As filed with the Securities and Exchange Commission on October 1, 2014

Registration No.        333-            

811- 22113

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-4

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

and

REGISTRATION STATEMENT UNDER

THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 6

SEPARATE ACCOUNT VA AA

(Exact Name of Registrant)

TRANSAMERICA PREMIER LIFE INSURANCE COMPANY

(Name of Depositor)

(Former Depositor, Western Reserve Life Assurance Co. of Ohio)

4333 Edgewood Road NE

Cedar Rapids, IA 52499

(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number: (800) 355-8511

Alison Ryan, Esq.

Transamerica Premier Life Insurance Company

4333 Edgewood Road, N.E.

Cedar Rapids, IA 52499-4240

(Name and Address of Agent for Service)

Title of Securities Being Registered:    Units of interest in a separate account under flexible premium individual deferred variable annuity contracts

Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of this 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.

WRL FREEDOM ADVISOR^SM

Issued by

TRANSAMERICA PREMIER LIFE INSURANCE COMPANY

Separate Account VA AA

Supplement Dated October 1, 2014

to the

Prospectus dated May 1, 2009, as Supplemented

Service Center: 4333 Edgewood Road NE

Cedar Rapids, Iowa 52499-0001

Phone: (800) 333-6524

Transamerica Premier Life Insurance Company (“TPLIC” or the “Company”) is amending the prospectus for WRL Freedom Advisor^SM policies (the “Policies”) for the purpose of providing information regarding the merger (the “Merger”) of the insurance company on your Policy, Western Reserve Life Assurance Co. of Ohio (“Western Reserve”), with and into TPLIC.

Western Reserve no longer sells the Policies. Following the Merger, TPLIC will not sell the former Western Reserve Policies.

Effective on or about October 1, 2014, Western Reserve merged with and into its affiliate TPLIC. Before the Merger, Western Reserve was the insurance company on the Policies. Upon consummation of the Merger, Western Reserve’s corporate existence ceased by operation of law, and TPLIC assumed legal ownership of all of the assets of Western Reserve, including Separate Account VA AA (the “separate account”) that funds the Policies, and the assets of the separate account. As a result of the merger, TPLIC became responsible for all liabilities and obligations of Western Reserve, including those created under the Policies. The Policies have thereby become flexible premium individual deferred variable annuity policies funded by a separate account of TPLIC.

The Merger did not affect the terms of, or the rights and obligations under, your Policy, other than to change the company that provides your Policy benefits from Western Reserve to TPLIC. The Merger also did not result in any adverse tax consequences for any Policy owners, and Policy owners will not be charged additional fees or expenses as a result of the Merger. You will receive a Policy endorsement from TPLIC that reflects the change from Western Reserve to TPLIC. Until we amend all forms we use that are related to the Policies, we may still reflect Western Reserve in correspondence and disclosure to you.

The following are the available investment options:

SUBACCOUNT	PORTFOLIO	ADVISOR/SUBADVISOR
Access One Trust
Access VP High Yield FundSM	Access VP High Yield FundSM	ProFund Advisors LLC
AllianceBernstein Variable Products Series Fund, Inc. – Class B
AllianceBernstein Balanced Wealth Strategy Portfolio	AllianceBernstein Balanced Wealth Strategy Portfolio	AllianceBernstein L.P.
Fidelity® Variable Insurance Products Fund – Service Class 2
Fidelity® VIP Index 500 Portfolio	Fidelity® VIP Index 500 Portfolio	Fidelity Management & Research Company and Geode Capital Management, LLC as subadvisor
ProFunds
ProFund VP Asia 30	ProFund VP Asia 30	ProFund Advisors LLC
ProFund VP Basic Materials	ProFund VP Basic Materials	ProFund Advisors LLC
ProFund VP Bull	ProFund VP Bull	ProFund Advisors LLC
ProFund VP Consumer Services	ProFund VP Consumer Services	ProFund Advisors LLC
ProFund VP Emerging Markets	ProFund VP Emerging Markets	ProFund Advisors LLC
ProFund VP Europe 30	ProFund VP Europe 30	ProFund Advisors LLC
ProFund VP Falling U.S. Dollar	ProFund VP Falling U.S. Dollar	ProFund Advisors LLC

SUBACCOUNT	PORTFOLIO	ADVISOR/SUBADVISOR
ProFund VP Financials	ProFund VP Financials	ProFund Advisors LLC
ProFund VP International	ProFund VP International	ProFund Advisors LLC
ProFund VP Japan	ProFund VP Japan	ProFund Advisors LLC
ProFund VP Mid-Cap	ProFund VP Mid-Cap	ProFund Advisors LLC
ProFund VP Money Market	ProFund VP Money Market	ProFund Advisors LLC
ProFund VP NASDAQ-100	ProFund VP NASDAQ-100	ProFund Advisors LLC
ProFund VP Oil & Gas	ProFund VP Oil & Gas	ProFund Advisors LLC
ProFund VP Pharmaceuticals	ProFund VP Pharmaceuticals	ProFund Advisors LLC
ProFund VP Precious Metals	ProFund VP Precious Metals	ProFund Advisors LLC
ProFund VP Short Emerging Markets	ProFund VP Short Emerging Markets	ProFund Advisors LLC
ProFund VP Short International	ProFund VP Short International	ProFund Advisors LLC
ProFund VP Short NASDAQ-100	ProFund VP Short NASDAQ-100	ProFund Advisors LLC
ProFund VP Short Small-Cap	ProFund VP Short Small-Cap	ProFund Advisors LLC
ProFund VP Small-Cap	ProFund VP Small-Cap	ProFund Advisors LLC
ProFund VP Small-Cap Value	ProFund VP Small-Cap Value	ProFund Advisors LLC
ProFund VP Telecommunications	ProFund VP Telecommunications	ProFund Advisors LLC
ProFund VP UltraSmall-Cap	ProFund VP UltraSmall-Cap	ProFund Advisors LLC
ProFund VP U.S. Government Plus	ProFund VP U.S. Government Plus	ProFund Advisors LLC
ProFund VP Utilities	ProFund VP Utilities	ProFund Advisors LLC
Transamerica Series Trust - Service Class
TA Aegon High Yield Bond	Transamerica Aegon High Yield Bond VP	Aegon USA Investment Management, LLC
TA Aegon Money Market	Transamerica Aegon Money Market VP	Aegon USA Investment Management, LLC
TA Aegon Tactical Vanguard ETF – Conservative	Transamerica Aegon Active Asset Allocation – Conservative VP	Aegon USA Investment Management, LLC
TA Aegon Tactical Vanguard ETF – Growth	Transamerica Aegon Active Asset Allocation – Moderate Growth VP	Aegon USA Investment Management, LLC
TA Aegon U.S. Government Securities	Transamerica Aegon U.S. Government Securities VP	Aegon USA Investment Management, LLC
TA AllianceBernstein Dynamic Allocation	Transamerica AllianceBernstein Dynamic Allocation VP	AllianceBernstein L.P.
TA Barrow Hanley Dividend Focused	Transamerica Barrow Hanley Dividend Focused VP	Barrow, Hanley, Mewhinney, & Strauss, LLC
TA BlackRock Tactical Allocation	Transamerica BlackRock Tactical Allocation VP	BlackRock Financial Management, Inc.
TA Clarion Global Real Estate Securities	Transamerica Clarion Global Real Estate Securities VP	CBRE Clarion Securities LLC
TA JPMorgan Core Bond	Transamerica JPMorgan Core Bond VP	J.P. Morgan Investment Management Inc.
TA JPMorgan Enhanced Index	Transamerica JPMorgan Enhanced Index VP	J.P. Morgan Investment Management Inc.
TA JPMorgan Tactical Allocation	Transamerica JPMorgan Tactical Allocation VP	J.P. Morgan Investment Management Inc.
TA Janus Balanced	Transamerica Janus Balanced VP	Janus Capital Management LLC
TA Jennison Growth	Transamerica Jennison Growth VP	Jennison Associates LLC
TA MFS International Equity	Transamerica MFS International Equity VP	MFS® Investment Management
TA Morgan Stanley Capital Growth	Transamerica Morgan Stanley Capital Growth VP	Morgan Stanley Investment Management Inc.
TA Morgan Stanley Mid-Cap Growth	Transamerica Morgan Stanley Mid-Cap Growth VP	Morgan Stanley Investment Management Inc.
TA Multi-Managed Balanced	Transamerica Multi-Managed Balanced VP	J.P. Morgan Investment Management Inc. and Aegon USA Investment Management, LLC
TA PIMCO Tactical - Balanced	Transamerica PIMCO Tactical - Balanced VP	Pacific Investment Management Company, LLC
TA PIMCO Tactical - Conservative	Transamerica PIMCO Tactical - Conservative VP	Pacific Investment Management Company, LLC
TA PIMCO Tactical - Growth	Transamerica PIMCO Tactical - Growth VP	Pacific Investment Management Company, LLC
TA PIMCO Total Return	Transamerica PIMCO Total Return VP	Pacific Investment Management Company LLC
TA Systematic Small/Mid Cap Value	Transamerica Systematic Small/Mid Cap Value VP	Systematic Financial Management L.P.
TA T. Rowe Price Small Cap	Transamerica T. Rowe Price Small Cap VP	T. Rowe Price Associates, Inc.
TA WMC US Growth	Transamerica WMC US Growth VP	Wellington Management Company, LLP
Transamerica Series Trust - Initial Class
TA Vanguard ETF – Balanced	Transamerica Vanguard ETF Portfolio – Balanced VP	Aegon USA Investment Management, LLC
TA Vanguard ETF – Growth	Transamerica Vanguard ETF Portfolio – Growth VP	Aegon USA Investment Management, LLC

Additional Information:

Effective open of business September 17, 2012, the following subaccount closed to new investments:

Franklin Templeton Variable Insurance Products Trust – Class 4
Franklin Founding Funds Allocation VIP Fund	Franklin Founding Funds Allocation VIP Fund	Franklin Templeton Services, LLC

The following hereby replaces the Other Information - Legal Proceedings section of the prospectus:

Legal Proceedings

We, like other life insurance companies, are subject to regulatory and legal proceedings, including class action lawsuits, in the ordinary course of our business. Such legal and regulatory matters include proceedings specific to us and other proceedings generally applicable to business practices in the industry in which we operate. In some lawsuits and regulatory proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation or regulatory proceeding cannot be predicted with certainty, at the present time, we believe that there are no pending or threatened proceedings or lawsuits that are likely to have a material adverse impact on the separate account, on TCI’s ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the policy.

We are currently being audited on behalf of multiple states’ treasury and controllers’ offices for compliance with laws and regulations concerning the identification, reporting and escheatment of unclaimed benefits or abandoned funds. The audits focus on insurance company processes and procedures for identifying unreported death claims, and their use of the Social Security Master Death File to identify deceased policy and contract holders. In addition, we are the subject of multiple state Insurance Department inquiries and market conduct examinations with a similar focus on the handling of unreported claims and abandoned property. The audits and related examination activity have resulted in or may result in additional payments to beneficiaries, escheatment of funds deemed abandoned, administrative penalties and changes in our procedures for the identification of unreported claims and handling of escheatable property. We do not believe that any regulatory actions or agreements that have resulted from or will result from these examinations has had or will have a material adverse impact on the separate account, on TCI’s ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the policy. Although it is possible that the outcome of any such examination could have a material adverse impact on results of TPLIC’s operations in any particular reporting period as the proceedings are resolved, TPLIC believes that it has adequately reserved for the unclaimed matters described here.

The following hereby replaces the Other Information - Western Reserve Life Assurance Co. Of Ohio section of the prospectus:

Transamerica Premier Life Insurance Company

Transamerica Premier Life Insurance Company (formerly known as Monumental Life Insurance Company) was incorporated under the laws of the State of Maryland on March 5, 1858. It was redomesticated to the State of Iowa on April 1, 2007. It is engaged in the sale of life and health insurance and annuity policies. The 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. All of the stock of Transamerica Corporation is indirectly owned by Aegon N.V. of The Netherlands, the securities of which are publicly traded. Aegon N.V., a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business. The Company is licensed in the District of Columbia, Guam, Puerto Rico and all states except New York.

On July 31, 2014, Monumental Life Insurance Company changed its name to Transamerica Premier Life Insurance Company.

All obligations arising under the policies, including the promise to make annuity payments, are general corporate obligations of the Company. Accordingly no financial institution, brokerage firm or insurance agency is responsible for the financial obligations of the Company arising under the policies.

The following hereby replaces Other Information - The Separate Account section of the prospectus:

The Separate Account

The Company established a separate account, called Separate Account VA AA, under the laws of the State of Ohio on May 30, 2007. Effective on October 1, 2014, the Separate Account VA AA was re-domesticated under the laws of the State of Iowa and reestablished under TPLIC. The separate account receives and invests the premium payments that are allocated to it for investment in shares of the underlying fund portfolios.

The separate account is divided into subaccounts, each of which invests in shares of a specific portfolio of a fund. These subaccounts buy and sell portfolio shares at net asset value without any sales charge. Any dividends and distributions from a portfolio are reinvested at net asset value in shares of that portfolio.

The separate account is registered with the SEC as a unit investment trust under the 1940 Act. However, the SEC does not supervise the management, the investment practices, or the policies of the separate account or the Company. Income, gains and losses (whether or not realized), from assets allocated to the separate account are, in accordance with the policies, credited to or charged against the separate account without regard to the Company’s other income, gains or losses.

The assets of the separate account are held in the Company’s name on behalf of the separate account and belong to the Company. However, the portion of the assets of the separate account equal to the reserves and other policy liabilities with respect to the separate account are not chargeable with liabilities arising out of any other business the Company may conduct. The separate account may include other subaccounts that are not available under these policies.

WRL FREEDOM ADVISOR

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

SEPARATE ACCOUNT VA AA

Supplement Dated November 4, 2013

to the

Prospectus dated May 1, 2009 as Supplemented

The following hereby amends, and to the extent inconsistent replaces, the corresponding paragraph in the 8. DEATH BENEFIT section in the prospectus:

We will pay a death benefit to your beneficiary, under certain circumstances, if the annuitant dies during the accumulation phase. If there is a surviving owner(s) when the annuitant dies, the surviving owner(s) will receive the death benefit instead of the listed beneficiary. The person receiving the death benefit may choose an annuity payment option (if you pick a variable annuity payment option fees and expenses will apply), or may choose to receive the death benefit via partial withdrawals, or lump sum withdrawal. The guarantees of these death benefits are based on our claims-paying ability.

We will determine the amount of and pay the death benefit proceeds, if any are payable on a policy, upon receipt at our Administrative and Service Office of satisfactory proof of the annuitant’s death, directions regarding how to pay the death benefit, and any other documents, forms and information that we need (collectively referred to as “due proof of death”). For policies with multiple beneficiaries, we will pay the first beneficiary to provide us with due proof of death their share of the death proceeds. We will not pay any remaining beneficiary their share until we receive due proof of death from that beneficiary. Such beneficiaries continue to bear the investment risk until they submit due proof of death. Please note, we may be required to remit the death benefit proceeds to a state prior to receiving “due proof of death.” See section 11. OTHER INFORMATION - Abandoned or Unclaimed Property.

Please Note: Such due proof of death must be received in good order to avoid a delay in processing the death benefit claim. Due proof requires selecting a payment option. See section 11. OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.

WRL FREEDOM ADVISOR

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated May 1, 2013

to the

Prospectus dated May 1, 2009

The following hereby amends and supplements your prospectus:

Abandoned or Unclaimed Property

Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including proceeds of annuity, life and other insurance policies) under various circumstances. In addition to the state unclaimed property laws, we may be required to escheat property pursuant to regulatory demand, finding, agreement or settlement. To help prevent such escheatment, it is important that you keep your contact and other information on file with us up to date, including the names, contact information and identifying information for owners, insureds, annuitants, beneficiaries and other payees. Such updates should be communicated in a form and manner satisfactory to us.

Legal Proceedings

We, like other life insurance companies, are subject to regulatory and legal proceedings, including class action lawsuits, in the ordinary course of our business. Such legal and regulatory matters include proceedings specific to us and other proceedings generally applicable to business practices in the industry in which we operate. In some lawsuits and regulatory proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation or regulatory proceeding cannot be predicted with certainty, at the present time, we believe that there are no pending or threatened proceedings or lawsuits that are likely to have a material adverse impact on the separate account, on TCI’s ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the policy.

We are currently being audited on behalf of multiple states’ treasury and controllers’ offices for compliance with laws and regulations concerning the identification, reporting and escheatment of unclaimed benefits or abandoned funds. The audits focus on insurance company processes and procedures for identifying unreported death claims, and their use of the Social Security Master Death File to identify deceased policy and contract holders. In addition, we are the subject of multiple state Insurance Department inquiries and market conduct examinations with a similar focus on the handling of unreported claims and abandoned property. The audits and related examination activity may result in additional payments to beneficiaries, escheatment of funds deemed abandoned, administrative penalties and changes in our procedures for the identification of unreported claims and handling of escheatable property. We do not believe that any regulatory actions or agreements that result from these examinations will have a material adverse impact on the separate account, on TCI’s ability to perform under its principal underwriting agreement, or on our ability to meet our obligations under the policy.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

WRL Freedom Advisor dated May 1, 2009

WRL FREEDOM ADVISOR

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated September 14, 2012

to the

Prospectus dated May 1, 2009

Effective on or about September 17, 2012, the following subaccounts were restructured and renamed:

Current:	New:
TA Hanlon Balanced – Service Class subadvised by Hanlon Investment Management, Inc.	TA PIMCO Tactical – Balanced – Service Class subadvised by Pacific Investment Management Company LLC
TA Hanlon Growth – Service Class subadvised by Hanlon Investment Management, Inc.	TA PIMCO Tactical – Growth – Service Class subadvised by Pacific Investment Management Company LLC
TA Hanlon Growth and Income – Service Class subadvised by Hanlon Investment Management, Inc.	TA PIMCO Tactical – Conservative – Service Class subadvised by Pacific Investment Management Company LLC

Effective on or about September 17, 2012, the following subaccount (the “Subaccount”) will be closed to new investments:

— Franklin Templeton VIP Founding Funds Allocation Fund – Class 4 (“Franklin subaccount”)

“Closed to new investments” means no one can allocate additional amounts (either through policy transfer or additional premium) to the Franklin subaccount after September 14, 2012.

If you have any amount in the Franklin subaccount on September 17, 2012, you may do the following (subject to the terms and conditions contained in the prospectus):

• transfer amounts out of the Franklin subaccount into other subaccounts;

• withdraw amounts from the Franklin subaccount; and

• maintain your current investment in the Franklin subaccount.

Please note: If you have given us allocation instructions for premium payments or other purposes (for example, dollar cost averaging, asset rebalancing or riders that contain asset allocation or rebalancing requirements) directing us to invest in the Franklin subaccount, you need to provide us with new instructions for amounts that would have otherwise gone into the Franklin subaccount. If you do not provide new instructions:

— subsequent premium payments and dollar cost averaging transactions will be re-allocated to the remaining available investment choices according to the investment allocation instructions you previously provided; and

— transfers and asset rebalancing transactions will not be processed and new instructions will be required.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

WRL Freedom Advisor dated May 1, 2009

The following hereby replaces the corresponding paragraph in Section 3. INVESTMENT CHOICES, Addition, Deletion or Substitution of Investments:

Similarly, the Company may, at its discretion, close a subaccount to new investment. Any subsequent premium payments or dollar cost averaging transactions into a closed subaccount will be re-allocated to the remaining available investment choices according to the investment allocation instructions you previously provided. Transfers and asset rebalancing transactions into a closed subaccount will not be processed and will cause the entire transfer or asset rebalancing transaction to fail. New instructions will be required in these instances.

2

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated December 12, 2011

to the

Prospectus dated May 1, 2009

Effective on or about December 9, 2011 the following subaccounts merged:

Existing Subaccount	Acquiring Subaccount
Transamerica Global Conservative VP	Transamerica AEGON Active Asset Allocation – Conservative VP
Transamerica Emerging Markets/Pacific Rim VP	Transamerica AEGON Active Asset Allocation – Moderate Growth VP
Transamerica Global Growth VP	Transamerica AEGON Active Asset Allocation – Moderate Growth VP

Effective on or about December 9, 2011 the following subaccount was restructured and renamed:

Old Subaccount Name	New Subaccount Name
Transamerica Global Commodities & Hard Assets VP	Transamerica Janus Balanced VP

Effective on or about December 12, 2011, the following subaccount name changes occurred:

Current Subaccount Name(1)	New Subaccount Name
Transamerica AEGON Active Asset Allocation – Conservative VP	TA AEGON Tactical Vanguard ETF – Conservative
Transamerica AEGON Active Asset Allocation – Moderate Growth VP	TA AEGON Tactical Vanguard ETF – Growth
Transamerica AEGON High Yield Bond VP	TA AEGON High Yield Bond
Transamerica AEGON Money Market VP	TA AEGON Money Market
Transamerica AEGON U.S. Government Securities	TA AEGON U.S. Government Securities
Transamerica Efficient Markets	TA Efficient Markets
Transamerica AllianceBernstein Dynamic Allocation VP	TA AllianceBernstein Dynamic Allocation
Transamerica BlackRock Large Cap Value VP	TA BlackRock Large Cap Value
Transamerica Hanlon Balanced VP	TA Hanlon Balanced
Transamerica Hanlon Growth VP	TA Hanlon Growth
Transamerica Hanlon Growth and Income VP	TA Hanlon Growth and Income
Transamerica Hanlon Income VP	TA Hanlon Income
Transamerica Clarion Global Real Estate Securities VP	TA Clarion Global Real Estate Securities
Transamerica JPMorgan Core Bond VP	TA JPMorgan Core Bond
Transamerica JPMorgan Enhanced Index VP	TA JPMorgan Enhanced Index
Transamerica JPMorgan Tactical Allocation VP	TA JPMorgan Tactical Allocation
Transamerica Multi-Managed Balanced VP	TA Multi-Managed Balanced
Transamerica Janus Balanced VP	TA Janus Balanced
Transamerica Jennison Growth VP	TA Jennison Growth
Transamerica MFS International Equity VP	TA MFS International Equity
Transamerica Morgan Stanley Capital Growth VP	TA Morgan Stanley Capital Growth
Transamerica Morgan Stanley Growth Opportunities VP	TA Morgan Stanley Growth Opportunities
Transamerica Morgan Stanley Mid Cap Growth VP	TA Morgan Stanley Mid Cap Growth
Transamerica PIMCO Total Return	TA PIMCO Total Return
Transamerica Systematic Small/Mid Cap Value	TA Systematic Small/Mid Cap Value
Transamerica T. Rowe Price Small Cap	TA T. Rowe Price Small Cap
Transamerica Third Avenue Value	TA Third Avenue Value
Transamerica WMC Diversified Growth	TA WMC Diversified Growth
Transamerica WMC Diversified Equity VP	TA WMC Diversified Equity

⁽¹⁾  Also the name of the underlying fund portfolio the subaccount invests in. The underlying fund portfolio name is not changing.

Effective on or about December 30, 2011, the following subaccount merger will occur:

Existing Subaccount	Acquiring Subaccount
TA Morgan Stanley Growth Opportunities	TA Morgan Stanley Mid Cap Growth
TA WMC Diversified Equity	TA WMC Diversified Growth

Any references in the Prospectus to the subaccounts are hereby changed as noted above.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

Flexible Premium Variable Annuity – M dated May 1, 2009

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated August 18, 2010

to the Prospectuses For

WRL FREEDOM ATTAINER® (Dated May 1, 2010)	WRL FREEDOM CONQUEROR® (Dated May 1, 2010)
WRL FREEDOM WEALTH CREATOR® (Dated May 1, 2010)	WRL FREEDOM PREMIER® (Dated May 1, 2010)
WRL FREEDOM ACCESS® (Dated May 1, 2008)	WRL FREEDOM BELLWETHER® (Dated May 1, 2008)
WRL FREEDOM ENHANCER® (Dated May 1, 2008)	WRL FREEDOM VARIABLE ANNUITY (Dated May 1, 2009)
FLEXIBLE PREMIUM VARIABLE ANNUITY - M (Dated May 1, 2009)

The following information supplements, amends and replaces the information in the Prospectus regarding the Transamerica Convertible Securities VP:

Effective on or around August 16, 2010, Transamerica Asset Management terminated its investment sub-advisory agreement with Transamerica Investment Management with respect to Transamerica Convertible Securities VP fund and entered into a new investment sub-advisory agreement with AllianceBernstein L.P. In connection with the change in sub-adviser, the Transamerica Convertible Securities VP fund’s investment objective, principal investment strategies and risks and benchmark index, as well as the name, changed. The new name of the fund is Transamerica AllianceBernstein Dynamic Allocation VP.

FLEXIBLE PREMIUM VARIABLE ANNUITY- M

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated June 14, 2010

to the

Prospectus dated May 1, 2009

The following herby amends the “Signature Guarantee” section under “6. ACCESS TO YOUR MONEY” in the prospectus:

Signature Guarantees

As a protection against fraud, we require that the following transaction requests include a Medallion signature guarantee:

— All requests for surrenders (i.e. partial surrenders and full surrenders) over $250,000;

— Any non-electronic disbursement request made on or within 15 days of a change to the address of record for policy owner’s account;

— Any disbursement request made on or within 15 days of an ownership change;

— Any electronic disbursement on or within 15 days of a change to the electronic funds transfer instructions;

— Any disbursement request when the Company has been directed to send the proceeds to a different personal address from the address of record for that policy owner’s account. PLEASE NOTE: This requirement will not apply to disbursement requests made in connection with exchanges of one annuity policy for another with the same owner in a “tax free exchange”;

— All requests for surrenders (i.e. partial surrenders and full surrenders) when the Company does not have an originating or guaranteed signature on file.

You can obtain a Medallion signature guarantee from more than 7,000 financial institutions across the United States and Canada that participate in the Medallion signature guarantee program. This includes many:

— National and state banks

— Savings banks and savings and loan association;

— Securities brokers and dealers; and

— Credit Unions.

The best source of a Medallion signature guarantee is a bank, savings and loan association, brokerage firm, or credit union with which you do business. Guarantor firms may, but frequently do not, charge a fee for their services.

A notary public cannot provide a Medallion signature guarantee. Notarization will not substitute for a Medallion signature guarantee.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

Flexible Premium Variable Annuity – M dated May 1, 2009

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued Through

SEPARATE ACCOUNT VA AA

By

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement dated November 19, 2009

to the

Prospectus dated May 1, 2009

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

Flexible Premium Variable Annuity - M dated May 1, 2009.

MERGER

At the close of business November 20, 2009 (“merger date”), the Transamerica Capital Guardian Value VP will merge into the Transamerica BlackRock Large Cap Value VP with the Transamerica BlackRock Large Cap Value VP being the surviving fund.

If you do not wish to remain allocated to the Transamerica BlackRock Large Cap Value VP, please note that you may transfer your policy value allocated in this subaccount to any of the subaccounts investing in the funds listed in your Prospectus provided your updated investment allocation does not violate any allocation guidelines and restrictions applicable to allocation instructions for premium payments or other purposes (for example, dollar cost averaging or asset rebalancing).

You will not be charged for the transfer we made to the Transamerica BlackRock Large Cap Value VP. In addition, if you reallocate your policy value to another subaccount from the Transamerica BlackRock Large Cap Value VP, you will not be charged for the transfer from that subaccount to another available subaccount if made within 30 days of the merger date. This reallocation also will not count as a transfer for purposes of any free transfers that you receive each contract year.

NEW INVESTMENT CHOICES

This supplement describes new investment choices generally available to policies on or after November 19, 2009.

TRANSAMERICA SERIES TRUST Subadvised by Foxhall

Capital Management, Inc. Transamerica Foxhall Global

Growth VP – Service Class

Transamerica Foxhall Global Conservative VP – Service Class Transamerica

Foxhall Global Hard Asset VP – Service Class Transamerica Foxhall

Emerging Markets/Pacific Rim VP – Service Class Subadvised by Hanlon

Investment Management, Inc.

Transamerica Hanlon Growth VP – Service Class

1

— (Continued)

Transamerica Hanlon Growth and Income VP – Service Class

Transamerica Hanlon Balanced VP – Service Class Transamerica

Hanlon Managed Income VP – Service Class

Please note:

The fax number for Western Reserve has changed to 866-671-9212.

2

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated September 25, 2009

to the

Prospectus dated May 1, 2009

Effective close of business September 28, 2009, we will not accept any premium payment that is allocated to the fixed account or the dollar cost averaging fixed account in excess of $5,000. We also will not accept any premium payment or transfer which would result in the aggregate policy value in the fixed account and the dollar cost averaging fixed account exceeding $5,000.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

Flexible Premium Variable Annuity – M dated May 1, 2009

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Supplement Dated May 18, 2009

to the

Prospectus dated May 1, 2009

Effective May 25, 2009, we will not accept any premium payment that is allocated to the fixed account in excess of $5,000, except the dollar cost averaging fixed account option. We also will not accept any premium payment or transfer which would result in the policy value in the fixed account exceeding $5,000, except the dollar cost averaging fixed account option.

