

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

underlying Series Fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.

21

Separate Account VA-5 of Transamerica Occidental Life

Insurance Company - Distinct Assets from Transamerica

Notes to Financial Statements

December 31, 2007

5. Administrative, Mortality, and Expense Risk Charge

Administrative charges include an annual charge of the lesser of 2% of the policy value or $25 per contract. Charges for administrative fees to the variable annuity contracts are an expense of the Mutual Fund Account. Transamerica Life does not currently, but may, deduct a daily charge equal to an annual rate of .15% of the contract owner’s account for administrative expenses.

Transamerica Life deducts a daily charge for assuming certain mortality and expense risks. This charge is equal to an effective annual rate of .85% of the value of the contract owner’s individual account.

6. Income 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 is not taxable to Transamerica Life, as long as earnings are credited under the variable annuity contracts.

7. Dividend Distributions

Dividends are not declared by the Mutual Fund Account, since the increase in the value of the underlying investment in the Series Funds is reflected daily in the accumulation unit price used to calculate the equity value within the Mutual Fund Account. Consequently, a dividend distribution by the underlying Series Funds does not change either the accumulation unit price or equity values within the Mutual Fund Account.

8. Event (Unaudited) Subsequent to the Date of the Report of Independent Public Accounting Firm

On June 13, 2008, the board of directors of Transamerica Occidental Life Insurance Company approved the merger of Transamerica Occidental Life Insurance Company into Transamerica Life Insurance Company (TLIC), an affiliated company, subject to regulatory approval. It is anticipated the merger will occur on October 1, 2008. As a result of the merger, TLIC will assume ownership of all assets, and responsibility for all liabilities of Transamerica Occidental Life Insurance Company, including those of the separate accounts.

22

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements

All required financial statements are included in Part B of this Registration Statement.

(b) Exhibits:

(1)	(a	)	Resolution of the Board of Directors of Transamerica Life Insurance Company authorizing establishment of the Separate Account. Note 6.
(1)	(b	)	Consent of Board of Directors—Merger. Note 6.
(2)			Not Applicable.
(3)	(a	)	Amended and Restated Principal Underwriting Agreement by and between Transamerica Life Insurance Company, on its own behalf and on the behalf of the Separate Account, and Transamerica Capital, Inc. Note 1.
	(a	) (2)	Amendment No. 8 and Novation to Amended and Restated Principal Underwriting Agreement. Note 2.
	(a	) (3)	Amendment No. 9 to Amended and Restated Principal Underwriting Agreement. Note 3.
	(a	) (4)	Form of Amendment to Amended and Restated Principal Underwriting Agreement. Note 6
	(b	)	Form of Broker/Dealer Supervision and Sales Agreement by and between Transamerica Capital, Inc. and the Broker/Dealer. Note 3.
(4)	(a	)	Form of Policy (Group). Note 6.
	(b	)	Form of Policy (Individual). Note 6.
(5)	(a	)	Form of Application. Note 6.
(6)	(a	)	Articles of Incorporation of Transamerica Life Insurance Company. Note 4.
	(b	)	By Laws of Transamerica Life Insurance Company. Note 4.
(7)			Reinsurance Agreements. Note 5.
(8)	(a	)	Form of Participation Agreement. Note 6.
(9)	(a	)	Opinion and Consent of Counsel. Note 6.
	(b	)	Consent of Counsel. Note 6
(10)	(a	)	Consent of Independent Registered Public Accounting Firm. Note 6.
(11)			Not applicable.
(12)			Not applicable.
(13)			Powers of Attorney. Craig D. Vermie, Arthur Schneider, Eric J. Martin, Brenda K. Clancy, M. Craig Fowler, Kenneth Kilbane and Mark W. Mullin) Note 6.

Note 1. Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-98891) filed on August 29, 2002.

Note 2. Incorporated herein by reference to Post-Effective Amendment No. 7 to form N-4 Registration Statement (File No. 333-109580) filed on April 27, 2007.

Note 3. Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-149336) on February 21, 2008.

Note 4. Incorporated herein by reference to Initial Filing of form N-4 Registration Statement (File No. 333-62738) filed on June 11, 2001.

Note 5. Incorporated herein by reference to Post-Effective Amendment No. 2 to form N-4 Registration Statement (File No. 333-109580) filed on January 7, 2005.

Note 6. Filed herewith.

Item 25. Directors and Officers of the Depositor (Transamerica Life Insurance Company)

Name and Business Address	Principal Positions and Offices with Depositor
Craig D. Vermie 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director, Senior Vice President, Secretary, and General Counsel
Arthur C. Schneider 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director, Chief Tax Officer, and Senior Vice President
Eric J. Martin 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Vice President and Corporate Controller
Brenda K. Clancy 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director and President
M. Craig Fowler 400 West Market Street Louisville, KY 40202	Vice President and Treasurer
Kenneth Kilbane 1150 South Olive St. Los Angeles, CA 90015	Director and Chairman of the Board
Mark W. Mullin 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director and Chief Executive Officer

Item 26. Persons Controlled by or under Common Control with the Depositor or Registrant —

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Academy Alliance Holdings Inc.	Canada	100% Creditor Resources, Inc.	Holding company
Academy Alliance Insurance Inc.	Canada	100% Creditor Resources, Inc.	Insurance
ADB Corporation, L.L.C.	Delaware	100% AUSA Holding Company	Special purpose limited Liability company
AEGON Alliances, Inc.	Virginia	100% Benefit Plans, Inc.	Insurance company marketing support
AEGON Asset Management Services, Inc.	Delaware	100% AUSA Holding Co.	Registered investment advisor
AEGON Assignment Corporation	Illinois	100% AEGON Financial Services Group, Inc.	Administrator of structured settlements
AEGON Assignment Corporation of Kentucky	Kentucky	100% AEGON Financial Services Group, Inc.	Administrator of structured settlements
AEGON Canada Inc. (“ACI”)	Canada	100% TIHI	Holding company
AEGON Capital Management, Inc.	Canada	100% AEGON Canada Inc.	Portfolio management company/investment advisor
AEGON Dealer Services Canada, Inc.	Canada	100% National Financial Corporation	Mutual fund dealership
AEGON Derivatives N.V.	Netherlands	100% AEGON N.V.	Holding company
AEGON Direct Marketing Services, Inc.	Maryland	Monumental Life Insurance Company owns 103,324 shares; Commonwealth General Corporation owns 37,161 shares	Marketing company
AEGON Direct Marketing Services Australia Pty Ltd.	Australia	100% Transamerica Direct Marketing Asia Pacific Pty Ltd.	Marketing/operations company
AEGON Direct Marketing Services e Corretora de Seguros Ltda.	Brazil	749,000 quota shares owned by AEGON DMS Holding B.V.; 1 quota share owned by AEGON International B.V.	Brokerage company
AEGON Direct Marketing Services Europe Ltd.	United Kingdom	100% Cornerstone International Holdings, Ltd.	Marketing
AEGON Direct Marketing Services Hong Kong Limited	China	100% AEGON DMS Holding B.V.	Provide consulting services ancillary to the marketing of insurance products overseas.
AEGON Direct Marketing Services Japan K.K.	Japan	100% AEGON DMS Holding B.V.	Marketing company
AEGON Direct Marketing Services Korea Co., Ltd.	Korea	100% AEGON DMS Holding B.V.	Provide consulting services ancillary to the marketing of insurance products overseas.
AEGON Direct Marketing Services Mexico, S.A. de C.V.	Mexico	100% AEGON DMS Holding B.V.	Provide management advisory and technical consultancy services.
AEGON Direct Marketing Services Mexico Servicios, S.A. de C.V.	Mexico	100% AEGON DMS Holding B.V.	Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies.
AEGON Direct Marketing Services, Inc.	Taiwan	100% AEGON DMS Holding B.V.	Authorized business: Enterprise management consultancy, credit investigation services, to engage in business not prohibited or restricted under any law of R.O.C., except business requiring special permission of government
AEGON Direct Marketing Services (Thailand) Ltd.	Thailand	93% Transamerica International Direct Marketing Consultants, LLC; remaining 7% held by various AEGON employees	Marketing of insurance products in Thailand
AEGON DMS Holding B.V.	Netherlands	100% AEGON International N.V.	Holding company
AEGON Financial Services Group, Inc.	Minnesota	100% Transamerica Life Insurance Co.	Marketing
AEGON Fund Management, Inc.	Canada	100% AEGON Canada Inc.	Mutual fund manager
AEGON Funding Corp.	Delaware	100% AEGON USA, Inc.	Issue debt securities-net proceeds used to make loans to affiliates
AEGON Institutional Markets, Inc.	Delaware	100% Commonwealth General Corporation	Provider of investment, marketing and administrative services to insurance companies
AEGON International B.V.	Netherlands	100% AEGON N.V.	Holding company
AEGON Ireland Services Limited	Ireland	100% AEGON Ireland Holding B.V.	Provides the services of staff and vendors to AEGON Financial Assurance Ireland, Limited and AEGON Global Institutional Markets, PLC
AEGON Life Insurance Agency	Taiwan	100% AEGON Direct Marketing Services, Inc. (Taiwan)	Life insurance

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
AEGON Managed Enhanced Cash, LLC	Delaware	Members: Transamerica Life Insurance Company (42.54%); Transamerica Occidental Life Insurance Company (21.38%); Monumental Life Insurance Company (20.54%); Life Investors Insurance Company of America (15.54%)	Investment vehicle for securities lending cash collaterol
AEGON Management Company	Indiana	100% AEGON U.S. Holding Corporation	Holding company
AEGON Direct Marketing Services e Corretora de Seguros de Vida Ltda.	Brazil	749,000 quotes shares owned by AEGON DMS Holding B.V.; 1 quota share owned by AEGON International N.V.	Brokerage company
AEGON N.V.	Netherlands	22.238% of Vereniging AEGON Netherlands Membership Association	Holding company
AEGON Nederland N.V.	Netherlands	100% AEGON N.V.	Holding company
AEGON Nevak Holding B.V.	Netherlands	100% AEGON N.V.	Holding company
AEGON Structured Settlements, Inc.	Kentucky	100% Commonwealth General Corporation	Administers structured settlements of plaintiff’s physical injury claims against property and casualty insurance companies
AEGON U.S. Corporation	Iowa	AEGON U.S. Holding Corporation owns 12,962 shares; AEGON USA, Inc. owns 3,238 shares	Holding company
AEGON U.S. Holding Corporation	Delaware	1056 shares of Common Stock owned by Transamerica Corp.; 225 shares of Series A Voting Preferred Stock owned by Transamerica Corporation	Holding company
AEGON USA Investment Management, LLC	Iowa	100% AEGON USA, Inc.	Investment advisor
AEGON USA Real Estate Services, Inc.	Delaware	100% AEGON USA Realty Advisors, Inc.	Real estate and mortgage holding company
AEGON USA Realty Advisors, Inc.	Iowa	100% AUSA Holding Co,	Administrative and investment services
AEGON USA Travel and Conference Services LLC	Iowa	100% Money Services, Inc.	Travel and conference services
AEGON USA, Inc.	Iowa	10 shares Series A Preferred Stock owned by AEGON U.S Holding Corporation; 150,000 shares of Class B Non-Voting Stock owned by AEGON U.S. Corporation; 120 shares Voting Common Stock owned by AEGON U.S Corporation	Holding company
AEGON/Transamerica Series Trust	Delaware	100% AEGON/Transamerica Fund Advisors, Inc.	Mutual fund
AFSG Securities Corporation	Pennsylvania	100% Commonwealth General Corporation	Inactive
ALH Properties Eight LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Eleven LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Fifteen LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Five LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Four LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Nine LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Seven LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Seventeen LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Sixteen LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Ten LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Twelve LLC	Delaware	100% FGH USA LLC	Real estate
ALH Properties Two LLC	Delaware	100% FGH USA LLC	Real estate
American Bond Services LLC	Iowa	100% Transamerica Life Insurance Company (sole member)	Limited liability company
Ampac, Inc.	Texas	100% Academy Insurance Group, Inc.	Managing general agent
Apple Partners of Iowa LLC	Iowa	Member: Monumental Life Insurance Company	Hold title on Trustee’s Deeds on secured property
ARC Reinsurance Corporation	Hawaii	100% Transamerica Corp,	Property & Casualty Insurance

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
ARV Pacific Villas, A California Limited Partnership	California	General Partners - Transamerica Affordable Housing, Inc. (0.5%); Non-Affiliate of AEGON, Jamboree Housing Corp. (0.5%). Limited Partner: TOLIC (99%)	Property
Asia Investments Holdings, Limited	Hong Kong	99% TOLIC	Holding company
AUSA Holding Company	Maryland	100% AEGON USA, Inc.	Holding company
AUSACAN LP	Canada	General Partner - AUSA Holding Co. (1%); Limited Partner - First AUSA Life Insurance Company (99%)	Inter-company lending and general business
Bankers Financial Life Ins. Co.	Arizona	Class B Common stock is allocated 75% of total cumulative vote - AEGON USA, Inc. Class A Common stock (100% owned by non-AEGON shareholders) is allocated 25% of total cumulative vote.	Insurance
Bay Area Community Investments I, LLC	California	70% LIICA; 30% Monumental Life Insurance Company	Investments in low income housing tax credit properties
Bay State Community Investments I, LLC	Delaware	100% Monumental Life Insurance Company	Investments in low income housing tax credit properties
Bay State Community Investments II, LLC	Delaware	100% Monumental Life Insurance Company	Investments in low income housing tax credit properties
Beijing Dafu Insurance Agency Co. Ltd.	Peoples Republic of China	10% owned by WFG China Holdings, Inc.; 90% owned by private individual (non-AEGON associated), Chen Jun	Insurance Agency
Canadian Premier Holdings Ltd.	Canada	100% AEGON DMS Holding B.V.	Holding company
Canadian Premier Life Insurance Company	Canada	100% Canadian Premier Holdings Ltd.	Insurance company
Capital General Development Corporation	Delaware	2.64 shares of common stock owned by AEGON USA, Inc.; 18.79 shares of common stock owned by Commonwealth General Corporation	Holding company
CBC Insurance Revenue Securitization, LLC	Delaware	100% Clark Consulting, Inc.	Special purpose
Clark/Bardes (Bermuda) Ltd.	Bermuda	100% Clark, Inc.	Insurance agency
Clark, Inc.	Delaware	100% AUSA Holding Company	Holding company
Clark Consulting, Inc.	Delaware	100% Clark, Inc.	Financial consulting firm
Clark Investment Strategies, inc.	Delaware	100% Clark Consulting, Inc.	Registered investment advisor
Clark Securities, Inc.	California	100% Clark Consulting, Inc.	Broker-Dealer
COLI Insurance Agency, Inc.	California	100% Clark Consulting, Inc.	Inactive
Commonwealth General Corporation (“CGC”)	Delaware	AEGON U.S. Corporation owns 100 shares; AEGON USA, Inc. owns 5 shares	Holding company
Consumer Membership Services Canada Inc.	Canada	100% Canadian Premier Holdings Ltd.	Marketing of credit card protection membership services in Canada
Cornerstone International Holdings Ltd.	UK	100% AEGON DMS Holding B.V.	Holding company
CRC Creditor Resources Canadian Dealer Network Inc.	Canada	100% Creditor Resources, Inc.	Insurance agency
CRG Fiduciary Services, Inc.	California	100% Clark Consulting, Inc.	Inactive
CRG Insurance Agency, Inc.	California	100% Clark Consulting, Inc.	Insurance agency
Creditor Resources, Inc.	Michigan	100% AUSA Holding Co.	Credit insurance
CRI Canada Inc.	Canada	100% Creditor Resources, Inc.	Holding company
CRI Credit Group Services Inc.	Canada	100% Creditor Resources, Inc.	Holding company
CRI Systems, Inc.	Maryland	100% Creditor Resources, Inc.	Technology
Diversified Actuarial Services, Inc.	Massachusetts	100% Diversified Investment Advisors, Inc.	Employee benefit and actuarial consulting
Diversified Investment Advisors, Inc.	Delaware	100% AUSA Holding Co.	Registered investment advisor
Diversified Investors Securities Corp.	Delaware	100% Diversified Investment Advisors, Inc.	Broker-Dealer
ECB Insurance Agency, Inc.	California	100% Clark Consulting, Inc.	Inactive
Edgewood IP, LLC	Iowa	100% TOLIC	Limited liability company
Executive Benefit Services, Inc.	California	100% Clark Consulting, Inc.	Inactive
FGH Eastern Region LLC	Delaware	100% FGH USA LLC	Real estate

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
FGH Realty Credit LLC	Delaware	100% FGH Eastern Region LLC	Real estate
FGH USA LLC	Delaware	100% RCC North America LLC	Real estate
FGP 90 West Street LLC	Delaware	100% FGH USA LLC	Real estate
FGP Burkewood, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP Bush Terminal, Inc.	Delaware	100% FGH Realty Credit LLC	Real estate
FGP Franklin LLC.	Delaware	100% FGH USA LLC	Real estate
FGP Herald Center, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP Heritage Square, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP Islandia, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP Merrick, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP West 32nd Street, Inc.	Delaware	100% FGH USA LLC	Real estate
FGP West Mezzanine LLC	Delaware	100% FGH USA LLC	Real estate
FGP West Street LLC	Delaware	100% FGH USA LLC	Real estate
FGP West Street Two LLC	Delaware	100% FGH USA LLC	Real estate
Fifth FGP LLC	Delaware	100% FGH USA LLC	Real estate
Financial Planning Services, Inc.	District of Columbia	100% Commonwealth General Corporation	Special-purpose subsidiary
Financial Resources Insurance Agency of Texas	Texas	100% owned by Dan Trivers, VP & Director of Operations of Transamerica Financial Advisors, Inc., to comply with Texas insurance law	Retail sale of securities products
First FGP LLC	Delaware	100% FGH USA LLC	Real estate
Flashdance, LLC	New York	100% Transamerica Occidental Life Insurance Company	Broadway production
Fourth & Market Funding, LLC	Delaware	100% Commonwealth General Corporation	Investments
Fourth FGP LLC	Delaware	100% FGH USA LLC	Real estate
Garnet Assurance Corporation	Kentucky	100% Life Investors Insurance Company of America	Investments
Garnet Assurance Corporation II	Iowa	100% Monumental Life Insurance Company	Business investments
Garnet Community Investments, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments I, LLC	Delaware	100% Life Investors Insurance Company of America	Securities
Garnet Community Investments II, LLC	Delaware	100% Monumental Life Insurance Company	Securities
Garnet Community Investments III, LLC	Delaware	100% Transamerica Occidental Life Insurance Company	Business investments
Garnet Community Investments IV, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments V, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments VI, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments VII, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments VIII, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments IX, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments X, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments XI, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments XII, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet LIHTC Fund I, LLC	Delaware	Members: Garnet Community Investments I, LLC (0.01%); Goldenrod Asset Management, Inc.—a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund II, LLC	Delaware	Members: Garnet Community Investments II, LLC (0.01%); Metropolitan Life Insurance Company, a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund III, LLC	Delaware	Members: Garnet Community Investments III, LLC (0.01%); Jefferson-Pilot Life Insurance Company, a non-AEGON affiliate (99.99%)	Investments

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet LIHTC Fund IV, LLC	Delaware	Members: Garnet Community Investments IV, LLC (0.01%); Goldenrod Asset Management, Inc., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund V, LLC	Delaware	Members: Garnet Community Investments V, LLC (0.01%); Lease Plan North America, Inc., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund VI, LLC	Delaware	Members: Garnet Community Investments VI, LLC (0.01%); Pydna Corporation, a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund VII, LLC	Delaware	Members: Garnet Community Investments VII, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate(99.99%)	Investments
Garnet LIHTC Fund VIII, LLC	Delaware	Members: Garnet Community Investments VIII, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate(99.99%)	Investments
Garnet LIHTC Fund IX, LLC	Delaware	Members: Garnet Community Investments IX, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund X, LLC	Delaware	Members: Garnet Community Investments X, LLC (0.01%); Goldenrod Asset Management, a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XI, LLC	Delaware	100% Garnet Community Investments XI, LLC	Investments
Garnet LIHTC Fund XII, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); and the following non-AEGON affiliates: Bank of America, N.A.( 73.39%); Washington Mutual Bank (13.30%); NorLease, Inc. (13.30%)	Investments
Garnet LIHTC Fund XII-A, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XII-B, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); Washington Mutual Bank, a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XII-C, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XIII, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Washington Mutual Bank, a non-AEGON affiliate (68.10%); Norlease, Inc., a non-AEGON affiliate (31.89%)	Investments
Garnet LIHTC Fund XIII-A, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Washington Mutual Bank, a non-AEGON affilaite (99.99%)	Investments
Garnet LIHTC Fund XIII-B, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Norlease, Inc., a non-AEGON affilaite (99.99%)	Investments
Garnet LIHTC Fund XIV, LLC	Delaware	100% Garnet Community Investments, LLC	Investments
Garnet LIHTC Fund XV, LLC	Delaware	100% Garnet Community Investments, LLC	Investments
Garnet LIHTC Fund XVI, LLC	Delaware	100% Garnet Community Investments, LLC	Investments
Garnet LIHTC Fund XVII, LLC	Delaware	100% Garnet Community Investments, LLC	Investments
Gemini Investments, Inc.	Delaware	100% TLIC	Investment subsidiary
Global Preferred Re Limited	Bermuda	100% GPRE Acquisition Corp.	Reinsurance

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Global Premier Reinsurance Company, Ltd.	British Virgin	100% Commonwealth General Corporation	Reinsurance company
GPRE Acquisition Corp.	Delaware	100% AEGON N.V.	Acquisition company
Hott Feet Development LLC	New York	100% Transamerica Occidental Life Insurance Company	Broadway production
In the Pocket LLC	New York	100% Transamerica Occidental Life Insurance Company	Broadway production
Innergy Lending, LLC	Delaware	50% World Financial Group, Inc.; 50% ComUnity Lending, Inc.(non-AEGON entity)	Lending
InterSecurities, Inc.	Delaware	100% AUSA Holding Co.	Broker-Dealer
Investors Warranty of America, Inc.	Iowa	100% AUSA Holding Co.	Leases business equipment
Iowa Fidelity Life Insurance Co.	Arizona	Ordinary common stock is allowed 60% of total cumulative vote - AEGON USA, Inc. Participating common stock (100% owned by non-AEGON shareholders) is allowed 40% of total cumulative vote.	Insurance
JMH Operating Company, Inc.	Mississippi	100% Monumental Life Insurance Company	Real estate holdings
Legacy General Insurance Company	Canada	100% Canadian Premier Holdings Ltd.	Insurance company
Life Investors Alliance, LLC	Delaware	100% LIICA	Purchase, own, and hold the equity interest of other entities
Life Investors Financial Group, Inc.	Iowa	100% AUSA Holding Company	Special-purpose subsidiary
Life Investors Insurance Company of America	Iowa	679,802 shares Common Stock owned by AEGON USA, Inc.; 504,033 shares Series A Preferred Stock owned by AEGON USA, Inc.	Insurance
LIICA Holdings, LLC	Delaware	Sole Member: Life Investors Insurance Company of America	To form and capitalize LIICA Re I, Inc.
LIICA Re I, Inc.	Vermont	100% LIICA Holdings, LLC	Captive insurance company
LIICA Re II, Inc.	Vermont	100% Life Investors Insurance Company of America	Captive insurance company
Massachusetts Fidelity Trust Co.	Iowa	100% AUSA Holding Co.	Trust company
Merrill Lynch Life Insurance Company	Arkansas	100% AEGON USA, Inc.	Insurance company
ML Life Insurance Company of New York	New York	100% AEGON USA, Inc.	Insurance company
Money Concepts (Canada) Limited	Canada	100% National Financial Corporation	Financial services, marketing and distribution
Money Services, Inc.	Delaware	100% AUSA Holding Co.	Provides financial counseling for employees and agents of affiliated companies
Monumental General Administrators, Inc.	Maryland	100% Monumental General Insurance Group, Inc.	Provides management services to unaffiliated third party administrator
Monumental General Insurance Group, Inc.	Maryland	100% AUSA Holding Co.	Holding company
Monumental Life Insurance Company	Iowa	99.72% Capital General Development Corporation; 28% Commonwealth General Corporation	Insurance Company
nVISION Financial, Inc.	Iowa	100% AUSA Holding Company	Special-purpose subsidiary
National Association Management and Consultant Services, Inc.	Maryland	100% Monumental General Administrators, Inc.	Provides actuarial consulting services
National Financial Corporation	Canada	100% AEGON Canada, Inc.	Holding company
National Financial Insurance Agency, Inc.	Canada	100% 1488207 Ontario Limited	Insurance agency
NEF Investment Company	Calfornia	100% TOLIC	Real estate development
New Markets Community Investment Fund, LLC	Iowa	50% AEGON Institutional Markets, Inc.; 50% AEGON USA Realty Advisors, Inc.	Community development entity
Penco, Inc.	Ohio	100% AUSA Holding Company	Record keeping
Pensaprima, Inc.	Iowa	100% AEGON USA Realty Advisors, Inc.	Investments