This Prospectus Supplement must be accompanied or preceded

by the Prospectus for the

Flexible Premium Variable Annuity – M dated May 1, 2009

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued Through

SEPARATE ACCOUNT VA AA

By

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

Prospectus

May 1, 2009

This flexible premium deferred annuity policy has many investment choices. There is a separate account that currently provides a means of investing in various underlying fund portfolios. There is also a fixed account, which offers interest at rates that are guaranteed by Western Reserve Life Assurance Co. of Ohio. You can choose any combination of these investment choices. You bear the entire investment risk for all amounts you put in the separate account.

This prospectus and the underlying fund prospectuses give you important information about the policies and the underlying fund portfolios. Please read them carefully before you invest and keep them for future reference.

If you would like more information about the Flexible Premium Variable Annuity – M, you can obtain a free copy of the Statement of Additional Information (SAI) dated May 1, 2009. Please call us at (800) 851-9777 or write us at: Western Reserve Life Assurance Co. of Ohio, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001. A registration statement, including the SAI, has been filed with the Securities and Exchange Commission (SEC) and the SAI is incorporated herein by reference. More information about the variable annuity can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may obtain information about the operation of the public reference room by calling the SEC at 1-800-732-0330. The SEC also maintains a web site (http://www.sec.gov) that contains the prospectus, the SAI, material incorporated by reference, and other information. The table of contents of the SAI is included at the end of this prospectus.

Please note that the policies and the separate account investment choices:

— are not bank deposits

— are not federally insured

— are not endorsed by any bank or government agency

— are not guaranteed to achieve their goal

— are subject to risks, including loss of premium

The Securities and Exchange Commission has not approved or disapproved these securities, or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

PORTFOLIOS ASSOCIATED WITH THE SUBACCOUNTS

TRANSAMERICA SERIES TRUST

Subadvised by BlackRock Investment Management, LLC

Transamerica BlackRock Large Cap Value VP – Service Class

Subadvised by Capital Guardian Trust Company

Transamerica Capital Guardian Value VP – Service Class

Subadvised by ING Clarion Real Estate Securities, L.P.

Transamerica Clarion Global Real Estate Securities VP – Service Class

Subadvised by Federated Equity Management Company of Pennsylvania

Transamerica Federated Market Opportunity VP – Service Class

Subadvised by JPMorgan Investment Advisors, Inc.

Transamerica JPMorgan Core Bond VP – Service Class

Subadvised by J.P. Morgan Investment Management Inc.

Transamerica JPMorgan Enhanced Index VP – Service Class

Subadvised by ClearBridge Advisors, LLC

Transamerica Legg Mason Partners All Cap VP – Service Class

Subadvised by MFS^® Investment Management

Transamerica MFS High Yield VP – Service Class

Transamerica MFS International Equity VP – Service Class

Subadvised by Columbia Management Advisors, LLC

Transamerica Marsico Growth VP – Service Class

Subadvised by Munder Capital Management

Transamerica Munder Net50 VP – Service Class

Subadvised by Pacific Investment Management Company LLC

Transamerica PIMCO Total Return VP – Service Class

Subadvised by T. Rowe Price Associates, Inc.

Transamerica T. Rowe Price Equity Income VP – Service Class

Transamerica T. Rowe Price Small Cap VP – Service Class

Subadvised by Templeton Investment Counsel, LLC and Transamerica Investment Management, LLC

Transamerica Templeton Global VP – Service Class

Subadvised by Third Avenue Management LLC

Transamerica Third Avenue Value VP – Service Class

Subadvised by AEGON USA Investment Management, LLC.

Transamerica Efficient Markets VP – Service Class

Subadvised by Transamerica Investment Management, LLC

Transamerica Balanced VP – Service Class

Transamerica Convertible Securities VP – Service Class

Transamerica Equity VP – Service Class

Transamerica Growth Opportunities VP – Service Class

Transamerica Money Market VP – Service Class

Transamerica Science & Technology VP – Service Class

Transamerica Small/Mid Cap Value VP – Service Class

Transamerica U.S. Government Securities VP – Service Class

Transamerica Value Balanced VP – Service Class

Subadvised by Van Kampen Asset Management

Transamerica Van Kampen Mid-Cap Growth VP – Service Class

Managed by AEGON USA Investment Management, LLC.

Transamerica Index 50 VP – Initial Class

Transamerica Index 75 VP – Initial Class

ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.

Managed by AllianceBernstein L.P.

AllianceBernstein Balanced Wealth Strategy Portfolio – Class B

FIDELITY VARIABLE INSURANCE PRODUCTS FUND

Managed by Fidelity Management & Research Company and Geode Capital Management, LLC as subadviser

Fidelity – VIP Index 500 Portfolio – Service Class 2

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Fund Administrator: Franklin Templeton Services, LLC

Franklin Templeton VIP Founding Funds Allocation Fund – Class 4

PROFUNDS

Managed by ProFund Advisors LLC

ProFund VP Asia 30

ProFund VP Basic Materials

ProFund VP Bull

ProFund VP Consumer Services

ProFund VP Emerging Markets

ProFund VP Europe 30

ProFund VP Falling US Dollar

ProFund VP Financials

ProFund VP International

ProFund VP Japan

ProFund VP Mid-Cap

ProFund VP Money Market

ProFund VP NASDAQ-100

ProFund VP Oil & Gas

ProFund VP Pharmaceuticals

ProFund VP Precious Metals

ProFund VP Short Emerging Markets

ProFund VP Short International

ProFund VP Short NASDAQ-100

ProFund VP Short Small-Cap

ProFund VP Small-Cap

ProFund VP Small-Cap Value

ProFund VP Telecommunications

ProFund VP UltraSmall-Cap

ProFund VP U.S. Government

Plus ProFund VP Utilities

ACCESS ONE TRUST

Managed by ProFund Advisors LLC

Access VP High Yield Fund^SM

2

TABLE OF CONTENTS

GLOSSARY OF TERMS	5
SUMMARY	7
ANNUITY POLICY FEE TABLE AND EXPENSE EXAMPLES	12
1.     THE ANNUITY POLICY	15
2.     PURCHASE	15
Policy Issue Requirements	15
Premium Payments	15
Initial Premium Requirements	16
Additional Premium Payments	16
Maximum Total Premium Payments	16
Allocation of Premium Payments	16
Policy Value	17
3.     INVESTMENT CHOICES	17
The Separate Account	17
Selection of Underlying Portfolios	19
Addition, Deletion, or Substitution of Investments	20
The Fixed Account	21
Transfers	22
Market Timing and Disruptive Trading	22
Third Party Investment Services	26
4.     PERFORMANCE	26
5.     EXPENSES	27
Excess Interest Adjustment	27
Mortality and Expense Risk Fees	27
Premium Taxes	28
Federal, State and Local Taxes	28
Special Service Fees	28
Transfer Fee	28
Administrative Charges	28
Initial Payment Guarantee	28
Fund Facilitation Fee	28
Beneficiary Earnings Enhancement - Extra II	28
Portfolio Fees and Expenses	29
Revenue We Receive	29
6.     ACCESS TO YOUR MONEY	31
Surrenders	31
Delay of Payment and Transfers	31
Excess Interest Adjustment	32
Signature Guarantee	32

7.     ANNUITY PAYMENTS (THE INCOME PHASE)	33
Annuity Payment Options	33
8.     DEATH BENEFIT	36
When We Pay A Death Benefit	36
When We Do Not Pay A Death Benefit	36
Deaths After the Annuity Commencement Date	36
Succession of Ownership	37
Amount of Death Benefit	37
Guaranteed Minimum Death Benefit	37
Adjusted Partial Surrender	38
9.     TAXES	38
Annuity Policies in General	39
Qualified and Nonqualified Policies	39
Surrenders-Qualified Policies Generally	40
Surrenders-403(b) Policies	41
Surrenders-Nonqualified Policies	41
Taxation of Death Benefit Proceeds	42
Annuity Payments	42
Diversification and Distribution Requirements	43
Federal Estate Taxes	43
Generation-Skipping Transfer Tax	43
Annuity Purchases by Residents of Puerto Rico	43
Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations	43
Transfers, Assignments or Exchanges of Policies	43
Possible Tax Law Changes	43
Separate Account Charges	44
Foreign Tax Credits	44
10.  ADDITIONAL FEATURES	44
Systematic Payout Option	44
Initial Payment Guarantee	44
Beneficiary Earnings Enhancement - Extra II	45
Nursing Care and Terminal Condition Withdrawal Option	46
Unemployment Waiver	47
Telephone Transactions	47
Dollar Cost Averaging Program	47
Asset Rebalancing	49

3

TABLE OF CONTENTS continued

11.  OTHER INFORMATION	49
Ownership	49
Right to Cancel Period	49
Assignment	49
Sending Forms and Transaction Requests in Good Order	49
Mixed and Shared Funding	50
Exchanges and Reinstatements	50
Voting Rights	50
IMSA	51
Legal Proceedings	51
Western Reserve Life Assurance Co. of Ohio	51
Financial Condition of the Company	51
The Separate Account	52
Distribution of the Policies	53

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION	55
APPENDIX CONDENSED FINANCIAL INFORMATION	56
APPENDIX EXCESS INTEREST ADJUSTMENT EXAMPLES	62
APPENDIX DEATH BENEFIT	66
APPENDIX BENEFICIARY EARNINGS ENHANCEMENT - EXTRA II RIDER - ADDITIONAL INFORMATION	69

4

GLOSSARY OF TERMS

Accumulation Unit — An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.

Adjusted Policy Value — The policy value increased or decreased by any excess interest adjustment.

Administrative and Service Office — Western Reserve Life Assurance Co. of Ohio, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001, (800) 851-9777. All premium payments, loan repayments, correspondence and notices should be sent to this address.

Annuitant — The person on whose life any annuity payments involving life contingencies will be based.

Annuitize (Annuitization) — When you switch from the accumulation phase to the income phase and we begin to make annuity payments to you (or your designee).

Annuity Commencement Date — The date upon which annuity payments are to commence. This date may be any date after the policy date and may not be later than the last day of the policy month following the month after the annuitant attains age 95. The earliest annuity commencement date is at least thirty days after you purchase your policy. The annuity commencement date may have to be earlier for qualified policies and may be earlier if required by state law.

Annuity Payment Option — A method of receiving a stream of annuity payments selected by the owner.

Assumed Investment Return or AIR — The annual effective rate shown in the contract specifications section of the contract that is used in the calculation of each variable annuity payment.

Cash Value — The adjusted policy value less any rider fees (imposed upon surrender).

Excess Interest Adjustment — A positive or negative adjustment to amounts surrendered (both partial or full surrenders and transfers) or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by the Company since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The

excess interest adjustment can either decrease or increase the amount to be received by the owner upon full surrender or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively.

Fixed Account — One or more investment choices under the policy that are part of the Company’s general assets and are not in the separate account.

Free Amount — The amount that can be withdrawn each year without incurring any excess interest adjustment.

Guaranteed Period Options — The various guaranteed interest rate periods of the fixed account which the Company may offer and into which premium payments may be paid or amounts transferred.

Owner (You, Your) — The person who may exercise all rights and privileges under the policy. The owner during the lifetime of the annuitant and before the annuity commencement date is the person designated as the owner in the information that we require to issue a policy.

Policy Date — The date shown on the policy data page attached to the policy and the date on which the policy becomes effective.

Policy Value — On or before the annuity commencement date, the policy value is equal to the owner’s:

— premium payments; minus

— gross partial surrenders (partial surrenders minus excess interest adjustments); plus

— interest credited in the fixed account; plus

— accumulated gains in the separate account; minus

— accumulated losses in the separate account; minus

— service charges, rider fees, premium taxes, transfer fees, and other charges, if any.

Policy Year — A policy year begins on the policy date and on each anniversary thereof.

Separate Account — Separate Account VA AA, a separate account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”), to which premium payments under the policies may be allocated.

5

Separate Account Value — The portion of the policy value that is invested in the separate account.

Subaccount — A subdivision within the separate account, the assets of which are invested in a specified underlying fund portfolio.

Valuation Period — The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of values. Such determination shall be made on each business day.

Written Notice — Written notice, signed by the owner, that gives the Company the information it requires and is received in good order at the Administrative and Service Office. For some transactions, the Company may accept an electronic notice such as telephone instructions. Such electronic notice must meet the requirements for good order that the Company establishes for such notices.

You (Your) — the owner of the policy.

6

SUMMARY

The sections in this summary correspond to sections in this prospectus, which discuss the topics in more detail.

1. THE ANNUITY POLICY

The flexible premium deferred variable annuity policy offered by Western Reserve Life Assurance Co. of Ohio (the Company, we, us, or our) provides a way for you to invest on a tax-deferred basis in the following investment choices: various subaccounts of the separate account and the fixed account of the Company. The policy is intended to accumulate money for retirement or other long-term investment purposes.

This policy currently offers subaccounts that are listed under “Investment Choices” in this prospectus. Each subaccount invests exclusively in shares of one of the underlying fund portfolios. The policy value may depend on the investment experience of the selected subaccounts. Therefore, you bear the entire investment risk with respect to all policy value in any subaccount. You could lose the amount that you invest.

The fixed account offers an interest rate that the Company guarantees.

The policy, like all deferred annuity policies, has two phases: the “accumulation phase” and the “income phase.” During the accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as ordinary income when you take them out of the policy. The income phase occurs when you annuitize and begin receiving regular annuity payments from your policy. The money you can accumulate during the accumulation phase will largely determine the payments you receive during the income phase.

2. PURCHASE

The initial premium payment for policies must be at least $30,000 or more, under most circumstances. You must obtain prior Company approval to purchase a policy with an amount less than the stated minimum. You can generally add as little as $50 at any time during the accumulation phase.

3. INVESTMENT CHOICES

You can allocate your premium payments to one of several underlying fund portfolios listed under Investment Choices in this prospectus and described in the underlying fund prospectuses. Depending upon their investment performance, you can make or lose money in any of the subaccounts.

You can also allocate your premium payments to the fixed account.

We currently allow you to transfer money between any of the investment choices during the accumulation phase. We reserve the right to impose a $10 fee for each transfer in excess of 12 transfers per policy year and to impose restrictions and limitations on transfers.

4. PERFORMANCE

The value of the policy will vary up or down depending upon the investment performance of the subaccounts you choose.

5. EXPENSES

No deductions are made from premium payments at the time you buy the policy so that the full amount of each premium payment is invested in one or more

7

of your investment choices. If you select the Life with Emergency Cash^® annuity payment option, then you can surrender your policy after annuity payments have begun. A surrender charge of up to 4% of policy value will apply during the first four years after the annuity commencement date.

Full surrenders, partial surrenders, and transfers from a guaranteed period option of the fixed account may also be subject to an excess interest adjustment, which may increase or decrease the amount you receive. This adjustment may also apply to amounts applied to an annuity payment option from a guaranteed period option of the fixed account prior to the end of the guaranteed period option.

We deduct daily mortality and expense risk fees and administrative charges from the assets in each subaccount during the accumulation phase, at an annual rate (as a percentage of the subaccount’s value) that depend on the death benefit option that you select, as follows:

— 0.45% if you do not choose an optional guaranteed minimum death benefit

— 0.50% if you choose the Return of Premium Death Benefit

— 0.70% if you choose the Annual Step-Up Death Benefit

— 0.75% if you choose the 5% Annually Compounding Death Benefit

— 0.85% if you choose the Double Enhanced Death Benefit

During the accumulation phase, we deduct an annual service charge of no more than $30 from the policy value on each policy anniversary and at the time of surrender. The charge is waived if either the policy value or the sum of all premium payments, minus all partial surrenders, is at least $30,000.

Upon full surrender, payment of a death benefit, or when annuity payments begin, we will deduct state premium taxes, if applicable. State premium taxes currently range from 0% to 3.50%, depending on the state.

If you elect the Initial Payment Guarantee feature when you annuitize, then there is a daily fee (during the income phase) currently equal to an annual rate of 1.25% of the daily net asset value in the subaccounts.

We deduct a daily fund facilitation fee from the assets in certain investment choices at an annual rate (as a percentage of the subaccount’s value) as follows:

— 0.20% if you choose the AllianceBernstein Balanced Wealth Strategy Portfolio - Class B

— 0.15% if you choose the Franklin Templeton VIP Founding Funds Allocation Fund - Class 4

If you elect the Beneficiary Earnings Enhancement -Extra II (“BEE -Extra II”), then there is an annual rider fee during the accumulation phase of 0.55% of the policy value.

The value of the net assets of the subaccounts will reflect the management fee and other expenses incurred by the underlying fund portfolios.

6. ACCESS TO YOUR MONEY

You can generally take out $200 or more anytime during the accumulation phase (except under certain qualified policies).

You may have to pay income tax and a tax penalty on any money you take out.

8

Access to amounts held in qualified policies may be restricted or prohibited by law or regulation or the terms of the policy.

Surrenders are not generally permitted during the income phase unless you elect the Life with Emergency Cash^® annuity payment option.

7. ANNUITY PAYMENTS

(THE INCOME PHASE)

The policy allows you to receive income under one of several annuity payment options. You may choose from fixed payment options, variable payment options, or a combination of both. If you select a variable payment option, then the dollar amount of your annuity payments may go up or down. However, the Initial Payment Guarantee is available for an extra fee and it guarantees a minimum amount for each annuity payment.

8. DEATH BENEFIT

If the sole annuitant dies before the income phase begins, then the beneficiary will generally receive a death benefit. If the owner is not the annuitant, then no death benefit is paid if the owner dies; however required distribution rules require that the policy value be distributed upon the death of any owner.

Naming different persons as owner and annuitant can affect to whom and whether amounts will be paid. Use care when naming owners, annuitants and beneficiaries, and consult your agent if you have questions.

When you purchase a policy you may generally choose an optional guaranteed minimum death benefit:

— Double Enhanced Death Benefit

— 5% Annually Compounding Death Benefit

— Annual Step-Up Death Benefit

— Return of Premium Death Benefit

Charges are lower if you do not choose an optional guaranteed minimum death benefit.

After the policy is issued, a guaranteed minimum death benefit cannot be added, and the death benefit cannot be changed.

The death benefit is paid first to a surviving owner, if any; it is only paid to the beneficiary if there is no surviving owner.

9. TAXES

Earnings, if any, are generally not taxed until taken out. If you take money out of a nonqualified policy during the accumulation phase, earnings come out first for federal tax purposes, and are taxed as ordinary income. For nonqualified and certain qualified policies, payments during the income phase may be considered partly a return of your original investment so that part of each payment may not be taxable as income. For qualified policies, payments during the income phase are, in many cases, considered as all taxable income. If you are younger than 59 ¹⁄₂ when you take money out, you may incur a 10% federal penalty tax on the taxable earnings.

10. ADDITIONAL FEATURES

This policy has additional features that might interest you. These features may not be available for all policies, may vary for certain policies, may not each be available in combination with other optional benefits under the policy, and may not be suitable for your particular situation.

These features include, but are not limited to, the following:

— You can arrange to have money automatically sent to you monthly, quarterly, semi-annually or annually while your policy is in the accumulation phase. This feature is referred to as the “Systematic Payout Option” (“SPO”).

9

Amounts you receive may be included in your gross income, and in certain circumstances, may be subject to penalty taxes.

— You can elect an optional feature at the time of annuitization that guarantees your variable annuity payments will never be less than a percentage of the initial variable annuity payment. This feature is called the “Initial Payment Guarantee” (“IPG”). There is an extra charge for this feature.

— You may elect an optional rider that might pay an additional amount on top of the policy death benefit, in certain circumstances. This feature is called the “Beneficiary Earnings Enhancement - Extra II” (“BEE -Extra II”). There is an extra charge for this rider.

— Under certain medically related circumstances, you may surrender all or part of the policy value without any excess interest adjustment. This feature is called the “Nursing Care and Terminal Condition Withdrawal Option.”

— Under certain unemployment circumstances, you may surrender all or a portion of the policy value free of any excess interest adjustment. This feature is called the “Unemployment Waiver.”

— You may generally make transfers and/or change the allocation of additional premium payments by telephone. We may restrict or eliminate this feature.

— You can arrange to automatically transfer money (at least $500 per transfer) monthly or quarterly from certain investment choices into one or more subaccounts. This feature is known as “Dollar Cost Averaging.”

— We will, upon your request, automatically transfer amounts among the subaccounts on a regular basis to maintain a desired allocation of the policy value among the various subaccounts. This feature is called “Asset Rebalancing.”

11. OTHER INFORMATION

Right to Cancel Period. You may return your policy for a refund, but only if you return it within a prescribed period, which is generally 10 days (after you receive the policy), or whatever longer time may be required by state law. The amount of the refund will generally be the premiums paid plus or minus accumulated gains or losses in the separate account; if state law requires, we will refund your original premium payment(s). The policy will then be deemed void.

No Probate. Usually, the person receiving the death benefit under this policy will not have to go through probate. State laws vary on how the amount that may be paid is treated for estate tax purposes.

Who should purchase the Policy? This policy is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes; and for persons who have maximized their use of other retirement savings methods, such as 401(k) plans. The tax-deferred feature is most attractive to people in high federal and state tax brackets. The tax deferral features of variable annuities are unnecessary when purchased to fund a qualified plan. You should not buy this policy if you are looking for a short-term investment, market timing, or if you cannot take the risk of losing money that you put in.

There are various fees and charges associated with variable annuities. You should consider whether the features and benefits of this policy, unique to variable annuities, such as the opportunity for lifetime income payments, a guaranteed death benefit, the guaranteed level of certain charges, and additional features, make this policy appropriate for your needs.

10

State Variations. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. These differences include, among other things, free look rights, issue age limitations, and the general availability of riders. Please note that this prospectus describes the material rights and obligations of a policy owner, and the maximum fees and charges for all policy features and benefits are set forth in the fee table of this prospectus. See your policy for specific variations because any such state variations will be included in your policy or in riders or endorsements attached to your policy. See your agent or contact us for specific information that is applicable to your state.

Financial Statements. Financial Statements for the Company and the subaccounts are in the SAI. Condensed financial information for the subaccounts (those in operation by year end December 31, 2008, if any) are in Appendix – Condensed Financial Information to this prospectus.

12. INQUIRIES

If you need more information or want to make a transaction, please contact us at:

Western Reserve Life Assurance Co. of Ohio Administrative and Service Office

Attention: Customer Care Group

4333 Edgewood Road NE

Cedar Rapids, IA 52499-0001

(800) 851-9777

All premium payments, loan repayments, correspondence and notices should be sent to this address.

You may check your policy at www.westernreserve.com. Follow the logon procedures. You will need your pre-assigned Personal Identification Number (“PIN”) to access information about your policy. We cannot guarantee that you will be able to access this site.

You should protect your PIN, because on-line (or telephone) options may be available and could be made by anyone who knows your PIN. We may not be able to verify that the person providing instructions using your PIN is you or someone authorized by you.

11

ANNUITY POLICY FEE TABLE AND EXPENSE EXAMPLES

The following describes the fees and expenses that you will pay when buying, owning, and surrendering the policy. Please be certain to review the notes following the fee table and expense examples for further information about the fees and charges presented. The order of the notes follows the order in which the fees and charges under the policy are presented in the fee tables and the expense examples.

The first section describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy, or transfer cash value between investment choices. State premium taxes may also be deducted. Excess interest adjustments may be made to amounts surrendered or applied to annuity payment options from cash value from the fixed account. (All fees are maximum for purchases made while this prospectus is effective unless otherwise noted.)

Policy Owner Transaction Expenses:
Sales Load On Purchase Payments	0%
Maximum Surrender Charge (as a % of premium payments surrendered)
Base Policy	0%
Transfer Fee	$0 - $10
Special Service Fee	$0 - $25

The next section describes the fees and expenses that you will pay periodically during the time that you own the policy, not including portfolio fees and expenses. (All fees are maximum for purchases made while this prospectus is effective unless otherwise noted.)

Annual Service Charge	$	0 - $30 per policy
Separate Account Annual Expenses (as a percentage, annually, of average separate account value):
Base Separate Account Expenses:
Mortality and Expense Risk Fee		0.30%
Administrative Charge		0.15%
Total Base Separate Account Annual Expenses		0.45%
Optional Separate Account Expenses:
Double Enhanced Death Benefit		0.40%
5% Annually Compounding Death Benefit		0.30%
Annual Step-Up Death Benefit		0.25%
Return of Premium Death Benefit		0.05%
Fund Facilitation Fee		0.20%
Total Separate Account Annual Expenses with Highest Optional Separate Account Expenses		1.05%
Optional Rider Fees:
Beneficiary Earnings Enhancement - Extra II (annual charge based on policy value)		0.55%

The next section shows the lowest and highest total operating expenses charged by the underlying fund portfolios for the year ended December 31, 2008 (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.

12

Total Portfolio Annual Operating Expenses (Expenses that are deducted from portfolio assets, including management fees, distribution and/or service 12b-1 fees, and other expenses):

Lowest Gross	0.35	%
Highest Gross	2.49	%

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

The Example assumes that you invest $10,000 in the policy for the time periods indicated. The Example also assumes that your investment has a 5% return each year, the highest fees and expenses of any of the portfolios for the year ended December 31, 2008, and the base policy with the combination of available optional features or riders with the highest fees and expenses, including the Highest Fund Facilitation Fee, Double Enhanced Death Benefit and the Beneficiary Earnings Enhancement - Extra II Rider. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

Expense Examples (Highest Gross):

If the policy is surrendered at the end of the applicable time period:
1 Year	$	415
3 Years	$	1257
5 Years	$	2114
10 Years	$	4321
If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy:
1 Year	$	415
3 Years	$	1257
5 Years	$	2114
10 Years	$	4321

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

For information concerning compensation paid for the sale of the policies, see “Distributor of the Policies.”

NOTES TO FEE TABLE AND EXPENSE EXAMPLES

Annuity Policy Fee Table and Expense Examples: The fee table applies only to the accumulation phase and reflects the maximum charges unless otherwise noted. During the income phase the fees may be different than those described in the Fee Table. See section “5. Expenses”.

Policy Owner Transaction Expenses:

Maximum Surrender Charge: If you select the Life with Emergency Cash^® annuity payment option, you will be subject to a surrender charge after the annuity commencement date. See section “5. Expenses”.

13

Transfer Fee: The transfer fee, if any is imposed, applies to each policy, regardless of how policy value is allocated among the investment choices. There is no fee for the first 12 transfers per policy year. For additional transfers, the Company may charge a fee of $10 per transfer.

Special Service Fees: We may deduct a charge for special services, such as overnight delivery.

Annual Service Charge:

Annual Service Charge: The annual service charge is assessed on each policy anniversary and at surrender. The charge is waived if your policy value, or the sum of your premiums less all partial surrenders, is at least $30,000.

Separate Account Annual Expenses:

Mortality and Expense Risk Fee: The mortality and expense risk fee shown is for the accumulation phase with the base death benefit.

Optional Separate Account Expenses: Any optional separate account expense is in addition to the mortality and expense risk and administrative fees.

Fund Facilitation Fee: This daily fee is applied only to policy value in the subaccounts invested in the AllianceBernstein Balanced Wealth Strategy Portfolio (0.20%) and the Franklin Templeton VIP Founding Funds Allocation Fund (0.15%). See section “5. Expenses”.

Total Separate Account Annual Expenses with Highest Optional Separate Account Expenses: This reflects the base separate account expenses, the Doubel Enhanced Death Benefit fee, plus the Fund Facilitation Fee, but does not include any annual optional rider fees.

Optional Rider Fees:

Optional Rider Fees: In some cases, riders to the policy are available that provide optional benefits. There are additional fees (each year) for those riders.

Beneficiary Earnings Enhancement - Extra II: This annual fee is a percentage of the policy value and is only deducted during the accumulation phase.

Total Portfolio Annual Operating Expenses:

Total Portfolio Annual Operating Expenses: The fee table information relating to the underlying fund portfolios was provided to the Company by the underlying fund portfolios, their investment advisors or managers, and the Company has not and cannot independently verify the accuracy or completeness of such information. Actual future expenses of the portfolios may be greater or less than those shown in the Table.

Expense Examples:

Expense Examples: The Example does not reflect premium tax charges or transfer fees. Different fees and expenses not reflected in the Example may be assessed during the income phase of the policy.

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1. THE ANNUITY POLICY

This prospectus describes the Flexible Premium Variable Annuity - M policy offered by the Company.

An annuity is a contract between you, the owner, and an insurance company (in this case the Company), where the insurance company promises to pay you an income in the form of annuity payments. These payments begin on a designated date, referred to as the annuity commencement date. Until the annuity commencement date, your annuity is in the accumulation phase and the earnings (if any) are tax deferred. Tax deferral means you generally are not taxed until you take money out of your annuity. After you annuitize, your annuity switches to the income phase.

The policy is a flexible premium deferred variable annuity. You can use the policy to accumulate funds for retirement or other long-term financial planning purposes. Your individual investment and your rights are determined primarily by your own policy.

The policy is a “flexible premium” annuity because after you purchase it, you can generally make additional investments of $50 or more until the annuity commencement date. You are not required to make any additional investments.

The policy is a “variable” annuity because the value of your investments can go up or down based on the performance of your investment choices. If you invest in the separate account, the amount of money you are able to accumulate in your policy during the accumulation phase depends upon the performance of your investment choices. You could lose the amount you allocate to the separate account. The amount of annuity payments you receive during the income phase from the separate account also depends upon the investment performance of your investment choices for the income phase. However, if you annuitize under the Initial Payment Guarantee

feature, then you will receive stabilized annuity payments that will never be less than a percentage of your initial annuity payment. There is an extra charge for this feature.

The policy also contains a fixed account. The fixed account offers interest at rates that we guarantee will not decrease during the selected guaranteed period. There may be different interest rates for each different guaranteed period that you select.

2.    PURCHASE

Policy Issue Requirements

The Company will not issue a policy unless:

— the Company receives in good order (at our Administrative and Service Office) all information needed to issue the policy;

— the Company receives in good order (at our Administrative and Service Office) a minimum initial premium payment; and

— the annuitant, owner, and any joint owner are age 90 or younger (the limit may be lower for qualified policies).

We reserve the right to reject any application or premium payment.

Premium Payments

You should make checks for premium payments payable only to Western Reserve Life Assurance Co. of Ohio and send them to the administrative and service office. Your check must be honored in order for us to pay any associated payments and benefits due under the policy.

We do not accept cash. We reserve the right to not accept third party checks. A third party check is a check that is made payable to one person who endorses it and offers it as payment to a second person. Checks should normally be payable to Western Reserve Life Assurance Co. of Ohio,

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however, in some circumstances, at our discretion we may accept third party checks that are from a rollover or transfer from other financial institutions. Any third party checks not accepted by our company will be returned.

We reserve the right to reject or accept any form of payment. Any unacceptable forms of payment will be returned.

Initial Premium Requirements

The initial premium payment for policies must be at least $30,000. You must obtain prior company approval to purchase a policy with an amount less than the stated minimum. There is generally no minimum initial premium payment for policies issued under section 403(b) of the Internal Revenue Code; however, your premium must be received within 90 days of the policy date or your policy will be canceled. We will credit your initial premium payment to your policy within two business days after the day we receive it and your complete policy information at our administrative and service office. If we are unable to credit your initial premium payment, we will contact you within five business days and explain why. We will also return your initial premium payment at that time unless you let us keep it and credit it as soon as possible.

The date on which we credit your initial premium payment to your policy is generally the policy date. The policy date is used to determine policy years, policy months and policy anniversaries.

There may be delays in our receipt of applications that are outside of our control (for example, because of the failure of the selling broker/dealer or sales agent to forward the application to us promptly, or because of delays in determining whether the policy is suitable for you). Any such delays will affect when your policy can be issued and your premium allocated among your investment choices.

Additional Premium Payments

You are not required to make any additional premium payments. However, you can generally make additional premium payments as often as you like during the accumulation phase. Additional premium payments must be at least $50. We will credit additional premium payments to your policy as of the business day we receive your premium and required information at our administrative and service office. Additional premium payments must be received before the close of a regular business session of the New York Stock Exchange (usually 4:00 p.m. Eastern Time) to get same-day pricing of the additional premium payment.

Maximum Total Premium Payments

We reserve the right to reject cumulative premium payments over $1,000,000 (this includes subsequent premium payments) for policies with the same owner or same annuitant we reserve the right to reject cumulative premium payments over $500,000 (this includes subsequent premium payments) for policies with the same owner or same annuitant.

Allocation of Premium Payments

When you purchase a policy, we will allocate your premium payment to the investment choices you select. Your allocation must be in whole percentages and must total 100%. We will allocate additional premium payments the same way, unless you request a different allocation.

If you allocate premium payments to the Dollar Cost Averaging program, you must give us instructions regarding the subaccount(s) to which transfers are to be made.

You may change allocations for future additional premium payments by sending written instructions to our administrative and service office, or by telephone, subject to the limitations described under

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“Telephone Transactions”. The allocation change will apply to premium payments received on or after the date we receive the change request in good order.

You could lose the amount you allocate to the variable subaccounts.

The Company reserves the right to restrict or refuse any premium payment after the first policy anniversary.

Policy Value

You should expect your policy value to change from valuation period to valuation period. A valuation period begins at the close of regular trading on the New York Stock Exchange on each business day and ends at the close of regular trading on the next succeeding business day. A business day is each day that the New York Stock Exchange is open. The New York Stock Exchange generally closes at 4:00 p.m. Eastern time. Holidays are generally not business days.

3.   INVESTMENT CHOICES

The Separate Account

The following variable subaccounts are available under the policy for new investors, but may not be available for all policies. The subaccounts invest in shares of the various underlying fund portfolios. The companies that provide investment advice and administrative services for the underlying fund portfolios offered through this policy are listed below. The following variable investment choices are currently offered through this policy. Please be certain to review the notes following the list of variable investment choices.

TRANSAMERICA SERIES TRUST

Subadvised by BlackRock Investment Management, LLC

Transamerica BlackRock Large Cap Value VP – Service Class

Subadvised by Capital Guardian Trust Company

Transamerica Capital Guardian Value VP – Service Class

Subadvised by ING Clarion Real Estate Securities, L.P.

Transamerica Clarion Global Real Estate Securities VP – Service Class

Subadvised by Federated Equity Management Company of Pennsylvania

Transamerica Federated Market Opportunity VP – Service Class

Subadvised by JPMorgan Investment Advisors, Inc.

Transamerica JPMorgan Core Bond VP – Service Class

Subadvised by J.P. Morgan Investment Management Inc.

Transamerica JPMorgan Enhanced Index VP – Service Class

Subadvised by ClearBridge Advisors, LLC

Transamerica Legg Mason Partners All Cap VP – Service Class

Subadvised by MFS^® Investment Management

Transamerica MFS High Yield VP – Service Class Transamerica MFS International Equity VP – Service Class

Subadvised by Columbia Management Advisors, LLC

Transamerica Marsico Growth VP – Service Class

Subadvised by Munder Capital Management

Transamerica Munder Net50 VP – Service Class

Subadvised by Pacific Investment Management Company LLC

Transamerica PIMCO Total Return VP – Service Class

Subadvised by T. Rowe Price Associates, Inc.

Transamerica T. Rowe Price Equity Income VP –Service Class

Transamerica T. Rowe Price Small Cap VP – Service Class

Subadvised by Templeton Investment Counsel, LLC and Transamerica Investment Management, LLC

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Transamerica Templeton Global VP – Service Class

Subadvised by Third Avenue Management LLC

Transamerica Third Avenue Value VP – Service Class

Subadvised by AEGON USA Investment Management, LLC.

Transamerica Efficient Markets VP – Service Class

Subadvised by Transamerica Investment Management, LLC

Transamerica Balanced VP – Service Class

Transamerica Convertible Securities VP – Service Class

Transamerica Equity VP – Service Class

Transamerica Growth Opportunities VP – Service Class

Transamerica Money Market VP – Service Class

Transamerica Science & Technology VP – Service Class

Transamerica Small/Mid Cap Value VP – Service Class

Transamerica U.S. Government Securities VP –Service Class

Transamerica Value Balanced VP – Service Class

Subadvised by Van Kampen Asset Management

Transamerica Van Kampen Mid-Cap Growth VP – Service Class

Managed by AEGON USA Investment Management, LLC.

Transamerica Index 50 VP – Initial Class

Transamerica Index 75 VP – Initial Class

ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.

Managed by AllianceBernstein L.P.

AllianceBernstein Balanced Wealth Strategy Portfolio - Class B

FIDELITY VARIABLE INSURANCE PRODUCTS FUND

Managed by Fidelity Management & Research Company and Geode Capital Management, LLC as subadviser

Fidelity - VIP Index 500 Portfolio – Service Class 2

FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST

Fund Administrator: Franklin Templeton Services, LLC

Franklin Templeton VIP Founding Funds Allocation Fund - Class 4

PROFUNDS

Managed by ProFund Advisors LLC

ProFund VP Asia 30

ProFund VP Basic Materials

ProFund VP Bull

ProFund VP Consumer Services

ProFund VP Emerging Markets

ProFund VP Europe 30

ProFund VP Falling US Dollar

ProFund VP Financials

ProFund VP International

ProFund VP Japan

ProFund VP Mid-Cap

ProFund VP Money Market

ProFund VP NASDAQ-100

ProFund VP Oil & Gas

ProFund VP Pharmaceuticals

ProFund VP Precious Metals

ProFund VP Short Emerging Markets

ProFund VP Short International

ProFund VP Short NASDAQ-100

ProFund VP Short Small-Cap

ProFund VP Small-Cap

ProFund VP Small-Cap Value

ProFund VP Telecommunications

ProFund VP UltraSmall-Cap

ProFund VP U.S. Government Plus

ProFund VP Utilities

ACCESS ONE TRUST

Managed by ProFund Advisors LLC

Access VP High Yield Fund^SM

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NOTES TO VARIABLE INVESTMENT CHOICES

Some subaccounts may be available for certain policies and may not be available for all policies. You should work with your registered representative to decide which subaccount(s) may be appropriate for you based on a thorough analysis of your particular insurance needs, financial objectives, investment goals, time horizons, and risk tolerance.

There can be no assurance that the Transamerica Money Market VP - Service Class portfolio or the ProFund Money Market VP portfolio will be able to maintain a stable net asset value per share. During extended periods of low interest rates, and partly as a result of Policy charges, the yield on the Transamerica Money Market VP - Service Class subaccount or the ProFund Money Market VP subaccount may become extremely low and possibly negative.

Please note: The ProFunds and the Access One Trust portfolios permit frequent transfers and investors in those portfolios may bear the additional costs and investment risks of frequent transfers.

The general public may not purchase shares of any of these underlying fund portfolios. The names and investment objectives and policies may be similar to other portfolios managed by the same investment advisor or manager that are sold directly to the public. You should not expect the investment results of the underlying fund portfolios to be the same as those of other portfolios.

More detailed information, including an explanation of the portfolios’ fees and investment objectives, may be found in the current prospectuses for the underlying fund portfolios, which accompany this prospectus. You should read the prospectuses for the underlying fund portfolios carefully before you invest.

Selection of Underlying Portfolios

The underlying fund portfolios offered through this product are selected by the Company, and the Company may consider various factors, including, but not limited to, asset class coverage, the strength of the adviser’s or sub-adviser’s reputation and

tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor that we may consider is whether the underlying fund portfolio or its service providers (e.g., the investment adviser or sub-advisers) or its affiliates will make payments to us or our affiliates. For additional information about these arrangements, see “Revenue We Receive.” We review the portfolios periodically and may remove a portfolio, or limit its availability to new premiums and/or transfers of cash value if we determine that a portfolio no longer satisfies one or more of the selection criteria, and/or if the portfolio has not attracted significant allocations from owners. We have included the Transamerica Series Trust (“TST”) underlying fund portfolios at least in part because they are managed by one of our affiliates, Transamerica Asset Management, Inc. (“TAM”).

We have developed this variable annuity product in cooperation with one or more distributors, and have included certain underlying fund portfolios based on their recommendations; their selection criteria may differ from our selection criteria.

You are responsible for choosing the subaccounts which invest in the underlying fund portfolios, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Because investment risk is borne by you, decisions regarding investment allocations should be carefully considered.

In making your investment selections, we encourage you to thoroughly investigate all of the information regarding the underlying fund portfolios that are available to you, including each underlying fund portfolio’s prospectus, statement of additional information and annual and semi-annual reports. Other sources such as the Fund’s website or newspapers and financial and other magazines provide more current information, including information about any regulatory actions or

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investigations relating to a Fund or underlying fund portfolio. After you select underlying fund portfolios for your initial premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.

You bear the risk of any decline in the cash value of your policy resulting from the performance of the underlying fund portfolios you have chosen.

We do not recommend or endorse any particular underlying fund portfolio and we do not provide investment advice.

We do not guarantee that any of the subaccounts will always be available for premium payments, allocations, or transfers. We reserve the right, subject to compliance with applicable law, to make certain changes to the separate account and its investments. We reserve the right to add new portfolios [or portfolio classes], close existing portfolios [or portfolio classes], or substitute portfolio shares that are held by any subaccount for shares of a different portfolio. We will not add, delete or substitute any underlying fund portfolio shares attributable to your interest in a subaccount without notice to you and prior approval of the SEC, to the extent required by the 1940 Act or other applicable law. See the SAI for more information concerning the possible addition, deletion, or substitution of investments.

We reserve the right to limit the number of subaccounts you are invested in at any one time.

Addition, Deletion, or Substitution of Investments

The Company cannot and does not guarantee that any of the subaccounts will always be available for premium payments, allocations, or transfers. The Company retains the right, subject to any applicable law, to make certain changes in the separate account and its investments. The Company reserves the right to eliminate the shares of any portfolio held by a

subaccount and to substitute shares of another portfolio of the underlying fund portfolios, or of another registered open-end management investment company for the shares of any portfolio, if the shares of the portfolio are no longer available for investment or if, in the Company’s judgment, investment in any portfolio would be inappropriate in view of the purposes of the separate account. To the extent required by the 1940 Act, as amended, substitutions of shares attributable to your interest in a subaccount will not be made without prior notice to you and the prior approval of the Securities and Exchange Commission (“SEC”). Nothing contained herein shall prevent the separate account from purchasing other securities for other series or classes of variable annuity policies, or from affecting an exchange between series or classes of variable annuity policies on the basis of your requests.

New subaccounts may be established when, in the sole discretion of the Company, marketing, tax, investment or other conditions warrant. Any new subaccounts may be made available to existing owners on a basis to be determined by the Company. Each additional subaccount will purchase shares in a mutual fund portfolio, or other investment vehicle. The Company may also eliminate one or more subaccounts if, in its sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any subaccount is eliminated, the Company will notify you and request a reallocation of the amounts invested in the eliminated subaccount.

Similarly, the Company may, at its discretion, close a subaccount to new investment (either transfers or premium payments). Any amounts that would otherwise be invested in a closed subaccount (for premium allocations, portfolio rebalancing, dollar cost averaging, automatic checking account or payroll deductions for period premiums, etc.) will, if you do not provide instructions for a new allocation be invested in the subaccount that invests in a portfolio of money market instruments. If a portfolio of

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money market instruments is unavailable, the Company will reinvest the amounts in another subaccount, or in the fixed account, if appropriate.

In the event of any such substitution or change, the Company may, by appropriate endorsement, make such changes in the policies as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the policies, the separate account may be (1) operated as a management company under the 1940 Act or any other form permitted by law, (2) deregistered under the 1940 Act in the event such registration is no longer required or (3) combined with one or more other separate accounts. To the extent permitted by applicable law, the Company also may (1) transfer the assets of the separate account associated with the policies to another account or accounts, (2) restrict or eliminate any voting rights of owners or other persons who have voting rights as to the separate account, (3) create new separate accounts, (4) add new subaccounts to or remove existing subaccounts from the separate account, or combine subaccounts, or (5) add new underlying fund portfolios, or substitute a new fund for an existing fund.

The Fixed Account

Premium payments allocated and amounts transferred to the fixed account become part of the Company’s general account. Interests in the general account have not been registered under the Securities Act of 1933 (the “1933 Act”), nor is the general account registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are generally subject to the provisions of the 1933 or 1940 Acts. Disclosures relating to interests in the general account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy of statements made in a registration statement.

While we do not guarantee that the fixed account will always be available for investment, we do guarantee that the interest credited to the fixed account will not be less than the guaranteed minimum effective annual interest rate shown on your policy (the “guaranteed minimum”). We determine credited rates, which are guaranteed for at least one year, in our sole discretion. You bear the risk that we will not credit interest greater than the guaranteed minimum. At the end of the guaranteed period option you selected, the value in that guaranteed period option will automatically be transferred into a new guaranteed period option of the same length (or the next shorter period if the same period is no longer offered) at the current interest rate for that period. You can transfer to another investment choice by giving us notice within 30 days before the end of the expiring guaranteed period.

Full and partial surrenders and transfers from a guaranteed period option of the fixed account are generally subject to an excess interest adjustment (except at the end of the guaranteed period). This adjustment will also be made to amounts that you apply to an annuity payment option. This adjustment may increase or decrease the amount of interest credited to your policy. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum.

We also guarantee that upon full surrender your cash value attributable to the fixed account will not be less than the amount required by the applicable nonforfeiture law at the time the policy is issued.

If you select the fixed account, your money will be placed with the Company’s other general assets. The amount of money you are able to accumulate in the fixed account during the accumulation phase depends upon the total interest credited. The amount of each annuity payment you receive during the income phase from the fixed portion of your policy will remain level for the entire income phase.

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We reserve the right to refuse any premium payment or transfer to the fixed account.

Transfers

During the accumulation phase, you may make transfers to or from any investment choice within certain limitations.

Transfers out of a guaranteed period option of the fixed account are limited to the following:

— Transfers at the end of a guaranteed period. No excess interest adjustment will apply.

— Transfers of amounts equal to interest credited. This may affect your overall interest-crediting rate, because transfers are deemed to come from the oldest premium payment first.

— Other than at the end of a guaranteed period, transfers of amounts from the guaranteed period option in excess of amounts equal to interest credited, are subject to an excess interest adjustment. If it is a negative adjustment, the maximum amount you can transfer in any one policy year is 25% of the amount in that guaranteed period option, less any previous transfers during the current policy year. If it is a positive adjustment, we do not limit the amount that you can transfer.

Each transfer must be at least $500, or the entire subaccount value. Transfers of interest from a guaranteed period option of the fixed account must be at least $50. If less than $500 remains as a result of the transfer, then we reserve the right to include that amount in the transfer. Transfer requests must be received at our administrative and service office while the New York Stock Exchange is open to get same-day pricing of the transaction.

The number of transfers permitted may be limited and a $10 charge or each transfer in excess of 12 in any policy year will apply. We reserve the right to prohibit transfers to the fixed account.

During the income phase, you may transfer values out of any subaccount; however, you cannot transfer values out of the fixed account. The minimum amount that can be transferred during this phase is the lesser of $10 of monthly income, or the entire monthly income of the annuity units in the subaccount from which the transfer is being made.

Transfers made by telephone are subject to the limitations described below under “Telephone Transactions.”

Market Timing and Disruptive Trading

The market timing policy and the related procedures (discussed below) do not apply to the ProFunds or Access subaccounts because the corresponding portfolios are specifically designed to accommodate frequent transfer activity. If you invest in the ProFunds or Access subaccounts, you should be aware that you may bear the costs and increased risks of frequent transfers discussed below.

Statement of Policy. This variable insurance product was not designed for the use of market timers or 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 policy 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”);

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(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 policy 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 (except in the ProFunds or Access subaccounts as discussed above) if you intend to conduct market timing or potentially disruptive trading.

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

Deterrence. If we determine you 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 policy 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

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fund portfolio refuses or reverses our order; in such instances some policy 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. Please note: If you engage a third party investment advisor for asset allocation services, then you may be subject to these transfer restrictions because of actions of your investment advisor in providing these services.

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;

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

— provide a certain number of allowable transfers in a given period.

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

In the absence of a prophylactic transfer restriction (e.g., expressly limiting the number of trades within a given period or limiting trades by their size), it is likely that some level of market timing and disruptive

trading will occur before it is detected and steps taken to deter it (although some level of market timing and disruptive trading can occur with a prophylactic transfer restriction). As noted above, we do not impose a prophylactic transfer restriction and, therefore, it is likely that, some level of market timing and disruptive trading will occur before we are able to detect it and take steps in an attempt to deter it.

Please note that the limits and restrictions described herein are subject to our ability to monitor transfer activity. Our ability to detect market timing or disruptive trading may be limited by operational and technological systems, as well as by our ability to predict strategies employed by policy 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 policy owners or intermediaries acting on their behalf. Moreover, our ability to discourage and restrict market timing or disruptive trading may be limited by decisions of state regulatory bodies and court orders that we cannot predict.

Furthermore, we may revise our policies and procedures in our sole discretion at any time and without prior notice, as we deem necessary or appropriate (1) to better detect and deter harmful trading that may adversely affect other policy 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.

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Underlying Fund Portfolio Frequent Trading Policies. The underlying fund portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. Underlying fund portfolios may, for example, assess a redemption fee (which we reserve the right to collect) on shares held for 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. Policy owners should be aware that we may not have the contractual ability or the operational capacity to monitor policy owners’ transfer requests and apply the frequent trading policies and procedures of the respective underlying funds that would be affected by the transfers. Accordingly, policy 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 or other disruptive trading in certain subaccounts.

Policy 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 policy owners, and to restrict or prohibit further purchases or transfers by specific policy owners identified by an underlying fund portfolio as violating the frequent trading policies established for that portfolio.

Omnibus Orders. Policy 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 policies, 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.

ProFunds and Access Subaccounts. The restrictions above do not apply to ProFunds nor Access subaccounts.

Because the above restrictions do not apply to the ProFunds nor Access subaccounts, they may have a greater risk than others of suffering from the harmful effects of market timing and disruptive trading, as discussed above (i.e., dilution, an adverse effect on portfolio management, and increased expenses).

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Third Party Investment Services

Western Reserve or an affiliate may provide administrative or other support services to independent third parties you authorize to conduct transfers on your behalf, or who provide recommendations as to how your subaccount values should be allocated. This includes, but is not limited to, transferring subaccount values among subaccounts in accordance with various investment allocation strategies that these third parties employ.

Western Reserve does not engage any third parties to offer investment allocation services of any type, so that persons or firms offering such services do so independent from any agency relationship they may have with Western Reserve for the sale of Policies. Western Reserve, therefore, takes no responsibility for the investment allocations and transfers transacted on your behalf by such third parties or any investment allocation recommendations made by such parties.

Western Reserve does not currently charge you any additional fees for providing these support services. Western Reserve reserves the right to discontinue providing administrative and support services to owners utilizing independent third parties who provide investment allocation and transfer recommendations.

Note carefully:

— Western Reserve does not offer, and does not engage any third parties to offer, investment allocation services of any type for use with the Policy.

— Western Reserve is not party to any agreement that you may have with any third parties that offer investment allocation services for use with your Policy. Western Reserve is not responsible for any recommendations such investment advisers make, any investment strategies they choose to follow, or any specific transfers they make on your behalf.

— Any fee that is charged by third parties offering investment allocation services for use with your Policy is in addition to the fees and expenses that apply under your Policy.

— If you make withdrawals of policy value to pay advisory fees, then taxes may apply to any such withdrawals and tax penalties may be assessed on withdrawals made before you attain age 59 ¹⁄₂.

4. PERFORMANCE

The Company periodically advertises performance of the various subaccounts. Performance figures might not reflect charges for options, riders, or endorsements. We may disclose at least three different kinds of non-standard performance. First, we may calculate performance by determining the percentage change in the value of an accumulation unit by dividing the increase (decrease) for that unit by the value of the accumulation unit at the beginning of the period. This performance number reflects the deduction of the mortality and expense risk fees and administrative charges. It does not reflect the deduction of any applicable premium taxes, or fees for any optional riders or endorsements. Any such deduction would reduce the percentage increase or make greater any percentage decrease.

Second, advertisements may also include total return figures, which reflect the deduction of the mortality and expense risk fees and administrative charges. These figures may also reflect the premium enhancement, if any.

Third, for certain investment portfolios, performance may be shown for the period commencing from the inception date of the investment portfolio (i.e., before commencement of subaccount operations). These figures should not be interpreted to reflect actual historical performance of the subaccounts.

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Not all types of performance data presented reflect all of the fees and charges that may be deducted (such as fees for optional benefits); performance figures would be lower if these charges were included.

5. EXPENSES

There are charges and expenses associated with your policy that reduce the return on your investment in the policy.

Life with Emergency Cash^® Surrender Charge

If you select the Life with Emergency Cash^® annuity payment option, then you can surrender your policy even after annuity payments have begun. However, there is a surrender charge during the first four years after the annuity commencement date. The following schedule shows the current surrender charge:

Number of Years Since Annuity Commencement Date	Surrender Charge (as a percentage of adjusted policy value)
0 – 1		4	%
1 – 2		3	%
2 – 3		2	%
3 – 4		1	%
more than 4		0	%

We can change the surrender charge, and you will be subject to whatever surrender schedule is in effect at the time you annuitize under the Life with Emergency Cash^® annuity payment option.

Note carefully the following three things about this surrender charge:

— this surrender charge is measured from the annuity commencement date and not from the premium payment date;

— this surrender charge is a percentage of the adjusted policy value applied to the Life with Emergency Cash^® annuity payment option, and not a percentage of premium; and

— under this payment option, there is no surrender charge free amount.

Excess Interest Adjustment

Surrenders and transfers from the fixed account may be subject to an excess interest adjustment. This adjustment could retroactively reduce the interest credited in the fixed account to the guaranteed minimum or increase the amount credited. This adjustment may also apply to amounts applied to an annuity payment option. Please see “Appendix - Excess Interest Adjustment Example” for an example showing the effect of a hypothetical excess interest adjustment calculation.

Mortality and Expense Risk Fees

We charge a fee as compensation for bearing certain mortality and expense risks under the policy. This fee is assessed daily based on the net asset value of each subaccount. Examples of such risks include a guarantee of annuity rates, the death benefit, certain expenses of the policy, and assuming the risk that the current charges will be insufficient in the future to cover costs of administering the policy. We may also pay distribution expenses out of this charge.

During the accumulation phase:

— For the Account Value Death Benefit, the daily mortality and expense risk fee is at an annual rate of 0.30%.

— For the Return of Premium Death Benefit, the daily mortality and expense risk fee is at an annual rate of 0.35%.

— For the Annual Step-Up Death Benefit, the daily mortality and expense risk fee is at an annual rate of 0.55%.

— For the 5% Annually Compounding Death Benefit, the daily mortality and expense risk fee is at an annual rate of 0.60%.

— For the Double Enhanced Death Benefit, the daily mortality and expense risk fee is at an annual rate of 0.70%.

During the income phase, the mortality and expense risk fee is at an annual rate of 0.35%.

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If this charge does not cover our actual costs, we absorb the loss. Conversely, if the charge more than covers actual costs, the excess is added to our surplus. We expect to profit from this charge. We may use any profit for any proper purpose, including distribution expenses.

Premium Taxes

Some states assess premium taxes on the premium payments you make. We currently do not deduct for these taxes at the time you make a premium payment. However, we will deduct the total amount of premium taxes, if any, from the policy value when:

— you begin receiving annuity payments;

— you surrender the policy; or

— a death benefit is paid.

State premium taxes currently range from 0% to 3.50%, depending on the state.

Federal, State and Local Taxes

We may in the future deduct charges from the policy for any taxes we incur because of the policy. However, no deductions are being made at the present time.

Special Service Fees

We will deduct a charge for special services, such as overnight delivery, up to $25 per service provided.

Transfer Fee

You are generally allowed to make 12 free transfers per policy year before the annuity commencement date. If you make more than 12 transfers per year, we reserve the right to charge $10 for each additional transfer. Premium payments, Asset Rebalancing, and Dollar Cost Averaging transfers do not count as one of your free transfers. All transfer requests made at the same time are treated as a single transfer.

Administrative Charges

We deduct a daily administrative charge to cover the costs of administering the policy (including certain distribution-related expenses). This charge is equal to an annual rate of 0.15% of the daily net asset value of each subaccount during both the accumulation phase and the income phase.

In addition, during the accumulation phase, an annual service charge of $30 (but not more than 2% of the policy value) is charged on each policy anniversary and at surrender. The service charge is waived if your policy value or the sum of your premiums, less all partial surrenders, is at least $30,000.

Initial Payment Guarantee

If you elect the Initial Payment Guarantee feature at the time of annuitization, there is a fee (during the income phase) currently at an annual rate of 1.25% of the daily net asset value. This fee may be higher or lower at the time you annuitize and elect the feature.

Fund Facilitation Fee

We charge a fund facilitation fee in order to make certain funds available as investment choices under the policies. This fee is assessed daily based on the net asset value of subaccounts that we specify. The fund facilitation fee, expressed as an annual rate is:

— 0.20% if you choose the AllianceBernstein Balanced Wealth Strategy Portfolio - Class B

— 0.15% if you choose the Franklin Templeton VIP Founding Funds Allocation Fund - Class 4

Beneficiary Earnings Enhancement - Extra II

If you elect the Beneficiary Earnings Enhancement - Extra II, there is an annual rider fee during the accumulation phase of 0.55% of the policy value. The rider fee will be deducted on each rider anniversary and upon termination of the rider during

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the accumulation phase. The rider fee(s) is deducted from each investment choice in proportion to the amount of policy value in each investment choice.

Portfolio Fees and Expenses

The value of the assets in each subaccount will reflect the fees and expenses paid by the underlying fund portfolios. The lowest and highest fund expenses for the previous calendar year are found in the Annuity Policy Fee Table section of this prospectus. See the prospectuses for the underlying fund portfolios for more information.

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 three types of payments:

— Rule 12b-1 Fees. Our affiliate TCI is the principal underwriter for the policies and receives some or all of the 12b-1 fees from the funds. Any 12b-1 fees received by TCI that are attributable to our variable insurance products are then credited to us. These fees range from 0.00% to 0.25% of the average daily assets of the certain underlying fund portfolios attributable to the policies and to certain other variable insurance products that we and our affiliates issue.

— Administrative, Marketing and Support Service Fees (“Support Fees”). As noted above, an investment adviser, sub-adviser, administrator and/or distributor (or affiliates thereof) of the underlying fund portfolios may make payments to us and/or our affiliates, including TCI. These payments may be derived, in whole or in part, from the profits the investment advisor or sub-adviser realized on the advisory fee deducted

from underlying fund portfolio assets. Policy owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees (see the prospectuses for the underlying funds for more information). The amount of the payments we (or our affiliates) receive is generally based on a percentage of the assets of the particular underlying fund portfolios attributable to the policy and to certain other variable insurance products that our affiliates and we issue. These percentages differ and the amounts may be significant. Some advisers or sub-advisers (or other affiliates) pay us more than others.