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Peoples Benefit Services, Inc.	Pennsylvania	100% Stonebridge Life Insurance Company	Special-purpose subsidiary
Pine Falls Re, Inc.	Vermont	100% Stonebridge Life Insurance Company	Captive insurance company
Premier Solutions Group, Inc.	Maryland	100% Creditor Resources, Inc.	Sales of reinsurance and credit insurance
Primus Guaranty, Ltd.	Bermuda	Partners are: Transamerica Life Insurance Company (13.1%) and non-affiliates of AEGON: XL Capital, Ltd. (34.7%); CalPERS/PCG Corporate Partners Fund, LLC (13.0%); Radian Group (11.1%). The remaining 28.1% of stock is publicly owned.	Provides protection from default risk of investment grade corporate and sovereign issues of financial obligations.
Prisma Holdings, Inc. I	Delaware	100% AUSA Holding Co.	Holding company
Prisma Holdings, Inc. II	Delaware	100% AUSA Holding Co.	Holding company
Pyramid Insurance Company, Ltd.	Hawaii	100% Transamerica Corp.	Property & Casualty Insurance
Quantitative Data Solutions, LLC	Delaware	100% TOLIC	Special purpose corporation
RCC North America LLC	Delaware	100% AEGON USA, Inc.	Real estate
Real Estate Alternatives Portfolio 1 LLC	Delaware	Members: 38.356% Transamerica Life Insurance Co.; 34.247% TOLIC; 18.356% LIICA; 6.301% Monumental Life Insurance Co.; 2.74% Transamerica Financial Life Insurance Co.	Real estate alternatives investment
Real Estate Alternatives Portfolio 2 LLC	Delaware	Members: 59.5% Transamerica Life Insurance Co.; 30.75% TOLIC; 22.25%; Transamerica Financial Life Insurance Co.; 2.25% Stonebridge Life Insurance Co.	Real estate alternatives investment
Real Estate Alternatives Portfolio 3 LLC	Delaware	Members: 30.4% Transamerica Life Insurance Company.; 23% Transamerica Occidental Life Insurance Company; 1% Stonebridge Life Insurance Company; 11% Life Investors Insurance Company of America; 19% Monumental Life Insurance Company	Real estate alternatives investment
Real Estate Alternatives Portfolio 3A, Inc.	Delaware	33.4% owned by Life Investors Insurance Company of America; 10% owned by Transamerica Occidental Life Insurance Company; 41.4% owned by Monumental Life Insurance Company; 9.4% owned by Transamerica Financial Life Insurance Company; 1% owned by Stonebridge Life Insurance Company	Real estate alternatives investment
Real Estate Alternatives Portfolio 4 HR, LLC	Delaware	34% owned by Transamerica Life Insurance Company; 30% owned by Transamerica Occidental Life Insurance Company; 32% owned by Monumental Life Insurance Company; 4% owned by Transamerica Financial Life Insurance Company	Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
Real Estate Alternatives Portfolio 4 MR, LLC	Delaware	34% owned by Transamerica Life Insurance Company; 30% owned by Transamerica Occidental Life Insurance Company; 32% owned by Monumental Life Insurance Company; 4% owned by Transamerica Financial Life Insurance Company	Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
Real Estate Alternatives Portfolio 5 NR, LLC	Delaware	Manager: AEGON USA Realty Advisors, Inc.	Real estate investments
Real Estate Alternatives Portfolio 5 RE, LLC	Delaware	Manager: AEGON USA Realty Advisors, Inc.	Real estate investments
Realty Information Systems, Inc.	Iowa	100% AEGON USA Realty Advisors, Inc.	Information Systems for real estate investment management

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Retirement Project Oakmont	CA	General Partners: Transamerica International Holdings, Inc. ; TOLIC; Transameirca Oakmont Retirement Associates, a CA limited partnership. Co-General Partners of Transamerica Oakmont Retirement Associates are Transamerica Oakmont Corp. and Transamerica Products I (Administrative General Partner).	Senior living apartment complex
River Ridge Insurance Company	Vermont	100% AEGON Management Company	Captive insurance company
Second FGP LLC	Delaware	100% FGH USA LLC	Real estate
Selient Inc.	Canada	100% Canadian Premier Holdings Ltd.	Application service provider providing loan origination platforms to Canadian credit unions.
Seventh FGP LLC	Delaware	100% FGH USA LLC	Real estate
Short Hills Management Company	New Jersey	100% AEGON U.S. Holding Corporation	Holding company
Southwest Equity Life Ins. Co.	Arizona	Voting common stock is allocated 75% of total cumulative vote - AEGON USA, Inc. Participating Common stock (100% owned by non-AEGON shareholders) is allocated 25% of total cumulative vote.	Insurance
Stonebridge Benefit Services, Inc.	Delaware	100% Commonwealth General Corporation	Health discount plan
Stonebridge Casualty Insurance Company	Ohio	100% AEGON USA, Inc.	Insurance company
Stonebridge Group, Inc.	Delaware	100% Commonwealth General Corporation	General purpose corporation
Stonebridge International Insurance Ltd.	UK	100% Cornerstone International Holdings Ltd.	General insurance company
Stonebridge Life Insurance Company	Vermont	100% Commonwealth General Corporation	Insurance company
Stonebridge Reinsurance Company	Vermont	100% Stonebridge Life Insurance Company	Captive insurance company
TA Air XI, Corp.	Delaware	100% TCFC Air Holdings, Inc.	Special purpose corporation
TAH-MCD IV, LLC	Iowa	100% Transamerica Affordable Housing, Inc.	Serve as the general partner for McDonald Corporate Tax Credit Fund IV Limited Partnership
TBK Insurance Agency of Ohio, Inc.	Ohio	500 shares non-voting common stock owned by Transamerica Financial Advisors, Inc.; 1 share voting common stock owned by James Krost	Variable insurance contract sales in state of Ohio
TCF Asset Management Corporation	Colorado	100% TCFC Asset Holdings, Inc.	A depository for foreclosed real and personal property
TCFC Air Holdings, Inc.	Delaware	100% Transamerica Commercial Finance Corporation, I	Holding company
TCFC Asset Holdings, Inc.	Delaware	100% Transamerica Commercial Finance Corporation, I	Holding company
TCFC Employment, Inc.	Delaware	100% Transamerica Commercial Finance Corporation, I	Used for payroll for employees at TFC
The AEGON Trust Advisory Board: Donald J. Shepard, Joseph B.M. Streppel, Alexander R. Wynaendts, and Craig D. Vermie	Delaware	AEGON International B.V.	Voting Trust
The RCC Group, Inc.	Delaware	100% FGH USA LLC	Real estate
TIHI Mexico, S. de R.L. de C.V.	Mexico	95% TIHI; 5% TOLIC	To render and receive all kind of administrative, accountant, mercantile and financial counsel and assistance to and from any other Mexican or foreign corporation, whether or not this company is a shareholder of them
Transamerica Accounts Holding Corporation	Delaware	100% TCFC Asset Holdings, Inc.	Holding company
Transamerica Affinity Services, Inc.	Maryland	100% AEGON Direct Marketing Services, Inc.	Marketing company
Transamerica Affordable Housing, Inc.	California	100% TRS	General partner LHTC Partnership
Transamerica Annuity Service Corporation	New Mexico	100% Transamerica International Holdings, Inc.	Performs services required for structured settlements
Transamerica Asset Management, Inc.	Florida	Western Reserve Life Assurance Co. of Ohio owns 77%; AUSA Holding Co. owns-23%	Fund advisor

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Transamerica Aviation LLC	Delaware	100% TCFC Air Holdings, Inc.	Special purpose corporation
Transamerica Capital, Inc.	California	100% AUSA Holding Co.	Broker/Dealer
Transamerica Commercial Finance Corporation, I	Delaware	100% TFC	Holding company
Transamerica Consultora Y Servicios Limitada	Chile	95% TOLIC; 5% Transamerica International Holdings, Inc.	Special purpose limited liability corporation
Transamerica Consumer Finance Holding Company	Delaware	100% TCFC Asset Holdings, Inc.	Consumer finance holding company
Transamerica Corporation	Delaware	100% The AEGON Trust	Major interest in insurance and finance
Transamerica Corporation (Oregon)	Oregon	100% Transamerica Corp.	Holding company
Transamerica Direct Marketing Asia Pacific Pty Ltd.	Australia	100% AEGON DMS Holding B.V.	Holding company
Transamerica Direct Marketing Consultants, LLC	Maryland	51% Hugh J. McAdorey; 49% AEGON Direct Marketing Services, Inc.	Provide consulting services ancillary to the marketing of insurance products overseas.
Transamerica Direct Marketing Group-Mexico Servicios S.A. de C.V.	Mexico	100% AEGON DMS Holding B.V.	Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies.
Transamerica Direct Marketing Services Korea Ltd.	Korea	99% AEGON DMS Holding B.V.: 1% AEGON International B.V.	Marketing company
Transamerica Distribution Finance - Overseas, Inc.	Delaware	100% TCFC Asset Holdings, Inc.	Commercial Finance
Transamerica Finance Corporation (“TFC”)	Delaware	100% Transamerica Corp.	Commercial & Consumer Lending & equipment leasing
Transamerica Financial Advisors, Inc.	Delaware	100% Transamerica International Holdings, Inc.	Broker/dealer
Transamerica Financial Life Insurance Company	New York	87.40% AEGON USA, Inc.; 12.60% TOLIC	Insurance
Transamerica Financial Resources Insurance Agency of Alabama, Inc.	Alabama	100% Transamerica Financial Advisors, Inc.	Insurance agent & broker
Transamerica Fund Services, Inc.	Florida	Western Reserve Life Assurance Co. of Ohio owns 44%; AUSA Holding Company owns 56%	Mutual fund
Transamerica Funding LP	U.K.	99% Transamerica Leasing Holdings, Inc.; 1% Transamerica Commercial Finance Corporation, I	Intermodal leasing
Transamerica Holding B.V.	Netherlands	100% AEGON International N.V.	Holding company
Transamerica Home Loan	California	100% Transamerica Finance Corporation	Consumer mortgages
Transamerica IDEX Mutual Funds	Delaware	100% InterSecurities, Inc.	Mutual fund
Transamerica Income Shares, Inc.	Maryland	100% AEGON/Transamerica Fund Advisers, Inc.	Mutual fund
Transamerica Insurance Marketing Asia Pacific Pty Ltd.	Australia	100% Transamerica Direct Marketing Asia Pacific Pty Ltd.	Insurance intermediary
Transamerica International Direct Marketing Group, Inc.	Maryland	100% Monumental General Insurance Group, Inc.	Marketing arm for sale of mass marketed insurance coverage
Transamerica International Holdings, Inc.	Delaware	100% AEGON USA, Inc.	Investments
Transamerica International RE (Bermuda) Ltd.	Bermuda	100% AEGON USA, Inc.	Reinsurance
Transamerica Investment Management, LLC	Delaware	80% Transamerica Investment Services, Inc. as Original Member; 20% owned by Professional Members (employees of Transamerica Investment Services, Inc.)	Investment advisor
Transamerica Investment Services, Inc. (“TISI”)	Delaware	100% Transamerica Corp.	Holding company
Transamerica Investors, Inc.	Maryland	100% Transamerica Investment Management, LLC	Advisor
Transamerica Leasing Holdings, Inc.	Delaware	100% Transamerica Finance Corporation	Holding company
Transamerica Life (Bermuda) Ltd.	Bermuda	100% Transamerica Occidental Life Insurance Company	Long-term life insurer in Bermuda — will primarily write fixed universal life and term insurance

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Transamerica Life Canada	Canada	AEGON Canada Inc. owns 9,600,000 shares of common stock; AEGON International N.V. owns 3,568,941 shares of common stock and 184,000 shares of Series IV Preferred stock.	Life insurance company
Transamerica Life Insurance Company	Iowa	316,955 shares Common Stock owned by Transamerica Occidental Life Insurance Company; 87,755 shares Series B Preferred Stock owned by AEGON USA, Inc.	Insurance
Transamerica Life Solutions, LLC	Delaware	Investors Warranty of America, Inc. - sole member	Provision of marketing, training, educational, and support services to life insurance professionals relating to the secondary market for life insurance, primarily through its affiliation with LexNet, LP, a life settlements marketplace.
Transamerica Minerals Company	California	100% TRS	Owner and lessor of oil and gas properties
Transamerica Oakmont Corporation	California	100% Transamerica International Holdings, Inc.	General partner retirement properties
Transamerica Oakmont Retirement Associates	California	Co-General Partners are Transamerica Oakmont Corporation and Transamerica Products I (Administrative General Partner)	Senior living apartments
Transamerica Occidental Life Insurance Company (“TOLIC”)	Iowa	1,104,117 shares Common Stock owned by Transamerica International Holdings, Inc.; 1,103,466 shares of Preferred Stock owned by Transamerica Corporation	Life Insurance
Transamerica Occidental’s Separate Account Fund C	California	100% TOLIC	Mutual fund
Transamerica Pacific Insurance Company, Ltd.	Hawaii	100% Transamerica Corp.	Life insurance
Transamerica Pyramid Properties LLC	Iowa	100% TOLIC	Realty limited liability company
Transamerica Re Consultoria em Seguros e Servicos Ltda	Brazil	95% TOLIC; 5% Transamerica International Holdings, Inc.	Insurance and reinsurance consulting
Transamerica Realty Investment Properties LLC	Delaware	100% TOLIC	Realty limited liability company
Transamerica Realty Services, LLC (“TRS”)	Delaware	100% AEGON USA Realty Advisors, Inc.	Real estate investments
Transamerica Retirement Management, Inc.	Minnesota	100% AEGON Financial Services Group, Inc.	Life Insurance and underwriting services
Transamerica Securities Sales Corporation	Maryland	100% Transamerica International Holdings, Inc.	Broker/Dealer
Transamerica Small Business Capital, Inc.	Delaware	100% TCFC Asset Holdings, Inc.	Holding company
Transamerica Trailer Leasing AG	Switzerland	100% Transamerica Leasing Holdings, Inc.	Leasing
Transamerica Trailer Leasing Sp. Z.O.O.	Poland	100% Transamerica Leasing Holdings, Inc.	Leasing
Transamerica Vendor Financial Services Corporation	Delaware	100% TCFC Asset Holdings, Inc.	Provides commercial leasing
Unicom Administrative Services, Inc.	Pennsylvania	100% Academy Insurance Group, Inc.	Provider of administrative services
United Financial Services, Inc.	Maryland	100% AEGON USA, Inc.	General agency
Universal Benefits Corporation	Iowa	100% AUSA Holding Co.	Third party administrator
USA Administration Services, Inc.	Kansas	100% TOLIC	Third party administrator
Valley Forge Associates, Inc.	Pennsylvania	100% Commonwealth General Corporation	Furniture & equipment lessor
Westcap Investors, LLC	Delaware	100% Transamerica Investment Management, LLC	Inactive
Westcap Investors Series Fund, LLC	Delaware	Transamerica Investment Management, LLC is the Managing Member	This Series Fund is an unregistered investments vehicle for Transamerica Investment Management, LLC (former Westcap Investors, LLC) clients are Members

As of 1/1/2008

Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Western Reserve Life Assurance Co. of Ohio	Ohio	100% AEGON USA, Inc.	Insurance
Westport Strategies, LLC	Delaware	AUSA Holding Company - sole Member	Provide administrative and support services, including but not limited to plan consulting, design and administration in connection with retail insurance brokerage business as carried on by producers related to corporate-owned or trust-owned life insurance policies
WFG China Holdings, Inc.	Delaware	100% World Financial Group, Inc.	Hold interest in Insurance Agency located in Peoples Republic of China
WFG Insurance Agency of Puerto Rico, Inc.	Puerto Rico	100% World Financial Group Insurance Agency, Inc.	Insurance agency
WFG Properties Holdings, LLC	Georgia	100% World Financial Group, Inc.	Marketing
WFG Property & Casualty Insurance Agency of California, Inc.	California	100% WFG Property & Casualty Insurance Agency, Inc.	Insurance agency
WFG Property & Casualty Insurance Agency of Nevada, Inc.	Nevada	100% WFG Property & Casualty Insurance Agency, Inc.	Insurance agency
WFG Property & Casualty Insurance Agency, Inc.	Georgia	100% World Financial Group Insurance Agency, Inc.	Insurance agency
WFG Reinsurance Limited	Bermuda	100% World Financial Group, Inc.	Reinsurance
WFG Securities of Canada, Inc.	Canada	100% World Financial Group Holding Company of Canada, Inc.	Mutual fund dealer
World Financial Group Holding Company of Canada Inc.	Canada	100% TIHI	Holding company
World Financial Group Insurance Agency of Canada Inc.	Ontario	50% World Financial Group Holding Co. of Canada Inc.; 50% World Financial Group Subholding Co. of Canada Inc.	Insurance agency
World Financial Group Insurance Agency of Hawaii, Inc.	Hawaii	100% World Financial Group Insurance Agency, Inc.	Insurance agency
World Financial Group Insurance Agency of Massachusetts, Inc.	Massachusetts	100% World Financial Group Insurance Agency, Inc.	Insurance agency
World Financial Group Insurance Agency of Wyoming, Inc.	Wyoming	100% World Financial Group Insurance Agency, Inc.	Insurance agency
World Financial Group Insurance Agency, Inc.	California	100% Western Reserve Life Assurance Co. of Ohio	Insurance agency
World Financial Group Subholding Company of Canada Inc.	Canada	100% World Financial Group Holding Company of Canada, Inc.	Holding company
World Financial Group, Inc.	Delaware	100% AEGON Asset Management Services, Inc.	Marketing
World Group Securities, Inc.	Delaware	100% AEGON Asset Management Services, Inc.	Broker-dealer
Zahorik Company, Inc.	California	100% AUSA Holding Co.	Inactive
Zero Beta Fund, LLC	Delaware	Manager: AEGON USA Investment Management, LLC	Aggregating vehicle formed to hold various fund investments.

As of 1/1/2008

Item 27. Number of Contract Owners

As of August 29, 2008, there were 200 Contract owners.

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 producers for determining when indemnification payments can be made.

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

Item 29. Principal Underwriters–

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

Transamerica Capital, Inc. serves as the principal underwriter for the Retirement Builder Variable Annuity Account, Separate Account VA A, Separate Account VA B, Separate Account VA C, Separate Account VA D, Separate Account VA E, Separate Account VA F, Separate Account VA I, Separate Account VA J, Separate Account VA K, Separate Account VA L, Separate Account VA P, Separate Account VA Q, Separate Account VA R, Separate Account VA S, Separate Account VA W, Separate Account VA X, Separate Account VA Y; Separate Account VA Z, Separate Account VA EE, Separate Account VA-1, Separate Account VA-6, Separate Account VA-7, Separate Account VA-8, Transamerica Corporate Separate Account Sixteen, Separate Account VL A and Separate Account VUL A. These accounts are separate accounts of Transamerica Life Insurance Company.

Transamerica Capital, Inc. serves as principal underwriter for Separate Account VA BNY, Separate Account VA GNY, Separate Account VA HNY, Separate Account VA QNY, Separate Account VA WNY, Separate Account VA YNY, TFLIC Separate Account VNY, Separate Account VA-2LNY, TFLIC Separate Account C, Separate Account VA-5NLNY, Separate Account VA-6NY, TFLIC Series Annuity Account and TFLIC Series Life Account. These accounts are separate accounts of Transamerica Financial Life Insurance Company.

Transamerica Capital, Inc. serves as principal underwriter for Separate Account VA U, Separate Account VA V, Separate Account VA AA, WRL Series Life Account, WRL Series Life Account G, WRL Series Life Corporate Account, WRL Series Annuity Account and WRL Series Annuity Account B. These accounts are separate accounts of Western Reserve Life Assurance Co. of Ohio.

Transamerica Capital, Inc. also serves as principal underwriter for Separate Account VA-2L, Separate Account VA-5, and Transamerica Occidental Life Separate Account VUL-3. These accounts are separate accounts of Transamerica Occidental Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for Separate Account VA BB, Separate Account VA CC, Separate Account VA WM, and Separate Account VL E. This account is a separate account of Monumental Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for Merrill Lynch Life Variable Annuity Separate Account, Merrill Lynch Life Variable Annuity Separate Account A, Merrill Lynch Life Variable Annuity Separate Account B, Merrill Lynch Life Variable Annuity Separate Account C, Merrill Lynch Life Variable Annuity Separate Account D, Merrill Lynch Variable Life Separate Account, and Merrill Lynch Life Variable Life Separate Account II. These accounts are separate accounts of Merrill Lynch Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for ML of New York Variable Annuity Separate Account, ML of New York Variable Annuity Separate Account A, ML of New York Variable Annuity Separate Account B, ML of New York Variable Annuity Separate Account C, ML of New York Variable Annuity Separate Account D, ML of New York Variable Life Separate Account, and ML of New York Variable Life Separate Account II. These accounts are separate accounts of ML Life Insurance Company of New York.

Transamerica Capital, Inc. also serves as principal underwriter for Transamerica Series Trust, Transamerica Funds and Transamerica Investors, Inc.

(b) Directors and Officers of Transamerica Capital, Inc.:

Name	Principal Business Address	Position and Offices with Underwriter
Robert R. Frederick	(1)	Chief Operations Officer, President and Director
John T. Mallett	(1)	Director
Mark W. Mullin	(1)	Director
Lon J. Olejniczak	(1)	Chief Executive Officer and Director
Michael W. Brandsma	(2)	Executive Vice President and Chief Financial Officer
David R. Paulsen	(2)	Executive Vice President
Michael G. Petko	(2)	Executive Vice President
Anne M. Spaes	(3)	Executive Vice President and Chief Marketing Officer
Courtney John	(2)	Chief Compliance Officer and Vice President
Frank A. Camp	(1)	Secretary
Amy J. Boyle	(4)	Assistant Vice President
John W. Fischer	(4)	Assistant Vice President
Clifton W. Flenniken, III	(5)	Assistant Vice President
Dennis P. Gallagher	(4)	Assistant Vice President
Linda S. Gilmer	(1)	Vice President
Karen D. Heburn	(4)	Vice President
Kyle A. Keelan	(4)	Assistant Vice President
Christy Post-Rissin	(4)	Assistant Vice President
Brenda L. Smith	(4)	Assistant Vice President
Darin D. Smith	(1)	Assistant Vice President
Arthur D. Woods	(4)	Assistant Vice President
Tamara D. Barkdoll	(2)	Assistant Secretary
Erin K. Burke	(1)	Assistant Secretary

(1) 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001

(2) 4600 S Syracuse St, Suite 1100, Denver, CO 80237-2719

(3) 400 West Market Street, Louisville, KY 40202

(4) 570 Carillon Parkway, St. Petersburg, FL 33716

(5) 1111 North Charles Street, Baltimore, MD 21201

(c) Compensation to Principal Underwriter:

Name of Principal Underwriter	Net Underwriting Discounts and Commissions(1)	Compensation on Redemption	Brokerage Commissions	Compensation
Transamerica Capital, Inc.(2)		0	0	0

⁽¹⁾ Fiscal Year 2007

⁽²⁾ Effective May 1, 2007, Transamerica Capital, Inc. replaced AFSG Securities Corporation as principal underwriter for the contracts.

Item 30. Location of Accounts and Records

The records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by Manager Regulatory Filing Unit, Transamerica Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001.

Item 31. Management Services.

All management Contracts are discussed in Part A or Part B.

Item 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 Premiums under the Contract may be accepted.

(b) Registrant undertakes that it will include either (i) a postcard or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information or (ii) a space in the Policy application that an applicant can check to request 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 Life Insurance Company at the address or phone number listed in the Prospectus.

(d) Transamerica Life Insurance Company hereby represents that the fees and charges deducted under the contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Transamerica Life Insurance Company.

SECTION 403(B) REPRESENTATIONS

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

TEXAS ORP REPRESENTATION

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

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, in the City of Cedar Rapids and State of Iowa, on this day 30^th of September, 2008.

SEPARATE ACCOUNT VA-5

TRANSAMERICA LIFE INSURANCE COMPANY

Depositor

*

Brenda K. Clancy

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 dates indicated.

Signatures	Title	Date
* Craig D. Vermie	Director, Senior Vice President, Secretary and General Counsel	2008
* Arthur C. Schneider	Director, Chief Tax Officer, and Senior Vice President	2008
* Eric J. Martin	Vice President and Corporate Controller	2008
* Brenda K. Clancy	Director and President	2008
* M. Craig Fowler	Vice President and Treasurer	2008
* Kenneth Kilbane	Director and Chairman of the Board	2008
* Mark W. Mullin	Director and Chief Executive Officer	2008
/s/ Darin D. Smith * By Darin D. Smith	Attorney-in-Fact pursuant to powers of Attorney filed previously and herewith.	September 30, 2008

Registration No.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

EXHIBITS

TO

FORM N-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FOR

SEPARATE ACCOUNT VA - 5

EXHIBIT INDEX

Exhibit No.	Description of Exhibit	Page No.*
1(a)	Resolution of the Board
(1)(b)	Consent of Board of Directors—Merger
3(a)(4)	Form of Amendment to Amended and Restated Principal Underwriting Agreement
4(a)	Form of Policy (Group)
4(b)	Form of Policy (Individual)
5(a)	Form of Application
8(a)	Form of Participation Agreement
9(a)	Opinion and Consent of Counsel
9(b)	Consent of Counsel
10(a)	Consent of Independent Registered Public Accounting Firm
13	Powers of Attorney

* Page numbers included only in manually executed original.