The following chart provides the maximum combined percentages of 12b-1 fees and Support Fees that we anticipate will be paid to us on an annual basis:

Incoming Payments to the Company and TCI
Fund	Maximum Fee % of assets
TRANSAMERICA SERIES TRUST	0.25%
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.	0.45%
ACCESS ONE TRUST	0.25%
PROFUNDS	0.25%
FIDELITY VARIABLE INSURANCE
PRODUCTS FUND	0.50%
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST	0.35%

NOTES TO INCOMING PAYMENTS TABLE:

Maximum Fee % of assets: Payments are based on a percentage of the average assets of each underlying fund portfolio owned by the subaccounts available under this policy and under certain other variable insurance products offered by our affiliates and us. We and TCI may continue to receive 12b-1 fees and 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 and TCI provide.

Transamerica Series Trust (“TST”): Because TST is managed by Transamerica Asset Management, Inc. (“TAM”), an affiliate of ours, there are additional benefits to us and our affiliates for amounts you allocate to the TST underlying fund portfolios, in terms of our and our affiliates’ overall profitability. These additional benefits may

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be significant. Payments or other benefits may be received from TAM. Such payments or arrangements may be entered into for a variety of purposes, such as to allocate resources to us to provide administrative services to the policyholders who invest in the TST underlying fund portfolios. These payments or arrangements may take the form of internal credits, recognition, or cash payments. A variety of financial and accounting methods may be used to allocate resources and profits to us. Additionally, if a TST portfolio is sub-advised by an entity that is affiliated with us, we may retain more revenue than on those TST portfolios that are sub-advised by non-affiliated entities. During 2008 we and TCI received $18,513,307.29 from TAM pursuant to these arrangements. This includes the 0.25% amount in the above chart. We anticipate receiving comparable amounts in the future.

Variable Insurance Products Fund: We receive this percentage once $100 million in fund shares are held by the subaccounts of the Company and its affiliates.

— Other Payments. We and our affiliates, inlcuding TCI, InterSecurities, Inc. (“ISI”), and World Group Securities (“WGS”), also directly or indirectly receives additional amounts or different percentages of assets under management from certain advisers and sub-advisers to the underlying fund portfolios (or their affiliates) with regard to variable insurance products or mutual funds that are issued by us and our affiliates. These amounts may be derived, in whole or in part, from the profits the investment adviser or sub-adviser receives from the advisory fee deducted from underlying fund portfolio assets. Policy 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 directly or indirectly 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 pay ISI varying amounts to obtain access to ISI’s wholesaling and selling representatives;

— may provide our affiliates and/or selling firms with wholesaling services to assist us in the distribution of the policies

— may provide us and/or certain affiliates and/or selling firms with occasional gifts, meals, tickets or other compensation as an incentive to market the underlying fund portfolios and to assist with their promotional efforts. The amounts may be significant and these arrangements provide the adviser or subadviser (or other affiliates) with increased access to us and to our affiliates involved in the distribution of the policies.

For the calendar year ended December 31, 2008, TCI received revenue sharing payments ranging from $4,000 to $35,295 (for a total of $418,058) from the following Fund managers and/or sub-advisers to participate in TCI’s events: AIM Advisors, Inc., Alliance Capital Management L.P., American Century Investment Management, Inc., BlackRock Investment Management, LLC., Columbia Management Advisors, Inc., Dreyfus, Evergreen Investments, Federated Investment Management Company, Fidelity Management and Research Company, Franklin Templeton Services, LLC, ING Clarion Real Estate Securities, Janus Capital Management, LLC, Jennison Associates LLC, JPMorgan Investment Management, Inc., Lehman Brothers, MFS Investment Management, Oppenheimer Funds, Inc., Pacific Investment Management Company LLC, Putnam , Schroders, T. Rowe Price Associates, Inc., Transamerica Investment Management, LLC, Morgan Stanley Investment Management, Inc., Van Kampen Asset Management, Vanguard, ClearBridge Advisors, LLC. Please note

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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 policy, and (2) that we incur, in our role as intermediary, in promoting, marketing, and administering the underlying fund portfolios. We and our affiliates may profit from these payments.

For further details about the compensation payments we make in connection with the sale of the policies, see “Distributor of the Policies” in this prospectus.

6. ACCESS TO YOUR MONEY

During the accumulation phase, you can have access to the money in your policy in the following ways:

— by making a surrender (either a full or partial surrender); or

— by taking systematic payouts (See “Section 10, Systematic Payout Option” for more details).

Surrenders

If you take a full surrender, you will receive your cash value.

If you want to take a partial surrender, in most cases it must be for at least $200. Unless you tell us otherwise, we will take the surrender from each of the investment choices in proportion to the policy value.

Remember that any surrender you take will reduce the policy value, and the amount of the death benefit. See “Section 8, Death Benefit”, for more details. A surrender may also reduce other benefits.

Surrenders from qualified policies may be restricted or prohibited.

During the income phase, you will receive annuity payments under the annuity payment option you select; however, you generally may not take any other surrenders, either full or partial, unless you elect a Life with Emergency Cash^® payment option.

If your policy was issued pursuant to a 403(b) plan, starting January 1, 2009 we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders, loans or transfers you request comply with applicable tax requirements and to decline requests that are not in compliance. We will defer such payments you request until all information required under the tax law has been received. By requesting a surrender, loan or transfer, you consent to the sharing of confidential information about you, the policy, and transactions under the policy and any other 403(b) contracts or accounts you have under the 403(b) plan among us, your employer or plan sponsor, any plan administrator or recordkeeper, and other product providers.

Delay of Payment and Transfers

Payment of any amount due from the separate account for a surrender, a death benefit, or the death of the owner of a nonqualified policy, will generally occur within seven days from the date we receive in good order all required information at our administrative and service office. We may defer such payment from the separate account if:

— the New York Stock Exchange is closed other than for usual weekends or holidays or trading on the Exchange is otherwise restricted;

— an emergency exists as defined by the SEC or the SEC requires that trading be restricted; or

— the SEC permits a delay for the protection of owners.

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In addition, transfers of amounts from the subaccounts may be deferred under these circumstances.

Any payment or transfer request which is not in good order will cause a delay.

Federal laws designed to counter terrorism and prevent money laundering by criminals might in certain circumstances require us to reject a premium payment and/or “freeze” a policy owner’s account. If these laws apply in a particular situation, we would not be allowed to pay any request for withdrawals, surrenders, or death benefits, make transfers, or continue making annuity payments absent instructions from the appropriate federal regulator. We may also be required to provide information about you and your policy to government agencies or departments.

Pursuant to the requirements of certain state laws, we reserve the right to defer payment of the cash value from the fixed account for up to six months. We may defer payment of any amount until your premium payment check has cleared your bank.

Excess Interest Adjustment

Money that you transfer out of or surrender from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. At the time you request a transfer or surrender (either full or partial), if interest rates set by the Company have risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value on surrender or transfer. However, if interest rates have fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value on

surrender or transfer. Please see “Appendix - Excess Interest Adjustment Examples” to see how the excess interest adjustment is calculated and illustrative examples using hypothetical values.

Any amount surrendered in excess of the cumulative interest credited is generally subject to an excess interest adjustment. An excess interest adjustment may also be made on amounts applied to an annuity payment option.

There will be no excess interest adjustment on any of the following:

— surrenders of cumulative interest credited;

— Nursing Care and Terminal Condition Withdrawal Option surrenders;

— Unemployment Waiver surrenders;

— surrenders to satisfy any minimum distribution requirements; and

— Systematic Payout Option payments, which do not exceed cumulative interest credited at the time of payment.

Please note that in these circumstances you will not receive a higher cash value if interest rates have fallen nor will you receive a lower cash value if interest rates have risen.

The excess interest adjustment may vary for certain policies and may not be applicable for all policies.

Signature Guarantee

As a protection against fraud, we require that the following transaction requests include a Medallion signature guarantee:

— All requests for disbursements (i.e. partial withdrawals and surrenders) $50,000 and over;

— Any non-electronic disbursement requests made on or within 15 days of a change to the address of record for a contract owner’s account; and

— Any disbursement request when Western Reserve Life Assurance Co. of Ohio has been directed to send proceeds to a different address

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from the address of record for that contract owner’s account. PLEASE NOTE: This requirement will not apply to disbursement request made in connection with exchanges of one annuity policy for another with the same owner in a “tax-free exchange” under Section 1035 of the Internal Revenue Code or a Qualified Direct Rollover to another insurance company.

An investor can obtain a Medallion signature guarantee from more than 7,000 financial institutions across the United States and Canada that participate in a Medallion signature guarantee program. This includes many:

— National and state banks;

— Savings banks and savings and loan associations;

— Securities brokers and dealers; and

— Credit unions.

The best source of a Medallion signature guarantee is a bank, savings and loan association, brokerage firm, or credit union with which you do business. Guarantor firms may, but frequently do not, charge a fee for their services.

A notary public cannot provide a Medallion signature guarantee. Notarization will not substitute for a Medallion signature guarantee.

7. ANNUITY PAYMENTS

(THE INCOME PHASE)

You choose the annuity commencement date. You can change this date by giving us notice with the information we need. New annuity commencement dates less than 30 days after we receive notice of the change require prior approval. The latest maximum annuity commencement date generally cannot be after the policy month following the month in which the annuitant attains age 95. The earliest annuity commencement date is at least thirty days after you purchase your policy.

Before the annuity commencement date, if the annuitant is alive, you may choose an annuity payment option or change your election. If the annuitant dies before the annuity commencement date, the death benefit is payable in a lump sum or under one of the annuity payment options (unless the surviving spouse continues the policy).

Unless you specify otherwise, the annuitant will receive the annuity payments. After the annuitant’s death, the beneficiary you designate at annuitization will receive any remaining guaranteed payments.

Annuity Payment Options

The policy provides several annuity payment options that are described below. You may choose any combination of annuity payment options. We will use your policy value to provide these annuity payments. If the policy value on the annuity commencement date is less than $2,000, we reserve the right to pay it in one lump sum in lieu of applying it under an annuity payment option. You can receive annuity payments monthly, quarterly, semi-annually, or annually. (We reserve the right to change the frequency if payments would be less than $50.)

If you choose to receive fixed payments, then the amount of each payment will be set on the annuity commencement date and will not change. You may, however, choose to receive variable payments. The dollar amount of the first variable payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the policy. The dollar amount of additional variable payments will vary based on the investment performance of the subaccount(s) you select. The dollar amount of each variable payment after the first may increase, decrease, or remain constant. If the actual investment performance (net of fees and expenses) exactly matched the assumed investment return of 5% at all times, the amount of each variable annuity payment would remain constant. If actual

33

investment performance (net of fees and expenses) exceeds the assumed investment return, the amount of the variable annuity payments would increase. Conversely, if actual investment performance (net of fees and expenses) is lower than the assumed investment return, the amount of the variable annuity payments would decrease. Please note that these changes only occur annually under the Initial Payment Guarantee.

A charge for premium taxes and an excess interest adjustment may be made when annuity payments begin.

The annuity payment options are explained below. Some options are fixed only and some can be fixed or variable.

Income for a Specified Period (fixed only). We will make level payments only for a fixed period. No funds will remain at the end of the period.

If your policy is a qualified policy, this payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.

Income of a Specified Amount (fixed only). Payments are made for any specified amount until the amount applied to this option, with interest, is exhausted. This will be a series of level payments followed by a smaller final payment.

If your policy is a qualified policy, this payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.

Life Income. You may choose between:

— No Period Certain (fixed or variable)-Payments will be made only during the annuitant’s lifetime.

— 10 Years Certain (fixed or variable)-Payments will be made for the longer of the annuitant’s lifetime or ten years.

— Guaranteed Return of Policy Proceeds (fixed only)-Payments will be made for the longer of the annuitant’s lifetime or until the total dollar amount of payments we made to you equals the annuitized amount.

— Life with Emergency Cash^® (fixed or variable)-Payments will be made during the annuitant’s lifetime. With the Life with Emergency Cash^® feature, you are able to surrender all or a portion of the Life with Emergency Cash^® benefit. The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency Cash^® benefit schedule that will assist you in estimating the amount you have available to surrender. A partial surrender will reduce all future payments pro rata. A surrender charge may apply and there may be tax consequences (consult a tax advisor before requesting a full or partial surrender). The maximum surrender charge is 4% of the annuitized amount (see “Expenses” for the surrender charge schedule). You will be subject to whatever surrender schedule is in effect at the time you annuitize under this annuity payment option. The Life with Emergency Cash^® benefit will continue through age 100 of the annuitant.

The Life with Emergency Cash^® benefit is also a death benefit that is paid upon the death of the annuitant and is generally equal to the surrender value without any surrender charges. For qualified policies the death benefit ceases on the date the annuitant reaches the IRS age limitation.

Joint and Survivor Annuity. You may choose between:

— No Period Certain (fixed or variable)-Payments are made during the joint lifetime of the annuitant and a joint annuitant of your selection. Payments will be made as long as either person is living.

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— Life with Emergency Cash^® (fixed or variable)-Payments will be made during the joint lifetime of the annuitant and a joint annuitant of your selection. Payments will be made as long as either person is living. With the Life with Emergency Cash^® feature, you are able to surrender all or a portion of the Life with Emergency Cash^® benefit. The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency Cash^® benefit schedule that will assist you in estimating the amount you have available to surrender. A partial surrender will reduce all future payments pro rata. A surrender charge may apply and there may be tax consequences (consult a tax advisor before requesting a full or partial surrender). The maximum surrender charge is 4% of the annuitized amount (see “Expenses” for the surrender charge schedule). You will be subject to whatever surrender schedule is in effect at the time you annuitize under this annuity payment option. The Life with Emergency Cash^® benefit will continue through age 100 of the surviving joint annuitant.

The Life with Emergency Cash^® benefit is also a death benefit that is paid upon the death of the surviving joint annuitant and is generally equal to the surrender value without any surrender charges. For qualified policies the death benefit ceases on the date the surviving joint annuitant reaches the IRS joint age limitation.

Other annuity payment options may be arranged by agreement with the Company. Some annuity payment options may not be available for all policies.

NOTE CAREFULLY

IF:

— you choose Life Income with No Period Certain or a Joint and Survivor Annuity with No Period Certain; and

— the annuitant dies (or both joint annuitants die) before the due date of the second (third, fourth, etc.) annuity payment;

THEN:

— we may make only one (two, three, etc.) annuity payments.

IF:

— you choose Income for a Specified Period, Life Income with 10 Years Certain, Life Income with Guaranteed Return of Policy Proceeds, or Income of a Specified Amount; and

— the person receiving payments dies prior to the end of the guaranteed period;

THEN:

— the remaining guaranteed payments will be continued to a new payee, or their present value may be paid in a single sum.

However, IF:

— you choose Life with Emergency Cash^® ; and

— the annuitant dies (if both joint annuitants die) before age 101;

THEN:

— a Life with Emergency Cash^® death benefit will be paid.

We will not pay interest on amounts represented by uncashed annuity payment checks if the postal or other delivery service is unable to deliver checks to the payee’s address of record. The person receiving payments is responsible for keeping the Company informed of his/her current address.

You must annuitize your policy no later than the maximum annuity commencement date specified in your policy (earlier for certain distribution channels).

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If you do not elect an annuity payment option, the default option will be Life with 10 Years Certain option. Please note, all optional benefits (including guaranteed minimum death benefits and living benefits) terminate upon annuitization.

8. DEATH BENEFIT

We will pay a death benefit to your beneficiary, under certain circumstances, if the annuitant dies during the accumulation phase. If there is a surviving owner(s) when the annuitant dies, the surviving owner(s) will receive the death benefit instead of the listed beneficiary. The person receiving the death benefit may choose an annuity payment option, or may choose to receive a lump sum.

We will determine the amount of and pay the death benefit proceeds, if any are payable on a policy, upon receipt at our administrative and service office of satisfactory proof of the annuitant’s death, written directions from each eligible recipient of death benefit proceeds regarding how to pay the death benefit, and any other documents, forms and information that we need (collectively referred to as “due proof of death”). Please Note: Such due proof of death must be submitted in good order to avoid a delay in processing the death benefit claim.

When We Pay A Death Benefit

We will pay a death benefit IF:

— you are both the annuitant and sole owner of the policy; and

— you die before the annuity commencement date.

We will pay a death benefit to you (owner) IF:

— you are not the annuitant; and

— the annuitant dies before the annuity commencement date.

If the only person receiving the death benefit is the surviving spouse, then he or she may elect to continue the policy as the new annuitant and owner, instead of receiving the death benefit.

When We Do Not Pay A Death Benefit

We will not pay a death benefit IF:

— you are not the annuitant; and

— you die prior to the annuity commencement date.

Please note the new owner (unless it is the deceased owner’s spouse) must generally surrender the policy within five years of your death.

Distribution requirements apply to the policy value upon the death of any owner. These distribution requirements are detailed in the SAI.

Deaths After the Annuity Commencement Date

The death benefit payable, if any, on or after the annuity commencement date depends on the annuity payment option selected.

IF:

— you are not the annuitant; and

— you die on or after the annuity commencement date; and

— the entire interest in the policy has not been paid;

THEN:

— the remaining portion of such interest in the policy will continue to be distributed at least as rapidly as under the method of distribution being used as of the date of your death.

IF:

— annuity payments are being made under the Life with Emergency Cash^® ; and

— the annuitant dies before age 101 (or earlier, if a qualified policy);

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THEN:

— a Life with Emergency Cash^® death benefit will be paid.

Succession of Ownership

If an owner dies during the accumulation phase, the person or entity first listed below who is alive or in existence on the date of that death will become the new owner:

— any surviving owner;

— primary beneficiary;

— contingent beneficiary; or

— owner’s estate.

Amount of Death Benefit

Death benefit provisions may differ from state to state. The death benefit may be paid as a lump sum or as annuity payments. The amount of the death benefit depends on the guaranteed minimum death benefit option, if any, you choose when you buy the policy. The “base policy” death benefit will generally be the greater of:

— the account value which is the greater of the policy value or cash value on the date we receive the required information in good order at our Administrative and Service Office

— the guaranteed minimum death benefit (discussed below), plus premium payments (after the date of death), less adjusted partial surrenders, from the date of death to the date the death benefit is paid.

Please note, the death benefit terminates upon annuitization and there is a maximum annuity commencement date.

Guaranteed Minimum Death Benefit

NOTE: The following generally applies, depending on the state of issue.

On the policy application, you may generally choose a guaranteed minimum death benefit (age limitations may apply) for an additional fee. After the policy is issued, you cannot make an election and the death benefit cannot be changed.

Double Enhanced Death Benefit

The death benefit under this option is the greater of 1 or 2 below:

1. The 5% Annually Compounding through age 80 Death Benefit, which is equal to:

— the total premium payments; less

— any adjusted partial surrenders;

— accumulated at an effective annual rate of 5% from each premium payment date and each surrender date to the earlier of the annuitant’s date of death or the annuitant’s 81st birthday.

2. The Annual Step-Up through age 80 Death Benefit, which is equal to:

— the largest policy value on the policy date or on any policy anniversary before the earlier of the annuitant’s date of death or the annuitant’s 86th birthday; plus

— any premium payments since the date of any policy anniversary with the largest policy value; minus

— any adjusted partial surrenders since the date of the policy anniversary with the largest policy value.

This benefit is not available if the owner or annuitant is age 76 or older on the policy date. There is an extra charge for this death benefit of 0.40% annually.

5% Annually Compounding Death Benefit

The 5% Annually Compounding Death Benefit is equal to:

— The premium payments; less

— Any adjusted partial withdrawals;

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Accumulated at an effective annual rate of 5% from the premium payment date or partial withdrawal date to the earlier of the annuitant’s date of death or the annuitant’s 81st birthday.

This benefit is not available if the owner or annuitant is age 76 or older on the policy date. There is an extra charge for this death benefit of 0.30% annually.

Annual Step-Up Death Benefit

Under this option, on each policy anniversary before your 86th birthday, a new “stepped-up” death benefit is determined and becomes the guaranteed minimum death benefit for that policy year. This “step-up” death benefit is equal to:

— the largest policy value on the policy date or on any policy anniversary prior to the earlier of the annuitant’s date of death or the annuitant’s 86th birthday; plus

— any premium payments since the date of any policy anniversary with the largest policy value; minus

— any adjusted partial surrenders since the date of the policy anniversary with the largest policy value.

The Annual Step-Up Death Benefit is not available if the annuitant is 81 or older on the policy date. There is an extra charge for this death benefit of 0.25% annually.

Return of Premium Death Benefit

The Return of Premium Death Benefit is equal to:

— total premium payments; less

— any adjusted partial surrenders as of the date of death.

This benefit is not available if the annuitant is 91 or older on the policy date. There is an extra charge for this death benefit of 0.05% annually.

— Please note: You will not receive an optional guaranteed minimum death benefit if you do not choose one when you purchase your policy.

The Guaranteed Minimum Death Benefit may vary for certain policies and may not be available for all policies. This disclosure explains the material features of the Guaranteed Minimum Death Benefit. The application and operation of the Guaranteed Minimum Death Benefit are governed by the terms and conditions of the policy form and riders.

Adjusted Partial Surrender

When you request a partial surrender, your guaranteed minimum death benefit will be reduced by an amount called the adjusted partial surrender. Under certain circumstances, the adjusted partial surrender may be more than the dollar amount of your surrender request. This will generally be the case if the guaranteed minimum death benefit exceeds the policy value at the time of surrender. It is also possible that if a death benefit is paid after you have made a partial surrender, then the total amount paid could be less than the total premium payments. We have included a detailed explanation of this adjustment in the “Appendix - Death Benefit.” This is referred to as “adjusted partial surrender” in your policy. If you have a qualified policy, minimum required distributions rules may require you to request a partial surrender.

9. TAXES

NOTE: We have prepared the following information on federal income taxes as a general discussion of the subject. It is not intended as tax advice to any individual. You should consult your

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own tax adviser about your own circumstances. We have included an additional discussion regarding taxes in the SAI.

Annuity Policies in General

Deferred annuity policies are a way of setting aside money for future needs like retirement. Congress recognized how important saving for retirement is and provided special rules in the Internal Revenue Code for annuities.

Simply stated, these rules generally provide that individuals will not be taxed on the earnings, if any, on the money held in an annuity policy until taken out. This is referred to as tax deferral. When a non-natural person (e.g., corporation or certain other entities other than tax-qualified trusts) owns a nonqualified policy, the policy will generally not be treated as an annuity for tax purposes.

There are different rules as to how you will be taxed depending on how you take the money out and the type of policy-qualified or nonqualified.

You will generally not be taxed on increases in the value of your policy until a distribution occurs (either as a surrender or as annuity payments).

Qualified and Nonqualified Policies

If you purchase the policy under an individual retirement annuity, a 403(b) plan, a pension plan, or specially sponsored program, your policy is referred to as a qualified policy.

Qualified policies are issued in connection with the following:

— Individual Retirement Annuity (IRA): A traditional IRA allows individuals to make contributions, which may be deductible, to the policy. A Roth IRA also allows individuals to make contributions to the policy, but it does not

allow a deduction for contributions, and distributions may be tax-free if the owner meets certain rules.

— Tax-Sheltered Annuity (403(b) Plan): A 403(b) Plan may be made available to employees of certain public school systems and tax-exempt organizations and permits contributions to the policy on a pre-tax basis. Pursuant to new tax regulations, starting January 1, 2009 the policy is not available for purchase under a 403(b) plan and we do not accept additional premiums or transfers to existing 403(b) policies. We generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders, loans or transfers you request from an existing 403(b) policy comply with applicable tax requirements before we process your request.

— Corporate Pension and Profit-Sharing and H.R. 10 Plan: Employers and self-employed individuals can establish pension or profit-sharing plans for their employees or themselves and make contributions to the policy on a pre-tax basis.

— Deferred Compensation Plan (457 Plan): Certain governmental and tax-exempt organizations can establish a plan to defer compensation on behalf of their employees through contributions to the policy.

There is no additional tax deferral benefit derived from placing qualified funds into a variable annuity. Features other than tax deferral should be considered in the purchase of a qualified policy. There are limits on the amount of contributions you can make to a qualified policy. Other restrictions may apply including terms of the plan in which you participate.

Optional death benefit features in some cases may exceed the greater of the premium payments or the policy value. Such a death benefit could be characterized as an incidental benefit, the amount of which is limited in any pension or profit-sharing plan or 403(b) plan. Because an optional death benefit may exceed this limitation, anyone using the policy

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in connection with such plans should consult their tax adviser before purchasing an optional death benefit. The Internal Revenue Service has not reviewed the policy for qualification as an IRA, and has not addressed in a ruling of general applicability whether the death benefit options and riders available, with the policy, if any, comport with IRA qualification requirements.

If you purchase the policy as an individual and not under an individual retirement annuity, 403(b) plan, 457 plan, or pension or profit sharing plan, your policy is referred to as a nonqualified policy.

Surrenders-Qualified Policies Generally

There are special rules that govern qualified policies. Generally, these rules restrict:

— the amount that can be contributed to the policy during any year;

— the time when amounts can be paid from the policy; and

— the amount of any death benefit that may be allowed.

In the case of a withdrawal under a qualified policy, a pro rata portion of the amount you receive is taxable, generally based on the ratio of your “investment in the contract” to your total account balance or accrued benefit under the retirement plan. Your “investment in the contract” generally equals the amount of any non-deductible purchase payments made by you or on your behalf. In some cases, your “investment in the contract” can be zero.

In addition, a penalty tax may be assessed on amounts surrendered from the policy prior to the date you reach age 59 ¹⁄₂, unless you meet one of the exceptions to this rule. You may also be required to begin taking minimum distributions from the policy by a certain date. Pursuant to special legislation, required minimum distributions for the 2009 tax year generally are not required, and 2009 distributions that otherwise would be required

minimum distributions may be eligible for rollover. The terms of the plan may limit the rights otherwise available to you under the policy. We have provided more information in the SAI.

We may make available under the policy certain guaranteed lifetime withdrawal and other optional benefits. The tax rules for qualified policies may limit the value of these optional benefits. For example, if you elect a guaranteed lifetime withdrawal benefit and your minimum required distribution amount exceeds your guaranteed withdrawal amount, you will have to withdraw more than the guaranteed withdrawal amount to avoid imposition of a 50% excise tax. It is not clear whether guaranteed lifetime withdrawal benefit payments made during the settlement phase will be taxed as withdrawals or as annuity payments. In view of this uncertainty, we will apply the non-annuity rules for determining minimum required distributions, meaning that a percentage of the value of all benefits under the contract will need to be withdrawn each year. The value may have to include the value of enhanced death benefits and other optional contract provisions such as the guaranteed lifetime withdrawal benefit rider itself.

If you are attempting to satisfy minimum required distribution rules through partial surrenders, the value of any enhanced death benefit or other optional rider may need to be included in calculating the amount required to be distributed.

The Internal Revenue Code generally requires that interests in a qualified policy be nonforfeitable. If your policy contains a bonus rider with a recapture, forfeiture, or “vesting” feature, it may not be consistent with those requirements. Consult a tax advisor before purchasing a bonus rider as part of a qualified policy.

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You should consult your legal counsel or tax adviser if you are considering purchasing an enhanced death benefit or other optional rider, or if you are considering purchasing a policy for use with any qualified retirement plan or arrangement.

Surrenders-403(b) Policies

The rules described above for qualified policies generally apply to 403(b) policies. However, specific rules apply to surrenders from certain 403(b) policies. Partial withdrawals and surrenders can generally only be made when an owner:

— reaches age 59 ¹⁄₂;

— leaves his/her job;

— dies;

— becomes disabled (as that term is defined in the Internal Revenue Code); or

— declares hardship. However, in the case of hardship, the owner can only surrender the premium payments and not any earnings.

Please Note: In some instances the signature of the employer may be required. For contracts issued after 2008, amounts attributable to nonelective contributions may be subject to distribution restrictions specified in the employer’s section 403(b) plan.

Pursuant to new tax regulations, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders you request from a 403(b) policy comply with applicable tax requirements before we process your request.

Defaulted loans from Code Section 403(b) arrangements, and pledges and assignments of qualified policies generally are taxed in the same manner as surrenders from such policies. Please refer to the SAI for further information applicable to distributions from 403(b) policies. Please note that a defaulted loan may stop the growth on a guaranteed lifetime withdrawal benefit.

Surrenders-Nonqualified Policies

The information above describing the taxation of qualified policies does not apply to nonqualified policies. If you take a partial withdrawal or surrender (including systematic payouts and payouts under an optional feature, if any) from a nonqualified policy before the annuity commencement date, the Internal Revenue Code treats that surrender as first coming from earnings and then from your premium payments. If your policy contains an excess interest adjustment feature (also known as a market value adjustment), then your account value immediately before the surrender may have to be increased by any positive excess interest adjustments that result from the surrender. There is, however, no definitive guidance on the proper tax treatment of excess interest adjustments, and you may want to discuss the potential tax consequences of an excess interest adjustment with your tax advisor.

When you make a surrender you are taxed on the amount of the surrender that is earnings. If you make a surrender, you are generally taxed on the amount that your surrender proceeds exceeds the “investment in the contract,” which is generally your premiums paid (adjusted for any prior surrenders or portions thereof that were not taxable). In general, loans, pledges, and assignments are taxed in the same manner as partial withdrawals and surrenders. Different rules apply for annuity payments. See “Annuity Payments” below.

The Internal Revenue Code also provides that surrendered earnings may be subject to a penalty tax. The amount of the penalty tax is equal to 10% of the amount that is includable in income. Some surrenders will be exempt from the penalty tax. They include, among others, any amounts:

— paid on or after the taxpayer reaches age 59 ¹⁄₂;

— paid after an owner dies;

— paid if the taxpayer becomes disabled (as that term is defined in the Internal Revenue Code);

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— paid in a series of substantially equal payments made annually (or more frequently) under a lifetime annuity;

— paid under an immediate annuity; or

— which come from premium payments made prior to August 14, 1982.

If your nonqualified policy contains a guaranteed lifetime withdrawal benefit rider, certain rules may apply. It is not clear whether guaranteed lifetime withdrawal benefit payments made during the settlement or income (payout) phase may be taxed as either withdrawals or annuities. In view of this uncertainty, we intend to adopt a conservative approach and treat guaranteed lifetime withdrawal payments during the settlement phase under nonqualified policies as withdrawals. Consult a tax advisor before purchasing a guaranteed lifetime withdrawal benefit rider or option.

All nonqualified deferred annuity policies that are issued by us (or our affiliates) to the same owner during any calendar year are treated as one annuity for purposes of determining the amount includable in the owner’s income when a taxable distribution occurs.

Taxation of Death Benefit Proceeds

Amounts may be distributed from the policy because of the death of the annuitant. Generally, such amounts should be includable in the income of the recipient:

— if distributed in a lump sum, these amounts are taxed in the same manner as a surrender; or

— if distributed under an annuity payment option, these amounts are taxed in the same manner as annuity payments.

Annuity Payments

Although the tax consequences may vary depending on the annuity payment option you select, in general, for nonqualified and certain qualified policies, only a portion of the annuity payments you receive will be includable in your gross income.

In general, the excludable portion of each annuity payment you receive will be determined as follows:

— Fixed payments-by dividing the “investment in the contract” on the annuity commencement date by the total expected value of the annuity payments for the term of the payments. This is the percentage of each annuity payment that is excludable.

— Variable payments-by dividing the “investment in the contract” on the annuity commencement date by the total number of expected periodic payments. This is the amount of each annuity payment that is excludable.

The remainder of each annuity payment is includable in gross income. Once the “investment in the contract” has been fully recovered, the full amount of any additional annuity payments is includable in gross income and taxed as ordinary income.

If you select more than one annuity payment option, special rules govern the allocation of the policy’s entire “investment in the contract” to each such option, for purposes of determining the excludable amount of each payment received under that option. We advise you to consult a competent tax adviser as to the potential tax effects of allocating amounts to any particular annuity payment option.

If, after the annuity commencement date, annuity payments stop because an annuitant died, the excess (if any) of the “investment in the contract” as of the annuity commencement date over the aggregate amount of annuity payments received that was excluded from gross income may possibly be allowable as a deduction in your tax return.

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You should consult a tax advisor before electing the Initial Payment Guarantee or a feature with stabilized payments.

Diversification and Distribution Requirements

The Internal Revenue Code provides that the underlying investments for a variable annuity must satisfy certain diversification requirements in order to be treated as an annuity. The policy must also meet certain distribution requirements at the death of an owner in order to be treated as an annuity. These diversification and distribution requirements are discussed in the SAI. We may modify the policy to attempt to maintain favorable tax treatment.

Federal Estate Taxes

While no attempt is being made to discuss the Federal estate tax implications of the Policy, a purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning advisor for more information.

Generation-Skipping Transfer Tax

Under certain circumstances, the Internal Revenue Code may impose a “generation skipping transfer tax” when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Contract, or from any applicable payment, and pay it directly to the IRS.

Annuity Purchases by Residents of Puerto Rico

The Internal Revenue Service recently announced that income received by residents of Puerto Rico under life insurance or annuity contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.

Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations

The discussion above provided general information (but not tax advice) regarding U.S. federal income tax consequences to annuity owners that are U.S. persons. Taxable distributions made to owners who are not U.S. persons will generally be subject to U.S. federal income tax withholding at a 30% rate, unless a lower treaty rate applies. In addition, distributions may be subject to state and/or municipal taxes and taxes that may be imposed by the owner’s country of citizenship or residence. Prospective foreign owners are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation for any annuity policy purchase.

Transfers, Assignments or Exchanges of Policies

A transfer of ownership or assignment of a policy, the designation of an annuitant or payee or other beneficiary who is not also the owner, the selection of certain annuity commencement dates, or a change of annuitant, may result in certain income or gift tax consequences to the owner that are beyond the scope of this discussion. An owner contemplating any such transfer, assignment, selection, or change should contact a competent tax adviser with respect to the potential tax effects of such a transaction.

Possible Tax Law Changes

Although the likelihood of legislative or regulatory changes is uncertain, there is always the possibility that the tax treatment of the policy could change by

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legislation, regulation, or otherwise. You should consult a tax adviser with respect to legal or regulatory developments and their effect on the policy.

We have the right to modify the policy to meet the requirements of any applicable laws or regulations, including legislative changes that could otherwise diminish the favorable tax treatment that annuity policy owners currently receive.

Separate Account Charges

It is possible that the Internal Revenue Service may take a position that fees for certain optional benefits (e.g., death benefits other than the Return of Premium death benefit) are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat fees associated with certain optional benefits as a taxable surrender, which might also be subject to a tax penalty if the surrender occurs prior to age 59 ¹⁄₂. Although we do not believe that the fees associated with any optional benefit provided under the policy should be treated as taxable surrenders, the tax rules associated with these benefits are unclear, and we advise that you consult your tax advisor prior to selecting any optional benefit under the policy.

Foreign Tax Credits

We may benefit from any foreign tax credits attributable to taxes paid by certain underlying funds to foreign jurisdictions to the extent permitted under federal tax law.

10. ADDITIONAL FEATURES

Systematic Payout Option

You can select at any time (during the accumulation phase) to receive regular withdrawals from your policy by using the Systematic Payout Option. Under this option, you can receive the greater of (1) or (2),

divided by the number of withdrawals made per year, where: (1) up to 10% of your premium payments (reduced by prior withdrawals in that policy year); and (2) is any gains in the policy. For amounts greater than 10% of your premium payments, you must receive prior Company approval.

Any payment in excess of the cumulative interest credited at the time of the payment may be subject to an excess interest adjustment.

Systematic withdrawals can be made monthly, quarterly, semi-annually, or annually and will not begin until one withdrawal period from the date we receive your written instructions in good order at our administrative and service office. Each withdrawal must be at least $50. Monthly and quarterly withdrawals must generally be made by electronic funds transfer directly to your checking or savings account.

Keep in mind that partial withdrawals under the Systematic Payout Option may be taxable, and if made before age 59 ¹⁄₂, may be subject to a 10% federal penalty tax.

Please note, if you elect certain features (e.g. living benefit riders) your Systematic Payout Option may be different for the first year.

There is no charge for this benefit.

Initial Payment Guarantee

You may only elect to purchase the Initial Payment Guarantee at the time you annuitize your policy. You cannot terminate this payment guarantee (or eliminate the charge for it) after you have elected it. The guarantee only applies to variable annuity payments. There is an additional charge for this guarantee.

The Initial Payment Guarantee does not establish or guarantee the performance of any subaccount.

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Under the Initial Payment Guarantee, you receive stabilized annuity payments that are guaranteed to never be less than a percentage of the initial payment. The guaranteed percentage is subject to change from time to time; however once you annuitize, the guaranteed percentage will not change during the life of the Initial Payment Guarantee. Contact us for the current guaranteed percentage.

In addition, with this guarantee your annuity payments are stabilized, or held level, throughout each year. The payment amount is adjusted once each year to reflect the investment performance of your selected investment choice(s) over the preceding year (but your payment will not be less than the guaranteed minimum).

Fee. There is a charge for the Initial Payment Guarantee, which is in addition to the base product mortality and expense risk fee and administrative charge. This fee is reflected in the amount of the annuity payments that you receive if you select the Initial Payment Guarantee. It is reflected in the calculation of the annuity unit values.

The Initial Payment Guarantee fee is currently equal to an annual rate of 1.25% of the daily net asset value in the subaccounts. We can change the fee, and you pay whatever the fee is when you annuitize.

Other Terms and Conditions. The Initial Payment Guarantee uses a 5% assumed investment return to calculate your annuity payments. This means that the dollar amount of the annuity payments will remain level if the investment return (net of fees and expenses) exactly equals 5%. The payments will increase if actual investment performance (net of fees and expenses) exceeds the assumed investment return, and decrease if actual performance is below the assumed investment return (but not below the guaranteed level).

Termination. The Initial Payment Guarantee is irrevocable.

The Initial Payment Guarantee may vary for certain policies, may not be available for all policies, and may not be available in all states. This disclosure explains the material features of the Initial Payment Guarantee. The application and operation of the Initial Payment Guarantee are governed by the terms and conditions of the policy itself.

Beneficiary Earnings Enhancement - Extra II

The optional Beneficiary Earnings Enhancement - Extra II rider pays an additional death benefit amount when a death benefit is payable during the accumulation phase under your policy, in certain circumstances. The Beneficiary Earnings Enhancement - Extra II is only available for issue ages through age 75.

Beneficiary Earnings Enhancement - Extra II Benefit Amount. An additional death benefit is only payable if a death benefit is paid on the base policy to which the rider is attached. The amount of the additional benefit is dependent on the amount of time that has passed since the rider date as follows:

— If a death benefit is payable within the first five years after the rider date, the additional benefit amount will be equal to the sum of all rider fees paid since the rider date.

— If a death benefit is payable after five years following the rider date, the additional benefit will be equal to the rider benefit base multiplied by the rider benefit percentage.

The rider benefit base at any time is equal to the policy value less any premiums added after the rider date.

The rider benefit percentage may vary but currently equals 30% for issue ages 0 - 70 and 20% for issue ages 71 - 75, based on the annuitant’s age.

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No benefit is payable under the Beneficiary Earnings Enhancement - Extra II if the policy value on the date the death benefit is paid is less than the premium payments after the rider date.

For purposes of computing taxable gains, both the death benefit payable under the policy and the additional benefit will be considered.

Please see “Appendix – Beneficiary Earnings Enhancement - Extra II—Additional Information” for an example that illustrates the additional death benefit payable as well as the effect of a partial surrender on the Beneficiary Earnings Enhancement - Extra II benefit amount.

Spousal Continuation. If a spouse, as the new owner of the policy, elects to continue the policy instead of receiving the death benefit and Beneficiary Earnings Enhancement - Extra II, then the spouse will receive a one-time policy value increase equal to the Beneficiary Earnings Enhancement - Extra II. At this time the rider will terminate. The spouse will have the option of immediately re-electing the rider through age 75.

Rider Fee. A rider fee, currently 0.55% of the policy value, is deducted annually on each rider anniversary prior to annuitization. We will also deduct this fee upon full surrender of the policy or other termination of the rider. Please note: the rider fee is deducted pro rata from each investment choice. The fee is deducted even during periods when the rider would not pay any benefits.

Termination. The rider will remain in effect until:

— you cancel it by notifying our Administrative and Service Office in writing in good order,

— the policy is annuitized or surrendered, or

— the additional death benefit is paid or added to the policy value under a spousal continuation.

Once terminated, the Beneficiary Earnings Enhancement - Extra II may not be re-elected for one year.

The tax consequences associated with this rider are not clear. This rider may violate the requirements of certain qualified plans and for any qualified plan or IRAs. Consult a tax adviser before electing this rider.

Please note: This feature terminates upon annuitization and there is a maximum annuity commencement date.

The Beneficiary Earnings Enhancement - Extra II may vary for certain policies, may not be available for all policies, and may not be available in all states. This disclosure explains the material features of the Beneficiary Earnings Enhancement - Extra II. The application and operation of the rider are governed by the terms and conditions of the rider itself.

Nursing Care and Terminal Condition Withdrawal Option

No excess interest adjustment will apply if you make a surrender ($1,000 minimum), under certain circumstances, because you or your spouse has been:

— confined in a hospital or nursing facility for 30 days in a row after the policy issue date; or

— diagnosed with a terminal condition after the policy issue date (usually a life expectancy of 12 months or less).

This benefit is also available to the annuitant or annuitant’s spouse if the owner is not a natural person.

You may exercise this benefit at any time (during the accumulation phase). There is no charge for this benefit.

This benefit may vary for certain policies, may not be available for all policies, and may not be available in all states.

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Unemployment Waiver

No excess interest adjustment will apply to surrenders after you or your spouse become unemployed in certain circumstances, because you were terminated, laid off, or otherwise lost your job involuntarily. In order to qualify, you (or your spouse, whichever is applicable) must have been:

— employed full time for at least two years prior to becoming unemployed;

— employed full time on the policy date;

— unemployed for at least 60 days in a row at the time of surrender;

— must have a minimum cash value at the time of surrender of $5,000; and

— you (or your spouse) must be receiving unemployment benefits.

You must provide written proof from your State’s Department of Labor, which verifies that you qualify for and are receiving unemployment benefits at the time of surrender.

You may select this benefit at any time (during the accumulation phase) and there is no charge for this benefit.

This benefit is also available to the annuitant or annuitant’s spouse if the owner is not a natural person. There is no charge for this benefit.

This benefit may vary for certain policies, may not be available for all policies, and may not be available in all states.

Telephone Transactions

You may generally make transfers and change the allocation of additional premium payments by telephone IF:

— you select the “Telephone Transfer/Reallocation Authorization” box in the policy application or enrollment information; or

— you later complete an authorization form.

You will be required to provide certain information for identification purposes when requesting a transaction by telephone and we may record your telephone call. We may also require written confirmation of your request. We will not be liable for following telephone requests that we believe are genuine. We reserve the right to revoke your telephone transaction privileges at any time without revoking all owners’ telephone transfer privileges.

Telephone requests must be received while the New York Stock Exchange is open for regular trading to get same-day pricing of the transaction. We may discontinue this option at any time.

We may deny the telephone transaction privileges to market timers and frequent or disruptive traders.

We cannot guarantee that telephone transactions will always be available. For example, our offices may be closed during severe circumstances or other emergencies. There may be interruptions in service beyond our control, and if the volume of calls is unusually high, we might not have anyone available, or lines available, to take your call. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability in all circumstances.

Dollar Cost Averaging Program

During the accumulation phase, you may instruct us to automatically make transfers into one or more variable subaccounts in accordance with your allocation instructions. This is known as Dollar Cost Averaging. While Dollar Cost Averaging buys more accumulation units when prices are low and fewer accumulation units when prices are high, it does not guarantee profits or assure that you will not experience a loss.

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There are two Dollar Cost Averaging programs available under your policy:

— Traditional—You may specify the dollar amount to be transferred or the number of transfers. Transfers will begin as soon as the program is started.

— Special—You may only elect either a six or twelve month program. Transfers will begin as soon as the program is started. You cannot transfer from another investment choice into a Special Dollar Cost Averaging program. This program is only available for new premium, requires transfers from a fixed source, and may credit a higher or lower interest rate than a traditional program.

A minimum of $500 per transfer is required. A minimum of $3,000 is required to start a 6-month program and $6,000 is required to start a 12-month program. The minimum number of transfers is 6 monthly or 4 quarterly, and the maximum is 24 monthly or 8 quarterly.

You can elect to transfer from one of the fixed or variable sources listed on the Dollar Cost Averaging election form (only fixed sources are available for special Dollar Cost Averaging programs).

A Dollar Cost Averaging program will begin once we have received in good order all necessary information and the minimum required amount. Please note: Dollar Cost Averaging programs will not begin on the 29th, 30th, or 31st. If a program would have started on one of those dates, it will start on the 1st business day of the following month. If we receive additional premium payments while a Dollar Cost Averaging program is running, absent new instructions to the contrary, the amount of the Dollar Cost Averaging transfers will increase, but the length of the Dollar Cost Averaging program will not.

NOTE CAREFULLY:

IF:

— we do not receive all necessary information to begin an initial Dollar Cost Averaging

program within 30 days of allocating the minimum required amount to a Dollar Cost Averaging program; or

— we do not receive the minimum required amount to begin an initial Dollar Cost Averaging program within 30 days of allocating an insufficient amount;

THEN

— any amount in a fixed source will be transferred to the money market investment choice; and

— any amount in a variable source will remain in that variable investment choice; and

— new instructions will be required to begin a Dollar Cost Averaging program.

IF:

— we receive additional premium payments after a Dollar Cost Averaging program is completed;

THEN

— the additional premium payments will be allocated according to the current payment allocations at that time and will not reactivate a completed Dollar Cost Averaging program. (New Dollar Cost Averaging instructions are required to start a new Dollar Cost Averaging program once the previous Dollar Cost Averaging program has completed.)

— we receive additional premium payments after a Dollar Cost Averaging program is completed, and the additional premium does not meet the minimum requirements to start a Dollar Cost Averaging program;

IF:

— you discontinue a Dollar Cost Averaging program before its completion;

THEN

— we will, absent new instructions to the contrary, transfer any remaining balance directly into the subaccounts in the Dollar Cost Averaging instructions.

48

You should consider your ability to continue a Dollar Cost Averaging program during all economic conditions.

There is no charge for this benefit.

The Dollar Cost Averaging Program may vary for certain policies, may not be available for all policies, and may not be available in all states. See your policy for availability of the fixed account options.

Asset Rebalancing

During the accumulation phase you can instruct us to automatically rebalance the amounts in your subaccounts to maintain your desired asset allocation. This feature is called Asset Rebalancing and can be started and stopped at any time. However, we will not rebalance if you are in the Dollar Cost Averaging program or if any other transfer is requested. If a transfer is requested, we will honor the requested transfer and discontinue Asset Rebalancing. New instructions are required to start Asset Rebalancing. Asset Rebalancing ignores amounts in the fixed account. You can choose to rebalance monthly, quarterly, semi-annually, or annually.

There is no charge for this benefit.

11. OTHER INFORMATION

Ownership

You, as owner of the policy, exercise all rights under the policy. You can change the owner at any time by notifying us in writing at our administrative and service office. An ownership change may be a taxable event.

Right to Cancel Period

You may return your policy for a refund, but only if you return it within a prescribed period, which is generally 10 days (after you receive the policy), or

whatever longer time may be required by state law. The amount of the refund will generally be the premiums paid plus or minus accumulated gains or losses in the separate account. You bear the risk of any decline in policy value during the right to cancel period. However, if state law requires, we will refund your original premium payment(s). We will pay the refund within seven days after we receive in good order within the applicable period at our Administrative and Service Office, written notice of cancellation and the returned policy. The policy will then be deemed void.

Assignment

You can also generally assign the policy any time during your lifetime. We will not be bound by the assignment until we receive written notice of the assignment in good order at our Administrative and Service Office and approve it. We reserve the right, except to the extent prohibited by applicable laws, regulations, or actions of the State insurance commissioner, to require that an assignment will be effective only upon acceptance by us, and to refuse assignments or transfers at any time on a non-discriminatory basis. We will not be liable for any payment or other action we take in accordance with the policy before we approve the assignment. There may be limitations on your ability to assign a qualified policy. An assignment may have tax consequences.

Sending Forms and Transaction Requests in Good Order

We cannot process your requests for transactions relating to the policy until we have received them in good order at our Administrative and Service Office. “good order” means the actual receipt by us of the instructions relating to the requested transaction in writing (or, when appropriate, by telephone or electronically, along with all forms, information and supporting legal documentation necessary to effect the transaction. This information and documentation

49

generally includes, to the extend applicable to the transaction: your completed application; the policy number; the transaction amount (in dollars or percentage terms); the names and allocations to and/or from the Subaccounts affected by the requested transaction; the signatures of all policy owners (exactly as registered on the Policy) if necessary; Social Security Number or Taxpayer I.D.; and any other information or supporting documentation that we may require, including any spousal or joint owner’s consents. With respect to purchase requests, “good order” also generally includes receipt (by us) of sufficient funds to effect the purchase. We may, in our sole discretion, determine whether any particular transaction request is in good order, and we reserve the right to change or waive any good order requirements at any time.

Mixed and Shared Funding

Before making a decision concerning the allocation of premium payments to a particular subaccount, please read the prospectuses for the underlying fund portfolios. The underlying fund portfolios are not limited to selling their shares to this separate account and can accept investments from any insurance company separate account or qualified retirement plan. Since the underlying fund portfolios are available to registered separate accounts offering variable annuity products of the Company, as well as variable annuity and variable life products of other insurance companies, and qualified retirement plans, there is a possibility that a material conflict may arise between the interests of this separate account and one or more of the other separate accounts of another participating insurance company. In the event of a material conflict, the affected insurance companies, including the Company, agree to take any necessary steps to resolve the matter. This may include removing their separate accounts from the underlying fund portfolios. See the underlying fund portfolios prospectuses for more details.

Exchanges and Reinstatements

You can generally exchange one annuity policy for another in a “tax-free exchange” under Section 1035 of the Internal Revenue Code. Before making an exchange, you should compare both annuities carefully. Remember that if you exchange another annuity for the one described in this prospectus, then you may pay a surrender charge on the other annuity and other charges may be higher (or lower) and the benefits under this annuity may be different. You should not exchange another annuity for this one unless you determine, after knowing all the facts, that the exchange is in your best interest and not just better for the person trying to sell you this policy (that person will generally earn a commission if you buy this policy through an exchange or otherwise).

You may surrender your policy and transfer your money directly to another life insurance company (sometimes referred to as a 1035 Exchange or a trustee-to-trustee transfer). You may also ask us to reinstate your policy after such a transfer and in certain limited circumstances we will allow you to do so by returning the same total dollar amount of funds to the applicable investment choices. The dollar amount will be used to purchase new accumulation units at the then current price. Because of changes in market value, your new accumulation units may be worth more or less than the units you previously owned. We recommend that you consult a tax professional to explain the possible tax consequences of exchanges and/or reinstatements.

Voting Rights

To the extent required by law, the Company will vote all shares of the underlying fund portfolios held in the separate account in accordance with instructions we receive from you and other owners that have voting interests in the portfolios. We will send you and other owners requests for instructions on how to vote those shares. When we receive those instructions, we will vote all of the shares in

50

proportion to those instructions. Accordingly, it is possible for a small number of policy owners (assuming there is a quorum) to determine the outcome of a vote, especially if they have large policy values. If, however, we determine that we are permitted to vote the shares in our own right, we may do so.

Each person having a voting interest will receive proxy material, reports, and other materials relating to the appropriate portfolio.

IMSA

We are a member of the Insurance Marketplace Standards Association (IMSA). IMSA is an independent, voluntary organization of life insurance companies. It promotes high ethical standards in the sales and advertising of individual life insurance, long-term care insurance, and annuity products. Through its Principles and Code of Ethical Market Conduct, IMSA encourages its member companies to develop and implement policies and procedures to promote sound market practices. Companies must undergo a rigorous self and independent assessment of their practices to become a member of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to these standards. You may find more information about IMSA and its ethical standards at www.imsaethics.org in the “Consumer” section or by contacting IMSA at: 240-744-3030.

Legal Proceedings

There are no legal proceedings to which the separate account is a party or to which the assets of the separate account are subject. The Company, like other life insurance companies, is involved in lawsuits. In some class action and other lawsuits involving other insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, the Company believes that at the present time there are

no pending or threatened lawsuits that are reasonably likely to have a material adverse impact on the separate account, on the ability of Transamerica Capital, Inc., to perform under its principal underwriting agreement, or on the ability of the Company to meet its obligations under the policy.

Western Reserve Life Assurance Co. of Ohio

Western Reserve Life Assurance Co. of Ohio was incorporated under the laws of the State of Ohio on October 1, 1957. It is engaged in the business of writing life insurance policies and annuity contracts. The 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. All of the stock of Transamerica Corporation is indirectly owned by AEGON N.V. of The Netherlands, the securities of which are publicly traded. AEGON N.V., a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business. The Company is licensed in the District of Columbia, Guam, Puerto Rico, and all states except New York. The Company is obligated to pay all benefits under the policy.

Financial Condition of the Company

Many financial services companies, including insurance companies, have been facing challenges in this unprecedented economic and market environment, and we are not immune to those challenges. It is important for you to understand the impact these events may have, not only on your Policy Value, but also on our ability to meet the guarantees under your policy.

Assets in the Separate Account. You assume all of the investment risk for your policy value that is allocated to the subaccounts of the separate account. Your policy value in those subaccounts constitutes a portion of the assets of the separate account. These assets are segregated

51

and insulated from our general account, and may not be charged with liabilities arising from any other business that we may conduct.

Assets in the General Account. You also may be permitted to make allocations to guaranteed period options of the fixed account, which are supported by the assets in our general account. Any guarantees under a policy that exceed policy value, such as those associated with any lifetime withdrawal benefit riders and any optional death benefits, are paid from our general account (and not the separate account). Therefore, any amounts that we may be obligated to pay under the policy in excess of policy value are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. The assets of the separate account, however, are also available to cover the liabilities of our general account, but only to the extent that the separate account assets exceed the separate account liabilities arising under the policies supported by it.

We issue other types of insurance policies and financial products as well, and we also pay our obligations under these products from our assets in the general account.

Our Financial Condition. As an insurance company, we are required by state insurance regulation to hold a specified amount of reserves in order to meet all the contractual obligations of our general account. In order to meet our claims-paying obligation we monitor our reserves so that we hold sufficient amounts to cover actual or expected policy and claims payments. However, it is important to note that there are risks to purchasing any insurance product.

State insurance regulators also require insurance companies to maintain a minimum amount of capital, which acts as a cushion in the event that the insurer suffers a financial impairment, based on the inherent risks in the insurer’s operations. These risks include those associated with losses that we may

incur as the result of defaults on the payment of interest or principal on our general account assets, which include bonds, mortgages, general real estate investments, and stocks, as well as the loss in market value of these investments.

How to Obtain More Information. We encourage both existing and prospective policy owners to read and understand our financial statements. We prepare our financial statements on a statutory basis. Our financial statements, which are presented in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance as well as the financial statements of the separate account—are located in the statement of Additional Information (SAI). For a free copy of the SAI, simply call or write us at the phone number or address of our Administrative and Service Office referenced in this prospectus. In addition, the SAI’s available on the SEC;s website at http://www.sec.gov. Our financial strength can be found on our website.

The Separate Account

The Company established a separate account, called Separate Account VA AA, under the laws of the State of Ohio on May 30, 2007. The separate account receives and invests the premium payments that are allocated to it for investment in shares of the underlying fund portfolios.

The separate account is registered with the SEC as a unit investment trust under the 1940 Act. However, the SEC does not supervise the management, the investment practices, or the policies of the separate account or the Company. Income, gains and losses (whether or not realized), from assets allocated to the separate account are, in accordance with the policies, credited to or charged against the separate account without regard to the Company’s other income, gains or losses.

52

The assets of the separate account are held in the Company’s name on behalf of the separate account and belong to the Company. However, those assets that underlie the policies are not chargeable with liabilities arising out of any other business the Company may conduct. The separate account may include other subaccounts that are not available under these policies.

Distribution of the Policies

Distribution and Principal Underwriting Agreement. We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (TCI), for the distribution and sale of the policies. We pay commissions to TCI which are passed through to selling firms. (See below). We also pay TCI an “override” that is a percentage of total commissions paid on sales of our policies which is not passed through to the selling firms and we may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies. TCI markets the policies through bank affiliated firms, national brokerage firms, regional and independent broker-dealers and independent financial planners.

Compensation to Advisers and Broker-Dealers Selling the Policies. The policies are offered to investors through investment advisers (“advisers”) that are licensed under the federal securities laws and that charge an investor an investment advisory fee to manage the investor’s assets. The Policies are also offered to the public through broker-dealers (“selling firms”) that are licensed under the federal securities laws; the selling firm and/or its affiliates are also licensed under state insurance laws. The selling firms have entered into written selling agreements with us and with TCI as principal underwriter for the policies. We do not pay commissions to the advisers or the selling firms (but 0.20% of premiums may be paid as an override to wholesalers).

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

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

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 this policy to you. You may wish to take such payments into account when considering and evaluating any recommendation relating to the policies.

Special Compensation For Affiliated Wholesaling and Selling Firms. Our parent company provides paid-in capital to TCI and pays the cost of TCI’s operating and other expenses, including costs for facilities, legal and accounting services, and other internal administrative functions.

53

Western Reserve’s two main distribution channels are InterSecurities, Inc. (“ISI”) and World Group Securities (“WGS”), both affiliates, who sell Western Reserve products.

Western Reserve underwrites the cost of ISI’s various facilities, third-party services and internal administrative functions, including employee salaries, sales representative training and computer systems, that are provided directly to ISI. These facilities and services are necessary for ISI’s administration and operation, and Western Reserve is compensated by ISI for these expenses based on ISI’s usage. In addition, Western Reserve and other affiliates pay for certain sales expenses of ISI, including the costs of preparing and producing prospectuses and sales promotional materials for the policy.

ISI pays its branch managers a portion of the commissions received from Western Reserve for the sale of the policies. Sales representatives receive a portion of the commissions for their sales of policies in accordance with ISI’s internal compensation programs.