EX-1.A

Exhibit 1(a)

Resolution of the Board

SECRETARY’S CERTIFICATE

I, Susan Vivino, Assistant Secretary of Transamerica Occidental Life Insurance Company, do hereby certify that the attached is a full, true and correct copy of a resolution - SEPARATE ACCOUNTS duly passed and adopted at a regular meeting of the Board of Directors of Transamerica Occidental Life Insurance Company on the 6^th day of December, 1996 at which meeting a quorum of the directors was present. I further certify that said resolution is now in full force and effect.

WITNESS my hand and the seal of Transamerica Occidental Life Insurance Company this 12 day of July, 2001.

Assistant secretary

Resolution of the Board of Directors of the Company

Establishing the Separate Account

EXCERPTS FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY HELD DECEMBER 6, 1996.

SEPARATE ACCOUNTS

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

WHEREAS, this Corporation adopted a resolution authorizing its proper officers to enter into, make, perform and carry out contracts pursuant to Section 10506 of the California Insurance Code; and

WHEREAS, this Corporation desires to continue entering into, making, performing and carrying out contracts pursuant to Section 10506 et seq. of the California Insurance Code, and specifically at this time to authorize its proper officers to establish additional separate accounts under Section 10506 et seq. of the California Insurance Code without further action of approval of this Board of Directors;

THEREFORE IT IS RESOLVED, that this Corporation reaffirms that through its proper officers, be and hereby is authorized (1) to enter into, make, perform and carry out contracts of every sort and kind which may be necessary, suitable or convenient to the conduct of business pursuant to Section 10506 et seq. Of the California Insurance Code, which permits a life insurance company to allocate to one more separate accounts, in accordance with the terms of a written agreement approved by the Insurance Commissioner of California, any amounts that are paid to the Company under a pension, retirement or profit-sharing plan, or program for one or more persons and that are to be applied in payment of proceeds or benefits under the Company’s policies, contracts, or agreements in fixed or variable dollar amounts, or both, and (2) to do all and everything necessary, suitable or convenient to the conduct of such business, including any act or thing incidental to, or growing out of, or connected with the conduct of such business and further including, but not limited to, the power to establish new separate accounts, both pooled and non-pooled, without further action or approval by this Board of Directors; and

FURTHER RESOLVED, that 1) the income, if any, and gains and losses, realized and unrealized, in each separate account shall be credited to or charged against such separate account without regard to other gains or losses of the Company’s general account or other separate accounts; and 2) no separate account shall be chargeable with liabilities arising out of any other business of the Company.

EX-1.B

EXHIBIT (1)(b)

CONSENT OF BOARD OF DIRECTORS - MERGER

WRITTEN CONSENT OF THE

BOARD OF DIRECTORS OF

TRANSAMERICA LIFE INSURANCE COMPANY

June 13, 2008

The undersigned, being all of the Directors of Transamerica Life Insurance Company, an Iowa corporation (hereafter referred to as the “Company”), acting as authorized in Section 490.821 of the Iowa Business Corporation Act and Article II, Section 8, of the Company’s Bylaws, HEREBY ADOPT, unanimously, the following resolutions by Written Consent and authorize the actions therein to be taken by the Company upon the filing of the Written Consent in the Minute Book of the Company:

RESOLVED, that the Board of Directors of the Company hereby approves the terms and form, in substantially the form which attached hereto and made a part of this Written Consent, of the Plan of Merger by and between Transamerica Occidental Life Insurance Company (“TOLIC”) and Transamerica Life Insurance Company (“TLIC”), wherein TLIC will be the surviving corporation, and that the effective date of the merger will be October 1, 2008, or such later date as the appropriate regulatory authorities have approved such merger.

FURTHER RESOLVED, that the Plan of Merger be submitted and recommended for approval to the sole shareholder of the Company.

FURTHER RESOLVED, that the officers of the Company be and they are hereby authorized to take such actions and execute such documents as they may deem necessary to effectuate the aforestated Agreement.

WHEREAS, it will be necessary to execute and file certain documents with the various state insurance departments to reflect the aforementioned merger; and

WHEREAS, the Company desires to avoid having to adopt separate individual resolutions for each state in the future.

NOW, THEREFORE, BE IT RESOLVED, that the President or any Vice President and the Secretary or any Assistant Secretary of the Company be and they are hereby authorized to execute and file any such documents which are required to be filed with any state insurance department in connection with the merger of TOLIC into TLIC; and

1

FURTHER RESOLVED, that, if with respect to any state insurance department, a prescribed form of resolution or resolutions is required to be adopted by the Board of Directors, each such resolution shall be deemed to have been and hereby is adopted by this Written Consent; and the Secretary or an Assistant Secretary of the Company is hereby authorized to certify the adoption of all such resolutions as though such resolutions were now presented to and adopted by this Written Consent.

This Written Consent may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Written Consent.

IN WITNESS WHEREOF, the undersigned have executed this Written Consent of the Board of Directors of Transamerica Life Insurance Company as of the date first hereinabove set forth.

/s/ Brenda K. Clancy	/s/ Arthur C. Schneider
Brenda K. Clancy	Arthur C. Schneider
/s/ Kenneth Kilbane	/s/ Craig D. Vermie
Kenneth Kilbane	Craig D. Vermie
/s/ Mark W. Mullin
Mark W. Mullin

2

ARTICLES OF MERGER

OF

TRANSAMERICA LIFE INSURANCE COMPANY

AN IOWA CORPORATION

AND

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

AN IOWA CORPORATION

Pursuant to the provisions of Section 490.1102 of the Iowa Business Corporation Act, Transamerica Life Insurance Company, an Iowa corporation (“TLIC”), hereby merges Transamerica Occidental Life Insurance Company, an Iowa corporation (“TOLIC”) into TLIC on the following terms and conditions:

1. TLIC and TOLIC are hereby merged in accordance with the terms of, and in the manner set forth in, the Plan of Merger attached hereto as Exhibit A and incorporated herein by reference, effective October 1, 2008. The name of the surviving corporation is “Transamerica Life Insurance Company”. The Articles of Incorporation of TLIC shall continue as the Articles of Incorporation of the surviving corporation.

2. The Plan of Merger was approved by resolution adopted by the Boards of Directors of TLIC and TOLIC and by resolution adopted by the Shareholders of TLIC and TOLIC, and the performance of its terms were duly authorized by all action required by the laws of the State of Iowa and by the articles of incorporation of TOLIC and TLIC.

3. TOLIC has Common Stock outstanding, par value $12.50 per share, all of which are owned by Transamerica International Holdings, Inc. and Voting Preferred Stock outstanding, par value $12.50 per share, all of which are owned by Transamerica Corporation. There are no shares of any other class of capital stock of TOLIC outstanding.

4. TLIC has Common Stock outstanding, par value $10.00 per share, all of which are owned by Transamerica Occidental Life Insurance Company, and Series B Preferred Stock outstanding, par value $10.00 per share, all of which are owned by AEGON USA, LLC.

5. The executed Plan of Merger is on file at the principal place of business of TLIC, 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499.

CORPORATE SEAL Attest:	TRANSAMERICA LIFE INSURANCE COMPANY
	By:
Craig D. Vermie		Brenda K. Clancy
Secretary		President                                     Date:
CORPORATE SEAL Attest:	TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
	By:
Craig D. Vermie		James M. Flewellen
Secretary		President                                     Date:

STATE OF IOWA	)
	)  ss
COUNTY OF LINN	)

I,                                              , a Notary Public, do hereby certify that on                                 , 2008, personally appeared before me Brenda K. Clancy, who being by me first duly sworn, declared that she is the President of Transamerica Life Insurance Company, that she signed the foregoing document as President of the corporation, and that the statements therein contained are true.

(Notarial Seal)
	Notary Public My Commission Expires: _____________

STATE OF CALIFORNIA )

                                             )  ss

COUNTY OF__________ )

I,                                              , a Notary Public, do hereby certify that on                                 , 2008, personally appeared before me James M. Flewellen, who being by me first duly sworn, declared that he is the President of Transamerica Occidental Life Insurance Company, that he signed the foregoing document as President of the corporation, and that the statements therein contained are true.

(Notarial Seal)
	Notary Public My Commission Expires: _____________

EXHIBIT A

PLAN OF MERGER

OF

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

AN IOWA CORPORATION

INTO

TRANSAMERICA LIFE INSURANCE COMPANY

AN IOWA CORPORATION

1. The name of the corporation to be merged is Transamerica Occidental Life Insurance Company (“TOLIC”), an Iowa corporation incorporated on June 30, 1906. The name of the corporation into which TOLIC will merge is Transamerica Life Insurance Company (“TLIC”), an Iowa corporation incorporated on April 14, 1961.

2. TOLIC has Common Stock outstanding, par value of $12.50 each, all of which are owned by Transamerica International Holdings, Inc. (“TIHI”), and Voting Preferred Stock outstanding, par value of $12.50 each, all of which are owned by Transamerica Corporation. TLIC has Common Stock outstanding, par value of $10.00 each, all of which owned by TOLIC; and Series B Preferred Stock outstanding, par value of $10.00 each, all of which owned by AEGON USA, LLC. TLIC, TOLIC, TIHI, Transamerica Corporation and AEGON USA, LLC are affiliated corporations within the same insurance holding company system.

3. The name of the surviving corporation shall be “Transamerica Life Insurance Company”. The Articles of Incorporation of TLIC shall continue as the Articles of Incorporation of the surviving corporation. The Bylaws of TLIC shall continue as the Bylaws of the surviving corporation.

4. The officers and board of directors of TLIC shall continue in office until their successors are duly elected and qualified under the provisions of the Bylaws of TLIC.

5. This merger of TOLIC with and into TLIC is intended to be a tax-free reorganization pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986.

TOLIC stock shall be deemed cancelled by operation of law. Therefore, in exchange for its agreement to merge TOLIC into TLIC, TIHI shall receive TLIC Common Stock equal in value to the fair market value of the TOLIC Common Stock that is deemed cancelled and Transamerica Corporation shall receive Series B Preferred Stock from TLIC equal in value to the fair market value of the TOLIC Voting Preferred Stock that is deemed cancelled.

6. The merger shall become effective on October 1, 2008, or such later date when the necessary regulatory approvals have been obtained, including the approval of the Iowa Insurance Division.

CORPORATE SEAL Attest:	TRANSAMERICA LIFE INSURANCE COMPANY
	By:
Craig D. Vermie		Brenda K. Clancy
Secretary		President                                     Date:
CORPORATE SEAL Attest:	TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
	By:
Craig D. Vermie		James M. Flewellen
Secretary		President                                     Date:

STATE OF IOWA	)
	)  ss
COUNTY OF LINN	)

I,                                              , a Notary Public, do hereby certify that on                                 , 2008, personally appeared before me Brenda K. Clancy, who being by me first duly sworn, declared that she is the President of Transamerica Life Insurance Company, that she signed the foregoing document as President of the corporation, and that the statements therein contained are true.

(Notarial Seal)
	Notary Public My Commission Expires: _____________

STATE OF CALIFORNIA )

                                             )  ss

COUNTY OF__________ )

I,                                              , a Notary Public, do hereby certify that on                                 , 2008, personally appeared before me James M. Flewellen, who being by me first duly sworn, declared that he is the President of Transamerica Occidental Life Insurance Company, that he signed the foregoing document as President of the corporation, and that the statements therein contained are true.

(Notarial Seal)
	Notary Public My Commission Expires: _____________

CERTIFICATION

I, Craig D. Vermie, being the duly constituted Secretary of Transamerica Life Insurance Company (“TLIC”), a corporation duly organized and existing under the laws of Iowa, hereby certify that the following is a true and correct copy of resolutions duly adopted by Written Consent of the Board of Directors of TLIC dated August 27, 2008, and said resolutions are still in full force and effect:

WHEREAS, the consummation of the statutory mergers of Transamerica Occidental Life Insurance Company and Life Investors Insurance Company of America with and into Transamerica Life Insurance Company, in accordance with the applicable laws of the State of Iowa, and the resulting cessation of the separate existence of Transamerica Occidental Life Insurance Company and of Life Investors Insurance Company of America is expected soon; and

WHEREAS, upon the consummation of the statutory mergers, Transamerica Life Insurance Company shall possess all assets, including all separate account assets, of Transamerica Occidental Insurance Company and Life Investors Insurance Company of America, and Transamerica Life Insurance Company shall be vested with all obligations belonging to or due Transamerica Occidental Life Insurance Company and Life Investors Insurance Company of America without further act or deed; and

WHEREAS, Transamerica Life Insurance Company is and shall continue to be subject to the laws of the State of Iowa; and

WHEREAS, upon consummation of the statutory mergers, Transamerica Life Insurance Company shall become the depositor of Life Investors Variable Account A of Life Investors Insurance Company of America, and of the following Separate Accounts of Transamerica Occidental Life Insurance Company:

Transamerica Occidental Life Insurance Company Separate Account VA-2L;

Transamerica Occidental Life Insurance Company Separate Account VA-5;

Transamerica Occidental Life Insurance Company Separate Account VL;

Transamerica Occidental Life Insurance Company Separate Account VUL-1;

Transamerica Occidental Life Insurance Company Separate Account VUL-2;

Transamerica Occidental Life Insurance Company Separate Account VUL-3;

Transamerica Occidental Life Insurance Company Separate Account VUL-4;

Transamerica Occidental Life Insurance Company Separate Account VUL-5;

Transamerica Occidental Life Insurance Company Separate Account VUL-6; and

WHEREAS, each of the above-mentioned Separate Accounts has been duly established in accordance with the applicable provisions of the insurance law of the State of Iowa and is registered with the United States Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940; and

WHEREAS, Life Investors Variable Account A supports benefits payable under variable universal life insurance policies issued by Life Investors Insurance Company of America, and each of the other above-mentioned Separate Accounts supports benefits payable under variable annuity contracts or variable universal life insurance policies issued by Transamerica Occidental Life Insurance Company, and, upon consummation of the statutory mergers, Transamerica Life Insurance Company shall become the issuer of each such variable annuity contract and variable universal life insurance policy; and

WHEREAS, the Directors of Transamerica Life Insurance Company deem it advisable to change the designations of the above-mentioned Separate Accounts as follows, upon the consummation of the statutory mergers:

Separate Account VA-2L of Transamerica Life Insurance Company;

Separate Account VA-5 of Transamerica Life Insurance Company;

Separate Account VL of Transamerica Life Insurance Company;

Separate Account VUL-1 of Transamerica Life Insurance Company;

Separate Account VUL-2 of Transamerica Life Insurance Company;

Separate Account VUL-3 of Transamerica Life Insurance Company

Separate Account VUL-4 of Transamerica Life Insurance Company;

Separate Account VUL-5 of Transamerica Life Insurance Company;

Separate Account VUL-6 of Transamerica Life Insurance Company;

Variable Life Account A of Transamerica Life Insurance Company.

NOW THEREFORE, BE IT RESOLVED, that Transamerica Life Insurance Company, an Iowa stock life insurance company, shall be authorized to act as the depositor of the following Separate Accounts of Transamerica Occidental Life Insurance Company and Life Investors Insurance Company of America:

Transamerica Occidental Life Insurance Company Separate Account VA-2L;

Transamerica Occidental Life Insurance Company Separate Account VA-5;

Transamerica Occidental Life Insurance Company Separate Account VL;

Transamerica Occidental Life Insurance Company Separate Account VUL-1;

Transamerica Occidental Life Insurance Company Separate Account VUL-2;

Transamerica Occidental Life Insurance Company Separate Account VUL-3;

Transamerica Occidental Life Insurance Company Separate Account VUL-4;

Transamerica Occidental Life Insurance Company Separate Account VUL-5;

Transamerica Occidental Life Insurance Company Separate Account VUL-6;

Life Investors Insurance Company of America Life Investors Variable Account A; and

RESOLVED FURTHER, that the Board of Directors of Transamerica Life Insurance Company hereby approves changing the designations of the above-listed Separate Accounts of Transamerica Occidental Life Insurance Company and Life Investors Insurance Company of America as follows, upon consummation of the statutory mergers of Transamerica Occidental Life

2

Insurance Company and Life Investors Insurance Company of America with and into Transamerica Life Insurance Company:

Separate Account VA-2L of Transamerica Life Insurance Company;

Separate Account VA-5 of Transamerica Life Insurance Company;

Separate Account VL of Transamerica Life Insurance Company;

Separate Account VUL-1 of Transamerica Life Insurance Company;

Separate Account VUL-2 of Transamerica Life Insurance Company;

Separate Account VUL-3 of Transamerica Life Insurance Company

Separate Account VUL-4 of Transamerica Life Insurance Company;

Separate Account VUL-5 of Transamerica Life Insurance Company;

Separate Account VUL-6 of Transamerica Life Insurance Company;

Variable Life Account A of Transamerica Life Insurance Company; and

RESOLVED FURTHER, that the appropriate officers of Transamerica life Insurance Company, with such assistance from auditors, legal counsel and independent consultants or other individuals as they may require, are hereby authorized and directed to take all actions and execute any and all documents, as may be necessary to maintain the lawful operations of each of the above-listed Separate Accounts under all applicable federal and state laws, rules, and regulation.

Dated this 26^th day of Sept., 2008.

Craig D. Vermie

3

EX-3.A.4

Exhibit 3(a)(4)

Form of Amendment to Principal Underwriting Agreement

AMENDMENT NO. 10 TO

AMENDED AND RESTATED

PRINCIPAL UNDERWRITING AGREEMENT

Amendment dated October 1, 2008, to the Amended and Restated Principal Underwriting Agreement, dated as of May 1, 2002, by and between Transamerica Capital, Inc. (“TCI”) and Transamerica Life Insurance Company (“Transamerica”) (the “Agreement”).

WHEREAS, effective October 1, 2008, Exhibit A of the Agreement is hereby deleted in its entirety and replaced with the attached Exhibit A.

NOW, THEREFORE, in consideration of the above premises and of the mutual promises contained herein and the mutual benefits to be derived herefrom, TCI and Transamerica (the “parties”), intending to be legally bound, hereby agree as follows:

1. Agreement Remains Effective. Unless expressly modified by this Amendment, all terms and conditions contained in the Agreement shall remain in effect in accordance with the terms of the Agreement.

2. Entire Agreement and Modification. This Amendment and the Agreement contain the entire understanding and agreement between the parties hereto and supersede all prior or contemporaneous agreements relative to the subject matter of the Agreement. This Amendment and the Agreement may not be amended, modified, supplemented or changed, in any respect whatsoever, except by a written agreement duly executed by the parties.

IN WITNESS WHEREOF, the parties, by their duly authorized officers, have executed this Amendment on the dates indicated.

TRANSAMERICA CAPITAL, INC.		TRANSAMERICA LIFE INSURANCE COMPANY
By:		By:
	Robert R. Frederick		Darin D. Smith
Title:	President and Chief Operations Officer	Title:	Vice President

EXHIBIT A

Separate Accounts

1.      Separate Account VA A

2.      Separate Account VA B

3.      Separate Account VA C

4.      Separate Account VA D

5.      Separate Account VA E

6.      Separate Account VA F

7.      Separate Account VA I

8.      Separate Account VA J

9.      Separate Account VA K

10.    Separate Account VA L

11.    Separate Account VA P

12.    Retirement Builder Variable Annuity Account

13.    Separate Account VL A

14.    Separate Account VUL A

15.    Transamerica Corporate Separate Account Sixteen

16.    PFL Corporate Account One

17.    PFL Corporate Separate Account Four

18.    PFL Corporate Account Three

19.    TA PPVUL 1

20.    Separate Account VA Q

21.    Separate Account VA R

22.    Separate Account VA S

23.    Separate Account VA W

24.    Separate Account VA X

25.    Separate Account VA-1

26.    Separate Account VA-6

27.    Separate Account VA-7

28.    Separate Account VA-8

29.    Separate Account VA Y

30.    Separate Account VA Z

31.    Separate Account VA EE

32.    Separate Account VA-2L

33.    Separate Account VA-5

34.    Separate Account VUL-3

35.    Transamerica Occidental Separate Account Two

36.    Variable Life Account A

EX-4.A

Exhibit 4(a)

Form of Policy (Group)

Home Office: 1150 South Olive Los Angeles, CA 90015-2211 A Stock Company Transamerica Occidental Life Insurance Company

ANNUITANT	JOHN DOE	SPECIMEN	ANNUITY CERTIFICATE NUMBER
COMMENCEMENT OF ANNUITY PAYMENT DATE	FEBRUARY 1, 2044	JANUARY 1, 1994	ANNUITY ISSUE DATE

READ THIS CERTIFICATE CAREFULLY

THIS CERTIFIES THAT the Owner of this Certificate is participating under a Group Annuity Contract (hereinafter referred to as the “Contract”). As such, the Owner will be entitled to certain benefits provided under this Certificate, subject to its provisions. This Certificate sets forth the Owner’s rights under the Contract.

RIGHT TO CANCEL - The Owner may cancel this Certificate by delivering or mailing written notice or sending a telegram to Transamerica Occidental Life Insurance Company, Schwab Annuity Service Center, P.O. Box 7785, San Francisco, California 94120-9420, and by returning the Certificate before midnight of the tenth day after receipt of the Certificate. Notice given by mail and the return of the Certificate by mail will be effective as of the date the notice is received. We will refund all Purchase Payments paid or, if greater, the Account Value, within seven days after we receive such notice to cancel and the returned Certificate.

PAYMENTS AND VALUES PROVIDED UNDER THIS CERTIFICATE, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. REFER TO PAGES 9 AND 10 FOR ADDITIONAL INFORMATION ON THE VARIABLE ACCOUNT.

Signed for the Company at Los Angeles, California, to be effective as of the Annuity Issue Date.

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY	CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

CERTIFICATE OF PARTICIPATION

Issued in connection with

Group Annuity Contract Form No. GNP-215-193

Separate Account Investments

Annuity Payable in Fixed Dollar Amounts

Non-Participating - No Annual Dividends

Illegible

Home Office: 1150 South Olive Los Angeles, CA 90015-2211 A Stock Company Transamerica Occidental Life Insurance Company

ANNUITANT	ANNUITY CERTIFICATE NUMBER
COMMENCEMENT OF ANNUITY PAYMENT DATE	ANNUITY ISSUE DATE

IMPORTANT

YOU (THE “OWNER”) HAVE PURCHASED AN ANNUITY CERTIFICATE.

CAREFULLY REVIEW IT FOR LIMITATIONS.

THIS CERTIFICATE MAY BE RETURNED WITHIN 30 DAYS FROM THE DATE YOU RECEIVE IT BY RETURNING IT TO TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, SCHWAB ANNUITY SERVICE CENTER, P.O. BOX 7785, SAN FRANCISCO, CALIFORNIA 94120-9420. WE WILL REFUND TO YOU ALL PURCHASE PAYMENTS PAID, OR IF GREATER, THE ACCOUNT VALUE, WITHIN SEVEN DAYS AFTER WE RECEIVE THE RETURNED CERTIFICATE.

GCE-036-194

THIS CERTIFIES THAT the Owner of this Certificate is participating under a Group Annuity Contract (hereinafter referred to as the “Contract”). As such, the Owner will be entitled to certain benefits provided under this Certificate, subject to its provisions. This Certificate sets forth the Owner’s rights under the Contract.

PAYMENTS AND VALUES PROVIDED UNDER THIS CERTIFICATE, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. REFER TO PAGES 9 AND 10 FOR ADDITIONAL INFORMATION ON THE VARIABLE ACCOUNT.

Signed for the Company at Los Angeles, California, to be effective as of the Annuity Issue Date.