To support its sales of Western Reserve’s variable annuity products, WGS receives an expense allowance of 0.35% of the annual annuity premiums paid on variable annuities sold by WGS. Sales representatives receive a portion of the commissions for their sales of policies in accordance with WGS’s internal compensation programs.

Sales representatives and their managers at ISI and WGS may receive, directly or indirectly, additional cash benefits and non-cash compensation or reimbursements from us or our affiliates. Additional compensation or reimbursement arrangements may include payments in connection with the firm’s conferences or seminars, sales or training programs for invited selling representatives and other employees, seminars for the public, trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items,

and payments, loans, loan guaranties, or loan forgiveness to assist a firm or a representative in connection with systems, operating, marketing and other business expenses. The amounts may be significant and may provide us with increased access to the sales representatives.

In addition, ISI’s managers and/or sales representatives who meet certain productivity standards may be eligible for additional compensation. Sales of the policies by affiliated selling firms may help sales representatives and/or their managers qualify for certain benefits, and may provide such persons with special incentive to sell our policies. For example, ISI’s and WGS’s registered representatives, general agents, marketing directors and supervisors may be eligible to participate in a voluntary stock purchase plan that permits participants to purchase stock of AEGON N.V. (Western Reserve’s ultimate parent) by allocating a portion of the commissions they earn to purchase such shares. A portion of the contributions of commissions by ISI’s representatives may be matched by ISI.

ISI’s and WGS’s registered representatives may also be eligible to participate in a stock option and award plan. Registered representatives who meet certain production goals will be issued options on the stock of AEGON N.V.

Additional Compensation that We, TCI and/or our Affiliates Pay to Selected Selling Firms. We may pay certain selling firms additional cash amounts for “preferred product” treatment of the policies in their marketing programs in order to receive enhanced marketing services and increased access to their sales representatives. In exchange for providing us 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, and events and/or other services they provide to us and

54

our affiliates. To the extent permitted by applicable law, we and other parties may allow other non-cash incentives and compensation to be paid to these selling firms. These special compensation arrangements are not offered to all selling firms, and the terms of such arrangements may differ between selling firms.

Special compensation arrangements are calculated in different ways by different selling firms and may be based on past or anticipated sales of the Policies or other criteria. For instance, Western Reserve made flat fee payments to several selling firms with payments ranging from $950 to $20,000 in 2008 for the sales of the Western Reserve’s insurance products.

During 2008, we entered into “preferred product” arrangements with ISI, WGS, Broker Dealer Financial Services, Inc., Coordinated Capital Securities, Inc., First Founders Securities Inc., Girard Securities, Inc., H. Beck, Inc., Harbour Investments Inc., IMS Securities, Inc., Next Financial Group, Inc., Packerland Brokerage Services, Inc., Summitt Brokerage Services, Inc. and Workman Securities Corporation. We paid the following amounts (in addition to sales commissions and expense allowances) to these firms:

Name of Firm	Aggregate Amount Paid in 2008
Next Financial Group, Inc.	$20,000
H. Beck, Inc.	$18,000
Girard Securities, Inc.	$14,000
First Founders Securities, Inc.	$10,000
Harbour Investments, Inc.	$10,000
Workman Securities Corporation	$10,000
Summit Brokerage Services, Inc.	$5,000

Name of Firm	Aggregate Amount Paid in 2008
Packerland Brokerage Services, Inc.	$3,500
Broker Dealer Financial Services Corp.	$3,250
Coordinated Capital Securities, Inc.	$2,000
IMS Securities, Inc.	$950

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

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

Glossary of Terms

The Policy - General Provisions

Certain Federal Income Tax Consequences

Investment Experience

Historical Performance Data

Published Ratings

State Regulation of Western Reserve Life Assurance Co. of Ohio

Administration

Records and Reports

Distribution of the Policies

Voting Rights

Other Products

Custody of Assets

Legal Matters

Independent Registered Public Accounting Firm

Other Information

Financial Statements*

Appendix A - Condensed Financial Information

*Not included in the refiled Statement of Additional Information dated May 1, 2009.

55

APPENDIX

CONDENSED FINANCIAL INFORMATION

The following tables list the accumulation unit value information for accumulation units outstanding for policies with the highest total separate account expenses and policies with the lowest total separate account expenses available on December 31, 2008. Should the total separate account expense applicable to your policy fall between the highest and lowest charges, AND you wish to see a copy of the Condensed Financial Information applicable to your policy, such information is contained in the SAI. You can obtain a copy of the SAI FREE OF CHARGE by contacting us at:

calling:	1-800-851-9777
writing:	Western Reserve Life Assurance Co. of Ohio
	4333 Edgewood Road NE
	Cedar Rapids, IA 52499-0001

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.959573	$0.627361	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959573	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902013	$0.539459	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902013	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.885821	$0.505072	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.885821	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013206	$0.957934	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013206	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014043	$1.058278	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014043	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.948925	$0.587869	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.948925	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.963696	$0.606394	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963696	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.981858	$0.725652	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981858	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.963499	$0.615802	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963499	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.964749	$0.563143	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964749	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.919719	$0.513510	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919719	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.020403	$0.980678	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.020403	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.954664	$0.603977	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954664	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.940996	$0.593375	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.940996	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.968904	$0.539780	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.968904	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.924807	$0.538407	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.924807	0.000

56

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.037772	0.000
Transamerica Balanced VP – Service Class	2008	$0.980563	$0.655572	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980563	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.953988	$0.595946	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953988	0.000
Transamerica Equity VP – Service Class	2008	$0.970361	$0.517878	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.970361	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.930793	$0.543925	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.930793	0.000
Transamerica Money Market VP – Service Class	2008	$1.006008	$1.019092	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006008	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955278	$0.484272	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955278	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934236	$0.546074	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934236	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.011777	$1.077611	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.011777	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.959854	$0.659539	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959854	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.939360	$0.498871	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.939360	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.823317	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.726861	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.013901	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.954770	$0.594911	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954770	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991198	0.000
ProFund VP Asia 30	2008	$0.849883	$0.414415	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.849883	0.000
ProFund VP Basic Materials	2008	$0.980513	$0.472266	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980513	0.000
ProFund VP Bull	2008	$0.953190	$0.589118	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953190	0.000
ProFund VP Consumer Services	2008	$0.919366	$0.625507	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919366	0.000
ProFund VP Emerging Markets	2008	$0.912286	$0.451446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912286	0.000
ProFund VP Europe 30	2008	$0.947594	$0.526117	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.947594	0.000
ProFund VP Falling US Dollar	2008	$1.005807	$0.946292	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.005807	0.000

57

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Financials	2008	$0.876460	$0.429808	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.876460	0.000
ProFund VP International	2008	$0.941170	$0.518844	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941170	0.000
ProFund VP Japan	2008	$0.904932	$0.530790	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.904932	0.000
ProFund VP Mid-Cap	2008	$0.953907	$0.582935	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953907	0.000
ProFund VP Money Market	2008	$1.003989	$1.003861	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003989	0.000
ProFund VP Oil & Gas	2008	$1.014356	$0.634153	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014356	0.000
ProFund VP NASDAQ-100	2008	$0.944750	$0.538800	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.944750	0.000
ProFund VP Pharmaceuticals	2008	$0.974065	$0.777412	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974065	0.000
ProFund VP Precious Metals	2008	$0.922185	$0.633126	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922185	0.000
ProFund VP Short Emerging Markets	2008	$1.055106	$1.383367	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055106	0.000
ProFund VP Short International	2008	$1.058704	$1.451062	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.058704	0.000
ProFund VP Short NASDAQ-100	2008	$1.055884	$1.551202	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055884	0.000
ProFund VP Short Small-Cap	2008	$1.064491	$1.309675	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.064491	0.000
ProFund VP Small-Cap	2008	$0.932068	$0.597003	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932068	0.000
ProFund VP Small-Cap Value	2008	$0.922045	$0.633727	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922045	0.000
ProFund VP Telecommunications	2008	$0.943332	$0.613403	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943332	0.000
ProFund VP UltraSmall-Cap	2008	$0.851219	$0.285394	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851219	0.000
ProFund VP U.S. Government Plus	2008	$1.045021	$1.551803	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045021	0.000
ProFund VP Utilities	2008	$1.012180	$0.695535	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012180	0.000
Access VP High Yield FundSM	2008	$1.003395	$0.948702	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003395	0.000
		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.960236	$0.630298	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960236	0.000

58

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902633	$0.541986	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902633	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.886432	$0.507446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.886432	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013901	$0.962432	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013901	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014738	$1.063225	158,805.596
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014738	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.949579	$0.590625	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.949579	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.964363	$0.609239	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964363	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.982536	$0.729052	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.982536	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.964161	$0.618694	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964161	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.965413	$0.565789	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.965413	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.920358	$0.515926	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.920358	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.021103	$0.985271	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.021103	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.955323	$0.606817	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955323	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.941647	$0.596164	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941647	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.969572	$0.542320	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.969572	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.925444	$0.540939	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.925444	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.038351	0.000
Transamerica Balanced VP – Service Class	2008	$0.981241	$0.658643	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981241	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.954640	$0.598736	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954640	0.000
Transamerica Equity VP – Service Class	2008	$0.971034	$0.520319	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.971034	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.931433	$0.546482	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.931433	0.000
Transamerica Money Market VP – Service Class	2008	$1.006699	$1.023867	484,158.697
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006699	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955935	$0.486557	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955935	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934880	$0.548637	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934880	0.000

59

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica U.S. Government Securities VP – Service Class	2008	$1.012472	$1.082652	128,929.556
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012472	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.960514	$0.662622	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960514	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.940013	$0.501219	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.940013	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.825517	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.728804	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.014465	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.955425	$0.597702	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955425	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991747	0.000
ProFund VP Asia 30	2008	$0.850475	$0.416368	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.850475	0.000
ProFund VP Basic Materials	2008	$0.981187	$0.474483	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981187	9,453.012
ProFund VP Bull	2008	$0.953846	$0.591881	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953846	0.000
ProFund VP Consumer Services	2008	$0.920000	$0.628446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.920000	0.000
ProFund VP Emerging Markets	2008	$0.912915	$0.453562	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912915	0.000
ProFund VP Europe 30	2008	$0.948249	$0.528596	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.948249	14,704.591
ProFund VP Falling US Dollar	2008	$1.006492	$0.950709	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006492	0.000
ProFund VP Financials	2008	$0.877063	$0.431838	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.877063	0.000
ProFund VP International	2008	$0.941817	$0.521286	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941817	0.000
ProFund VP Japan	2008	$0.905555	$0.533287	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.905555	0.000
ProFund VP Mid-Cap	2008	$0.954563	$0.585680	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954563	0.000
ProFund VP Money Market	2008	$1.004680	$1.008564	214,040.120
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004680	9,313.419
ProFund VP Oil & Gas	2008	$1.015052	$0.637124	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.015052	0.000
ProFund VP NASDAQ-100	2008	$0.945402	$0.541332	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.945402	0.000
ProFund VP Pharmaceuticals	2008	$0.974733	$0.781055	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974733	0.000

60

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Precious Metals	2008	$0.922823	$0.636094	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922823	0.000
ProFund VP Short Emerging Markets	2008	$1.055827	$1.389829	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055827	0.000
ProFund VP Short International	2008	$1.059426	$1.457857	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.059426	0.000
ProFund VP Short NASDAQ-100	2008	$1.056600	$1.558447	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.056600	0.000
ProFund VP Short Small-Cap	2008	$1.065220	$1.315797	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.065220	0.000
ProFund VP Small-Cap	2008	$0.932709	$0.599806	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932709	0.000
ProFund VP Small-Cap Value	2008	$0.922681	$0.636701	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922681	0.000
ProFund VP Telecommunications	2008	$0.943978	$0.616270	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943978	0.000
ProFund VP UltraSmall-Cap	2008	$0.851818	$0.286747	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851818	0.000
ProFund VP U.S. Government Plus	2008	$1.045739	$1.559049	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045739	0.000
ProFund VP Utilities	2008	$1.012876	$0.698798	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012876	13,740.172
Access VP High Yield FundSM	2008	$1.004084	$0.953142	76,797.461
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004084	0.000

61

APPENDIX

EXCESS INTEREST ADJUSTMENT EXAMPLES

Money that you surrender from, transfer out of, or apply to an annuity payment option, from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment (“EIA”). At the time you request a surrender, if interest rates set by the Company have risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value. However, if interest rates have fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value.

Excess interest adjustments will not reduce the policy value for a guaranteed period option below the premium payments and transfers to that guaranteed period option, less any prior partial surrenders and transfers from the guaranteed period option, plus interest at the policy’s minimum guaranteed effective annual interest rate. This is referred to as the excess interest adjustment floor.

The formula that will be used to determine the excess interest adjustment is:

S* (G-C)* (M/12)

S	=	Gross amount being surrendered that is subject to the excess
		interest adjustment
G	=	Guaranteed interest rate in effect for the policy
C	=	Current guaranteed interest rate then being offered on new
		premiums for the next longer option period than “M”. If
		this policy form or such an option period is no longer offered,
		“C” will be the U.S. Treasury rate for the next longer maturity
		(in whole years) than “M” on the 25th day of the previous
		calendar month, plus up to 2%.
M	=	Number of months remaining in the current option period,
		rounded up to the next higher whole number of months.
*	=	multiplication
^	=	exponentiation

62

Excess Interest Adjustment Examples — (Continued)

The following examples are for illustrative purposes only and ore calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

Example 1 (Full Surrender, rates increase by 4%):

Single premium:	$50,000.00
Guarantee period:	5 Years
Guarantee rate:	5.50% per annum
Surrender:	Middle of policy year 3
Policy value at middle of policy year 3	= 50,000.00 * (1.055) ^ 2.5 = 57,161.18
Adjustment free amount at middle of policy year 3	= 57,161.18 - 50,000 = 7,161.18
Amount subject to excess interest adjustment	= 57,161.18 – 7,161.18 = 50,000.00
Excess interest adjustment floor	= 50,000.00 * (1.015) ^ 2.5 = 51,896.14
Excess interest adjustment
G = .055
C = .095
M = 30
Excess interest adjustment	= S * (G - C) * (M/12)
	= 50,000.00 * (.055 - .095) * (30/12)
	= -5,000.00, but excess interest adjustment cannot cause the adjusted policy value to fall below the excess interest adjustment floor, so the adjustment is limited to 51,896.14 - 57,161.18 = -5,265.03
Adjusted policy value	= policy value + excess interest adjustment = 57,161.18 + (-5,265.03) = 51,896.15
Cash value at middle of policy year 3	= policy value + excess interest adjustment = 57,161.18 + (-5,265.03) = 51,896.15
Upon full surrender of the policy, the minimum cash value will never be less than that required by the non-forfeiture laws of your state.

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

63

Excess Interest Adjustment Examples — (Continued)

Example 2 (Full Surrender, rates decrease by 1%):

Single premium:	$50,000.00
Guarantee period:	5 Years
Guarantee rate:	5.50% per annum
Surrender:	Middle of policy year 3
Policy value at middle of policy year 3	= 50,000.00 * (1.055) ^ 2.5 = 57,161.18
Adjustment free amount at middle of policy year 3	= 57,161.18 – 50,000.00 = 7,161.18
Amount subject to excess interest adjustment	= 57,161.18 – 7,161.18 = 50,000.00
Excess interest adjustment floor	= 50,000.00 * (1.015) ^ 2.5 = 51,896.14
Excess interest adjustment
G = .055
C = .045
M = 30
Excess interest adjustment	= S * (G - C) * (M/12)
	= 50,000.00 * (.055 - .045) * (30/12) = 1,250.00
Adjusted policy value	= 57,161.18 + 1,250.00 = 58,411.18
Cash value at middle of policy year 3	= policy value + excess interest adjustment = 57,161.18 + 1,250.00 = 58,411.18
Upon full surrender of the policy, the minimum cash value will never by less than that required by the non-forfeiture laws of your state.

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

On a partial surrender, the Company will pay the policyholder the full amount of surrender requested (as long as the policy value is sufficient). Amounts surrendered will reduce the policy value by an amount equal to:

R - E

R   =   the requested partial surrender

E   =   the excess interest adjustment

64

Excess Interest Adjustment Examples — (Continued)

Example 3 (Partial Surrender, rates increase by 1%):

Single premium:	$50,000.00
Guarantee period:	5 Years
Guarantee rate:	5.50% per annum
Partial surrender:	$20,000; middle of policy year 3
Policy value at middle of policy year 3	= 50,000.00 * (1.055) ^ 2.5 = 57,161.18
Adjustment free amount at middle of contract year 3	= 57,161.18 – 50,000.00 = 7,161.18
Excess interest adjustment
S= 20,000 – 7,161.18 = 12,838.82
G= .055
C= .065
M= 30
Excess interest adjustment	= S * (G - C) * (M/12)
	= 12,838.82 * (.055 - .065) * (30/12)
	= -320.97
Remaining policy value at middle of policy year 3	= 57,161.18 - (R - E)
	= 57,161.18 - (20,000.00 - (-320.97)) = 36,840.21

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

Example 4 (Partial Surrender, rates decrease by 1%):

Single premium:	$50,000.00
Guarantee period:	5 Years
Guarantee rate:	5.50% per annum
Partial surrender:	$20,000; middle of policy year 3
Policy value at middle of policy year 3	= 50,000.00 * (1.055) ^ 2.5 = 57,161.18
Adjustment free amount at middle of policy year 3	= 57,161.18 - 50,000.00 = 7,161.18
Excess interest adjustment
S= 20,000 – 7,161.18 = 12,838.82
G= .055
C= .045
M= 30
Excess interest adjustment	= 12,838.82 * (.055 - .045) * (30/12)
	= 320.97
Remaining policy value at middle of policy year 3	= 57,161.18 - (R - E)
	= 57,161.18 - (20,000.00 – 320.97) = 37,482.15

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

65

APPENDIX

DEATH BENEFIT

Adjusted Partial Surrender. If you make a partial surrender (withdrawal), then your guaranteed minimum death benefit is reduced by an amount called the adjusted partial surrender. The amount of the reduction depends on the relationship between your death benefit and policy value. The adjusted partial surrender is equal to (1) plus (2) multiplied by (3), where:

(1) is the amount of the gross partial surrender that is less than the remaining annual adjustment-free amount for the policy year. For any death benefit other than the Double Enhanced Death Benefit, this amount is equal to zero;

(2) is the gross partial surrender amount that exceeds the annual adjustment-free amount (excess gross partial surrender);

(3) is the adjustment factor = current death proceeds after the annual free surrender amount but prior to the excess gross partial surrender divided by the policy value after the free amount but prior to the gross partial surrender.

The following examples describe the effect of a surrender on the guaranteed minimum death benefit and policy value.

Example 1 (Assumed Facts for Example)

Current guaranteed minimum death benefit before surrender	$75,000
Current policy value before surrender	$50,000
Current death proceeds	$75,000
Remaining guaranteed minimum death benefit adjustment free amount	$ 0
Total Gross Partial Surrender	$15,494
Adjusted partial surrender = 15,494 * 75,000 / 50,000	$23,241
New guaranteed minimum death benefit (after surrender) = 75,000 – 23,241	$51,759
New policy value (after surrender) = 50,000 - 15,494	$34,506

Summary:
Reduction in guaranteed minimum death benefit	= $23,241
Reduction in policy value	= $15,494

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

** The guaranteed minimum death benefit is reduced more than the policy value because the guaranteed minimum death benefit was greater than the policy value just prior to the surrender.

66

Death Benefit — (Continued)

Example 2 (Assumed Facts for Example)

Current guaranteed minimum death benefit before surrender	$50,000
Current policy value before surrender	$75,000
Current death proceeds	$75,000
Remaining guaranteed minimum death benefit adjustment free surrender amount	$0
Total Gross Partial Surrender	$15,556
Adjusted partial surrender = 15,556 * 75,000 / 75,000	$15,556
New guaranteed minimum death benefit (after surrender) = 50,000 - 15,556	$34,444
New policy value (after surrender) = 75,000 - 15,556	$59,444

Summary:
Reduction in guaranteed minimum death benefit	= $15,556
Reduction in policy value	= $15,556

* This example is for illustrative purposes only. The purpose of this illustration is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.

** The guaranteed minimum death benefit and policy value are reduced by the same amount because the policy value was higher than the guaranteed minimum death benefit just prior to the surrender.

Due proof of death of the annuitant is proof that the annuitant died prior to the commencement of annuity payments. A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by the attending physician, or any other proof satisfactory to the Company will constitute due proof of death.

Upon receipt in good order (at our Administrative and Service Office) of this proof and an election of a method of settlement and return of the policy, the death benefit generally will be paid within seven days, or as soon thereafter as the Company has sufficient information about the beneficiary(ies) to make the payment. The beneficiary may receive the amount payable in a lump sum cash benefit, or, subject to any limitation under any state or federal law, rule, or regulation, under one of the annuity payment options described above, unless a settlement agreement is effective at the death of the owner preventing such election.

If an owner is not an annuitant, and dies prior to the annuity commencement date, the new owner may surrender the policy at any time for the amount of the policy value. If the new owner is not the deceased owner’s spouse, however, (1) the policy value must be distributed within five years after the date of the deceased owner’s death, or (2) payments under an annuity payment option must begin no later than one year after the deceased owner’s death and must be made for the new owner’s lifetime or for a period certain (so long as any period certain does not exceed the new owner’s life expectancy). If the sole new owner is the deceased owner’s surviving spouse, such spouse may elect to continue the policy as the new owner instead of receiving the death benefit.

67

Death Benefit — (Continued)

Beneficiary. The beneficiary designation in the enrollment form will remain in effect until changed. The owner may change the designated beneficiary by sending written notice to the Company. The beneficiary’s consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the owner may then designate a new beneficiary.) The change will take effect as of the date the owner signs the written notice, whether or not the owner is living when the notice is received by the Company. The Company will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If upon the death of the annuitant there is a surviving owner(s), the surviving owner(s) automatically takes the place of any beneficiary designation.

Hypothetical Example

In this example, certain death benefit values at various points in time are depicted based on hypothetical assumed rates of performance. This example is for illustrative purposes only and assumes a single $100,000 premium payment by a sole owner and annuitant who is age 50. It further assumes no subsequent premium payments or withdrawals.

End of Year	Net Rate of Return for Fund*	Return of Premium	Annual Step-Up	Greater of 6% & Monthly Step-Up**
Issue	N/A	$100,000	$100,000	$100,000
1	-4%	$100,000	$100,000	$106,000
2	20%	$100,000	$112,622	$112,360
3	17%	$100,000	$130,417	$128,804
4	-7%	$100,000	$130,417	$128,804
5	18%	$100,000	$139,836	$136,900
6	10%	$100,000	$152,142	$148,331
7	16%	$100,000	$174,658	$169,616
8	10%	$100,000	$190,028	$183,779
9	19%	$100,000	$223,853	$215,665
10	10%	$100,000	$243,553	$233,673

* The assumed rate does reflect the deduction of a hypothetical fund fee but does not reflect the deduction of any other fees, charges or taxes. The death benefit values do reflect the deduction of hypothetical base policy fees and hypothetical death benefit fees. Different hypothetical returns would produce different results.

** For years 1-2, the cumulative portion is higher, for the remaining years the step-up portion is higher (if the hypothetical returns for these years had been lower, the cumulative portion would be larger than the step-up portion).

68

APPENDIX

BENEFICIARY EARNINGS ENHANCEMENT - EXTRA II RIDER - ADDITIONAL INFORMATION

Assume the Beneficiary Earnings Enhancement - Extra II is added to a new policy opened with $100,000 initial premium. The annuitant is less than age 71 on the Rider Date. On the first and second Rider Anniversaries, the Policy Value is $110,000 and $95,000 respectively when the Rider Fees are deducted. The annuitant adds $25,000 premium in the 3rd Rider Year when the Policy Value is equal to $115,000 and then takes a withdrawal of $35,000 during the 4th Rider Year when the Policy Value is equal to $145,000. After 5 years, the Policy Value is equal to $130,000 and the death proceeds are equal to $145,000.

Example 1

Account Value on Rider Date (equals initial policy value since new policy)	$100,000
Additional Death Benefit during first Rider Year	$0
Rider Fee on first Rider Anniversary (= Rider Fee * Policy Value = 0.55% * $110,000)	$605
Additional Death Benefit during 2nd Rider Year (= sum of total Rider Fees paid)	$605
Rider Fee on second Rider Anniversary (= Rider Fee * Policy Value = 0.55% * $95,000)	$522.50
Additional Death Benefit during 3rd Rider Year (= sum of total Rider Fees paid = $605 + $522.50)	$1,127.50
Rider Benefit Base in 3rd Rider Year prior to Premium addition (= Account Value less premiums added since Rider Date = $115,000 – $0)	$115,000
Rider Benefit Base in 3rd Rider Year after Premium addition (= $140,000 - $25,000)	$115,000
Rider Benefit Base in 4th Rider Year prior to withdrawal (= Account Value less premiums added since Rider Date = $145,000 - $25,000)	$120,000
Rider Benefit Base in 4th Rider Year after withdrawal = (Account Value less premiums added since Rider Date = $110,000 - $25,000)	$85,000
Rider Benefit Base in 5th Rider Year (= $130,000 - $25,000)	$105,000
Additional Death Benefit = Rider Benefit Percentage * Rider Benefit Base = 30% * $105,000	$31,500
Total Death Proceeds in 5th Rider Year (= base policy Death Proceeds + Additional Death Benefit Amount = $145,000 + $31,500)	$176,500

69

WRL FREEDOM ADVISOR^SM

Issued by

TRANSAMERICA PREMIER LIFE INSURANCE COMPANY*

Separate Account VA AA

Supplement Dated October 1, 2014

to the

Statement of Additional Information dated May 1, 2009

The following hereby amends and supplements your Statement of Additional Information:

*Effective on or about October 1, 2014, Western Reserve Life Assurance Co. of Ohio (“Western Reserve”) merged with and into its affiliate Transamerica Premier Life Insurance Company (“TPLIC” or the “Company”). Before the merger, the WRL Freedom Advisor^SM policies (“Policies”) were issued by Western Reserve. Upon consummation of the Merger, Western Reserve’s corporate existence ceased by operation of law, and TPLIC became responsible for all liabilities and obligations of Western Reserve, including those created under the Policies.

The following hereby replaces the State Regulation of Western Reserve Life Assurance Co. of Ohio section of the Statement of Additional Information:

STATE REGULATION OF US

The Company is subject to the laws of Iowa governing insurance companies and to regulation by the Iowa Department of Insurance. An annual statement in a prescribed form is filed with the Department of Insurance each year covering the operation of the Company for the preceding year and its financial condition as of the end of such year. Regulation by the Department of Insurance includes periodic examination to determine the Company’s contract liabilities and reserves so that the Department may determine the items are correct. The Company’s books and accounts are subject to review by the Department of Insurance at all times, and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. In addition, the Company is subject to regulation under the insurance laws of other jurisdictions in which it may operate.

The following updates the Distribution of the Policies section of the Statement of Additional Information:

The Policies are no longer sold to new purchasers.

The following hereby replaces the Independent Registered Public Accounting Firm section of the Statement of Additional Information:

Independent Registered Public Accounting Firm

The financial statements of the Separate Account VA AA at December 31, 2013, and for the periods disclosed in the financial statements, and the statutory-basis financial statements and schedules of Transamerica Premier Life Insurance Company (formerly known as Monumental Life Insurance Company) at December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013, and Western Reserve Life Assurance Co. of Ohio at December 31, 2013 and 2012 (restated), and for each of the three years in the period ended December 31, 2013, appearing herein, have been audited by Ernst & Young LLP, Suite 3000, 801 Grand Avenue, Des Moines, Iowa 50309, Independent Registered Public Accounting Firm, as set forth in their respective reports thereon appearing elsewhere herein, and are included in reliance upon their reports given on their authority as experts in accounting and auditing.

The following hereby replaces the Financial Statements section 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). Western Reserve and TPLIC financial statements, which are included in this SAI, should be considered only as bearing on the ability of TPLIC to meet its obligations under the policies. They should not be considered as bearing on the investment performance of the assets held in the separate account.

The statutory basis financial statements of Transamerica Premier Life Insurance Company (formerly, Monumental Life Insurance Company) and Western Reserve Life Assurance Co. of Ohio, and the audited financial statements (U.S. GAAP basis) of the WRL Series Annuity Account are included herein. Unaudited pro forma combined financials statements showing the effects of the merger of Western Reserve Life Assurance Co. of Ohio with and into Transamerica Premier Life Insurance Company as of December 31, 2013, are also included.

Pro Forma Unaudited Consolidated Statutory Balance Sheet and Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

Effective on or about October 1, 2014, Western Reserve Life Assurance Co. of Ohio (WRL) will merge with and into its affiliate, Transamerica Premier Life Insurance Company (TPLIC), f.k.a. Monumental Life Insurance Company. Upon consummation of the merger, WRL’s corporate existence will cease by operation of law, whereby TPLIC will assume legal ownership of all of the assets and responsibility for all of the liabilities and obligations of WRL. The accompanying unaudited pro forma condensed combined statutory basis financial statements have been prepared in accordance with statutory accounting principles, which includes the balance sheet as of December 31, 2013 and income statements for the years ended 2013, 2012 and 2011 in a combined manner, as if the two entities had merged. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

The unaudited pro forma condensed financial data is 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 WRL and Monumental Life Insurance Company (renamed TPLIC), which are included in this registration statement.