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY	CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

CERTIFICATE OF PARTICIPATION

Issued in connection with

Group Annuity Contract Form No. GNP-215-193

Separate Account Investments

Annuity Payable in Fixed Dollar Amounts

Non-Participating - No Annual Dividends

GNC-37-193 Page 1

CERTIFICATE DATA

CERTIFICATE INFORMATION
Annuity Certificate Number:	Specimen	Annuity Issue Date:	January 1, 1994
Status of Annuity Certificate:	Non-Qualified	Initial Purchase Payment:	$20,000,00
Commencement of Annuity Payment Date:	February 1, 2044

OWNER INFORMATION		ANNUITANT INFORMATION
Owner:	John Doe	Annuitant:	John Doe
Date of Birth:	January 1, 1959	Date of Birth:	January 1, 1959
Tax ID Number:	999-99-9999	Tax ID Number:	999-99-9999
Beneficiary:	N/A	Beneficiary:	Jane Doe
Beneficiary’s Date of Birth:                N/A		Beneficiary’s Date of Birth:                 January 1, 1959
Beneficiary’s Tax ID Number:            N/A		Beneficiary’s Tax ID Number:             999-99-9999

JOINT OWNER INFORMATION		CONTINGENT ANNUITANT INFORMATION
Joint Owner:	Jane Doe	Contingent Annuitant:	N/A
Date of Birth:	January 1, 1959	Date of Birth:	N/A
Tax ID Number:	999-99-9999	Tax ID Number:	N/A

ALLOCATION OF INITIAL PURCHASE PAYMENT
Federated Equity Growth & Income Fund:	10	%
Federated U.S. Government Bond Fund:	10	%
INVESCO VIF-High Yield Bond Fund Portfolio:	10	%
INVESCO VIF-Industrial Income Portfolio:	10	%
INVESCO VIF-Total Return Portfolio:	10	%
Janus Aggressive Growth Portfolio:	00	%
Janus Aspen Growth Portfolio:	10	%
Janus Worldwide Growth Portfolio:	00	%
Lexington Emerging Markets Fund:	00	%
Montgomery Variable Series: Growth Fund:	00	%
Schwab Money Market Portfolio:	10	%
SteinRoe Capital Appreciation Fund:	10	%
Strong Discovery Fund II:	10	%
TCI Growth Portfolio:	10	%
TCI International Portfolio:	00	%
Van Eck Gold and Natural Resources Fund:	00	%
Fixed Account - 2 Yr.:	00	%
Fixed Account - 4 Yr.:	00	%
Total:	100	%

* During the Free Look Period, your Initial Purchase Payment, not allocated to the Fixed Account, will be invested in the Schwab Money Market. It will then be allocated based upon the percentages you have elected (as shown above). You may change this allocation at any time.

This Certificate reflects the information with which your annuity Certificate has been set up. If you wish to change/correct any information on this page, please call us immediately at 1-800-838-0650.

CONTINUED ON THE FOLLOWING PAGE

GNC-37-193 Page 2

CERTIFICATE DATA (Continued)

CHARGES AND FEES - Current charges and fees at the time we issued this Certificate are shown below.

• MORTALITY AND EXPENSE RISK CHARGE: An annual charge of 0.85% of the assets in each Sub-account of the Variable Account held for this Certificate.

• ADMINISTRATIVE EXPENSE CHARGE: Currently, there is no Administrative Expense Charge. However, prior to the Annuity Date, we reserve the right to impose an annual Administrative Expense Charge of 0.15% of the assets in each Sub-account of the Variable Account held for this Certificate.

• TRANSFER FEE: $10.00 for each transfer in excess of ten transfers in any Certificate Year, or 2% of the amount of transfer if such amount is less than $10.00.

• ANNUAL CONTRACT CHARGE: $25.00, or 2% of the Account Value, whichever is less.

OTHER CONDITIONS - Current Purchase Payment minimum and maximum amounts and the Annuity Form at the time we issued this Certificate are:

• MINIMUM INITIAL PURCHASE PAYMENT:     $5,000.00

• PER PAYMENT MINIMUM:                                   $1,000.00

• MAXIMUM TOTAL PURCHASE PAYMENT: $1,000,000.00

• ANNUITY DATE: The date on which annuity payments are determined. The Annuity Date is the first day of the month immediately preceding the Commencement of Annuity Payment Date.

• COMMENCEMENT OF ANNUITY PAYMENT DATE: The date on which annuity payments will start. Page 2 of the Certificate Data indicates the date that you selected, or if no date specified, the latest date on which payments can start.

(You may change the Commencement of Annuity Payment Date any time up until 30 days prior to the Annuity Date.)

• ANNUITY FORM: Life Annuity with a Period Certain of 120 Months.

(You may choose any of the Annuity Forms outlined in the Certificate up until 30 days prior to the Annuity Date. Prior to your selection, the above named Annuity Form will be in effect.)

For additional information on Purchase Payments and the timing or forms of annuity payment, please refer to the Purchase Payment and Annuity provisions of the Certificate.

SERVICE CENTER: Transamerica Occidental Life Insurance Company Schwab Annuity Service Center P.O. Box 7785 San Francisco, California 94120-9420 1-(800) 838-0650

END OF CERTIFICATE DATA

GNC-37-193 Page 2A

SCHEDULE A

The following is a list of the Sub-accounts of the Variable Account available under this Certificate at the time of issue.

Federated Equity Growth & Income Fund

Federated U.S. Government Bond Fund

INVESCO VIF-High Yield Portfolio

INVESCO VIF-lndustrial Income Portfolio

INVESCO VIF-Total Return Portfolio

Janus Aspen Aggressive Growth Portfolio

Janus Aspen Growth Portfolio

Janus Aspen Worldwide Growth Portfolio

Lexington Emerging Markets Fund

Montgomery Variable Series: Growth Fund

Schwab Money Market Portfolio

SteinRoe Capital Appreciation Fund

Strong Discovery Fund II

TCI Growth Portfolio

TCI International Portfolio

Van Eck Gold and Natural Resources Fund

Fixed Account - 2 Yr.

Fixed Account - 4 Yr.

GNC-37-193 Page 2B

TABLE OF CONTENTS

	PAGE
CERTIFICATE DATA	2& 2A
SCHEDULE A	2B
DEFINITION OF TERMS	5
PURCHASE PAYMENT PROVISIONS
Payment and Acceptance of Purchase Payments	7
Allocation of Net Purchase Payments	7
Initial Purchase Payment	7
Flexibility of Purchase Payments	7
Change in Purchase Payment Allocation	8
Purchase Payment Limitations	8
NON-FORFEITURE PROVISIONS
Continuation on Paid-up Basis	8
Annuitization of Paid-up Certificate	8
Surrender of Paid-up Certificate	8
THE VARIABLE ACCOUNT
The Variable Account	9
Sub-accounts	9
Variable Accumulation Units	10
Net Investment Factor	10
TRANSFER PROVISIONS
Transfers Between Sub-accounts	11
Transfer Allocation	11
Minimum Transfer Amount	11
Transfer Limitations	11
Effect on Variable Accumulation Units	11
WITHDRAWAL PROVISIONS
Partial Withdrawals	11
Withdrawal Allocation	11
Minimum Withdrawal Amount	11
Withdrawal Limitations	11
Effect on Variable Accumulation Units	12
SURRENDER PROVISIONS	12
PREMIUM TAXES, CHARGES, FEES AND SERVICES
Premium Taxes	12
Mortality and Expense Risk Charge	12
Administrative Expense Charge	12
Transfer Fee	12
Annual Contract Charge	12
Statements of Account	12

GNC-37-193 Page 3

	PAGE
ANNUITY PROVISIONS
Fixed Annuities	13
Date Annuity Payments Start	13
Change of Annuity Date	13
Change of Annuity Form	13
Amount of Monthly Annuity	13
Minimum Amount of Monthly Annuity	13
Change of Payee	13
ANNUITY FORMS
Life Annuity	14
Life and Contingent Annuity	14
Life Annuity with Period Certain	14
Joint and Survivor Annuity	14
Other Forms of Payment	14
DEATH BENEFIT PROVISIONS
In General	15
If Annuitant Dies Before Annuity Starts	15
If Owner Dies Before Annuity Starts	15
If Annuitant Dies After Annuity Starts	16
If Owner Dies After Annuity Starts	16
Joint Ownership	16
Proof of Death	16
BENEFICIARY PROVISIONS
Designation of Beneficiary	16
Change of Beneficiary	16
Death of Beneficiary	16
Successive Beneficiaries	16
GENERAL PROVISIONS
Entire Contract	17
Misstatement of Age and Sex	17
Proof of Existence and Age	17
Changes in the Contract and Certificate	17
Incontestability	17
Assignment of the Certificate	17
Payments by the Company	17
Delay of Payment or Transfer	17
Facility of Payment	18
Minimum Benefits	18
Protection of Benefits/Proceeds	18
Notices and Directions	18
Termination of Contract	18
Non-Participating	18
Voting Rights	18
APPENDIX - ANNUITY RATE TABLES	18

GNC-37-193 Page 4

DEFINITION OF TERMS

Account Value - The total dollar amount of all Variable Accumulation Units under each Sub-account of the Variable Account held for this Certificate prior to the Annuity Date. The Account Value prior to 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, if any; less

(e) any applicable Transfer Fees; less

(f) reductions for the Annual Contract Charge deducted on the last business day of each Certificate Year; and less

(g) withdrawals from the Sub-accounts.

Age - The age nearest birthday.

Annuitant - The person named on the Certificate Data page. The Annuitant is 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 this Certificate has been issued, except upon the Annuitant’s death prior to the Annuity Date if a Contingent Annuitant has previously been named.

Annuitant’s Beneficiary - - The person or persons named on the Certificate Data page, or on a beneficiary designation form. The Annuitant’s Beneficiary is the person(s) who may receive the Death Benefit under the Certificate, 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 (b) the Annuitant dies after the Annuity Date under an Annuity Form containing a period certain option.

Annuity Date - Unless changed as provided under the Annuity Provisions, the Annuity Date is the date on which the Account Value, less any applicable premium taxes, is applied to determine the amount of monthly annuity payments under the Annuity Form chosen by the Owner. The date annuity payments start is the Commencement of Annuity Payment Date shown on the Certificate Data page.

Annuity Issue Date - The date the Certificate becomes effective. The Annuity Issue Date is shown on the Certificate Data page.

Calendar Year - A one-year period beginning January 1 and ending December 31.

Cash Value - The amount payable to the Owner if the Certificate is surrendered on or before the Annuity Date. The Cash Value will be equal to the Account Value, less any applicable premium taxes.

Certificate - This Certificate of Participation which evidences the Owner’s coverage and participation under the Contract.

Certificate Anniversary - The same month and day as the Annuity Issue Date in each Calendar Year after the Calendar Year in which the Annuity Issue Date occurs.

Certificate Year - The 12-month period starting on the Annuity Issue Date and ending with the day before the Certificate Anniversary, and each 12-month period thereafter.

Code - The U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder.

GNC-37-193 Page 5

Contingent Annuitant - The person, if any, named on the Certificate Data page. The Contingent Annuitant is the person who: (a) becomes the Annuitant if the Annuitant dies before the Annuity Date; or (b) may receive benefits under the Certificate if the Annuitant dies after the Annuity Date under an Annuity Form containing a contingent annuity option. The Contingent Annuitant may be changed by the Owner at any time while the Annuitant is living and before the Annuity Date.

Death Benefit - The benefit that may be payable by us to the Owner’s or Annuitant’s Beneficiary, as applicable, if the Owner or Annuitant dies before the Annuity Date. The Death Benefit will be equal to the greater of: (a) the Account Value; or (b) the sum of all Purchase Payments paid by the Owner, less the sum of all withdrawals and any applicable premium taxes. The Death Benefit will be determined as of the end of the Valuation Period during which the last of the following items is received by us at our Service Center: (i) proof of death of the Owner or Annuitant; and (ii) the written notice of the method of settlement elected by the Beneficiary.

Free Look Period - The period described in the Right To Cancel provision during which the Certificate may be canceled and treated as void.

Net Investment Factor - A formula 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.

Owner (Joint Owners) - The person or persons named on the Certificate Data page. The Owner is the person who, while living, controls all rights and benefits under the Certificate. Joint Owners must be husband and wife as of the Annuity Issue Date. Joint Owners own the Certificate equally with the right of survivorship. The right of survivorship means that if a Joint Owner dies, his or her interest in the Certificate will pass to the surviving Joint Owner in accordance with the Death Benefit Provisions. This Certificate may not have Joint Owners if the Status shown on the Certificate Data page is Qualified.

Owner’s Beneficiary - The person or persons, if any, named on the Certificate Data page, or on a beneficiary designation form. 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 Certificate has Joint Owners, the surviving Joint Owner will be deemed the Owner’s Beneficiary.

Portfolio - An investment portfolio underlying one of the Sub-accounts of the Variable Account.

Purchase Payment - An amount paid to us as consideration for the benefits provided under the Certificate.

Status (Qualified and Non-Qualified) - The Status shown on the Certificate Data page. This Certificate has a Qualified status [i.e, Qualified IRA or Qualified 401 (a)] if it is issued in connection with a retirement plan or program which receives favorable federal income tax treatment under the Code. Any Certificate not qualified to receive such favorable federal income tax treatment under the Code has a Non-Qualified status.

Sub-account - A subdivision of the Variable Account investing solely in shares of one of the Portfolios. The investment performance of each Sub-account is linked directly to the investment performance of the underlying Portfolio.

GNC-37-193 Page 6

Valuation Day - Any day that the New York Stock Exchange is open for trading and that is a regular business day of our Service Center.

Valuation Period - The time interval between the closing (generally 4:00 p.m. Eastern Time) of the New York Stock Exchange on consecutive Valuation Days.

Variable Account - The Variable Account (Separate Account VA-5) is a separate account established and maintained by us for the investment of a portion of our assets pursuant to Section 10506 of the California Insurance Code. The Variable Account contains several Sub-accounts to which Net Purchase Payments may be allocated.

Variable Accumulation Unit - A unit of measure used to determine the Account Value prior to the Annuity Date. The value of a Variable Accumulation Unit varies with each Sub-account

We, us, our and Company - Transamerica Occidental Life Insurance Company, a stock insurance company, with its Home Office in Los Angeles, California.

PURCHASE PAYMENT PROVISIONS

Payment and Acceptance of Purchase Payments - All Purchase Payments must be paid to us at our Service Center.

Allocation of Net Purchase Payments - Net Purchase Payments may be allocated to one or more Sub-accounts of the Variable Account, as directed by the Owner. The Variable Account is described in detail on Pages 9 and 10.

Initial Purchase Payment - The Initial Purchase Payment will be credited within two business days of the later of: (a) the date we receive sufficient information, in a form and manner acceptable to us, in order to issue this Certificate; or (b) the date our Service Center receives the Initial Purchase Payment.

The allocation of the Initial Purchase Payment to the Sub-accounts must be in whole number percentages and must provide a minimum allocation of at least 10% of the Initial Purchase Payment to each Sub-account of the Variable Account selected by the Owner. The allocation percentages will be further subject to a minimum dollar amount of $1,000 to each Sub-account chosen.

The Net Purchase Payment (derived from the Initial Purchase Payment) will first be allocated to the Money Market Sub-account and will remain in that Sub-account until the end of the Free Look Period. After the end of the Free Look Period, the total dollar value of the Variable Accumulation Units held in the Money Market Sub-account attributable to such Net Purchase Payment will be allocated to the Sub-accounts selected by the Owner.

Flexibility of Purchase Payments - Additional Purchase Payments to this Certificate may be paid by the Owner at any time after the Initial Purchase Payment and before the Annuity Date. Each Net Purchase Payment (derived from additional Purchase Payments) will be credited on the date such payment is received by us at our Service Center, provided that: (a) such additional Purchase Payment is not less than the Per Payment Minimum shown on the Certificate Data page; and (b) any portion of the Net Purchase Payment allocated to a Sub-account of the Variable Account with a zero balance, may not be less than $1,000. Each Net Purchase Payment will be subject to the allocation percentages in effect at the time of receipt of such Purchase Payment. We reserve the right to return to the Owner any additional Purchase Payment which does not meet the conditions described in (a) and (b) of this paragraph.

GNC-37-193 Page 7

Change in Purchase Payment Allocation - The Owner may, at any time before the Annuity Date, change the allocation percentages in effect for future Purchase Payments. The allocation percentages must be in whole number percentages and must provide a minimum allocation of at least 10% of future Purchase Payments to each Sub-account of the Variable Account selected by the Owner.

The change in allocation will be processed as of the date the request for such change, in a form and manner acceptable to us, is received at our Service Center. The change in allocation will take effect with the first Purchase Payment received with or after receipt of the notice of change and will continue in effect for future Purchase Payments until subsequently changed.

Purchase Payment Limitations - In no event may the sum of all Purchase Payments paid during any taxable year exceed the limits imposed by any applicable federal or state law, rules or regulations. In no event may the total of all Purchase Payments paid during the life of the Certificate exceed the Maximum Total Purchase Payment amount, shown on the Certificate Data page, without our approval.

We reserve the right to return to the Owner any portion of a Purchase Payment which would cause the total of all Purchase Payments paid to the Certificate to exceed the Maximum Total Purchase Payment amount shown on the Certificate Data page.

NON-FORFEITURE PROVISIONS

Continuation on Paid-up Basis - If the Owner stops making Purchase Payments, the Certificate will be continued on a paid-up basis to the Annuity Date. This means that the provisions of the Certificate will continue in full force and effect, and the Owner may exercise any of the rights granted by the Certificate until the Annuity Date or, if earlier, as of the date the Certificate is surrendered.

Annuitization of Paid-up Certificate - The paid-up Certificate may be applied to any Annuity Form offered in this Certificate. The Account Value will be used in determining the amount of any paid-up annuity benefit.

Surrender of Paid-up Certificate - On or before the Annuity Date, the Owner may surrender the paid-up Certificate to us for its Cash Value. Surrender of the paid-up Certificate will be subject to the Surrender Provisions on Page 12.

GNC-37-193 Page 8

THE VARIABLE ACCOUNT

The Variable Account - The Variable Account (Separate Account VA-5) is a separate account established and maintained by us for the investment of a portion of our assets pursuant to Section 10506 of the California Insurance Code. We will use the assets of the Variable Account to buy shares in the various Portfolios. Net Purchase Payments allocated to one or more Sub-accounts of the Variable Account will become a part of Separate Account VA-5.

We are not, and do not claim to be, a trustee with respect to the Variable Account, the assets of which are owned absolutely and exclusively by us. The assets in the Variable Account shall not be chargeable with liabilities arising out of any other business of the Company, except to the extent that they exceed the reserves and other liabilities of the Variable Account. The assets of the Variable Account maintained under this Certificate and under all other contracts and certificates of this type will be kept separate from the assets held in our general account and are not subject to the claims of the general creditors of the Company. Income, gains and losses, whether or not realized, from assets in the Variable Account are credited to, or charged against, the Variable Account without regard to other income, gains or losses of the Company.

We will hold assets in the Variable Account with a value at least equal to the total liability for the Variable Account under this and all other contracts and certificates of this type. To the extent those assets do not exceed this total, we will use them to support only those contracts and certificates and will not use those assets to support any other business. We may use any excess over this amount at our sole discretion.

For all purposes under the Certificate, we will determine the value of the assets in the Variable Account at the end of each Valuation Day. To determine the value of an asset on a day that is not a Valuation Day, we will use the value of that asset as of the end of the next Valuation Day.

Sub-accounts - The Variable Account contains several Sub-accounts, each of which invests solely in the shares of a specified Portfolio. Income, gains and losses, whether or not realized, from assets in the Sub-accounts are credited to, or charged against, the Sub-accounts without regard to other income, gains or losses of the Company. The Sub-accounts available under this Certificate are shown in Schedule A.

We cannot and do not guarantee that any of the Sub-accounts of the Variable Account will always be available for investment. We reserve the right, subject to compliance with applicable federal or state law, rules or regulations, to make additions to, deletions from, or substitutions for, the Sub-accounts, or the Portfolio shares held by a Sub-account of the Variable Account if such Portfolio shares are no longer available for investment, or if we determine that continued investment in such Portfolio would be inappropriate or inconsistent with the purposes of the Variable Account. We will not substitute any shares attributable to the Owner’s interest in a Sub-account without advance written notice to the Owner and prior approval of the Securities and Exchange Commission, to the extent required by the Investment Company Act of 1940 (the “1940 Act”). Nothing contained herein shall prevent the Variable Account from purchasing other securities for other series or classes of variable contracts, or from effecting an exchange between series or classes of variable contracts on the basis of requests made by the Owner.

We reserve the right to establish additional Sub-accounts, each of which would invest solely in shares of other Portfolios. If we decide to make those Sub-accounts available under this Certificate, we will send written notification to the Owner. The Owner may instruct us to allocate future Purchase Payments to those Sub-accounts, or transfer all or a portion of the Account Value to those Sub-accounts, subject to the terms and conditions described under the Transfer Provisions on Page 11 and by the Portfolio.

In the event of any addition, deletion or substitution of any Sub-account of the Variable Account, we may, by appropriate endorsement, make such changes to the Certificate as may be necessary to reflect such addition, deletion or substitution. If we deem it to be in the best interest of Owners who have voting rights, the Variable Account may be: (a) operated as a management company under the 1940 Act or any other form permitted by law; (b) de-registered under the 1940 Act in the event such registration is no longer required; or (c) combined with one or more other separate accounts.

GNC-37-193 Page 9

Variable Accumulation Units - Net Purchase Payments and transfers allocated to a Sub-account are used to purchase Variable Accumulation Units in that Sub-account. The number of Variable Accumulation Units to be credited to each Sub-account will be determined by dividing the portion of each Net Purchase Payment or transfer allocated to the Sub-account by that Sub-account’s Variable Accumulation Unit value for the Valuation Day on which the Purchase Payment was received at the Service Center or for the Valuation Day on which the transfer was made.

The Net Purchase Payment (derived from the Initial Purchase Payment) allocated to the Money Market Sub-account during the Free Look Period, will be credited with Variable Accumulation Units within two business days of the later of: (a) the date we receive sufficient information, in a form and manner acceptable to us, in order to issue this Certificate; or (b) the date our Service Center receives the Initial Purchase Payment. In the case of any subsequent Purchase Payment, we will credit Variable Accumulation Units for that Purchase Payment as of the date such payment is received by us at our Service Center, subject to the conditions described under the Flexibility of Purchase Payments provision.

The value of a Variable Accumulation Unit for each Sub-account at the end of any Valuation Period 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.

Net Investment Factor - For any Sub-account, the Net Investment Factor for a Valuation Period is determined by dividing (a) by (b), then subtracting (c).

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 of the end of the Valuation Period for tax reserves for realized and unrealized capital gains, if any.

Where (b) is

The net asset value per share held in the Sub-account as of the end of the last prior Valuation Period.

Where (c) is

The daily Mortality and Expense Risk Charge times the number of calendar days in the current Valuation Period; plus

The daily Administrative Expense Charge, if any, times the number of calendar days in the current Valuation Period.

GNC-37-193 Page 10

TRANSFER PROVISIONS

Transfers Between Sub-accounts - Before the Annuity Date, the Owner may transfer all or any portion of the Account Value to one or more Sub-accounts of the Variable Account, subject to the provisions described below.

Transfer Allocation - Transfers will generally be effective as of the date the request for the transfer, in a form and manner acceptable to us, is received at our Service Center. The transfer request must specify: (a) the Sub-account(s) from which the transfer is to be made; (b) the amount of the transfer, subject to the minimum transfer amount described below; and (c) the Sub-account(s) to receive the transferred amount.

Minimum Transfer Amount - The minimum amount that may be transferred is the lesser of $1,000, or the entire value of the Sub-account from which the transfer is being made.

Transfer Limitations - The Owner may make any number of transfers prior to the Annuity Date. However, each transfer in excess of ten during any Certificate Year will be subject to a Transfer Fee, as described on Page 12. If a transfer amount reduces the value of the Sub-account from which the transfer was made to less than $1,000, we reserve the right to transfer the remaining value in that Sub-account in accordance with the transfer instructions provided by the Owner. We also reserve the right to limit the number of transfers made during any Certificate Year.

Effect on Variable Accumulation Units - Transfers within the Variable Account will result in the purchase and/or cancellation of Variable Accumulation Units having a total value equal to the dollar amount being transferred to or from a particular Sub-account. The purchase and/or cancellation of such units generally shall be made using the Variable Accumulation Unit value of the applicable Sub-account on the Valuation Day on which the transfer is effective.

WITHDRAWAL PROVISIONS

Partial Withdrawals - Before the Annuity Date, the Owner may withdraw a portion of the Account Value for cash, subject to any withdrawal limitations imposed under any applicable federal or state law, rules or regulations, and further subject to the provisions described below.

Withdrawal Allocation - Withdrawals will generally be processed as of the date the request for the withdrawal, in a form and manner acceptable to us, is received at our Service Center. The withdrawal request must specify the amount of the withdrawal or the percentage of value to be withdrawn from each Sub-account, subject to the minimum withdrawal amount described below. The Owner may direct a withdrawal to be made from a specific Sub-account or taken pro rata from all Sub-accounts. If the Owner does not specify the Sub-account(s) from which the withdrawal is to be made, the withdrawal will be taken pro rata from all Sub-accounts with current values.

Minimum Withdrawal Amount - The minimum amount that may be withdrawn is the lesser of $1,000, or the entire value of the Sub-account from which the withdrawal is being made.

Withdrawal Limitations - The Owner may make any number of withdrawals prior to the Annuity Date. If the requested withdrawal reduces the value of the Sub-account from which the withdrawal was made to less than $1,000, we reserve the right not to allow the withdrawal.

We will further notify the Owner if the requested withdrawal would reduce the Account Value to less than $2,000. The Owner will have 10 days from the date our notice is given or mailed to: (a) withdraw a lesser amount (subject to a minimum withdrawal amount of $1,000), leaving an Account Value of at least $2,000; or (b) surrender the Certificate for its Cash Value. If, after the expiration of the 10 day period, no election is received by us from the Owner, the withdrawal request will be considered null and void, and no withdrawal will be processed.

GNC-37-193 Page 11

Effect on Variable Accumulation Units - Withdrawals from the Variable Account will result in the cancellation of Variable Accumulation Units having a total value equal to the dollar amount being withdrawn from a particular Sub-account. The cancellation of such units generally shall be made using the Variable Accumulation Unit value of the applicable Sub-account as of the end of the Valuation Day on which the withdrawal is processed.

SURRENDER PROVISIONS

Surrender of Certificate - On or before the Annuity Date, the Owner may surrender the Certificate to us for its Cash Value. Surrender of the Certificate will be subject to any withdrawal limitations imposed under applicable federal or state law, rules or regulations.

The Owner’s request for surrender will generally be processed as of the date the request for surrender, in a form and manner acceptable to us, is received at our Service Center. Payment of the Cash Value to the Owner will be in full settlement of our liability under the Certificate.

PREMIUM TAXES, CHARGES, FEES AND SERVICES

Premium Taxes - The amount of any applicable premium tax imposed on amounts relating to this Certificate may be withdrawn at the time such tax is incurred. For purposes of this Certificate, premium taxes include retaliatory taxes or other similar taxes.

Mortality and Expense Risk Charge - The Company imposes a charge as compensation for bearing certain mortality and expense risks under the Variable Account. The Mortality portion of the charge compensates us for the mortality risk inherent in the Death Benefit and for the mortality risk inherent with an annuity. The Expense portion of the charge compensates us for the possibility that charges and fees for administrative expenses which are guaranteed for the life of the Certificate may be insufficient to cover actual costs of issuing and administering the Certificate.

The amount of the daily Mortality and Expense Risk Charge is equal to 0.002319%, corresponding to an annual charge of 0.85%, of the assets in each Sub-account held for this Certificate. The Mortality and Expense Risk Charge will be deducted on a daily basis from the assets in each such Sub-account and will remain constant for the life of the Certificate.

Administrative Expense Charge - Prior to the Annuity Date, we reserve the right to impose a daily Administrative Expense Charge on the assets in each Sub-account held for this Certificate. The Administrative Expense Charge compensates us for some of the costs incurred in administering the Certificate and the Variable Account. If imposed, the amount of the daily Administrative Expense Charge will be equal to 0.000411%, corresponding to an annual charge of 0.15%, of the assets in each Sub-account held for this Certificate.

Transfer Fee - Prior to the Annuity Date and for each transfer in excess of ten transfers in any Certificate Year, a Transfer Fee of $10.00, or 2% of the amount of the transfer, whichever is less, will be deducted from the amount of the transfer prior to its reallocation. If transfers are made from two or more Sub-accounts on the same day, the Transfer Fee will be withdrawn pro rata from the amount of the transfers.

Annual Contract Charge - Prior to the Annuity Date, an Annual Contract Charge of $25.00, or 2% of the Account Value, whichever is less. This charge will first be deducted from the Money Market Sub-account. If the Money Market Sub-account is insufficient to cover the charge, any remaining balance due will be deducted on a pro rata basis from all other Sub-accounts with current values. The charge will be deducted on the last business day of each Certificate Year.

Statements of Account - At least once during each Certificate Year, we will send the Owner a Statement of Account reflecting the value of the Certificate. Statements of Account will cease to be provided to the Owner after the Annuity Date.

GNC-37-193 Page 12

ANNUITY PROVISIONS

Fixed Annuities - All annuities provided under this Certificate will be payable in fixed-dollar amounts. This means that monthly annuity payments will remain the same in accordance with the terms of the Annuity Form selected by the Owner.

Date Annuity Payments Start - Annuity payments will be made on a monthly basis starting on the first day of the month immediately following the Annuity Date, if the Annuitant is living and the Cash Value of this Certificate has not been paid. Unless otherwise changed, the Annuity Form under which the annuity will be paid will be a Life Annuity with a Period Certain of 120 Months. Once payments start under an Annuity Form, no change in the form of payment will be allowed.

Change of Annuity Date - The Annuity Date may be changed by the Owner upon 30 days advance notice to our Service Center. The revised Annuity Date may not be earlier than the first day of the calendar month coinciding with or next following the first Certificate Anniversary, but in no event later than the first day of the calendar month immediately preceding the month of the Annuitant’s 85th birthday.

Change of Annuity Form - - The Owner may change the Annuity Form to any other form of payment described on Page 14 of this Certificate. The election of the new Annuity Form must be received at our Service Center at least 30 days prior to the currently elected Annuity Date.

Amount of Monthly Annuity - The amount of monthly annuity payments will be determined as of the Annuity Date. We will apply the Account Value as a single premium, based on the Annuity Form and the Ages of the Annuitant and any other measuring life, under the appropriate guaranteed annuity rate tables contained in the Appendix, or under our then current single premium immediate annuity rates, if such current rates provide a higher amount of monthly annuity payments than those provided under the guaranteed annuity rates.

Minimum Amount of Monthly Annuity - If the amount of the first monthly annuity payment would result in a monthly annuity of less than $150, or if the Account Value is less than $5,000, we reserve the right to offer a less frequent mode of payment or make a cash payment to the Owner equal to the Cash Value. Such cash payment will be in full settlement of our liability under the Certificate.

Change of Payee - - Except as provided in the following paragraph, upon written notice to us at our Service Center, the Owner may, at any time during the annuitization period, change the payee of annuity benefits being provided under the Certificate. The effective date of the change in payee will be the later of: (a) the date we receive the written request for such change; or (b) the date specified by the Owner.

If the Status shown on the Certificate Data page is Qualified, the Owner may not change the payee of annuity benefits to be provided under the Certificate before or after the Annuity Date.

GNC-37-193 Page 13

ANNUITY FORMS

Benefits can be provided under any Annuity Form described below, subject to any applicable federal or state law, rules or regulations.

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 made just before the Annuitant’s death. There is no death benefit under this Annuity Form.

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. If the named Contingent Annuitant is living after the Annuitant dies, payments will continue 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 50% or 66 2/3% thereof. Payments will end with the payment made just before the death of the Contingent Annuitant. If the Contingent Annuitant does not survive the Annuitant, payments will end with the payment made just before the death of the Annuitant. Once payments start under this Annuity Form, the person named as Contingent Annuitant, for the purpose of being the measuring life, may not be changed.

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, 180 or 240 months, but in no event may such period exceed the life expectancy of the Annuitant. If the Annuitant dies during the period certain, the remaining period certain payments will generally be made to the Annuitant’s Beneficiary.

After the Annuitant’s death, the Owner 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. If the Annuitant dies after all payments have been made for the period certain, payments will cease with the payment made just before the Annuitant’s death.

Joint and Survivor Annuity - Payments start on the first day of the month immediately following the Annuity Date, if the Annuitant and Joint Annuitant are both living. After either the Annuitant or Joint Annuitant dies, payments will continue for 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 50% or 66 2/3% thereof. Payments end with the payment made just before the death of 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.

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 federal or state law, rules or regulations.

GNC-37-193 Page 14

DEATH BENEFIT PROVISIONS

In General - Notwithstanding any provision of this Certificate to the contrary, no payment of benefits provided under the Certificate will be allowed that does not satisfy the requirements of Code Section 72(s), as amended from time to time.

If Annuitant Dies Before Annuity Starts - Upon receipt of proof of death of the Annuitant while the Owner is living, this Certificate is in force and before the Annuity Date, and subject to any applicable federal or state law, rules or regulations, we will pay the Death Benefit provided under the Certificate to the Annuitant’s Beneficiary in a cash payment, unless there is a surviving Contingent Annuitant.

In lieu of receiving a cash payment, the Annuitant’s Beneficiary may receive the Death Benefit in the form of an annuity from us, under any of the Annuity Forms offered in this Certificate, unless a settlement agreement to the contrary is in effect.

If a Contingent Annuitant has been named by the Owner, then upon the death of the Annuitant before the Annuity Date while the Owner is living, the Contingent Annuitant, if alive, will become the Annuitant. Any Death Benefit normally paid to the Annuitant’s Beneficiary will not be payable if the named Contingent Annuitant is alive at the time of the Annuitant’s death.

If the Owner is a corporation or other non-individual, or if the deceased Annuitant is the Owner, the death of the Annuitant will be treated as the death of the Owner and the Certificate will be subject to the provisions described below.

If Owner Dies Before Annuity Starts - Notwithstanding any other provision of this Certificate, if the 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, provided that; (1) such annuity is distributed in substantially equal installments over the life of such Owner’s Beneficiary or over a period not extending beyond the life expectancy of such Owner’s Beneficiary; and (2) such distributions begin not later than one year after the Owner’s date of death.

Notwithstanding (a) and (b) above, if the sole Owner’s Beneficiary is the deceased Owner’s surviving spouse, then such spouse may elect, within the one year period after the Owner’s date of death, to continue the Certificate under the same terms as before the Owner’s death. Upon receipt of such election from the spouse, in a form and manner acceptable to us, at our Service Center: (1) all rights of the spouse as Owner’s Beneficiary under the Certificate in effect prior to such election will cease; (2) the spouse will become the Owner of the Certificate 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 Certificate or allowed by us will belong to the spouse as Owner of the Certificate. This election will be deemed to have been made by the spouse if such spouse makes a Purchase Payment to the Certificate 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 Certificate.

GNC-37-193 Page 15

If Annuitant Dies After Annuity Starts - 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 Owner Dies After Annuity Starts - 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 Owner’s rights granted under the Certificate or allowed by us will pass to the Owner’s Beneficiary.

Joint Ownership - For purposes of this section, if the Certificate 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 Certificate.

Proof of Death - Proof of death must be submitted to us at our Service Center before any benefits due under the Certificate are paid. Appropriate forms will be made available upon request.

For purposes of this Certificate, proof of death means: (a) a copy of a certified death certificate; (b) a copy of a certified decree of a court of competent jurisdiction as to a finding of death; (c) a written statement by a medical doctor who attended the deceased; or (d) any other proof satisfactory to us.

BENEFICIARY PROVISIONS

Designation of Beneficiary - Unless changed as provided below or as otherwise required by law, the Owner’s and Annuitant’s Beneficiary will be as shown on the Certificate Data page. Unless otherwise indicated, if more than one Owner’s or Annuitant’s Beneficiary is designated, then each such Beneficiary so designated will share equally in any benefits and/or rights granted by the Certificate to such Beneficiary or allowed by us. If either the Owner’s or Annuitant’s Beneficiary is a partnership, any benefits will be paid to the partnership as it existed at the time of the Owner’s or Annuitant’s death. We may rely on an affidavit by any responsible person to identify a Beneficiary or verify the non-existence of a Beneficiary not identified by name.

Change of Beneficiary - The Owner may change the Beneficiaries by giving written notice to us at our Service Center. We will not be bound by any change of Beneficiary unless it is made in writing and recorded by us at our Service Center. A Beneficiary designated irrevocably may not be changed without the written consent of that Beneficiary, except to the extent required by law.

Death of Beneficiary - The interest of any Beneficiary who dies before the Owner or Annuitant will terminate at the death of such 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 to such Beneficiary, unless the Owner has given us written notice of some other arrangement. The benefits will then be paid as though the Beneficiary had died before the Owner or Annuitant.

Successive Beneficiaries - If there is no named Owner’s Beneficiary alive at the time of the Owner’s death, then the Owner’s Beneficiary will be the Annuitant, if living, or the Annuitant’s Beneficiary if the Annuitant is not living. If there is no surviving Annuitant or Annuitant’s Beneficiary, any benefits payable will be paid to the Owner’s estate.

GNC-37-193 Page 16

GENERAL PROVISIONS

Entire Contract - This Certificate and the Group Annuity Contract, under which the Certificate has been issued, make the entire contract.

Misstatement of Age and Sex - If the age or sex of the Annuitant and/or of any other measuring life has been misstated, the monthly annuity payments payable under this Certificate will be whatever the Account Value would provide on the basis of the correct Age or sex of the Annuitant and/or of any other measuring life, if any, on the Annuity Date.

Any underpayment by us, as a result of such misstatement, will be paid in a lump sum on the next annuity payment by us, and any overpayment may be deducted from the current or succeeding payments.

Proof of Existence and Age - Before making any payment under this Certificate, we may require proof of the existence and proof of age of the Annuitant and/or any other payee, or any other information as we may deem necessary in order to provide benefits under the Certificate.

Changes in the Contract and Certificate - Only two authorized officers of the Company, acting together, have the authority to bind us or to make any changes in the Contract and this Certificate and then only in writing. We will not be bound by any promise or representation made by any other person or persons.

We may change or amend the Contract and this Certificate at any time without the consent of the Contractholder and the Owner if such change or amendment is necessary for the Contract and Certificate to comply with any changes in the Code so as to continue treatment of the Contract and this Certificate as an annuity, or as required by any other applicable federal or state law, rules or regulations.

Incontestability - This Certificate will be incontestable from the Annuity Issue Date.

Assignment of the Certificate - Except as permitted by law, no person has the right to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit under the Certificate. Any assignment will be subject to the limitations described in the following paragraph.

No assignment of any benefits to which the Owner is entitled under this Certificate will be binding on the Company, unless made in writing and given to us at our Service Center. We are not responsible for the adequacy of any assignment. However, when a written assignment permitted by law, is filed with us and recorded by us at our Service Center, the Annuitant, the Contingent Annuitant, the Owner’s Beneficiary and/or the Annuitant’s Beneficiary, will be subject to the assignment.

Payments by the Company - All sums payable by us under this Certificate are payable at our Service Center.

Delay of Payment or Transfer - We will generally pay amounts due from the Certificate within seven days of the date the request for such amount, in a form and manner acceptable to us, is received at our Service Center.

We reserve the right to delay the payment of any amount withdrawn or transfer request from the Variable Account due to: (a) the closure of the New York Stock Exchange for reasons other than usual weekends, holidays or if trading on such Exchange is restricted; (b) the existence of an emergency as defined by the Securities and Exchange Commission or the Commission requires that trading be restricted; or (c) the Securities and Exchange Commission permits delay for the protection of security holders.

Payments of amounts derived from Purchase Payments paid by check may also be delayed until the check has cleared the Owner’s bank.

GNC-37-193 Page 17

Facility of Payment - If a payee is a minor, or if we have reason to believe that a valid receipt cannot be given for any payment due to the payee, we will make the payment to the legal guardian or conservator of the payee, or to such other person(s) as we have reason to believe has assumed the custody and principal support of the payee.

Minimum Benefits - Any annuity, cash surrender or death benefits that may be available under this Certificate are not less than the minimum benefits required by any statute of the jurisdiction in which this Certificate is delivered.

Protection of Benefits/Proceeds - To the extent permitted by law, no payment of benefits or interest will be subject to the claim(s) of any creditor of any Owner, Annuitant or Beneficiary or to any claim or process of law against any Owner, Annuitant or Beneficiary.

Notices and Directions - We will not be bound by any authorization, direction, election or notice which is not in a form and manner acceptable to us and received at our Service Center.

Any written notice requirement by us to the Owner will be satisfied by our mailing of any such required written notice, by first-class mail, to the Owner’s last known address as shown on our records.

Termination of Contract - The Contract will terminate when all funds held under this and all other certificates issued under the Contract have been exhausted and all annuities have been paid.

Non-Participating - - The Contract under which this Certificate has been issued is classified as non-participating Contract. It does not participate in our profits or surplus, and therefore no dividends are payable under this Certificate.

Voting Rights - As long as this Certificate is in force, the Owner will have all applicable voting rights under the Portfolios.

APPENDIX

ANNUITY RATE TABLES

Applicability of Rates - The guaranteed annuity rates contained in Tables I, II and III will be used to provide a minimum guaranteed monthly annuity. The rates contained in this Certificate are for each $1,000 applied under the applicable Annuity Form and do not include any applicable premium tax. Any applicable premium tax will be withdrawn as described in the Premium Taxes provision.

Tables I and II, as applicable, will be used for all annuity purchases, subject to any limitations imposed under: (a) the retirement plan or program under which this Certificate is issued; or (b) applicable federal or state law, rules or regulations which restrict the use of such rates. If any federal or state law, rules or regulations prohibit the use of the rates provided in Tables I and II, then the annuity rates provided in Table III will be used.

Rates Not Shown - Any rates not shown in the Tables contained in this Certificate will be provided by the Company upon request.

GNC-37-193 Page 18

APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE I - MALE RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.76	3.76	3.75	3.73
41	3.80	3.79	3.78	3.76
42	3.84	3.83	3.82	3.80
43	3.88	3.87	3.86	3.83
44	3.93	3.92	3.90	3.87
45	3.97	3.96	3.94	3.91
46	4.02	4.01	3.98	3.95
47	4.07	4.06	4.03	3.99
48	4.13	4.11	4.08	4.03
49	4.18	4.16	4.13	4.08
50	4.24	4.21	4.18	4.13
51	4.30	4.27	4.23	4.17
52	4.37	4.33	4.29	4.22
53	4.43	4.40	4.34	4.28
54	4.51	4.46	4.41	4.33
55	4.58	4.53	4.47	4.38
56	4.66	4.60	4.54	4.44
57	4.74	4.68	4.60	4.50
58	4.83	4.76	4.67	4.56
59	4.92	4.84	4.75	4.61
60	5.02	4.93	4.83	4.68
61	5.12	5.02	4.90	4.74
62	5.23	5.12	4.99	4.80
63	5.34	5.22	5.07	4.87
64	5.47	5.33	5.16	4.93
65	5.60	5.45	5.25	5.00
66	5.74	5.57	5.35	5.06
67	5.90	5.69	5.45	5.12
68	6.06	5.83	5.55	5.18
69	6.24	5.97	5.64	5.24
70	6.43	6.11	5.74	5.30
71	6.63	6.26	5.84	5.35
72	6.84	6.42	5.95	5.41
73	7.07	6.58	6.05	5.45
74	7.32	6.74	6.14	5.50
75	7.58	6.91	6.24	5.54
76	7.86	7.08	6.33	5.57
77	8.16	7.26	6.42	5.61
78	8.48	7.43	6.50	5.63
79	8.83	7.61	6.58	5.66
80	9.20	7.79	6.65	5.68

Basis of Computation - The actuarial basis for the annuity rates contained in this Table I, is the 1983a Annuity Mortality Table for males, without projection, set back 5 years, with an interest rate of 3.5% per annum.

GNC-37-193 Page 19

APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE II - FEMALE RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.58	3.58	3.57	3.56
41	3.61	3.60	3.60	3.59
42	3.64	3.64	3.63	3.62
43	3.67	3.67	3.66	3.65
44	3.71	3.70	3.69	3.68
45	3.74	3.74	3.73	3.71
46	3.78	3.77	3.76	3.75
47	3.82	3.81	3.80	3.78
48	3.86	3.85	3.84	3.82
49	3.90	3.89	3.88	3.86
50	3.95	3.94	3.92	3.90
51	4.00	3.98	3.97	3.94
52	4.05	4.03	4.01	3.98
53	4.10	4.08	4.06	4.03
54	4.15	4.14	4.11	4.08
55	4.21	4.19	4.17	4.13
56	4.28	4.25	4.22	4.18
57	4.34	4.32	4.28	4.23
58	4.41	4.38	4.34	4.28
59	4.48	4.45	4.41	4.34
60	4.56	4.52	4.47	4.40
61	4.64	4.60	4.55	4.46
62	4.73	4.68	4.62	4.52
63	4.82	4.77	4.70	4.59
64	4.92	4.86	4.78	4.66
65	5.03	4.96	4.86	4.72
66	5.14	5.06	4.95	4.79
67	5.26	5.17	5.04	4.86
68	5.39	5.28	5.14	4.93
69	5.52	5.40	5.24	5.01
70	5.67	5.52	5.34	5.07
71	5.82	5.66	5.44	5.14
72	5.99	5.80	5.55	5.21
73	6.17	5.95	5.66	5.27
74	6.36	6.10	5.77	5.34
75	6.57	6.27	5.88	5.40
76	6.80	6.44	6.00	5.45
77	7.04	6.61	6.11	5.50
78	7.31	6.80	6.21	5.54
79	7.60	6.99	6.32	5.58
80	7.91	7.18	6.42	5.62

Basis of Computation - The actuarial basis for the annuity rates contained in this Table II, is the 1983a Annuity Mortality Table for females, without projection, set back 5 years, with an interest rate of 3.5% per annum.

GNC-37-193 Page 20

APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE III - UNISEX RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.69	3.69	3.68	3.66
41	3.73	3.72	3.71	3.70
42	3.76	3.76	3.75	3.73
43	3.80	3.79	3.78	3.76
44	3.84	3.83	3.82	3.80
45	3.88	3.87	3.86	3.83
46	3.93	3.92	3.90	3.87
47	3.97	3.96	3.94	3.91
48	4.02	4.01	3.98	3.95
49	4.07	4.06	4.03	4.00
50	4.13	4.11	4.08	4.04
51	4.18	4.16	4.13	4.08
52	4.24	4.22	4.18	4.13
53	4.30	4.27	4.24	4.18
54	4.37	4.33	4.29	4.23
55	4.44	4.40	4.35	4.28
56	4.51	4.47	4.42	4.34
57	4.59	4.54	4.48	4.40
58	4.66	4.61	4.55	4.45
59	4.75	4.69	4.62	4.51
60	4.84	4.77	4.69	4.57
61	4.93	4.86	4.77	4.64
62	5.03	4.95	4.85	4.70
63	5.14	5.05	4.93	4.76
64	5.25	5.15	5.02	4.83
65	5.37	5.26	5.11	4.89
66	5.50	5.37	5.20	4.96
67	5.64	5.49	5.29	5.03
68	5.79	5.61	5.39	5.09
69	5.95	5.75	5.49	5.15
70	6.12	5.88	5.59	5.22
71	6.31	6.03	5.69	5.28
72	6.50	6.18	5.80	5.34
73	6.71	6.33	5.90	5.39
74	6.93	6.49	6.01	5.44
75	7.17	6.66	6.11	5.49
76	7.43	6.84	6.21	5.53
77	7.71	7.01	6.31	5.57
78	8.01	7.19	6.40	5.61
79	8.33	7.37	6.49	5.63
80	8.67	7.56	6.57	5.66

Basis of Computation - The actuarial basis for the annuity rates contained in this Table III, is the 1983a Annuity Mortality Table, without projection, blended 60% males and 40% females, set back 5 years, with an interest rate of 3.5% per annum.

GNC-37-193 Page 21

CERTIFICATE OF PARTICIPATION

issued in connection with

Group Annuity Contract Form No. GNP-215-193

Separate Account Investments

Annuity Payable in Fixed Dollar Amounts

Non-Participating - No Annual Dividends

Home Office: 1150 South Olive Los Angeles, CA 90015-2211 A Stock Company GNC-37-193

EX-4.B

Exhibit 4(b)

Form of Policy (Individual)

Home Office: 1150 South Olive Los Angeles, CA 90015-2211 A Stock Company Transamerica Occidental Life Insurance Company

ANNUITANT	JOHN DOE	SPECIMEN	ANNUITY CONTRACT NUMBER
COMMENCEMENT OF ANNUITY PAYMENT DATE	FEBRUARY 1, 2044	JANUARY 1, 1994	ANNUITY ISSUE DATE

READ THIS CONTRACT CAREFULLY

This is a legal contract between the Owner and Transamerica Occidental Life Insurance Company (hereinafter referred to as “we”, “us”, “our” and the “Company”).

The Company will provide annuities and other benefits as set out in this contract, subject to its provisions.

RIGHT TO CANCEL - The Owner may cancel this contract by delivering or mailing written notice or sending a telegram to Transamerica Occidental Life Insurance Company, Schwab Annuity Service Center, P.O. Box 7785, San Francisco, California 94120-9420, and by returning the contract before midnight of the tenth day after receipt of the contract. Notice given by mail will be effective as of the date the notice is received. We will refund the greater of all Purchase Payments paid for this contract or the Account Value, within seven days after we receive such notice to cancel and the returned contract.

PAYMENTS AND VALUES PROVIDED UNDER THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. REFER TO PAGE 8 FOR ADDITIONAL INFORMATION ON THE VARIABLE ACCOUNT.

Signed for the Company at Los Angeles, California, to be effective as of the Annuity Issue Date.

TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY	CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

FLEXIBLE PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT

Separate Account Investments

Annuity Payable in Fixed Dollar Amounts

Non-Participating - No Annual Dividends

1-504 11-194 Page 1

CONTRACT DATA

CONTRACT INFORMATION
Annuity Contract Number:	Specimen	Annuity Issue Date:	January 1, 1994
Status of Annuity Contract:	Non-Qualified	Initial Purchase Payment:	$20,000.00
Commencement of Annuity Payment Date:	February 1, 2044
OWNER INFORMATION		ANNUITANT INFORMATION
Owner:	John Doe	Annuitant:	John Doe
Date of Birth: Tax ID Number:	January 1, 1959 999-99-9999	Date of Birth: Tax ID Number:	January 1, 1959 999-99-9999
Beneficiary:	N/A	Beneficiary:	Jane Doe
Beneficiary’s Date of Birth: Beneficiary’s Tax ID Number:	N/A N/A	Beneficiary’s Date of Birth: Beneficiary’s Tax ID Number:	January 1, 1959 999-99-9999
JOINT OWNER INFORMATION		CONTINGENT ANNUITANT INFORMATION
Joint Owner: Date of Birth: Tax ID Number:	Jane Doe January 1, 1959 999-99-9999	Contingent Annuitant: Date of Birth: Tax ID Number:	N/A N/A N/A

ALLOCATION OF INITIAL PURCHASE PAYMENT
Federated Equity Growth & Income Fund:	10	%
Federated U.S. Government Bond Fund:	10	%
INVESCO VIF-High Yield Bond Fund Portfolio:	10	%
INVESCO VIF-Industrial Income Portfolio:	10	%
INVESCO VIF-Total Return Portfolio:	10	%
Janus Aggressive Growth Portfolio:	00	%
Janus Aspen Growth Portfolio:	10	%
Janus Worldwide Growth Portfolio:	00	%
Lexington Emerging Markets Fund:	00	%
Montgomery Variable Series: Growth Fund:	00	%
Schwab Money Market Portfolio:	10	%
SteinRoe Capital Appreciation Fund:	10	%
Strong Discovery Fund II:	10	%
TCI Growth Portfolio:	10	%
TCI International Portfolio:	00	%
Van Eck Gold and Natural Resources Fund:	00	%
Fixed Account - 2 Yr:	00	%
Fixed Account - 4 Yr.:	00	%
Total:	100	%

* During the Free Look Period, your Initial Purchase Payment, not allocated to the Fixed Account, will be invested in the Schwab Money Market. It will then be allocated based upon the percentages you have elected (as shown above). You may change this allocation at any time.

This contract reflects the information with which your annuity contract has been set up. If you wish to change/correct any information on this page, please call us immediately at 1-800-838-0650.

CONTINUED ON THE FOLLOWING PAGE

Page 2

CONTRACT DATA (Continued)

CHARGES AND FEES - Current charges and fees at the time we issued this contract are shown below.

• MORTALITY AND EXPENSE RISK CHARGE: An annual charge of 0.85% of the assets in each Sub-account of the Variable Account held for this contract.

• ADMINISTRATIVE EXPENSE CHARGE: Currently, there is no Administrative Expense Charge. However, prior to the Annuity Date, we reserve the right to impose an annual Administrative Expense Charge of 0.15% of the assets in each Sub-account of the Variable Account held for this contract.

• TRANSFER FEE: $10.00 for each transfer in excess of ten transfers in any Contract Year, or 2% of the amount of transfer if such amount is less than $10.00.

• ANNUAL CONTRACT CHARGE: $25.00, or 2% of the Account Value, whichever is less.

OTHER CONDITIONS - Current Purchase Payment minimum and maximum amounts and the Annuity Form at the time we issued this contract are:

• MINIMUM INITIAL PURCHASE PAYMENT: $5,000.00

• PER PAYMENT MINIMUM: $1,000.00

• MAXIMUM TOTAL PURCHASE PAYMENT: $1,000,000.00

• ANNUITY DATE: The date on which annuity payments are determined. The Annuity Date is the first day of the month immediately preceding the Commencement of Annuity Payment Date.

• COMMENCEMENT OF ANNUITY PAYMENT DATE: The date on which-annuity payments will start Page 2 of the Contract Data indicates the date that you selected, or if no date specified, the latest date on which payments can start.

(You may change the Commencement of Annuity Payment Date any time up until 30 days prior to the Annuity Date.)

• ANNUITY FORM: Life Annuity with a Period Certain of 120 Months.

(You may choose any of the Annuity Forms outlined in the contract up until 30 days prior to the Annuity Date. Prior to your selection, the above named Annuity Form will be in effect.)

For additional information on Purchase Payments and the timing or forms of annuity payment, please refer to the Purchase Payment and Annuity provisions of the contract.

SERVICE CENTER:	Transamerica Occidental Life Insurance Company
	Schwab Annuity Service Center
	P. O. Box 7785
	San Francisco, California 94120-9420
	1-(800) 838-0650

END OF CONTRACT DATA

1-504 11-194 Page 2A

SCHEDULE A

The following is a list of the Sub-accounts of the Variable Account available under this contract at the time of issue.

Federated Equity Growth & Income Fund

Federated U.S. Government Bond Fund

INVESCO VIF-High Yield Portfolio

INVESCO VIF-lndustrial Income Portfolio

INVESCO VIF-Total Return Portfolio

Janus Aspen Aggressive Growth Portfolio

Janus Aspen Growth Portfolio

Janus Aspen Worldwide Growth Portfolio

Lexington Emerging Markets Fund

Montgomery Variable Series: Growth Fund

Schwab Money Market Portfolio

SteinRoe Capital Appreciation Fund

Strong Discovery Fund II

TCI Growth Portfolio

TCI International Portfolio

Van Eck Gold and Natural Resources Fund

Fixed Account - 2 Yr.

Fixed Account - 4 Yr.

1-504 11-194 Page 2B

TABLE OF CONTENTS

	PAGE
CONTRACT DATA	2 & 2A
SCHEDULE A	2B
DEFINITION OF TERMS	5
PURCHASE PAYMENT PROVISIONS	7
Payment and Acceptance of Purchase Payments
Allocation of Net Purchase Payments	7
Initial Purchase Payment	7
Flexibility of Purchase Payments	7
Change in Purchase Payment Allocation	7
Purchase Payment Limitations	7
NON-FORFEITURE PROVISIONS
Continuation on Paid-up Basis	8
Annuitization of Paid-up Contract	8
Surrender of Paid-up Contract	8
THE VARIABLE ACCOUNT
The Variable Account	8
Sub-accounts	9
Variable Accumulation Units	9
Net Investment Factor	10
TRANSFER PROVISIONS
Transfers Between Sub-accounts	10
Transfer Allocation	10
Minimum Transfer Amount	10
Transfer Limitations	10
Effect on Variable Accumulation Units	10
WITHDRAWAL PROVISIONS
Partial Withdrawals	11
Withdrawal Allocation	11
Minimum Withdrawal Amount	11
Withdrawal Limitations	11
Effect on Variable Accumulation Units	11
SURRENDER PROVISIONS	11
PREMIUM TAXES, CHARGES, FEES AND SERVICES
Premium Taxes	12
Mortality and Expense Risk Charge	12
Administrative Expense Charge	12
Transfer Fee	12
Annual Contract Charge	12
Statements of Account	12

1-504 11-194 Page 3

	PAGE
ANNUITY PROVISIONS
Fixed Annuities	13
Date Annuity Payments Start	13
Change of Annuity Date	13
Change of Annuity Form	13
Amount of Monthly Annuity	13
Minimum Amount of Monthly Annuity	.13
Change of Payee	13
ANNUITY FORMS
Life Annuity	14
Life and Contingent Annuity	14
Life Annuity with Period Certain	14
Joint and Survivor Annuity	14
Other Forms of Payment	14
DEATH BENEFIT PROVISIONS
In General	15
If Annuitant Dies Before Annuity Starts	15
If Owner Dies Before Annuity Starts	15
If Annuitant Dies After Annuity Starts	16
If Owner Dies After Annuity Starts	16
Joint Ownership	16
Proof of Death	16
BENEFICIARY PROVISIONS
Designation of Beneficiary	16
Change of Beneficiary	16
Death of Beneficiary	16
Successive Beneficiaries	16
GENERAL PROVISIONS
Entire Contract	17
Misstatement of Age and Sex	17
Proof of Existence and Age	17
Changes in the Contract	17
Incontestability	17
Assignment of the Contract	17
Payments by the Company	17
Delay of Payment or Transfer	17
Facility of Payment	18
Minimum Benefits	18
Protection of Benefits/Proceeds	18
Notices and Directions	18
Non-Participating	18
Voting Rights	18
APPENDIX - ANNUITY RATE TABLES	18

1-504 11-194 Page 4

DEFINITION OF TERMS

Account Value - The total dollar amount of all Variable Accumulation Units under each Sub-account of the Variable Account held for this contract prior to the Annuity Date. The Account Value prior to 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, if any; less

(e) any applicable Transfer Fees; less

(f) reductions for the Annual Contract Charge deducted on the last business day of each Contract Year; and less

(g) withdrawals from the Sub-accounts.

Age - The age nearest birthday.

Annuitant - The person named on the Contract Data page. The Annuitant is 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 this contract has been issued, except upon the Annuitant’s death prior to the Annuity Date if a Contingent Annuitant has previously been named.

Annuitant’s Beneficiary - The person or persons named on the Contract Data page, or on a beneficiary designation form. The Annuitant’s Beneficiary is the person(s) 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 (b) the Annuitant dies after the Annuity Date under an Annuity Form containing a period certain option.

Annuity Date - Unless changed as provided under the Annuity Provisions, the Annuity Date is the date on which the Account Value, less any applicable premium taxes, is applied to determine, the amount of monthly annuity payments under the Annuity Form chosen by the Owner. The date annuity payments start is the Commencement of Annuity Payment Date shown on the Contract Data page.

Annuity Issue Date - The date the contract becomes effective. The Annuity Issue Date is shown on the Contract Data page.

Calendar Year - A one-year period beginning January 1 and ending December 31.

Cash Value - The amount payable to the Owner if the contract is surrendered on or before the Annuity Date. The Cash Value will be equal to the Account Value, less any applicable premium taxes.

Code - The U.S. Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder.

Contract Anniversary - The same month and day as the Annuity Issue Date in each Calendar Year after the Calendar Year in which the Annuity Issue Date occurs.

Contract Year - The 12-month period starting on the Annuity Issue Date and ending with the day before the Contract Anniversary, and each 12-month period thereafter.

Contingent Annuitant - The person, if any, named on the Contract Data page. The Contingent Annuitant is 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. The Contingent Annuitant may be changed by the Owner at any time while the Annuitant is living and before the Annuity Date.

1-504 11-194 Page 5

Death Benefit - The benefit that may be payable by us to the Owner’s or Annuitant’s Beneficiary, as applicable, if the Owner or Annuitant dies before the Annuity Date. The Death Benefit will be equal to the greater of: (a) the Account Value; or (b) the sum of all Purchase Payments paid by the Owner, less the sum of all withdrawals and any applicable premium taxes. The Death Benefit will be determined as of the end of the Valuation Period during which the last of the following items is received by us at our Service Center: (i) proof of death of the Owner or Annuitant; and (ii) the written notice of the method of settlement elected by the Beneficiary.

Free Look Period - The period described in the Right To Cancel provision during which the contract may be canceled and treated as void.

Net Investment Factor - A formula 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.

Owner (Joint Owners) - The person or persons named on the Contract Data page. The Owner is the person who, while living, controls all rights and benefits under the contract. Joint Owners must be husband and wife as of the Annuity Issue Date. 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 Provisions. This contract may not have Joint Owners if the Status shown on the Contract Data page is Qualified.

Owner’s Beneficiary - The person or persons, if any, named on the Contract Data page, or on a beneficiary designation form. 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 deemed the Owner’s Beneficiary.

Portfolio - An investment portfolio underlying one of the Sub-accounts of the Variable Account.

Purchase Payment - An amount paid to us as consideration for the benefits provided under the contract.

Status (Qualified and Non-Qualified) - The Status shown on the Contract Data page. This contract has a Qualified status [i.e., Qualified IRA or Qualified 401(a)] if it is issued in connection with a retirement plan or program which receives favorable federal income tax treatment under the Code. Any contract not qualified to receive such favorable federal income tax treatment under the Code has a Non-Qualified status.

Sub-account - A subdivision of the Variable Account investing solely in shares of one of the Portfolios. The investment performance of each Sub-account is linked directly to the investment performance of the underlying Portfolio.

Valuation Day - Any day that the New York Stock Exchange is open for trading and that is a regular business day of our Service Center.

Valuation Period - The time interval between the closing (generally 4:00 p.m. Eastern Time) of the New York Stock Exchange on consecutive Valuation Days.

Variable Account - The Variable Account (Separate Account VA-5) is a separate account established and maintained by us for the investment of a portion of our assets pursuant to Section 10506 of the California Insurance Code. The Variable Account contains several Sub-accounts to which Net Purchase Payments may be allocated.

Variable Accumulation Unit - A unit of measure used to determine the Account Value prior to the Annuity Date. The value of a Variable Accumulation Unit varies with each Sub-account.

We, us, our and Company - Transamerica Occidental Life Insurance Company, a stock insurance company, with its Home Office in Los Angeles, California.

1-504 11-194 Page 6

PURCHASE PAYMENT PROVISIONS

Payment and Acceptance of Purchase Payments - All Purchase Payments must be paid to us at our Service Center.

Allocation of Net Purchase Payments - Net Purchase Payments may be allocated to one or more Sub-accounts of the Variable Account, as directed by the Owner. The Variable Account is described in detail starting on Page 8.

Initial Purchase Payment - The Initial Purchase Payment will be credited within two business days of the later of: (a) the date we receive sufficient information, in a form and manner acceptable to us, in order to issue this contract; or (b) the date our Service Center receives the Initial Purchase Payment.

The allocation of the Initial Purchase Payment to the Sub-accounts must be in whole number percentages and must provide a minimum allocation of at least 10% of the Initial Purchase Payment to each Sub-account of the Variable Account selected by the Owner. The allocation percentages will be further subject to a minimum dollar amount of $1,000 to each Sub-account chosen.

The Net Purchase Payment (derived from the Initial Purchase Payment) will first be allocated to the Money Market Sub-account and will remain in that Sub-account until the end of the Free Look Period. After the end of the Free Look Period, the total dollar value of the Variable Accumulation Units held in the Money Market Sub-account attributable to such Net Purchase Payment will be allocated to the Sub-accounts selected by the Owner.

Flexibility of Purchase Payments - Additional Purchase Payments to this contract may be paid by the Owner at any time after the Initial Purchase Payment and before the Annuity Date. Each Net Purchase Payment (derived from additional Purchase Payments) will be credited on the date such payment is received by us at our Service Center, provided that (a) such additional Purchase Payment is not less than the Per Payment Minimum shown on the Contract Data page; and (b) any portion of the Net Purchase Payment allocated to a Sub-account of the Variable Account with a zero balance, may not be less than $1,000. Each Net Purchase Payment will be subject to the allocation percentages in effect at the time of receipt of such Purchase Payment. We reserve the right to return to the Owner any additional Purchase Payment which does not meet the conditions described in (a) and (b) of this paragraph.

Change in Purchase Payment Allocation - The Owner may, at any time before the Annuity Date, change the allocation percentages in effect for future Purchase Payments. The allocation percentages must be in whole number percentages and must provide a minimum allocation of at least 10% of future Purchase Payments to each Sub-account of the Variable Account selected by the Owner.

The change in allocation will be processed as of the date the request for such change, in a form and manner acceptable to us, is received at our Service Center. The change in allocation will take effect with the first Purchase Payment received with or after receipt of the notice of change and will continue in effect for future Purchase Payments until subsequently changed.

Purchase Payment Limitations - In no event may the sum of all Purchase Payments paid during any taxable year exceed the limits imposed by any applicable federal or state law, rules or regulations. In no event may the total of all Purchase Payments paid during the life of the contract exceed the Maximum Total Purchase Payment amount, shown on the Contract Data page, without our approval.

We reserve the right to return to the Owner any portion of a Purchase Payment which would cause the total of all Purchase Payments paid to the contract to exceed the Maximum Total Purchase Payment amount shown on the Contract Data page.

1-504 11-194 Page 7

NON-FORFEITURE PROVISIONS

Continuation on Paid-up Basis - If the Owner stops making Purchase Payments, the contract will be continued on a paid-up basis to the Annuity Date. This means that the provisions of the contract will continue in full force and effect, and the Owner may exercise any of the rights granted by the contract until the Annuity Date or, if earlier, as of the date the contract is surrendered.

Annuitization of Paid-up Contract - The paid-up contract may be applied to any Annuity Form offered in this contract. The Account Value will be used in determining the amount of any paid-up annuity benefit.

Surrender of Paid-up Contract - On or before the Annuity Date, the Owner may surrender the paid-up contract to us for its Cash Value. Surrender of the paid-up contract will be subject to the Surrender Provisions on Page 11.

THE VARIABLE ACCOUNT

The Variable Account - The Variable Account (Separate Account VA-5) is a separate account established and maintained by us for the investment of a portion of our assets pursuant to Section 10506 of the California Insurance Code. We will use the assets of the Variable Account to buy shares in the various Portfolios. Net Purchase Payments allocated to one or more Sub-accounts of the Variable Account will become a part of Separate Account VA-5.

We are not, and do not claim to be, a trustee with respect to the Variable Account, the assets of which are owned absolutely and exclusively by us. The assets in the Variable Account shall not be chargeable with liabilities arising out of any other business of the Company, except to the extent that they exceed the reserves and other liabilities of the Variable Account. The assets of the Variable Account maintained under this contract and under all other contracts of this type will be kept separate from the assets held in our general account and are not subject to the claims of the general creditors of the Company. Income, gains and losses, whether or not realized, from assets in the Variable Account are credited to, or charged against, the Variable Account without regard to other income, gains or losses of the Company.

We will hold assets in the Variable Account with a value at least equal to the total liability for the Variable Account under this and all other contracts of this type. To the extent those assets do not exceed this total, we will use them to support only those contracts and will not use those assets to support any other business. We may use any excess over this amount at our sole discretion.

For all purposes under the contract, we will determine the value of the assets in the Variable Account at the end of each Valuation Day. To determine the value of an asset on a day that is not a Valuation Day, we will use the value of that asset as of the end of the next Valuation Day.

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Sub-accounts - The Variable Account contains several Sub-accounts, each of which invests solely in the shares of a specified Portfolio. Income, gains and losses, whether or not realized, from assets in the Sub-accounts are credited to, or charged against, the Sub-accounts without regard to other income, gains or losses of the Company. The Sub-accounts available under this contract are shown in Schedule A.

We cannot and do not guarantee that any of the Sub-accounts of the Variable Account will always be available for investment. We reserve the right, subject to compliance with applicable federal or state law, rules or regulations, to make additions to, deletions from, or substitutions for, the Sub-accounts, or the Portfolio shares held by a Sub-account of the Variable Account if such Portfolio shares are no longer available for investment, or if we determine that continued investment in such Portfolio would be inappropriate or inconsistent with the purposes of the Variable Account. We will not substitute any shares attributable to the Owner’s interest in a Sub-account without advance written notice to the Owner and prior approval of the Securities and Exchange Commission, to the extent required by the Investment Company Act of 1940 (the “1940 Act”). Nothing contained herein shall prevent the Variable Account from purchasing other securities for other series or classes of variable contracts, or from effecting an exchange between series or classes of variable contracts on the basis of requests made by the Owner.

We reserve the right to establish additional Sub-accounts, each of which would invest solely in shares of other Portfolios. If we decide to make those Sub-accounts available under this contract, we will send written notification to the Owner. The Owner may instruct us to allocate future Purchase Payments to those Sub-accounts, or transfer all or a portion of the Account Value to those Sub-accounts, subject to the terms and conditions described under the Transfer Provisions on Page 10 and by the Portfolio.

In the event of any addition, deletion or substitution of any Sub-account of the Variable Account, we may, by appropriate endorsement, make such changes to the contract as may be necessary to reflect such addition, deletion or substitution. If we deem it to be in the best interest of Owners who have voting rights, the Variable Account may be: (a) operated as a management company under the 1940 Act or any other form permitted by law; (b) de-registered under the 1940 Act in the event such registration is no longer required; or (c) combined with one or more other separate accounts.

Variable Accumulation Units - Net Purchase Payments and transfers allocated to a Sub-account are used to purchase Variable Accumulation Units in that Sub-account. The number of Variable Accumulation Units to be credited to each Sub-account will be determined by dividing the portion of each Net Purchase Payment or transfer allocated to the Sub-account by that Sub-account’s Variable Accumulation Unit value for the Valuation Day on which the Purchase Payment was received at the Service Center or for the Valuation Day on which the transfer was made.

The Net Purchase Payment (derived from the Initial Purchase Payment) allocated to the Money Market Sub-account during the Free Look Period, will be credited with Variable Accumulation Units within two business days of the later of: (a) the date we receive sufficient information, in a form and manner acceptable to us, in order to issue this contract; or (b) the date our Service Center receives the Initial Purchase Payment. In the case of any subsequent Purchase Payment, we will credit Variable Accumulation Units for that Purchase Payment as of the date such payment is received by us at our Service Center, subject to the conditions described under the Flexibility of Purchase Payments provision.

The value of a Variable Accumulation Unit for each Sub-account at the end of any Valuation Period 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.

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Net Investment Factor - For any Sub-account, the Net Investment Factor for a Valuation Period is determined by dividing (a) by (b), then subtracting (c).

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 of the end of the Valuation Period for tax reserves for realized and unrealized capital gains, if any.

Where (b) is

The net asset value per share held in the Sub-account as of the end of the last prior Valuation Period.

Where (c) is

The daily Mortality and Expense Risk Charge times the number of calendar days in the current Valuation Period; plus

The daily Administrative Expense Charge, if any, times the number of calendar days in the current Valuation Period.

TRANSFER PROVISIONS

Transfers Between Sub-accounts - Before the Annuity Date, the Owner may transfer all or any portion of the Account Value to one or more Sub-accounts of the Variable Account, subject to the provisions described below.

Transfer Allocation - Transfers will generally be effective as of the date the request for the transfer, in a form and manner acceptable to us, is received at our Service Center. The transfer request must specify: (a) the Sub-account(s) from which the transfer is to be made; (b) the amount of the transfer, subject to the minimum transfer amount described below; and (c) the Sub-account(s) to receive the transferred amount.

Minimum Transfer Amount - The minimum amount that may be transferred is the lesser of $1,000, or the entire value of the Sub-account from which the transfer is being made.

Transfer Limitations - The Owner may make any number of transfers prior to the Annuity Date. However, each transfer in excess of ten during any Contract Year will be subject to a Transfer Fee, as described on Page 12. If a transfer amount reduces the value of the Sub-account from which the transfer was made to less than $1,000, we reserve the right to transfer the remaining value in that Sub-account in accordance with the transfer instructions provided by the Owner. We also reserve the right to limit the number of transfers made during any Contract Year.

Effect on Variable Accumulation Units - Transfers within the Variable Account will result in the purchase and/or cancellation of Variable Accumulation Units having a total value equal to the dollar amount being transferred to or from a particular Sub-account. The purchase and/or cancellation of such units generally shall be made using the Variable Accumulation Unit value of the applicable Sub-account on the Valuation Day on which the transfer is effective.

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WITHDRAWAL PROVISIONS

Partial Withdrawals - Before the Annuity Date, the Owner may withdraw a portion of the Account Value for cash, subject to any withdrawal limitations imposed under any applicable federal or state law, rules or regulations, and further subject to the provisions described below.

Withdrawal Allocation - Withdrawals will generally be processed as of the date the request for the withdrawal, in a form and manner acceptable to us, is received at our Service Center. The withdrawal request must specify the amount of the withdrawal or the percentage of value to be withdrawn from each Sub-account, subject to the minimum withdrawal amount described below. The Owner may direct a withdrawal to be made from a specific Sub-account or taken pro rata from all Sub-accounts. If the Owner does not specify the Sub-account(s) from which the withdrawal is to be made, the withdrawal will be taken pro rata from all Sub-accounts with current values.

Minimum Withdrawal Amount - The minimum amount that may be withdrawn is the lesser of $1,000, or the entire value of the Sub-account from which the withdrawal is being made.

Withdrawal Limitations - The Owner may make any number of withdrawals prior to the Annuity Date. If the requested withdrawal reduces the value of the Sub-account from which the withdrawal was made to less than $1,000, we reserve the right not to allow the withdrawal.

We will further notify the Owner if the requested withdrawal would reduce the Account Value to less than $2,000. The Owner will have 10 days from the date our notice is given or mailed to: (a) withdraw a lesser amount (subject to a minimum withdrawal amount of $1,000), leaving an Account Value of at least $2,000; or (b) surrender the contract for its Cash Value. If, after the expiration of the 10 day period, no election is received by us from the Owner, the withdrawal request will be considered null and void, and no withdrawal will be processed.

Effect on Variable Accumulation Units - Withdrawals from the Variable Account will result in the cancellation of Variable Accumulation Units having a total value equal to the dollar amount being withdrawn from a particular Sub-account. The cancellation of such units generally shall be made using the Variable Accumulation Unit value of the applicable Sub-account as of the end of the Valuation Day on which the withdrawal is processed.