P-1

Pro Forma Unaudited Consolidated Statutory Balance Sheet

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

As of December 31, 2013

										TPLIC (MLIC)
										Dec 31, 2013
			WRL		TPLIC (MLIC)		Eliminations		Reference	Totals
ASSETS
1.	Bonds		$	1,448,053,453	$	12,381,999,416	$	0		$	13,830,052,869
2.	Stocks:
	2.1	Preferred stocks		0		9,540,762					9,540,762
	2.2	Common stocks		35,347,839		62,267,638					97,615,477
3.	Mortgage loans on real estate:
	3.1	First liens		77,804,931		1,692,859,515					1,770,664,446
	3.2	Other than first liens		0		0					0
4.	Real estate
	4.1	Properties occupied by the company		27,382,074		0					27,382,074
	4.2	Properties held for production of income		0		384,967					384,967
	4.3	Properties held for sale		6,259,139		6,900,282					13,159,421
5.	Cash, cash equivalents and short-term investments			110,546,907		558,922,981					669,469,888
6.	Contract loans (including $ 0 premium notes)			442,799,902		470,548,651					913,348,553
7.	Derivatives			0		186,389,116					186,389,116
8.	Other invested assets			3,011,913		796,355,167					799,367,080
9.	Receivable for securities			0		62					62
10.	Securities lending reinvested collateral assets			88,265,219		322,209,041					410,474,260
11.	Aggregate write-ins for invested assets			0		9,006,454					9,006,454
12.	Subtotals, cash and invested assets (Lines 1 to 9)			2,239,471,377		16,497,384,052		0			18,736,855,429
13.	Title plants less $0 charged off (for Title insurers only)			0		0		0			0
14.	Investment income due and accrued			17,360,751		166,253,130					183,613,881
15.	Premiums and considerations:
	15.1	Uncollected premiums and agents’ balances in course of collection		102,285		46,971,091					47,073,376
	15.2	Deferred premiums, agents’ balances and installments booked but deferred and not yet due (including $0 earned but unbilled premiums)		2,662,663		131,157,528					133,820,191
	15.3.	Accrued retrospective premiums		0		0					0
16.	Reinsurance:
	16.1	Amounts recoverable from reinsurers		1,909,962		6,374,104					8,284,066
	16.2	Funds held by or deposited with reinsured companies		0		0					0
	16.3	Other amounts receivable under reinsurance contracts		0		12,333,424					12,333,424
17.	Amounts receivable relating to uninsured plans			0		0					0
18.1	Current federal and foreign income tax recoverable and interest thereon			0		5,495,809					5,495,809
18.2	Net deferred tax asset			86,384,460		162,711,377					249,095,837
19.	Guaranty funds receivable or on deposit			943,953		3,242,833					4,186,786
20.	Electronic data processing equipment and software			0		0					0
21.	Furniture and equipment, including health care delivery assets ($0)			0		0					0
22.	Net adjustment in assets and liabilities due to foreign exchange rates			0		0					0
23.	Receivable from parent, subsidiaries and affiliates			19,858,988		57,107,606					76,966,594
24.	Health care ($0) and other amounts receivable			0		0					0
25.	Aggregate write-ins for other than invested assets			82,148,235		264,540,509		0			346,688,744
26.	Total assets excluding Separate Accounts business (Lines 12 to 25)			2,450,842,674		17,353,571,463		0			19,804,414,137
27.	From Separate Accounts Statement			6,969,476,743		14,526,002,778		0			21,495,479,521
28.	Total (Lines 27 and 28)		$	9,420,319,417	$	31,879,574,241	$	0		$	41,299,893,658
DETAILS OF ASSET WRITE-INS (Line 11)
Receivable for derivative cash collateral			$	0	$	219,679	$	0		$	219,679
Invested asset collateral balance				0	$	8,786,775				$	8,786,775
TOTAL OF ASSETS WRITE-INS FOR LINES 11			$	0	$	9,006,454	$	0		$	9,006,454
DETAILS OF ASSET WRITE-INS (Line 25)
Accounts receivable			$	5,846,847	$	41,164,204	$	0		$	47,011,051
Contribution receivable from parent				0		135,000,000					135,000,000
Estimated premium tax offsets related to the provision for future GFA				222,285		847,186					1,069,471
Investment receivable				37,483		752,104					789,587
Company owned life insurance				75,881,155		79,732,778					155,613,933
Goodwill				0		6,582,224					6,582,224
State transferable tax credits				160,465		462,013					622,478
TOTAL OF ASSETS WRITE-INS FOR LINES 25			$	82,148,235	$	264,540,509	$	0		$	346,688,744

P-2

Pro Forma Unaudited Consolidated Statutory Balance Sheet

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

As of December 31, 2013

													TPLIC (MLIC)
													Dec 31, 2013
			WRL			TPLIC (MLIC)			Eliminations			Reference	Totals
LIABILITIES
1.	Aggregate reserve for life contracts		$	1,909,589,432		$	9,259,113,572		$	0			$	11,168,703,004
2.	Aggregate reserve for accident and health contracts			1,157,547			716,358,263							717,515,810
3.	Liability for deposit-type contracts			21,519,616			675,894,726							697,414,342
4.	Contract claims:
	4.1	Life		25,085,544			127,458,689							152,544,233
	4.2	Accident and health		0			110,668,627							110,668,627
5.	Policyholders’ dividends and coupons due and unpaid			0			75,358							75,358
6.	Provision for policyholders’ dividends and coupons payable in following calendar year-estimated amounts:
	6.1	Dividends apportioned for payment to December 31, 2005		0			1,293,678							1,293,678
	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			34,996			5,226,469							5,261,465
9.	Contract liabilities not included elsewhere:
	9.1	Surrender values on canceled contracts		0			0							0
	9.2	Provision for experience rating refunds		0			6,735,207							6,735,207
	9.3	Other amounts payable on reinsurance		2,408,262			2,949,115							5,357,377
	9.4	Interest Maintenance Reserve		25,813,207			302,887,952							328,701,159
10.	Commissions to agents due or accrued			74,671			22,153,370							22,228,041
11.	Commissions and expense allowances payable on reinsurance assumed			—			1,870,790							1,870,790
12.	General expenses due or accrued			6,446,238			5,113,171							11,559,409
13 .	Transfers to Separate Accounts due or accrued			(212,707,836	)		(2,957,359	)						(215,665,195	)
14.	Taxes, licenses and fees due or accrued, excluding federal income taxes			4,350,885			23,288,386							27,639,271
15.1.	Current federal and foreign income taxes			17,160,329			0							17,160,329
15.2.	Net deferred tax liability			0			0							0
16.	Unearned investment income			9,736,113			5,639,380							15,375,493
17.	Amounts withheld or retained by company as agent or trustee			944,020			36,161,821							37,105,841
18.	Amounts held for agents’ account, including agents’ credit balance			120,119			1,072,781							1,192,900
19.	Remittances and items not allocated			10,776,233			4,159,410							14,935,643
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			0			0							0
22.	Borrowed money and interest thereon			26,717,773			53,453,126							80,170,899
23.	Dividends to stockholders declared and unpaid			0			0							0
24.	Miscellaneous liabilities:
	24.1	Asset valuation reserve		17,642,203			243,971,748							261,613,951
	24.2	Reinsurance in unauthorized companies		0			1,979,758							1,979,758
	24.3	Funds held under reinsurance treaties with unauthorized reinsurers		78,160,850			4,274,528,544							4,352,689,394
	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		0			(17,903	)						(17,903	)
	24.8	Derivatives		4,100,401			25,231,400							29,331,801
	24.9	Payable for securities		8,000,000			177							8,000,177
	24.10	Payable for securities lending		88,265,219			322,209,046							410,474,265
	24.11	Capital notes and interest thereon		0			0							0
25.	Aggregate write-ins for liabilities			0			155,827,442			0				155,827,442
26.	Total liabilities excluding Separate Accounts business (Lines 1-25)			2,045,395,822			16,382,346,744			0				18,427,742,566
27.	From Separate Accounts Statement			6,969,476,743			14,526,002,778			0				21,495,479,521
28.	Total liabilities (Line 26 and 27)		$	9,014,872,565		$	30,908,349,522		$	0			$	39,923,222,087
DETAILS OF LIABILITIES WRITE-INS (Line 25)
Payable for derivative cash collateral			$	0		$	150,114,562		$	0			$	150,114,562
Deferred derivative gain/loss				0			3,616,019							3,616,019
Synthetic GICs and provision for liquidity reserves				0			1,296,861							1,296,861
Interest payable on surplus notes				0			800,000							800,000
TOTAL OF LIABILITIES WRITE-INS FOR LINE 25			$	0		$	155,827,442		$	0			$	155,827,442
SURPLUS AND OTHER FUNDS
29.	Common capital stock		$	2,500,000		$	10,137,150		$	(2,500,000	)	A	$	10,137,150
30.	Preferred capital stock			0			0			0				0
31.	Aggregate write-ins for other than special surplus funds			0			0							0
32.	Surplus notes			0			160,000,000							160,000,000
33.	Gross paid in and contributed surplus			149,627,109			757,198,973			2,500,000		A		909,326,082
34.	Aggregate write-ins for special surplus funds			0			0							0
35.	Unassigned funds (surplus)			253,319,743			43,888,596			0				297,208,339
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)			402,946,852			961,087,569			2,500,000				1,366,534,421
38.	Totals of Lines 29, 30 and 37			405,446,852			971,224,719			0				1,376,671,571
39.	Totals of Lines 28 and 38 (Liabilities and Surplus)		$	9,420,319,417		$	31,879,574,241		$	0			$	41,299,893,658

* This balance sheet is an unaudited consolidation of the December 31, 2013 NAIC Annual Statement balance sheets for Western Reserve Life Assurance Co. of Ohio and Monumental Life Insurance Company.

P-3

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2013

											TPLIC (MLIC)
											Dec 31, 2013
		WRL			TPLIC (MLIC)			Eliminations		Reference	Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	538,421,190		$	1,586,270,078		$	0		$	2,124,691,268
2	Considerations for supplementary contracts with life contingencies		2,669,815			120,206,309						122,876,124
3	Net investment income		92,490,364			729,328,837						821,819,201
4	Amortization of Interest Maintenance Reserve (IMR)		767,365			15,572,471						16,339,836
5	Separate Accounts net gain from operations excluding unrealized gains or losses		0			0						0
6	Commissions and expense allowances on reinsurance ceded		(15,256,488	)		209,399,681						194,143,193
7	Reserve adjustments on reinsurance ceded		(13,389,610	)		(226,237,769	)					(239,627,379	)
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		291,415,707			40,882,844						332,298,551
8.2	Charges and fees for deposit-type contracts		0			0						0
8.3	Aggregate write-ins for miscellaneous income		23,275,893			15,358,736			0			38,634,629
9	Totals (Lines 1 to 8.3)		920,394,236			2,490,781,187			0			3,411,175,423
10	Death benefits		70,180,365			239,620,179						309,800,544
11	Matured endowments (excluding guaranteed annual pure endowments)		20,665			9,689,204						9,709,869
12	Annuity benefits		19,270,127			313,063,790						332,333,917
13	Disability benefits and benefits under accident and health contracts		1,580,884			272,277,322						273,858,206
14	Coupons, guaranteed annual pure endowments and similar benefits		0			0						0
15	Surrender benefits and withdrawals for life contracts		541,358,940			1,019,521,589						1,560,880,529
16	Group conversions		0			0						0
17	Interest and adjustments on contract or deposit-type contract funds		475,650			40,362,252						40,837,902
18	Payments on supplementary contracts with life contingencies		3,276,454			34,080,716						37,357,170
19	Increase in aggregate reserves for life and accident and health contracts		127,763,858			(57,398,129	)		0			70,365,729
20	Totals (Lines 10 to 19)		763,926,943			1,871,216,923			0			2,635,143,866
21	Commissions on premiums, annuity considerations and deposit-type contract funds		155,583,798			275,345,715						430,929,513
22	Commissions and expense allowances on reinsurance assumed		0			42,743,256						42,743,256
23	General insurance expenses		72,084,952			220,220,369						292,305,321
24	Insurance taxes, licenses and fees, excluding federal income taxes		18,954,377			46,267,149						65,221,526
25	Increase in loading on deferred and uncollected premiums		77,142			(2,835,678	)					(2,758,536	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(280,807,082	)		(312,793,145	)					(593,600,227	)
27	Aggregate write-ins for deductions		16,255,075			147,145,291			0			163,400,366
28	Totals (Lines 20 to 27)		746,075,205			2,287,309,880			0			3,033,385,085
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		174,319,031			203,471,307			0			377,790,338
30	Dividends to policyholders		20,746			1,258,647						1,279,393
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		174,298,285			202,212,660			0			376,510,945
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		25,591,702			23,987,115						49,578,817
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)		148,706,583			178,225,545			0			326,932,128
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		11,102,563			(11,351,095	)					(248,532	)
35	Net income (Line 33 plus Line 34)	$	159,809,146		$	166,874,450		$	0		$	326,683,596

P-4

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2013

												TPLIC (MLIC)
												Dec 31, 2013
		WRL			TPLIC (MLIC)			Eliminations			Reference	Totals
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	338,415,864		$	811,320,218		$	0			$	1,149,736,082
37	Net income (Line 35)		159,809,146			166,874,450							326,683,596
38	Change in net unrealized capital gains (losses)		4,188,807			96,957,088							101,145,895
39	Change in net unrealized foreign exchange capital gain (loss)		0			(1,426,888	)						(1,426,888	)
40	Change in net deferred income tax		(14,828,899	)		1,497,207							(13,331,692	)
41	Change in nonadmitted assets and related items		(11,137,898	)		3,579,313							(7,558,585	)
42	Change in liability for reinsurance in unauthorized companies		264,898			187,382							452,280
43	Change in reserve on account of change in valuation basis, (increase) or decrease		0			0							0
44	Change in asset valuation reserve		(5,603,238	)		(51,980,043	)						(57,583,281	)
45	Change in treasury stock		0			0							0
46	Surplus (contributed to) withdrawn from Separate Accounts during period		0			0							0
47	Other changes in surplus in Separate Accounts Statement		0			0							0
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			(2,500,000	)	A		(2,500,000	)
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			135,925,882			2,500,000		A		138,425,882
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		(15,661,828	)		(63,742,772	)						(79,404,600	)
52	Dividends to stockholders		(50,000,000	)		(135,000,000	)						(185,000,000	)
53	Aggregate write-ins for gains and losses in surplus		0			7,032,882							7,032,882
54	Net change in capital and surplus (Lines 37 through 53)		67,030,988			159,904,501			0				226,935,489
55	Capital and surplus as of statement date (Lines 36 + 54)	$	405,446,852		$	971,224,719		$	0			$	1,376,671,571
DETAILS OF WRITE-INS (Line 8.3)
	Miscellaneous income	$	18,494,295		$	11,387,733		$	0			$	29,882,028
	Income earned on company owned life insurance		3,607,401			2,504,067							6,111,468
	Surrender charges		0			774,952							774,952
	Consideration on reinsurance recaptured		1,174,197			691,984							1,866,181
	TOTAL WRITE-INS FOR LINE 8.3	$	23,275,893		$	15,358,736		$	0			$	38,634,629
DETAILS OF WRITE-INS (Line 27)
	Interest on surplus notes	$	0		$	9,600,000		$	0			$	9,600,000
	Experience refunds		(580	)		246,617							246,037
	Fines and penalties		1,948			154,566							156,514
	Funds withheld ceded investment income		16,253,707			138,639,686							154,893,393
	Reinsurance Allowances		0			0							0
	Modco reserve adjustment		0			(10,254	)						(10,254	)
	Foreign currency translation adjustment		0			0							0
	Change in synthetic GICs and provision for liquidity guarantees		0			(1,485,324	)						(1,485,324	)
	TOTAL WRITE-INS FOR LINE 27	$	16,255,075		$	147,145,291		$	0			$	163,400,366
DETAILS OF WRITE-INS (Line 53)
	Correction of error- change in nonadmitted deferred tax assets	$	0		$	7,032,882		$	0			$	7,032,882
			0			0							0
	TOTAL WRITE-INS FOR LINE 53	$	0		$	7,032,882		$	0			$	7,032,882

* This income statement is an unaudited consolidation of the December 31, 2013 NAIC Annual Statement income statements for Western Reserve Life Assurance Co. of Ohio and Monumental Life Insurance Company.

P-5

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2012

											TPLIC (MLIC)
											Dec 31, 2012
		WRL			TPLIC (MLIC)			Eliminations		Reference	Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	486,919,136		$	1,497,625,426		$	0		$	1,984,544,562
2	Considerations for supplementary contracts with life contingencies		(2,210,995	)		24,091,339						21,880,344
3	Net investment income		81,728,965			822,313,801						904,042,766
4	Amortization of Interest Maintenance Reserve (IMR)		1,516,879			11,028,711						12,545,590
5	Separate Accounts net gain from operations excluding unrealized gains or losses		0			0						0
6	Commissions and expense allowances on reinsurance ceded		(3,414,666	)		377,804,411						374,389,745
7	Reserve adjustments on reinsurance ceded		(24,697,078	)		(762,678,546	)					(787,375,624	)
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		300,860,490			36,700,565						337,561,055
8.2	Charges and fees for deposit-type contracts		0			0						0
8.3	Aggregate write-ins for miscellaneous income		19,035,109			8,497,450			0			27,532,559
9	Totals (Lines 1 to 8.3)		859,737,840			2,015,383,157			0			2,875,120,997
10	Death benefits		70,668,289			183,519,981						254,188,270
11	Matured endowments (excluding guaranteed annual pure endowments)		22,545			11,213,370						11,235,915
12	Annuity benefits		21,113,855			306,294,955						327,408,810
13	Disability benefits and benefits under accident and health contracts		871,144			281,497,472						282,368,616
14	Coupons, guaranteed annual pure endowments and similar benefits		0			0						0
15	Surrender benefits and withdrawals for life contracts		423,202,502			824,936,262						1,248,138,764
16	Group conversions		0			0						0
17	Interest and adjustments on contract or deposit-type contract funds		649,406			36,904,416						37,553,822
18	Payments on supplementary contracts with life contingencies		2,238,541			18,437,164						20,675,705
19	Increase in aggregate reserves for life and accident and health contracts		35,664,048			(483,691,447	)		0			(448,027,399	)
20	Totals (Lines 10 to 19)		554,430,330			1,179,112,173			0			1,733,542,503
21	Commissions on premiums, annuity considerations and deposit-type contract funds		160,308,691			258,895,773						419,204,464
22	Commissions and expense allowances on reinsurance assumed		0			48,695,771						48,695,771
23	General insurance expenses		74,016,655			218,791,750						292,808,405
24	Insurance taxes, licenses and fees, excluding federal income taxes		17,897,862			31,214,586						49,112,448
25	Increase in loading on deferred and uncollected premiums		(54,095	)		(4,719,414	)					(4,773,509	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(107,485,224	)		(189,380,197	)					(296,865,421	)
27	Aggregate write-ins for deductions		12,038,761			216,975,741			0			229,014,502
28	Totals (Lines 20 to 27)		711,152,980			1,759,586,183			0			2,470,739,163
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		148,584,860			255,796,974			0			404,381,834
30	Dividends to policyholders		21,801			1,279,154						1,300,955
31	Net gain from operations after dividends to policyholders and before federal income (Line 29 minus Line 30)		148,563,059			254,517,820			0			403,080,879
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		13,976,714			103,095,420						117,072,134
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)		134,586,345			151,422,400			0			286,008,745
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		(4,590,812	)		(7,876,251	)					(12,467,063	)
35	Net income (Line 33 plus Line 34)	$	129,995,533		$	143,546,149		$	0		$	273,541,682

P-6

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2012

												TPLIC (MLIC)
												Dec 31, 2012
		WRL			TPLIC (MLIC)			Eliminations			Reference	Totals
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	275,198,023		$	980,853,380		$	0			$	1,256,051,403
37	Net income (Line 35)		129,995,533			143,546,149							273,541,682
38	Change in net unrealized capital gains (losses)		117,589			(34,637,639	)						(34,520,050	)
39	Change in net unrealized foreign exchange capital gain (loss)		0			1,378,866							1,378,866
40	Change in net deferred income tax		(12,436,991	)		822,923							(11,614,068	)
41	Change in nonadmitted assets and related items		(9,918,907	)		(29,675,578	)						(39,594,485	)
42	Change in liability for reinsurance in unauthorized companies		—			500,492							500,492
43	Change in reserve on account of change in valuation basis, (increase) or decrease		0			0							0
44	Change in asset valuation reserve		(3,200,787	)		(9,467,487	)						(12,668,274	)
45	Change in treasury stock		0			0							0
46	Surplus (contributed to) withdrawn from Separate Accounts during period		0			0							0
47	Other changes in surplus in Separate Accounts Statement		0			0							0
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			(2,500,000	)	A		(2,500,000	)
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			481,720			2,500,000		A		2,981,720
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		(33,519,286	)		207,517,392							173,998,106
52	Dividends to stockholders		(27,000,000	)		(450,000,000	)						(477,000,000	)
53	Aggregate write-ins for gains and losses in surplus		—			—							0
54	Net change in capital and surplus (Lines 37 through 53)		44,037,151			(169,533,162	)		0				(125,496,011	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	319,235,174		$	811,320,218		$	0			$	1,130,555,392
DETAILS OF WRITE-INS (Line 8.3)
	Miscellaneous income	$	17,160,566		$	5,094,642		$	0			$	22,255,208
	Income earned on company owned life insurance		1,874,543			2,445,497							4,320,040
	Surrender charges		0			922,816							922,816
	Consideration on reinsurance recaptured		0			34,495							34,495
	TOTAL WRITE-INS FOR LINE 8.3	$	19,035,109		$	8,497,450		$	0			$	27,532,559
DETAILS OF WRITE-INS (Line 27)
	Interest on surplus notes	$	0		$	9,600,000		$	0			$	9,600,000
	Experience refunds		(112	)		(319,009	)						(319,121	)
	Fines and penalties		989			4,535							5,524
	Funds withheld ceded investment income		12,037,884			213,972,859							226,010,743
	Reinsurance Allowances		0			5,385							5,385
	Modco reserve adjustment		0			(10,045	)						(10,045	)
	Foreign currency translation adjustment		0			(4,228,000	)						(4,228,000	)
	Change in synthetic GICs and provision for liquidity guarantees		0			(2,049,984	)						(2,049,984	)
	TOTAL WRITE-INS FOR LINE 27	$	12,038,761		$	216,975,741		$	0			$	229,014,502
DETAILS OF WRITE-INS (Line 53)
		$	0		$	0		$	0			$	0
			0			0							0
	TOTAL WRITE-INS FOR LINE 53	$	0		$	0		$	0			$	0

* This income statement is an unaudited consolidation of the December 31, 2012 NAIC Annual Statement income statements for Western Reserve Life Assurance Co. of Ohio and Monumental Life Insurance Company.

P-7

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2011

											TPLIC (MLIC)
											Dec 31, 2011
		WRL			TPLIC (MLIC)			Eliminations		Reference	Totals
1	Premiums and annuity considerations for life and accident and health contracts	$	479,669,678		$	1,391,712,990		$	0		$	1,871,382,668
2	Considerations for supplementary contracts with life contingencies		929,177			11,508,812						12,437,989
3	Net investment income		80,031,434			842,041,493						922,072,927
4	Amortization of Interest Maintenance Reserve (IMR)		1,325,917			4,411,559						5,737,476
5	Separate Accounts net gain from operations excluding unrealized gains or losses		0			0						0
6	Commissions and expense allowances on reinsurance ceded		(41,716,042	)		529,883,046						488,167,004
7	Reserve adjustments on reinsurance ceded		(31,044,498	)		(151,483,511	)					(182,528,009	)
8	Miscellaneous Income:
8.1	Income from fees associated with investment management, administration and contract guarantees from Separate Accounts		312,161,423			34,847,072						347,008,495
8.2	Charges and fees for deposit-type contracts		0			0						0
8.3	Aggregate write-ins for miscellaneous income		20,019,069			8,884,717			0			28,903,786
9	Totals (Lines 1 to 8.3)		821,376,158			2,671,806,178			0			3,493,182,336
10	Death benefits		64,792,471			183,623,096						248,415,567
11	Matured endowments (excluding guaranteed annual pure endowments)		20,646			9,811,580						9,832,226
12	Annuity benefits		25,823,646			275,877,445						301,701,091
13	Disability benefits and benefits under accident and health contracts		1,214,897			305,136,009						306,350,906
14	Coupons, guaranteed annual pure endowments and similar benefits		0			0						0
15	Surrender benefits and withdrawals for life contracts		614,466,490			731,102,194						1,345,568,684
16	Group conversions		0			0						0
17	Interest and adjustments on contract or deposit-type contract funds		797,706			40,623,746						41,421,452
18	Payments on supplementary contracts with life contingencies		1,333,270			17,015,971						18,349,241
19	Increase in aggregate reserves for life and accident and health contracts		85,582,954			(92,560,336	)		0			(6,977,382	)
20	Totals (Lines 10 to 19)		794,032,080			1,470,629,705			0			2,264,661,785
21	Commissions on premiums, annuity considerations and deposit-type contract funds		138,136,489			253,225,339						391,361,828
22	Commissions and expense allowances on reinsurance assumed		0			67,337,377						67,337,377
23	General insurance expenses		84,131,616			223,932,675						308,064,291
24	Insurance taxes, licenses and fees, excluding federal income taxes		14,478,324			28,925,224						43,403,548
25	Increase in loading on deferred and uncollected premiums		11,427			(4,278,103	)					(4,266,676	)
26	Net transfers to or (from) Separate Accounts net of reinsurance		(258,667,339	)		(136,669,812	)					(395,337,151	)
27	Aggregate write-ins for deductions		39,366,107			225,231,807			0			264,597,914
28	Totals (Lines 20 to 27)		811,488,704			2,128,334,212			0			2,939,822,916
29	Net gain from operations before dividends to policyholders and federal income taxes (Line 9 minus Line 28)		9,887,454			543,471,966			0			553,359,420
30	Dividends to policyholders		23,797			1,341,907						1,365,704
31	Net gain from operations after dividends to policyholders and before federal income taxes (Line 29 minus Line 30)		9,863,657			542,130,059			0			551,993,716
32	Federal and foreign income taxes incurred (excluding tax on capital gains)		9,379,020			31,580,088						40,959,108
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)		484,637			510,549,971			0			511,034,608
34	Net realized capital gains or (losses) less capital gains tax and transferred to the IMR		(12,431,038	)		(28,842,181	)					(41,273,219	)
35	Net income (Line 33 plus Line 34)	$	(11,946,401	)	$	481,707,790		$	0		$	469,761,389

P-8

Pro Forma Unaudited Consolidated Statutory Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

For Year Ending December 31, 2011

												TPLIC (MLIC)
												Dec 31, 2011
		WRL			TPLIC (MLIC)			Eliminations			Reference	Totals
CAPITAL AND SURPLUS ACCOUNT
36	Capital and surplus, December 31, prior year	$	511,264,493		$	1,174,423,154		$	0			$	1,685,687,647
37	Net income (Line 35)		(11,946,401	)		481,707,790							469,761,389
38	Change in net unrealized capital gains (losses)		(3,720,586	)		(12,830,567	)						(16,551,153	)
39	Change in net unrealized foreign exchange capital gain (loss)		0			747,269							747,269
40	Change in net deferred income tax		18,336,654			218,164,768							236,501,422
41	Change in nonadmitted assets and related items		(27,615,648	)		(246,969,162	)						(274,584,810	)
42	Change in liability for reinsurance in unauthorized companies		(104,262	)		(233,738	)						(338,000	)
43	Change in reserve on account of change in valuation basis, (increase) or decrease		0			0							0
44	Change in asset valuation reserve		378,352			(30,846,724	)						(30,468,372	)
45	Change in treasury stock		0			0							0
46	Surplus (contributed to) withdrawn from Separate Accounts during period		0			0							0
47	Other changes in surplus in Separate Accounts Statement		0			0							0
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			(2,500,000	)	A		(2,500,000	)
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			175,092			2,500,000		A		2,675,092
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		41,629,207			(321,586,829	)						(279,957,622	)
52	Dividends to stockholders		(250,000,000	)		(300,000,000	)						(550,000,000	)
53	Aggregate write-ins for gains and losses in surplus		(3,023,786	)		18,102,327							15,078,541
54	Net change in capital and surplus (Lines 37 through 53)		(236,066,470	)		(193,569,774	)		0				(429,636,244	)
55	Capital and surplus as of statement date (Lines 36 + 54)	$	275,198,023		$	980,853,380		$	0			$	1,256,051,403
DETAILS OF WRITE-INS (Line 8.3)
	Miscellaneous income	$	17,739,643		$	5,350,789		$	0			$	23,090,432
	Income earned on company owned life insurance		2,279,426			2,386,749							4,666,175
	Surrender charges		0			1,147,179							1,147,179
	TOTAL WRITE-INS FOR LINE 8.3	$	20,019,069		$	8,884,717		$	0			$	28,903,786
DETAILS OF WRITE-INS (Line 27)
	Interest on surplus notes	$	0		$	9,600,000		$	0			$	9,600,000
	Experience refunds		0			(140,105	)						(140,105	)
	Fines and penalties		514			18,999							19,513
	Funds withheld ceded investment income		10,065,593			211,608,375							221,673,968
	Reinsurance Allowances		0			6,173							6,173
	Modco reserve adjustment		0			(21,045	)						(21,045	)
	Consideration on reinsurance recaptured		29,300,000			3,039,400							32,339,400
	Change in synthetic GICs and provision for liquidity guarantees		0			1,120,010							1,120,010
	TOTAL WRITE-INS FOR LINE 27	$	39,366,107		$	225,231,807		$	0			$	264,597,914
DETAILS OF WRITE-INS (Line 53)
	Change in admitted deferred tax assets pursuant to SSAP No. 10R	$	(3,023,786	)	$	23,738,700		$	0			$	20,714,914
	Correction of error—funds withheld investment income		0			(5,636,373	)						(5,636,373	)
	TOTAL WRITE-INS FOR LINE 53	$	(3,023,786	)	$	18,102,327		$	0			$	15,078,541

* This income statement is an unaudited consolidation of the December 31, 2011 NAIC Annual Statement income statements for Western Reserve Life Assurance Co. of Ohio and Monumental Life Insurance Company.