SURRENDER PROVISIONS

Surrender of Contract - On or before the Annuity Date, the Owner may surrender the contract to us for its Cash Value. Surrender of the contract will be subject to any withdrawal limitations imposed under applicable federal or state law, rules or regulations.

The Owner’s request for surrender will generally be processed as of the date the request for surrender, in a form and manner acceptable to us, is received at our Service Center. Payment of the Cash Value to the Owner will be in full settlement of our liability under the contract.

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PREMIUM TAXES, CHARGES, FEES AND SERVICES

Premium Taxes - The amount of any applicable premium tax imposed on amounts relating to this contract may be withdrawn at the time such tax is incurred. For purposes of this contract, premium taxes include retaliatory taxes or other similar taxes.

Mortality and Expense Risk Charge - The Company imposes a charge as compensation for bearing certain mortality and expense risks under the Variable Account. The Mortality portion of the charge compensates us for the mortality risk inherent in the Death Benefit and for the mortality risk inherent with an annuity. The Expense portion of the charge compensates us for the possibility that charges and fees for administrative expenses which are guaranteed for the life of the contract may be insufficient to cover actual costs of issuing and administering the contract.

The amount of the daily Mortality and Expense Risk Charge is equal to 0.002319%, corresponding to an annual charge of 0.85%, of the assets in each Sub-account held for this contract. The Mortality and Expense Risk Charge will be deducted on a daily basis from the assets in each such Sub-account and will remain constant for the life of the contract.

Administrative Expense Charge - Prior to the Annuity Date, we reserve the right to impose a daily Administrative Expense Charge on the assets in each Sub-account held for this contract. The Administrative Expense Charge compensates us for some of the costs incurred in administering the contract and the Variable Account. If imposed, the amount of the daily Administrative Expense Charge will be equal to 0.000411%, corresponding to an annual charge of 0.15%, of the assets in each Sub-account held for this contract.

Transfer Fee - Prior to the Annuity Date and for each transfer in excess of ten transfers in any Contract Year, a Transfer Fee of $10.00, or 2% of the amount of the transfer, whichever is less, will be deducted from the amount of the transfer prior to its reallocation. If transfers are made from two or more Sub-accounts on the same day, the Transfer Fee will be withdrawn pro rata from the amount of the transfers.

Annual Contract Charge - Prior to the Annuity Date, an Annual Contract Charge of $25.00, or 2% of the Account Value, whichever is less. This charge will first be deducted from the Money Market Sub-account. If the Money Market Sub-account is insufficient to cover the charge, any remaining balance due will be deducted on a pro rata basis from all other Sub-accounts with current values. The charge will be deducted on the last business day of each Contract Year.

Statements of Account - At least once during each Contract Year, we will send the Owner a Statement of Account reflecting the value of the contract. Statements of Account will cease to be provided to the Owner after the Annuity Date.

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ANNUITY PROVISIONS

Fixed Annuities - All annuities provided under this contract will be payable in fixed-dollar amounts. This means that monthly annuity payments will remain the same in accordance with the terms of the Annuity Form selected by the Owner.

Date Annuity Payments Start - Annuity payments will be made on a monthly basis starting on the first day of the month immediately following the Annuity Date, if the Annuitant is living and the Cash Value of this contract has not been paid. Unless otherwise changed, the Annuity Form under which the annuity will be paid will be a Life Annuity with a Period Certain of 120 Months. Once payments start under an Annuity Form, no change in the form of payment will be allowed.

Change of Annuity Date - The Annuity Date may be changed by the Owner upon 30 days advance notice to our Service Center. The revised Annuity Date may not be earlier than the first day of the calendar month coinciding with or next following the first Contract Anniversary, but in no event later than the^: first day of the calendar month immediately preceding the month of the Annuitant’s 85th birthday.

Change of Annuity Form - The Owner may change the Annuity Form to any other form of payment described on Page 14 of this contract. The election of the new Annuity Form must be received at our Service Center at least 30 days prior to the currently elected Annuity Date.

Amount of Monthly Annuity - The amount of monthly annuity payments will be determined as of the Annuity Date. We will apply the Account Value as a single premium, based on the Annuity Form and the Ages of the Annuitant and any other measuring life, under the appropriate guaranteed annuity rate tables contained in the Appendix, or under our then current single premium immediate annuity rates, if such current rates provide a higher amount of monthly annuity payments than those provided under the guaranteed annuity rates.

Minimum Amount of Monthly Annuity - If the amount of the first monthly annuity payment would result in a monthly annuity of less than $150, or if the Account Value is less than $5,000, we reserve the right to offer a less frequent mode of payment or make a cash payment to the Owner equal to the Cash Value. Such cash payment will be in full settlement of our liability under the contract.

Change of Payee - Except as provided in the following paragraph, upon written notice to us at our Service Center, the Owner may, at any time during the annuitization period, change the payee of annuity benefits being provided under the contract. The effective date of the change in payee will be the later of: (a) the date we receive the written request for such change; or (b) the date specified by the Owner.

If the Status shown on the Contract Data page is Qualified, the Owner may not change the payee of annuity benefits to be provided under the contract before or after the Annuity Date.

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ANNUITY FORMS

Benefits can be provided under any Annuity Form described below, subject to any applicable federal or state law, rules or regulations.

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 made just before the Annuitant’s death. There is no death benefit under this Annuity Form.

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. If the named Contingent Annuitant is living after the Annuitant dies, payments will continue 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 50% or 66 2/3% thereof. Payments will end with the payment made just before the death of the Contingent Annuitant. If the Contingent Annuitant does not survive the Annuitant, payments will end with the payment made just before the death of the Annuitant. Once payments start under this Annuity Form, the person named as Contingent Annuitant, for the purpose of being the measuring life, may not be changed.

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, 180 or 240 months, but in no event may such period exceed the life expectancy of the Annuitant. If the Annuitant dies during the period certain, the remaining period certain payments will generally be made to the Annuitant’s Beneficiary.

After the Annuitant’s death, the Owner 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. If the Annuitant dies after all payments have been made for the period certain, payments will cease with the payment made just before the Annuitant’s death.

Joint and Survivor Annuity - Payments start on the first day of the month immediately following the Annuity Date, if the Annuitant and Joint Annuitant are both living. After either the Annuitant or Joint Annuitant dies, payments will continue for 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 50% or 66 2/3% thereof. Payments end with the payment made just before the death of 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.

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 federal or state law, rules or regulations.

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DEATH BENEFIT PROVISIONS

In General - Notwithstanding any provision of this contract to the contrary, no payment of benefits provided under the contract will be allowed that does not satisfy the requirements of Code Section 72(s), as amended from time to time.

If Annuitant Dies Before Annuity Starts - Upon receipt of proof of death of the Annuitant while the Owner is living, this contract is in force and before the Annuity Date, and subject to any applicable federal or state law, rules or regulations, we will pay the Death Benefit provided under the contract to the Annuitant’s Beneficiary in a cash payment, unless there is a surviving Contingent Annuitant.

In lieu of receiving a cash payment, the Annuitant’s Beneficiary may receive the Death Benefit in the form of an annuity from us, under any of the Annuity Forms offered in this contract, unless a settlement agreement to the contrary is in effect.

If a Contingent Annuitant has been named by the Owner, then upon the death of the Annuitant before the Annuity Date while the Owner is living, the Contingent Annuitant, if alive, will become the Annuitant. Any Death Benefit normally paid to the Annuitant’s Beneficiary will not be payable if the named Contingent Annuitant is alive at the time of the Annuitant’s death.

If the Owner is a corporation or other non-individual, or if the deceased Annuitant is the Owner, the death of the Annuitant will be treated as the death of the Owner and the contract will be subject to the provisions described below.

If Owner Dies Before Annuity Starts - Notwithstanding any other provision of this contract, if the 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, provided that; (1) such annuity is distributed in substantially equal installments over the life of such Owner’s Beneficiary or over a period not extending beyond the life expectancy of such Owner’s Beneficiary; and (2) such distributions begin not later than one year after the Owner’s date of death.

Notwithstanding (a) and (b) above, if the sole Owner’s Beneficiary is the deceased Owner’s surviving spouse, then such 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. Upon receipt of such election from the spouse, in a form and manner acceptable to us, at our Service Center: (1) all rights of the spouse as Owner’s Beneficiary under the contract in effect prior to 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.

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If Annuitant Dies After Annuity Starts - 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 Owner Dies After Annuity Starts - 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 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.

Proof of Death - Proof of death must be submitted to us at our Service Center before any benefits due under the contract are paid. Appropriate forms will be made available upon request.

For purposes of this contract, proof of death means: (a) a copy of a certified death certificate; (b) a copy of a certified decree of a court of competent jurisdiction as to a finding of death; (c) a written statement by a medical doctor who attended the deceased; or (d) any other proof satisfactory to us.

BENEFICIARY PROVISIONS

Designation of Beneficiary - Unless changed as provided below or as otherwise required by law, the Owner’s and Annuitant’s Beneficiary will be as shown on the Contract Data page. Unless otherwise indicated, if more than one Owner’s or Annuitant’s Beneficiary is designated, then each such Beneficiary so designated will share equally in any benefits and/or rights granted by the contract to such Beneficiary or allowed by us. If either the Owner’s or Annuitant’s Beneficiary is a partnership, any benefits will be paid to the partnership as it existed at the time of the Owner’s or Annuitant’s death. We may rely on an affidavit by any responsible person to identify a Beneficiary or verify the non-existence of a Beneficiary not identified by name.

Change of Beneficiary - The Owner may change the Beneficiaries by giving written notice to us at our Service Center. We will not be bound by any change of Beneficiary unless it is made in writing and recorded by us at our Service Center. A Beneficiary designated irrevocably may not be changed without the written consent of that Beneficiary, except to the extent required by law.

Death of Beneficiary - The interest of any Beneficiary who dies before the Owner or Annuitant will terminate at the death of such 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 to such Beneficiary, unless the Owner has given us written notice of some other arrangement. The benefits will then be paid as though the Beneficiary had died before the Owner or Annuitant.

Successive Beneficiaries - If there is no named Owner’s Beneficiary alive at the time of the Owner’s death, then the Owner’s Beneficiary will be the Annuitant, if living, or the Annuitant’s Beneficiary if the Annuitant is not living. If there is no surviving Annuitant or Annuitant’s Beneficiary, any benefits payable will be paid to the Owner’s estate.

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GENERAL PROVISIONS

Entire Contract - This contract makes the entire contract.

Misstatement of Age and Sex - If the age or sex of the Annuitant and/or of any other measuring life has been misstated, the monthly annuity payments payable under this contract will be whatever the Account Value would provide on the basis of the correct Age or sex of the Annuitant and/or of any other measuring life, if any, on the Annuity Date.

Any underpayment by us, as a result of such misstatement, will be paid in a lump sum on the next annuity payment by us, and any overpayment may be deducted from the current or succeeding payments.

Proof of Existence and Age - Before making any payment under this contract, we may require proof of the existence and proof of age of the Annuitant and/or any other payee, or any other information as we may deem necessary in order to provide benefits under the contract.

Changes in the Contract - Only two authorized officers of the Company, acting together, have the authority to bind us or to make any changes in this contract and then only in writing. We will not be bound by any promise or representation made by any other person or persons.

We may change or amend the contract at any time without the consent of the Owner if such change or amendment is necessary for the contract to comply with any changes in the Code so as to continue treatment of this contract as an annuity, or as required by any other applicable federal or state law, rules or regulations.

Incontestability - This contract will be incontestable from the Annuity Issue Date.

Assignment of the Contract - Except as permitted by law, no person has the right to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit under the contract. Any assignment will be subject to the limitations described in the following paragraph.

No assignment of any benefits to which the Owner is entitled under this contract will be binding on the Company, unless made in writing and given to us at our Service Center. We are not responsible for the adequacy of any assignment. However, when a written assignment, permitted by law, is filed with us and recorded by us at our Service Center, the Annuitant, the Contingent Annuitant, the Owner’s Beneficiary and/or the Annuitant’s Beneficiary, will be subject to the assignment.

Payments by the Company - All sums payable by us under this contract are payable at our Service Center.

Delay of Payment or Transfer - We will generally pay amounts due from the contract within seven days of the date the request for such amount, in a form and manner acceptable to us, is received at our Service Center.

We reserve the right to delay the payment of any amount withdrawn or transfer request from the Variable Account due to: (a) the closure of the New York Stock Exchange for reasons other than usual weekends, holidays or if trading on such Exchange is restricted; (b) the existence of an emergency as defined by the Securities and Exchange Commission or the Commission requires that trading be restricted; or (c) the Securities and Exchange Commission permits delay for the protection of security holders.

Payments of amounts derived from Purchase Payments paid by check may also be delayed until the check has cleared the Owner’s bank.

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Facility of Payment - If a payee is a minor, or if we have reason to believe that a valid receipt cannot be given for any payment due to the payee, we will make the payment to the legal guardian or conservator of the payee, or to such other person(s) as we have reason to believe has assumed the custody and principal support of the payee.

Minimum Benefits - Any annuity, cash surrender or death benefits that may be available under this contract are not less than the minimum benefits required by any statute of the jurisdiction in which this contract is delivered.

Protection of Benefits/Proceeds - To the extent permitted by law, no payment of benefits or interest will be subject to the claim(s) of any creditor of any Owner, Annuitant or Beneficiary or to any claim or process of law against any Owner, Annuitant or Beneficiary.

Notices and Directions - We will not be bound by any authorization, direction, election or notice which is not in a form and manner acceptable to us and received at our Service Center.

Any written notice requirement by us to the Owner will be satisfied by our mailing of any such required written notice, by first-class mail, to the Owner’s last known address as shown on our records.

Non-Participating - This contract is classified as non-participating contract. It does not participate in our profits or surplus, and therefore no dividends are payable.

Voting Rights - As long as this contract is in force, the Owner will have all applicable voting rights under the Portfolios.

APPENDIX

ANNUITY RATE TABLES

Applicability of Rates - The guaranteed annuity rates contained in Tables I, II and III will be used to provide a minimum guaranteed monthly annuity. The rates contained in this contract are for each $1,000 applied under the applicable Annuity Form and do not include any applicable premium tax. Any applicable premium tax will be withdrawn as described in the Premium Taxes provision.

Tables I and II, as applicable, will be used for all annuity purchases, subject to any limitations imposed under: (a) the retirement plan or program under which this contract is issued; or (b) applicable federal or state law, rules or regulations which restrict the use of such rates. If any federal or state law, rules or regulations prohibit the use of the rates provided in Tables I and II, then the annuity rates provided in Table III will be used.

Rates Not Shown - Any rates not shown in the Tables contained in this contract will be provided by the Company upon request.

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APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE 1 - MALE RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.76	3.76	3.75	3.73
41	3.80	3.79	3.78	3.76
42	3.84	3.83	3.82	3.80
43	3.88	3.87	3.86	3.83
44	3.93	3.92	3.90	3.87
45	3.97	3.96	3.94	3.91
46	4.02	4.01	3.98	3.95
47	4.07	4.06	4.03	3.99
48	4.13	4.11	4.08	4.03
49	4.18	4.16	4.13	4.08
50	4.24	4.21	4.18	4.13
51	4.30	4.27	4.23	4.17
52	4.37	4.33	4.29	4.22
53	4.43	4.40	4.34	4.28
54	4.51	4.46	4.41	4.33
55	4.58	4.53	4.47	4.38
56	4.66	4.60	4.54	4.44
57	4.74	4.68	4.60	4.50
58	4.83	4.76	4.67	4.56
59	4.92	4.84	4.75	4.61
60	5.02	4.93	4.83	4.68
61	5.12	5.02	4.90	4.74
62	5.23	5.12	4.99	4.80
63	5.34	5.22	5.07	4.87
64	5.47	5.33	5.16	4.93
65	5.60	5.45	5.25	5.00
66	5.74	5.57	5.35	5.06
67	5.90	5.69	5.45	5.12
68	6.06	5.83	5.55	5.18
69	6.24	5.97	5.64	5.24
70	6.43	6.11	5.74	5.30
71	6.63	6.26	5.84	5.35
72	6.84	6.42	5.95	5.41
73	7.07	6.58	6.05	5.45
74	7.32	6.74	6.14	5.50
75	7.58	6.91	6.24	5.54
76	7.86	7.08	6.33	5.57
77	8.16	7.26	6.42	5.61
78	8.48	7.43	6.50	5.63
79	8.83	7.61	6.58	5.66
80	9.20	7.79	6.65	5.68

Basis of Computation - The actuarial basis for the annuity rates contained in this Table I, is the 1983a Annuity Mortality Table for males, without projection, set back 5 years, with an interest rate of 3.5% per annum.

1-504 11-194 Page 19

APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE II - FEMALE RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.58	3.58	3.57	3.56
41	3.61	3.60	3.60	3.59
42	3.64	3.64	3.63	3.62
43	3.67	3.67	3.66	3.65
44	3.71	3.70	3.69	3.68
45	3.74	3.74	3.73	3.71
46	3.78	3.77	3.76	3.75
47	3.82	3.81	3.80	3.78
48	3.86	3.85	3.84	3.82
49	3.90	3.89	3.88	3.86
50	3.95	3.94	3.92	3.90
51	4.00	3.98	3.97	3.94
52	4.05	4.03	4.01	3.98
53	4.10	4.08	4.06	4.03
54	4.15	4.14	4.11	4.08
55	4.21	4.19	4.17	4.13
56	4.28	4.25	4.22	4.18
57	4.34	4.32	4.28	4.23
58	4.41	4.38	4.34	4.28
59	4.48	4.45	4.41	4.34
60	4.56	4.52	4.47	4.40
61	4.64	4.60	4.55	4.46
62	4.73	4.68	4.62	4.52
63	4.82	4.77	4.70	4.59
64	4.92	4.86	4.78	4.66
65	5.03	4.96	4.86	4.72
66	5.14	5.06	4.95	4.79
67	5.26	5.17	5.04	4.86
68	5.39	5.28	5.14	4.93
69	5.52	5.40	5.24	5.01
70	5.67	5.52	5.34	5.07
71	5.82	5.66	5.44	5.14
72	5.99	5.80	5.55	5.21
73	6.17	5.95	5.66	5.27
74	6.36	6.10	5.77	5.34
75	6.57	6.27	5.88	5.40
76	6.80	6.44	6.00	5.45
77	7.04	6.61	6.11	5.50
78	7.31	6.80	6.21	5.54
79	7.60	6.99	6.32	5.58
80	7.91	7.18	6.42	5.62

Basis of Computation - The actuarial basis for the annuity rates contained in this Table II, is the 1983a Annuity Mortality Table for females, without projection, set back 5 years, with an interest rate of 3.5% per annum.

1-504 11-194 Page 20

APPENDIX (continued)

TABLES OF GUARANTEED ANNUITY RATES

TABLE III - UNISEX RATES

Age	LIFE ANNUITY	LIFE ANNUITY WITH PERIOD CERTAIN
		120 Months	180 Months	240 Months
40	3.69	3.69	3.68	3.66
41	3.73	3.72	3.71	3.70
42	3.76	3.76	3.75	3.73
43	3.80	3.79	3.78	3.76
44	3.84	3.83	3.82	3.80
45	3.88	3.87	3.86	3.83
46	3.93	3.92	3.90	3.87
47	3.97	3.96	3.94	3.91
48	4.02	4.01	3.98	3.95
49	4.07	4.06	4.03	4.00
50	4.13	4.11	4.08	4.04
51	4.18	4.16	4.13	4.08
52	4.24	4.22	4.18	4.13
53	4.30	4.27	4.24	4.18
54	4.37	4.33	4.29	4.23
55	4.44	4.40	4.35	4.28
56	4.51	4.47	4.42	4.34
57	4.59	4.54	4.48	4.40
58	4.66	4.61	4.55	4.45
59	4.75	4.69	4.62	4.51
60	4.84	4.77	4.69	4.57
61	4.93	4.86	4.77	4.64
62	5.03	4.95	4.85	4.70
63	5.14	5.05	4.93	4.76
64	5.25	5.15	5.02	4.83
65	5.37	5.26	5.11	4.89
66	5.50	5.37	5.20	4.96
67	5.64	5.49	5.29	5.03
68	5.79	5.61	5.39	5.09
69	5.95	5.75	5.49	5.15
70	6.12	5.88	5.59	5.22
71	6.31	6.03	5.69	5.28
72	6.50	6.18	5.80	5.34
73	6.71	6.33	5.90	5.39
74	6.93	6.49	6.01	5.44
75	7.17	6.66	6.11	5.49
76	7.43	6.84	6.21	5.53
77	7.71	7.01	6.31	5.57
78	8.01	7.19	6.40	5.61
79	8.33	7.37	6.49	5.63
80	8.67	7.56	6.57	5.66

Basis of Computation - The actuarial basis for the annuity rates contained in this Table III, is the 1983a Annuity Mortality Table, without projection, blended 60% males and 40% females, set back 5 years, with an interest rate of 3.5% per annum.

1-504 11-194 Page 21

EX-5.A

Exhibit 5(a)

Form of Application

LOGO APPEAR HERE	Variable Annuity Application
SCHWAB INVESTMENT ADVANTAGE™ Annuity Service Center P.O. Box 7785, San Francisco, CA 94120-9420 1-800-888-0650	Schwab Investment Advantage A Variable Annuity Transamerica Occidental Life Insurance Company Charles Schwab & Co., Inc., Distributor Member NYSE/SIPC

1. Schwab Account Information

Please provide your Schwab account number below:
Schwab Account Number:	¨  None
/    /

2. Contract Owner

Name (First/Middle/Last)			Birth Date	Sex
				Male                Female
Home Address			Social Security/Tax I.D. Number
City	State	Zip	Daytime Telephone Number	Evening Telephone Number
			(         )	(         )

3. Joint Owner

Name (First/Middle/Last)			Birth Date
Home Address			Social Security/Tax I.D. Number
City	State	Zip

4. Owner’s Beneficiary

Name (First/Middle/Last)			Birth Date	Sex
				Male                Female
Home Address			Social Security/Tax I.D. Number
City	State	Zip

5. Annuitant (if someone other than the owner)

Name (First/Middle/Last)			Birth Date	Sex
				Male                Female
Home Address			Social Security/Tax I.D. Number
City	State	Zip

6. Contingent Annuitant

Name (First/Middle/Last)			Birth Date	Sex
				Male                Female
Home Address			Social Security/Tax I.D. Number
City	State	Zip

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13. REGULATORY FORMS

Securities regulations require Schwab to collect the following information prior to opening your annuity contract.

Overall Investment Objective	Federal Income Tax Bracket	Annual Income	Liquid Net Worth
¨ Capital Preservation	¨ 15%	¨ Under $15,000	¨ Under $15,000
¨ Income	¨ 28%	¨ $15,000 to $24,999	¨ $15,000 to $49,999
¨ Growth	¨ 31% or more	¨ $25,000 to $49,999	¨ $50,000 to $99,999
¨ Speculation		¨ $50,000 to $99,999	¨ $100,000 or more
		¨ $100,000 or more

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Is each individual named on this application in citizen of the United States? ¨ Yes ¨ No

If “No” give details below:

Name(s) Country of Legal Residence Country of Citizenship

Illegible

I understand that I am applying for a Schwab Investment Advantage variable annuity issued by Transamerica. Occidental Life Insurance Company. I declare that all statements made on this application are true to the best of my knowledge and belief. I acknowledge receipt of the prospectus for the variable annuity contract. I believe the contract is suitable for my retirement and insurance needs. I understand that payments and values, when based on the investment experience of the Variable Account, vary and are not guaranteed as to dollar amount. I authorize you to honor my telephone instructions to the Annuity Service Center for transactions (as permitted by the prospectus and company regulations) unless I notify you otherwise in writing. If a transfer from my Schwab account is indicated in section 10, I authorize Schwab to transfer the specified amount. I certify under penalty of perjury that the taxpayer identification numbers listed on this application are correct.

Annuity Owner’s Signature	Date	Signed at:
Annuity Joint Owner’s Signature	Date	City:	State:	Zip:

For Company Use Only — Not to be Filled in by Applicant

Do you have reason to believe the annuity applied for will replace any insurance or annuity with us or any other company? ¨  Yes ¨  No

Signature (If required) Code Date

Illegible Page 3

7. Annuitant’s Beneficiary

Name (First/Middle/Last)			Birth Date	Sex
				Male	Female
Home Address			Social Security/Tax I.D. Number
City	State	Zip

8. Will this annuity replace another contract?

Will this annuity replace any other life insurance or annuity contracts? ( If yes, you may need to complete additional forms. Please see Application Instructions.)    ¨  Yes         ¨  No

If yes, please provide your current carrier’s name and policy number:

Company Name Policy Number

9. Will this annuity be an Individual Retirement Annuity (IRA)?

                            ¨  Yes                ¨  No

10. Purchase Payment

Please Indicate your method of payment below (minimum $5,000)

¨	A.	Check for $                                (payable to Transamerica Occidental Life Insurance Company) is enclosed.	¨	B.	Transfer $                                         from my Schwab brokerage account listed in section 1.
		FOR IRAs: The amount remitted includes	¨	C.	Transfer the balance from my existing annuity or life insurance contract. (See Application Instructions.)
		$                                              for Tax Year                 ,
		$                                              for Tax Year                 , and $                                              as a rollover, which the Owner irrevocably elects to treat as a rollover contribution.	¨	D.	Transfer funds from my existing qualified plan or Individual Retirement Account/Annuity to this IRA. (See Application Instructions.)

11. Purchase Payment Allocation

Please use whole percentages of at least 10% per sub-account to indicate your allocation below. There is a minimum of $1000 per sub-account. The total must equal 100%.

Federated Equity Growth & Income Fund		%
Federated U.S. Government Bond Fund		%
Invesco VIF-High Yield Portfolio		%
Invesco VIF-Individual Income Portfolio		%
Invesco VIF-Total Return Portfolio		%
Janus Aspen Growth Portfolio		%
Lexington Emerging Markets Fund		%
Schwab Money Marker Portfolio .		%
SteinRoe Capital Appreciation Fund		%
Strong Discovery Fund II		%
TCI Balanced Portfolio		%
TCI Growth Portfolio		%
TOTAL	100	%

Future purchases will be allocated as shown above. You may change your allocation at any time, or you may make a different allocation at the time of your subsequent purchase.

12. Commencement of Annuity Payments

Illegible

Over, please

Illegible

Illegible Page 4

EX-8.A

Exhibit 8(a)

Form of Participation Agreement

1

PARTICIPATION AGREEMENT

Among

“TRUST”

“UNDERWRITER”

and

TRANSAMERICA LIFE INSURANCE COMPANY

THIS AGREEMENT, made and entered into as of the              day of                     ,             , by and among TRANSAMERICA LIFE INSURANCE COMPANY, (hereinafter the “Company”), an Iowa corporation, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the “Account”), and the              INSURANCE TRUST, a business trust organized under the laws of              (hereinafter the “Trust”) and              SECURITIES, INC. (hereinafter the “Underwriter”), a              corporation.

WHEREAS, the Trust engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the “Variable Insurance Products”) to be issued by Transamerica Life Insurance Company; and

WHEREAS, the beneficial interest in the Trust is divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets, any one or more of which may be made available under this Agreement, as set forth on Schedule A hereto and as may be amended from time to time by mutual agreement of the parties hereto (each such series hereinafter referred to as a “Portfolio”); and

WHEREAS, the Trust is registered as an open-end management investment company under the Investment Company Act of 1940 (the “1940 Act”) and its shares are registered under the Securities Act of 1933, as amended (the “1933 Act”); and

WHEREAS,              ADVISERS, INC. (the “Adviser”) is duly registered as an investment adviser under the federal Investment Advisers Act of 1940 (the “Advisers Act”) and any applicable state securities law; and

WHEREAS, the Company has registered or will register certain variable life insurance and variable annuity contracts under the 1933 Act or will not register the contracts in proper reliance on an exemption from registration under the 1933 Act; and

WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid variable annuity contracts; and

WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act; and

WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended, (hereinafter the “1934 Act”), and is a member in good standing of the National Association of Securities Dealers, Inc. (hereinafter “NASD”); and

WHEREAS, the Trust has obtained an order from the Securities and Exchange Commission granting participating insurance companies and their separate accounts exemptions from the provisions of section 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and nonaffiliated life insurance companies and certain qualified pension and retirement plans (the “Shared Exemptive Order”); and

2

WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid variable life and variable annuity contracts and the Underwriter is authorized to sell such shares to unit investment trusts such as each Account at net asset value;

NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust and the Underwriter agree as follows:

ARTICLE I. Sale of Trust Shares

1.1. The Company and Trust agree to communicate, process and settle purchase and redemption transactions for Shares (collectively, “Share Transactions”) via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (hereinafter, “NSCC”). The Company and Trust each represent and warrant that it: (a) has entered into an agreement with NSCC, (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking, and (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of Share Transactions. The Trust agrees to provide Company with account positions and activity data relating to Share Transactions via Networking. Company shall pay for Shares by the scheduled close of federal funds transmissions on the same Business Day on which it places an order to purchase Shares in accordance with this section. “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. Payment shall be in federal funds transmitted by wire from the designated NSCC Settling Bank (on behalf of Company).

For purposes of this Agreement, “Fund/SERV” shall mean NSCC’s system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; “Networking” shall mean NSCC’s (Level Three) system that allows mutual funds and life insurance companies to exchange account level information electronically; and “Settling Bank” shall mean the entity appointed by the Trust to perform such settlement services on behalf of the Trust, which agrees to abide by NSCC’s then current rules and procedures insofar as they relate to same day funds settlement. In all cases, processing and settlement of Share Transactions shall be done in a manner consistent with applicable law.

The parties agree that if the Trust sends paper information for any Share Transaction for which it also sends information electronically, the Company is not required to consider any such paper information. The Trust further agrees to indemnify and hold the parties harmless in the event information sent electronically differs from the paper information.

In the event that the Company or Trust is prohibited from communicating, processing or settling Share Transactions via Fund/SERV or Networking, such Company or Trust shall promptly notify the Company or Trust. After the Company or Trust have been notified, the provisions of this Agreement concerning non-electronic processing of transactions for Shares shall apply.

1.2. The Underwriter agrees to sell to the Company those Shares of the Trust which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the order for the shares of the Trust. For purposes of this Section 1.2, the Company shall be the designee of the Trust for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such order by 9:00 a.m. central time on the next following Business Day.

3

1.3. The Trust agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Trust calculates its net asset value pursuant to rules of the Securities and Exchange Commission and the Trust shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Trust (hereinafter the “Board”) may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio.

1.4. The Trust and the Underwriter agree that shares of the Trust will be sold only to the Company and its separate accounts or (subject to the other terms of this Agreement and the Shared Exemptive Order) to other life insurance companies that offer variable annuity and/or variable life insurance contracts to the public and which have entered into an agreement with the Trust. No shares of any Portfolio will be sold to the general public.

1.5. The Trust agrees to redeem for cash, on the Company’s request, any full or fractional shares of the Trust held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Trust for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such request for redemption on the next following Business Day.

1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Trust shall be made in accordance with the provisions of such prospectus.

1.7. The Company shall pay for Trust shares on the next Business Day after an order to purchase Trust shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Trust of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Trust.

1.8. Issuance and transfer of the Trust’s shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Trust will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account.

1.9. The Trust shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the Trust’s shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions.

1.10. The Trust shall make the net asset value per share for each Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally by 5:30 p.m. central time) and shall use its best efforts to make such net asset value per share available by 5:00 p.m. central time.

1.11. The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Trust’s shares may be sold to other insurance companies (subject to Section 1.4 and Article VI hereof) and the cash value of the Contracts may be invested in other investment companies.

ARTICLE II. Representations and Warranties

2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; or that the Contracts are not registered in proper reliance on an exemption from registration under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with

4

all applicable Federal and State laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section 508A.1 of the Iowa Insurance Code and has registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts, or that the Company will not register the Account in proper reliance upon an exclusion from registration under the1940 Act.

2.2. The Trust represents and warrants that Trust shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the state of Iowa and all applicable federal and state securities laws and that the Trust is and shall remain registered under the 1940 Act. The Trust shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Trust shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust or the Underwriter.

2.3. The Trust represents that it intends to qualify as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended, (the “Code”) and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future.

2.4. The Company represents that the Contracts are currently treated as endowment or annuity insurance contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Trust and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future.

2.5. The Fund represents and warrants that should it ever desire to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Directors, including a majority who are not “interested persons” of the Fund under the 1940 Act (“disinterested Directors”), will formulate and approve any plan under Rule 12b-1 to finance distribution expenses. To the extent that any Class of the Fund may finance its distribution expenses pursuant to a Plan adopted under Rule 12b-1, the Fund undertakes to comply with any then current SEC and SEC staff interpretations concerning Rule 12b-1 or any successor provisions.

2.6. The Trust makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Trust represents that the Trust’s investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the state of Iowa and the Trust and the Underwriter represent that their respective operations are and shall at all times remain in material compliance with the laws of the state of Iowa to the extent required to perform this Agreement.

2.7. The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Trust shares in accordance with the laws of the State of Iowa and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act.

2.8. The Trust represents that it is lawfully organized and validly existing under the laws of Iowa and that it does and will comply in all material respects with the 1940 Act.

2.9. The Underwriter represents and warrants that the Adviser is and shall remain duly registered in all material respects under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Trust in compliance in all material respects with the laws of the State of              and any applicable state and federal securities laws.

5

2.10. The Trust and Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Trust are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.

2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Trust are covered by a blanket fidelity bond or similar coverage for the benefit of the Trust, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less than $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Trust and the Underwriter in the event that such coverage no longer applies.

ARTICLE III. Prospectuses and Proxy Statements; Voting

3.1. The Underwriter shall provide the Company with as many printed copies of the Trust’s current prospectus and Statement of Additional Information (describing only the designated Portfolios listed on Schedule A) or, to the extent permitted, the Trust’s profiles as the Company may reasonably request. If requested by the Company in lieu thereof, the Trust shall provide camera-ready film containing the Trust’s prospectus and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Trust is amended during the year) to have the prospectus for the Contracts and the Trust’s prospectus printed together in one document, and to have the Statement of Additional Information for the Trust and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the Trust’s prospectus and/or its Statement of Additional Information in combination with other fund companies’ prospectuses and statements of additional information. All such documents shall be provided to the Company within time reasonably required to allow for printing and delivery to Contract owners, but no later than five business days prior to the date the documents are required under then-current regulations to be sent to Contract owners. Except as provided in the following three sentences, all expenses of printing and distributing Trust prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Trust. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Trust’s prospectus, the Trust will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the Contracts, and B is the Trust’s per unit cost of typesetting and printing the Trust’s prospectus. The same procedures shall be followed with respect to the Trust’s Statement of Additional Information.

The Company agrees to provide the Trust or its designee with such information as may be reasonably requested by the Trust to assure that the Trust’s expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts.

3.2. The Trust’s prospectus shall state that the Statement of Additional Information for the Trust is available from the Underwriter or the Company (or in the Trust’s discretion, the Prospectus shall state that such Statement is available from the Trust).

3.3. The Trust, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners.

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3.4. If and to the extent required by law the Company shall:

(i) solicit voting instructions from Contract owners;

(ii) vote the Trust shares in accordance with instructions received from Contract owners; and

(iii) vote Trust shares for which no instructions have been received in a particular separate account in the same proportion as Trust shares of such portfolio for which instructions have been received in that separate account, so long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.

3.5. The Company shall be responsible for assuring that each of its separate accounts participating in the Trust calculates voting privileges as required by the Shared Exemptive Order and consistent with any reasonable standards the Trust may adopt.

3.6. The Trust will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Trust will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Trust is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act in accordance with the Securities and Exchange Commission’s interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto.

ARTICLE IV. Sales Material and Information

4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee, each piece of sales literature or other promotional material in which the Trust or its investment adviser or the Underwriter is named, at least fifteen Business Days prior to its use. No such material shall be used if the Trust or its designee reasonably objects to such use within fifteen Business Days after receipt of such material.

4.2. The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Trust shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee or by the Underwriter, except with the permission of the Trust or the Underwriter or the designee of either.

4.3. The Trust, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or its separate account(s), is named at least fifteen Business Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within fifteen Business Days after receipt of such material.

4.4. The Trust and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company.

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4.5. The Trust will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Trust or its shares, contemporaneously with the filing of such document with the Securities and Exchange Commission or other regulatory authorities.

4.6. The Company will provide to the Trust at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, contemporaneously with the filing of such document with the SEC or other regulatory authorities.

4.7. For purposes of this Article IV, the phrase “sales literature or other promotional material” includes, but is not limited to, any of the following that refer to the Trust or any affiliate of the Trust: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, prospectuses, Statements of Additional Information, shareholder reports, and proxy materials.

ARTICLE V. Fees and Expenses

5.1. The Trust and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Trust or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Trust.

5.2. All expenses incident to performance by the Trust under this Agreement shall be paid by the Trust. The Trust shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Trust, in accordance with applicable state laws prior to their sale. The Trust shall bear the expenses for the cost of registration and qualification of the Trust’s shares, preparation and filing of the Trust’s prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Trust’s shares.

5.3. The Company shall bear the expenses of distributing the Trust’s prospectus, proxy materials and reports to owners of Contracts issued by the Company.

ARTICLE VI. Diversification

6.1. The Trust will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Trust will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Trust, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Trust so as to achieve compliance within the grace period afforded by Regulation 1.817-5.

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ARTICLE VII. Potential Conflicts

7.1. The Trust, if it determines to offer its shares to any other insurance company, separate account or to a qualified plan shall furnish the Company with a copy of its application for an order of the Securities and Exchange Commission under Section 6(c) of the 1940 Act for mixed and shared funding relief, and the notice of such application and order when issued by the SEC. The Company agrees to comply with the conditions on which such order is issued, including reporting any potential or existing conflicts promptly to the Board of Directors of the Trust (“Board”), and in particular whenever contract owner voting instructions are disregarded, to the extent such conditions are not materially different from the conditions of the mixed and shared funding relief that the Company has agreed to be bound by in similar participation agreements with other fund providers, and recognizes that it shall be responsible for assisting the Board in carrying out is responsibilities in connection with such order. The Company agrees to carry out such responsibilities with a view to the interests of existing contract owners.

7.2 The Board will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Trust. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof.

7.3. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Exemptive Order by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded.

7.4. If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company shall, at its expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Trust or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Trust, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of the Company) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account.

7.5. If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust’s election, to withdraw the affected Account’s investment in the Trust and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Trust shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust.

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7.6. If a material irreconcilable conflict arises because a particular state insurance regulator’s decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account’s investment in the Trust and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Trust shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust.

7.7. For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Trust be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.4 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account’s investment in the Trust and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board.

7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Exemptive Order) on terms and conditions materially different from those contained in the Shared Exemptive Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable.

ARTICLE VIII. Indemnification

8.1. Indemnification By The Company

8.1(a). The Company agrees to indemnify and hold harmless the Underwriter and the Trust and each trustee of the Board and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust’s shares or the Contracts and:

(i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Trust for use in the Registration Statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or

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(ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Trust Shares; or

(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Trust by or on behalf of the Company; or

(iv) arise as a result of any material failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or

(v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof.

8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.

8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Trust Shares or the Contracts or the operation of the Trust.

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8.2. Indemnification by the Underwriter

8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust’s shares or the Contracts and:

(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Trust by or on behalf of the Company for use in the Registration Statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or

(ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Trust, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Trust shares; or

(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Underwriter; or

(iv) arise as a result of any material failure by the Underwriter to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or

(v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof.

8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to each Company or the Account, whichever is applicable.

8.2(c). The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

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8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account.

8.3. Indemnification By the Trust

8.3(a). The Trust agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Trust and:

(i) arise as a result of any material failure by the Trust to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement);or

(ii) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof.

8.3(b). The Trust shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party’s willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified Party’s reckless disregard of obligations and duties under this Agreement or to the Company, the Trust, the Underwriter or each Account, whichever is applicable.

8.3(c). The Trust shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Trust of any such claim shall not relieve the Trust from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Trust will be entitled to participate, at its own expense, in the defense thereof. The Trust also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Trust to such party of the Trust’s election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Trust will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.

8.3(d). The Company and the Underwriter agree promptly to notify the Trust of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Trust.

ARTICLE IX. Applicable Law

9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Iowa.

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9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Securities and Exchange Commission may grant (including any Shared Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith.

ARTICLE X. Termination

10.1. This Agreement shall continue in full force and effect until the first to occur of:

(a) termination by any party for any reason by ninety (90) days advance written notice delivered to the other parties; or

(b) termination by the Company by written notice to the Trust and the Underwriter with respect to any Portfolio based upon the Company’s determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or

(c) termination by the Company by written notice to the Trust and the Underwriter with respect to any Portfolio in the event any of the Portfolio’s shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or

(d) termination by the Company by written notice to the Trust and the Underwriter with respect to any Portfolio in the event that such Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Trust may fail to so qualify; or

(e) termination by the Company by written notice to the Trust and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or

(f) termination by either the Trust or the Underwriter by written notice to the Company, if (1) either one or both of the Trust or the Underwriter respectively, shall determine, in their sole judgment reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of either the Trust or the Underwriter, (2) the Trust or the Underwriter shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Trust or the Underwriter shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or

(g) termination by the Company by written notice to the Trust and the Underwriter, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that either the Trust or the Underwriter has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Trust and the Underwriter in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Trust and/or the Underwriter and any other changes in circumstances since the giving of such notice, such determination of the Company shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or

10.2. Effect of Termination. Notwithstanding any termination of this Agreement, the Trust and the Underwriter shall at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of

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termination of this Agreement (hereinafter referred to as “Existing Contracts”). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement.

10.3. The Company shall not redeem Trust shares attributable to the Contracts (as opposed to Trust shares attributable to the Company’s assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a “Legally Required Redemption”) or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Trust and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Trust and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract Owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Trust or the Underwriter 90 days notice of its intention to do so.

ARTICLE XI. Notices

Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party.

If to the Trust:

Attention: Chief Legal Counsel

If to the Company:

4333 Edgewood Road, N E

Cedar Rapids, Iowa 52499-0001

Attention: Financial Markets Division, Legal Department

If to the Underwriter:

Attention: Chief Legal Counsel

ARTICLE XII. Miscellaneous

12.1. All persons dealing with the Trust must look solely to the property of the Trust for the enforcement of any claims against the Trust as neither the Board, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Trust.

12.2. Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party.

15

12.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

12.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.

12.5. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.

12.6. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the Iowa Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the insurance operations of the Company are being conducted in a manner consistent with the Iowa Insurance Regulations and any other applicable law or regulations.

12.7. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.

12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto; provided, however, that the Underwriter may assign this Agreement or any rights or obligations hereunder to any affiliate of or company under common control with the Underwriter, if such assignee is duly licensed and registered to perform the obligations of the Underwriter under this Agreement. The Company shall promptly notify the Trust and the Underwriter of any change in control of the Company.

12.9. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee copies of the following reports:

(a) the Company’s annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted accounting principles (“GAAP”), if any), as soon as practical and in any event within 90 days after the end of each fiscal year;

(b) the Company’s quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period:

(c) any financial statement, proxy statement, notice or report of the Company sent to stockholders and/or policyholders, as soon as practical after the delivery thereof to stockholders;

(d) any registration statement (without exhibits) and financial reports of the Company filed with the Securities and Exchange Commission or any state insurance regulator, as soon as practical after the filing thereof;

(e) any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below.

16

	Company:
SEAL
	By its authorized officer,
	By:
	Title:
	Date:

	Trust:
SEAL
	By its authorized officer,
	By:
	Title:
	Date:

	Underwriter:
SEAL
	By its authorized officer,
	By:
	Title:
	Date:

17

SCHEDULE A

SEPARATE ACCOUNTS, ASSOCIATED CONTRACTS, AND PORTFOLIOS

Name of Separate Account and Date Established by the Board of Directors Policy Form Numbers of Contracts Funded Applicable Portfolio

18

EX-9.A

EXHIBIT (9)(a)

OPINION AND CONSENT OF COUNSEL

[Transamerica Life Insurance Company Letterhead]

September 30, 2008

Transamerica Life Insurance Company

4333 Edgewood Road N.E.

Cedar Rapids, Iowa 52499-0001

Dear Sir/Madam:

With reference to the Registration Statement on Form N-4 by Transamerica Life Insurance Company and Separate Account VA - 5 with the Securities and Exchange Commission covering individual variable annuity contracts, I have consulted with outside counsel and examined such documents and such law as I considered necessary and appropriate, and on the basis of such examination and consultation, it is my opinion that:

1. Transamerica Life Insurance Company is duly organized and validly existing under the laws of the State of Iowa and has been duly authorized to issue individual variable annuity contracts by the Department of Insurance of the State of Iowa.

2. Separate Account VA - 5 is a duly authorized and existing separate account established pursuant to the provisions of Section 508A.1 of the Iowa Insurance Code.

3. The Individual Variable Annuity Contracts have been duly authorized by Transamerica Life Insurance Company and, when sold in jurisdictions authorizing such sales, in accordance with and when issued as contemplated by said Form N-4 Registration Statement, will constitute legal, validly issued and binding obligations of Transamerica Life Insurance Company.

I hereby consent to the filing of this opinion as an exhibit to said N-4 Registration Statement.

Very truly yours,

TRANSAMERICA LIFE INSURANCE COMPANY

/s/ Darin D. Smith

Darin D. Smith

General Counsel

EX-9.B

EXHIBIT (9)(b)

Consent of Counsel

[Sutherland Asbill & Brennan Letterhead]

September 30, 2008

Board of Directors

Transamerica Life Insurance Company

4333 Edgewood Road, NE

Cedar Rapids, IA. 52499-0001

RE: Separate Account VA - 5

Distinct Assets From Transamerica

File No. 811-08158

To the Board of Directors:

We hereby consent to the use of our name under the caption “Legal Matters” in the prospectus supplement contained in the Registration Statement on Form N-4 (File No. 811-08158) of the Separate Account VA - 5 filed by Transamerica Life Insurance Company with the Securities and Exchange Commission. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933.

Very truly yours,
Sutherland Asbill & Brennan LLP
By:	/s/ Frederick R. Bellamy, Esq.
	Frederick R. Bellamy, Esq.

EX-10.A

Exhibit 10(a)

Consent of Independent Registered Public Accounting Firm

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Independent Registered Public Accounting Firm” in the Supplement to the Prospectus and to the use of our reports: (1) dated March 28, 2008, with respect to the statutory-basis financial statements and schedules of Transamerica Occidental Life Insurance Company, (2) dated March 28, 2008, with respect to the statutory-basis financial statements and schedules of Transamerica Life Insurance Company, (3) dated August 5, 2008, with respect to the statutory-basis financial statements and schedules of Life Investors Insurance Company of America and (4) dated March 21, 2008, with respect to the financial statements of the subaccounts of Separate Account VA-5, which are available for investment by contract owners of the Distinct Assets Variable Annuity, included in Amendment No. 8 to the Registration Statement (Form N-4 No. 811-08158) under the Investment Company Act of 1940 and related Supplement to the Prospectus and Supplement to the Statement of Additional Information of Distinct Assets Variable Annuity.

/s/    Ernst & Young LLP

Des Moines, Iowa

September 26, 2008

EX-13

EXHIBIT (13)

POWERS OF ATTORNEY

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Director and President of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Brenda K. Clancy

Brenda K. Clancy

Director and President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Director and Chairman of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Kenneth Kilbane

Kenneth Kilbane

Director and Chairman of the Board

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Director and Chief Executive Officer of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Mark W. Mullin

Mark W. Mullin

Director and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Director, Chief Tax Officer and Senior Vice President of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Arthur C. Schneider

Arthur C. Schneider

Director, Chief Tax Officer and Senior Vice President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Director, Senior Vice President, Secretary and General Counsel of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Craig D. Vermie

Craig D. Vermie

Director, Senior Vice President, Secretary and General Counsel

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Vice President and Treasurer of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ M. Craig Fowler

M. Craig Fowler

Vice President and Treasurer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I, a Vice President and Corporate Controller of Transamerica Life Insurance Company, an Iowa corporation, do hereby appoint Darin D. Smith and Frank A. Camp, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, in connection with the registration of the variable contracts listed below, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder without the others.

Separate Account Name	Product Name	SEC 1933 File Number
Separate Account VA B	Transamerica Landmark Variable Annuity	033-33085
Separate Account VA B	Transamerica Freedom Variable Annuity	033-56908
Separate Account VA C	Transamerica EXTRA Variable Annuity	333-83957
Separate Account VA K	Retirement Income Builder-BAI Variable Annuity	333-76230
Separate Account VA Q	Flexible Premium Variable Annuity - B	333-110049
Separate Account VA R	Flexible Premium Variable Annuity - C	333-109580
Separate Account VA W	Flexible Premium Variable Annuity - G	333-116562
Separate Account VA X	Flexible Premium Variable Annuity - I	333-125817
Separate Account VA Y	Flexible Premium Variable Annuity - J	333-131987
Separate Account VA Z	Flexible Premium Variable Annuity - K	333-142762
Separate Account VA EE	Flexible Premium Variable Annuity – O	333-149336
Separate Account VA-2L	Dreyfus/Transamerica Triple Advantage® Variable Annuity
Separate Account VA-5	Distinct AssetsSM
Retirement Builder Variable Annuity Account	Portfolio Select Variable AnnuitySM	333-07509

IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of July, 2008.

/s/ Eric J. Martin

Eric J. Martin

Vice President and Corporate Controller