P-9

Pro Forma Unaudited Consolidated Statutory Balance Sheet and Income Statement

Western Reserve Life Assurance Co. of Ohio, Transamerica Premier Life Insurance Company

(f.k.a. Monumental Life Insurance Company)

Eliminations:

The following eliminations have been made to the combined WRL and TPLIC financial statements to more accurately depict the resultant combination of the entities in accordance with statutory accounting principles.

A - Reflect cancellation of WRL’s common stock held by AEGON USA, LLC:

WRL common capital stock owned by AEGON USA, LLC prior to merger $ 2,500,000

WRL’s common shares shall be deemed cancelled by operation of law. As AEGON USA, LLC owns 100% of the common shares of Commonwealth General Corporation (CGC), a Delaware holding company, who in turn will own 100% of TPLIC, and AEGON USA also owns 100% of WRL, AEGON USA is indifferent as to the consideration issued in the merger, since such issuance is meaningless to AEGON USA as an economic matter. Under these circumstances, AEGON USA agrees to accept one share of common stock of CGC in exchange for its agreement to merge WRL into TPLIC.

Overview of eliminations by statutory financial lines:

Balance Sheet Adjustments:
Surplus and Other Fund Adjustments:
Line 29 - Common capital stock	$	(2,500,000	)
Line 30 - Preferred capital stock		-
Line 33 - Gross paid in & contributed surplus		2,500,000
Line 35 - Unassigned		—
Total Surplus and Other Fund Adjustments	$	—
Income Statement Adjustments:
Net Income Adjustments:
	$	—
Total Net Income Adjustments	$	—
Capital and Surplus Adjustments:
Line 36 - Capital and surplus as of the prior year	$	—
Line 37 - Net Income		—
Line 38 - Change in net unrealized capital gains (losses)		—
Line 41 - Change in non-admitted assets and related items		—
Line 50.1 - Capital paid in		(2,500,000	)
Line 51.1 - Surplus paid in		2,500,000
Total Change in Capital and Surplus Adjustments	$	—

P-10

F I N A N C I A L     S T A T E M E N T S     A N D     S C H E D U L E S – S T A T U T O R Y     B A S I S

Western Reserve Life Assurance Co. of Ohio

Years Ended December 31, 2013, 2012 (restated) and 2011

Western Reserve Life Assurance Co. of Ohio

Financial Statements and Schedules – Statutory Basis

Years Ended December 31, 2013, 2012 (restated) and 2011

Contents

Report of Independent Auditors	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	5
Statements of Changes in Capital and Surplus – Statutory Basis	6
Statements of Cash Flow – Statutory Basis	8
Notes to Financial Statements – Statutory Basis	10
Statutory-Basis Financial Statement Schedules
Summary of Investments – Other Than Investments in Related Parties	70
Supplementary Insurance Information	71
Reinsurance	72

Report of Independent Auditors

The Board of Directors

Western Reserve Life Assurance Co. of Ohio

We have audited the accompanying statutory-basis financial statements of Western Reserve Life Assurance Company of Ohio, which comprise the balance sheets as of December 31, 2013 and 2012, 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, 2013, and the related notes to the financial statements. Our audits also included the statutory-basis financial statement schedules required by Regulation S-X, Article 7.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance. Management also is responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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

As described in Note 1, to meet the requirements of Ohio the financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance, which practices differ from U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles are described in Note 1. The effects on the accompanying financial statements of these variances are not reasonably determinable but are presumed to be material.

1

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the effects of the matter described in the preceding paragraph, the statutory-basis financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of Western Reserve Life Assurance Co. of Ohio at December 31, 2013 and 2012, or the results of its operations or its cash flows for each of the three years ended December 31, 2013.

Opinion on Statutory-Basis of Accounting

However, in our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the financial position of Western Reserve Life Assurance Co. of Ohio at December 31, 2013 and 2012, and the results of its operations and its cash flows for the three years ended December 31, 2013 in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance. 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.

Restatement

As discussed in Note 1 to the financial statements, the 2012 financial statements have been restated to correct an error in accounting for affiliated reinsurance receivables. Our opinion is not modified with respect to this matter.

/s/ Ernst & Young LLP

April 28, 2014

2

Western Reserve Life Assurance Co. of Ohio

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2013		2012
			Restated
Admitted assets
Cash and invested assets:
Bonds	$	1,448,053	$	1,116,229
Common stocks:
Affiliated entities (cost: 2013- $24,343; 2012- $22,921)		35,348		31,844
Unaffiliated entities (cost: 2013- $0; 2012- $117)		—		117
Mortgage loans on real estate		77,805		50,714
Real estate, at cost less accumulated depreciation (2013 - 14,745; 2012 - $12,942)
Home office properties		27,382		35,209
Properties held for sale		6,259		—
Cash, cash equivalents and short-term investments		110,547		184,234
Policy loans		442,800		411,101
Securities lending reinvested collateral assets		88,265		84,899
Other invested assets		3,012		3,293
Total cash and invested assets		2,239,471		1,917,640
Net deferred income tax asset		86,385		105,141
Premiums deferred and uncollected		2,765		2,735
Reinsurance receivable		1,910		3,358
Receivable from parent, subsidiaries and affiliates		19,859		10,992
Investment income due and accrued		17,361		14,224
Cash surrender value of life insurance policies		75,881		75,295
Other admitted assets		7,210		7,263
Separate account assets		6,969,477		6,477,241
Total admitted assets	$	9,420,319	$	8,613,889

3

Western Reserve Life Assurance Co. of Ohio

Balance Sheets – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2013			2012
				Restated
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life	$	1,520,248		$	1,300,741
Annuity		389,341			481,279
Accident and health		1,158			963
Life policy and contract claim reserves		25,085			26,339
Liability for deposit-type contracts		21,520			14,647
Other policyholders’ funds		35			41
Interest maintenance reserve		25,813			28,678
Remittances and items not allocated		10,776			9,670
Federal income taxes payable		17,160			17,951
Transfers from separate accounts due or accrued		(212,708	)		(285,883	)
Asset valuation reserve		17,642			12,039
Reinsurance in unauthorized companies		—			265
Funds held under coinsurance and other reinsurance treaties		78,161			54,464
Unearned investment income		9,736			9,509
Payable for securities		8,000			—
Payable for securities lending		88,265			83,058
Derivatives		4,100			1,841
Other liabilities		41,062			42,630
Separate account liabilities		6,969,477			6,477,241
Total liabilities		9,014,871			8,275,473
Capital and surplus:
Common stock, $1.00 par value, 3,000,000 shares authorized and 2,500,000 shares issued and outstanding		2,500			2,500
Paid-in surplus		149,627			149,627
Unassigned surplus		253,321			186,289
Total capital and surplus		405,448			338,416
Total liabilities and capital and surplus	$	9,420,319		$	8,613,889

See accompanying notes.

4

Western Reserve Life Assurance Co. of Ohio

Statement of Operations – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	Year Ended December 31
	2013			2012			2011
				Restated
Revenues:
Premiums and other considerations, net of reinsurance:
Life	$	525,693		$	469,503		$	456,926
Annuity		12,952			13,547			22,244
Accident and health		2,446			1,658			1,429
Net investment income		92,490			81,729			80,031
Amortization of interest maintenance reserve		767			1,516			1,326
Commissions and expense allowances on reinsurance ceded		(15,257	)		(8,070	)		(41,716	)
Reserve adjustments on reinsurance ceded		(13,390	)		(13,198	)		(31,044	)
Income from fees associated with investment management, administration and contract guarantees for separate accounts		291,416			300,860			312,161
Income earned on company owned life insurance		3,607			1,875			2,279
Consideration received on reinsurance recapture		1,174			—			—
Income from administrative service agreement with affiliate		24,966			23,814			24,411
Other		(6,470	)		(6,652	)		(6,671	)
		920,394			866,582			821,376
Benefits and expenses:
Benefits paid or provided for:
Life		70,180			70,941			64,792
Surrender benefits		541,359			423,203			418,362
Annuity benefits		19,270			21,114			25,824
Other benefits		5,354			3,781			3,367
Increase (decrease) in aggregate reserves for policies and contracts:
Life		219,507			94,292			66,540
Annuity		(91,938	)		(59,074	)		19,085
Accident and health		195			446			(42	)
		763,927			554,703			597,928
Insurance expenses:
Commissions		155,584			160,309			138,136
General insurance expenses		72,085			74,017			84,132
Taxes, licenses and fees		18,954			17,898			14,478
Net transfers from separate accounts		(280,807	)		(107,485	)		(62,563	)
Consideration paid on reinsurance recapture		—			—			29,300
Other expenses		16,332			11,984			10,077
		(17,852	)		156,723			213,560
Total benefits and expenses		746,075			711,426			811,488
Gain from operations before dividends to policyholders, federal income tax expense and net realized capital gains/losses on investments		174,319			155,156			9,888
Dividends to policyholders		21			22			24
Gain from operations before federal income tax expense and net realized capital gains/losses on investments		174,298			155,134			9,864
Federal income tax expense		25,592			20,548			9,379
Gain from operations before net realized capital gains/losses on investments		148,706			134,586			485
Net realized capital gain/ (loss) on investments (net of related federal income taxes and amounts tranferred to/from interest maintenance reserve)		11,103			(4,591	)		(12,431	)
Net income (loss)	$	159,809		$	129,995		$	(11,946	)

See accompanying notes.

5

Western Reserve Life Assurance Co. of Ohio

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Thousands)

	Common Stock		Aggregate Write-ins for Other than Special Surplus Funds			Paid-in Surplus		Unassigned Surplus			Total Capital and Surplus
Balance at January 1, 2011	$	2,500	$	70,527		$	149,627	$	288,610		$	511,264
Net loss		—		—			—		(11,946	)		(11,946	)
Change in net unrealized capital gains and losses, net of tax		—		—			—		(3,720	)		(3,720	)
Change in nonadmitted assets		—		—			—		(27,616	)		(27,616	)
Change in asset valuation reserve		—		—			—		378			378
Change in liability for reinsurance in unauthorized companies		—		—			—		(104	)		(104	)
Dividend to stockholder		—		—			—		(250,000	)		(250,000	)
Change in net deferred income tax asset		—		—			—		18,337			18,337
Change in surplus as a result of reinsurance		—		—			—		41,629			41,629
Change in admitted deferred tax asset pursuant to SSAP No. 10R		—		(3,024	)		—		—			(3,024	)
Balance at December 31, 2011		2,500		67,503			149,627		55,568			275,198
Net income		—		—			—		129,995			129,995
Change in net unrealized capital gains and losses, net of tax		—		—			—		118			118
Change in nonadmitted assets		—		—			—		(7,849	)		(7,849	)
Change in asset valuation reserve		—		—			—		(3,201	)		(3,201	)
Dividend to stockholder		—		—			—		(27,000	)		(27,000	)
Change in net deferred income tax asset		—		—			—		(12,437	)		(12,437	)
Change in surplus as a result of reinsurance		—		—			—		(21,315	)		(21,315	)
Change in admitted deferred tax assets pursuant to SSAP No. 101		—		(67,503	)		—		67,503			—
Correction of error - reinsurance		—		—			—		4,907			4,907
Balance at December 31, 2012 - restated	$	2,500	$	—		$	149,627	$	186,289		$	338,416

6

Western Reserve Life Assurance Co. of Ohio

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

(Dollars in Thousands)

	Common Stock		Paid-in Surplus		Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2012 - restated	$	2,500	$	149,627	$	186,289		$	338,416
Net income		—		—		159,809			159,809
Change in net unrealized capital gains and losses, net of tax		—		—		4,189			4,189
Change in nonadmitted assets		—		—		(11,138	)		(11,138	)
Change in asset valuation reserve		—		—		(5,603	)		(5,603	)
Change in liability for reinsurance in unauthorized and certified companies		—		—		265			265
Dividend to stockholder		—		—		(50,000	)		(50,000	)
Change in net deferred income tax asset		—		—		(14,829	)		(14,829	)
Change in surplus as a result of reinsurance		—		—		(15,661	)		(15,661	)
Balance at December 31, 2013	$	2,500	$	149,627	$	253,321		$	405,448

See accompanying notes.

7

Western Reserve Life Assurance Co. of Ohio

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
				Restated
Operating activities
Premiums collected, net of reinsurance	$	540,933		$	485,063		$	480,756
Net investment income received		96,249			84,038			85,361
Miscellaneous income received		278,156			277,542			271,567
Benefit and loss related payments		(636,087	)		(521,038	)		(698,717	)
Commissions, expenses paid and aggregate write-ins for deductions		(262,111	)		(264,731	)		(250,591	)
Net transfers from separate accounts		354,274			200,378			371,180
Dividends paid to policyholders		(21	)		(22	)		(24	)
Federal and foreign income taxes paid		(25,415	)		(5,134	)		(88,126	)
Net cash provided by operating activities		345,978			256,096			171,406
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds		321,363			337,040			263,103
Common stocks		117			2			120
Mortgage loans on real estate		3,846			9,355			6,267
Other invested assets		6			1			—
Securities lending reinvested collateral assets		—			4,729			104,301
Miscellaneous proceeds		21,512			5,275			6
Total investment proceeds		346,844			356,402			373,797
Costs of investments acquired:
Bonds		(657,368	)		(562,044	)		(212,793	)
Common stocks		(825	)		(1,143	)		(597	)
Mortgage loans on real estate		(31,484	)		(10,800	)		(43,694	)
Real estate		(235	)		(153	)		66
Other invested assets		(651	)		(502	)		(845	)
Securities lending reinvested collateral assets		(3,366	)		—			—
Miscellaneous applications		(33	)		(4,550	)		(18,575	)
Total cost of investments acquired		(693,962	)		(579,192	)		(276,438	)
Net increase in policy loans		(31,699	)		(5,064	)		(14,526	)
Net cost of investments acquired		(725,661	)		(584,256	)		(290,964	)
Net cash (used in) provided by investing activities		(378,817	)		(227,854	)		82,833

8

Western Reserve Life Assurance Co. of Ohio

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
				Restated
Financing and miscellaneous activities
Cash provided (applied):
Net deposits (withdrawals) on deposit-type contracts and other insurance liabilities		(1,417	)		1,424			(2,510	)
Borrowed funds		331			21,064			5,229
Dividends to stockholder		(50,000	)		(27,000	)		(250,000	)
Funds held under reinsurance treaty with unauthorized reinsurers		23,697			20,836			18,404
Receivable from parent, subsidiaries and affiliates		(8,867	)		(8,925	)		10,767
Payable to parent, subsidiaries and affiliates		—			(26,732	)		6,775
Payable for securities lending		3,366			(4,726	)		(104,302	)
Other cash provided (applied)		(7,958	)		9,696			(10,387	)
Net cash (used in) provided by financing and miscellaneous activities		(40,848	)		(14,363	)		(326,024	)
Net (decrease) increase in cash, cash equivalents and short-term investments		(73,687	)		13,880			(71,785	)
Cash, cash equivalents and short-term investments:
Beginning of year		184,234			170,354			242,139
End of year	$	110,547		$	184,234		$	170,354

See accompanying notes.

9

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands)

December 31, 2013

1. Organization and Summary of Significant Accounting Policies

Organization

Western Reserve Life Assurance Co. of Ohio (the Company) is a stock life insurance company and is a wholly owned subsidiary of Aegon USA, LLC (Aegon). Aegon is an indirect, wholly owned subsidiary of Aegon N.V., a holding company organized under the laws of The Netherlands.

Nature of Business

The Company operates predominantly in the variable universal life and variable annuity areas of the life insurance business. The Company is licensed in 49 states, District of Columbia, Puerto Rico and Guam. Sales of the Company’s products are through financial planners, independent representatives, financial institutions and stockbrokers. The majority of the Company’s new life insurance, and a portion of new annuities, are written through an affiliated marketing organization.

Basis of Presentation

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

The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Ohio Department of Insurance, 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 mandatory redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed maturity investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in earnings for those designated as trading and as a separate component of other comprehensive income (OCI) for those designated as available-for-sale. Fair value for GAAP is based on indexes, third party pricing services, brokers, external fund managers and internal models. For statutory reporting, the NAIC allows insurance companies to report the fair value determined by the Securities Valuation Office of the NAIC (SVO) or determine the fair value by using a permitted valuation method.

10

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If the fair value of the mortgage-backed/asset-backed security is less than amortized cost, an entity shall assess whether the impairment is other-than-temporary. An other-than-temporary impairment is considered to have occurred if the fair value of the mortgage-backed/asset-backed security is less than its amortized cost basis and the entity intends to sell the security or the entity does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis. An other-than-temporary impairment is also considered to have occurred if the discounted estimated future cash flows are less than the amortized cost basis of the security.

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

For GAAP, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If high credit quality securities are adjusted, the retrospective method is used. If it is determined that a decline in fair value is other-than-temporary and the entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the other-than-temporary impairment should be recognized in earnings equal to the entire difference between the amortized cost basis and its fair value at the impairment date. If the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery, the other-than-temporary impairment should be separated into a) the amount representing the credit loss, which is recognized in earnings, and b) the amount related to all other factors, which is recognized in OCI, net of applicable taxes.

11

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Derivative instruments are also used in replication 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 the changes in the fair value reported in income.

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

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

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

Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, 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 based on groupings of individual securities sold in five year bands. That net deferral is reported as the interest maintenance reserve (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under

12

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

GAAP, realized capital gains and losses are reported in the statement of operations on a pre-tax basis in the period that the assets giving rise to the gains or losses are sold.

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

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

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, incremental costs directly related to the successful acquisition of 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.

Nonadmitted Assets: Certain assets designated as “nonadmitted”, primarily net deferred tax assets and agent debit balances, and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual (NAIC SAP), are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent they are not impaired.

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

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.

13

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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: The Company computes deferred income taxes in accordance with Statement of Statutory Accounting Principle (SSAP) No. 101, Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10 (SSAP No. 101). Under SSAP No. 101, admitted adjusted deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of adjusted gross deferred income tax assets expected to be realized within three years limited to an amount that is no greater than 15% of current period’s adjusted statutory capital and surplus, plus 3) the amount of remaining adjusted gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities after considering the character (i.e., ordinary versus capital) and reversal patterns of the deferred tax assets and liabilities. The remaining adjusted deferred income tax assets are nonadmitted.

Deferred 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.

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.

14

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

Other significant accounting policies are as follows:

Investments

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

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

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

The Company closely monitors below investment grade holdings and those investment grade issuers where the Company has concerns. The Company also regularly monitors industry sectors. The Company considers relevant facts and circumstances in evaluating whether the impairment is other-than-temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; (2) the Company’s decision to sell a security prior to its maturity at an amount below its carrying amount; and (3) the Company’s ability to hold a structured security for a period of time to allow for recovery of the value to its carrying amount. Additionally, financial condition, near term prospects of the issuer and nationally recognized credit rating changes are monitored. Non-structured securities in unrealized loss positions that are considered other-than-temporary are written down to fair value. Structured securities considered other-than-temporarily impaired are written down to discounted estimated cash flows if the impairment is the result of cash flow

15

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

analysis. If the Company has an intent to sell or lack of ability to hold a structured security, it is written down to fair value. For structured securities, cash flow trends and underlying levels of collateral are monitored. The Company will record a charge to the statement of operations to the extent that these securities are determined to be other-than-temporarily impaired.

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

Common stocks of unaffiliated companies are reported at fair value and the related net unrealized capital gains or losses are reported in unassigned surplus along with any adjustments for federal income taxes.

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

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

There are no restrictions on common or preferred stock.

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

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

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

Land is reported at cost. Real estate occupied by the Company is reported at depreciated cost net of encumbrances. Real estate that the Company classifies as held for sale is measured at lower

16

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

of carrying amount or fair value less cost to sell. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. The Company recognizes an impairment loss if the Company determines that the carrying amount of the real estate is not recoverable and exceeds its fair value. The Company deems that the carrying amount of the asset is not recoverable if the carrying amount exceeds the sum of undiscounted cash flows expected to result from the use and disposition. The impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value.

Policy loans are reported at unpaid principal balance.

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

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or real estate where rent is in arrears for more than three months. Income is also not accrued when collection is uncertain. In addition, accrued interest is excluded from investment income when payment exceeds 90 days past due. At December 31, 2013 and 2012, the Company did not exclude any investment income due and accrued with respect to such practices.

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

Derivative Instruments

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

17

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Derivative instruments used in hedging relationships are accounted for on a basis that is consistent with the hedged item (amortized cost or fair value). Derivative instruments used in replication relationships are accounted for on a basis that is consistent with the cash instrument and the replicated asset (amortized cost or fair value). Derivative instruments used in income generation relationships are accounted for on a basis that is consistent with the associated covered asset or underlying interest to which the derivative indicates (amortized cost or fair value). Derivative instruments held for other investment/risk management activities receive fair value accounting.

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

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

Variance swaps are used in the asset/liability management process to mitigate the gamma risk created when the Company has issued minimum guarantee insurance contracts linked to an index. These variance swaps are similar to volatility options where the underlying index provides for the market value movements. Variance swaps do not accrue interest. Typically, no

18

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

cash is exchanged at the outset of initiating the variance swap and a single receipt or payment occurs at the maturity or termination of the contract. Variance swaps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, on the financial statements. If terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus.

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

Separate Accounts

Separate accounts held by the Company primarily represent funds which are administered for individual variable universal life and variable annuity contracts. 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 sheet. 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. The separate accounts, held for individual policyholders, do not have any minimum guarantees, and the investment risks associated with the fair value changes are borne entirely by the policyholder.

The Company received variable contract premiums of $282,851, $305,221 and $349,011, in 2013, 2012 and 2011, 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.

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 $291,416, $300,860 and $312,161, in 2013, 2012 and 2011, respectively, related to fees associated with investment management, administration and contractual guarantees for separate accounts.

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 required by law.

19

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The Company waives deduction of deferred fractional premiums upon death of the insured and returns any portion of premium for periods beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves.

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioner’s Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.0 to 5.5 percent and are computed principally on the Net Level Premium Valuation and the Commissioner’s Reserve Valuation Methods. Reserves for universal life policies are based on account balances adjusted for the Commissioner’s Reserve Valuation Method.

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

Deferred annuity reserves are calculated according to the Commissioner’s Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest. Reserves for immediate annuities and supplementary contracts with life contingencies are equal to the present value of future payments assuming interest rates ranging from 4 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.

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

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

The liabilities related to guaranteed investment contracts and policyholder funds left on deposit with the Company generally are equal to fund balances less applicable surrender charges.

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

20

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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 supplemental contracts and certain annuity contracts. Deposits and withdrawals on these contracts are recorded as a direct increase or decrease, respectively, to the liability balance, and are not reflected as premiums, benefits or changes in reserve in the statement of operations.

Premiums and Annuity Considerations

Revenues for policies with mortality or morbidity risk (including annuities with purchase rate guarantees) consist of the entire premium received and are recognized over the premium paying periods of the related policies. 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 income.

Reinsurance

Coinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies and the terms of the reinsurance contracts. Gains associated with reinsurance of in force blocks of business are included in unassigned surplus and amortized into income as earnings emerge on the reinsured block of business. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively. Policy liabilities and accruals are reported in the accompanying financial statements net of reinsurance ceded.

Recent Accounting Pronouncements

Effective December 31, 2013, the Company adopted revisions to SSAP No. 35R, Guaranty Fund and Other Assessments – Revised which incorporates subsequent event (Type II) disclosures for entities subject to Section 9010 of the Patient Protection and Affordable Care Act related to assessments payable. The adoption of this revision did not impact the financial position or results of operations of the Company as revisions relate to disclosures only. See Note 13 for further discussion.

Effective January 1, 2013, the Company adopted SSAP No. 92, Accounting for Postretirement Benefits Other Than Pensions, A Replacement of SSAP No. 14 and SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89. This guidance impacts accounting for defined benefit pension plans or other postretirement plans, along with related disclosures. SSAP No. 102 requires recognition of the funded status of the plan based on the projected benefit obligation instead of the accumulated benefit obligation as under SSAP No. 89. In addition, SSAP No. 92

21

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

and SSAP No. 102 require consideration of non-vested participants. The adoption of these standards did not impact the Company’s results of operations, financial position or disclosures as the Company does not sponsor the pension plan and is not directly liable under the plan. See Note 9 for further discussion of the Company’s pension plan and other postretirement plans as sponsored by Aegon.

Effective January 1, 2013, the Company adopted SSAP No. 103, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities which adopts with modifications the guidance in Accounting Standards Update (ASU) 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets and supersedes SSAP No. 91R, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The adoption of this standard did not impact the financial position or results of operation of the Company.

Effective January 1, 2013, the Company adopted non-substantive revisions to SSAP No. 36, Troubled Debt Restructuring. These revisions adopt guidance from ASU 2011-02, Receivables – A Creditors’ Determination of Whether a Restructuring is a Troubled Debt Restructuring, which clarifies what constitutes a troubled debt restructuring and adopts with modification troubled debt restructuring disclosures for creditors from ASU 2010-20: Receivables (Topic 310), Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The adoption of this revision did not impact the financial position or results of operations of the Company.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 86 to require disclosure of embedded credit derivatives within a financial instrument that expose the holder to the possibility of making future payments, and adopted guidance from Accounting Standards Update (ASU) 2010-11, Derivatives and Hedging – Scope Exception Related to Embedded Credit Derivatives, to clarify that seller credit derivative disclosures do not apply to embedded derivative features related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another. The adoption of these revisions had no impact to the Company’s results of operations or financial position.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 86 to move one aspect of the criteria for a hedged forecasted transaction and incorporate it as criteria for a fair value hedge. The adoption of this revision had no impact to the Company’s results of operations or financial position.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 27, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk, Financial Instruments with Concentrations of Credit Risk and Disclosures about Fair Value of Financial Instruments, which clarifies that embedded derivatives, which are not separately recognized as derivatives under statutory accounting, are included in the disclosures of financial instruments with off-balance-sheet risk. The adoption of this revision had no impact to the Company’s results of operations or financial position.

22

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 1, Disclosures of Accounting Policies, Risks and Uncertainties and Other Disclosures. These revisions require reference to the accounting policy and procedure footnote that describes permitted or prescribed practices when an individual note is impacted by such practices. The adoption of this requirement had no impact to the Company’s results of operation or financial position, but did require additional disclosures. See Note 6 Policy and Contract Attributes for further details.

Effective January 1, 2012, the Company adopted revisions to SSAP No. 100, Fair Value Measurements (SSAP No. 100). These revisions require new disclosures of fair value hierarchy and the method used to obtain the fair value measurement, a new footnote that summarizes hierarchy levels by type of financial instrument and gross presentation of purchases, sales, issues and settlements within the reconciliation for fair value measurements categorized within Level 3 of the hierarchy. The adoption of these revisions had no impact to the Company’s results of operations or financial position, but did require additional disclosures. See Note 2 Fair Values of Financial Instruments for further details.

Effective January 1, 2012, the Company began computing current and deferred income taxes in accordance with SSAP No. 101. This statement established statutory accounting principles for current and deferred federal and foreign income taxes and current state income taxes. The adoption of this statement resulted in the transfer of $67,503 from Aggregate Write-Ins for Other than Special Surplus Funds to Unassigned Funds and updates to the Company’s income tax disclosures. See Note 5 Income Taxes for further details.

For the year ended December 31, 2011, the Company adopted SSAP No. 10R, Income Taxes –Revised, A Temporary Replacement of SSAP No. 10 (SSAP No. 10R). This statement established statutory accounting principles for current and deferred federal and foreign income taxes and current state income taxes. The SSAP temporarily superseded SSAP No. 10, Income Taxes. SSAP No. 10R allowed an entity to elect to admit additional deferred tax assets (DTAs) utilizing a three year loss carryback provision, plus the lesser of a look-forward of three years on gross DTAs expected to be realized or 15% of statutory capital and surplus if the entity’s risk-based capital is above the 250% risk-based capital level where an action level could occur as a result of a trend test utilizing the old SSAP No. 10 provisions to calculate the DTA. Prior to the adoption of SSAP No. 10R, the admitted DTA was calculated by taking into consideration a one year loss carryback and look-forward on gross DTAs that can be expected to be realized and a 10% capital and surplus limit on the admitted amount of the DTA. The Company elected to admit additional deferred tax assets pursuant to SSAP No. 10R and as a result, the cumulative effect of the adoption of this standard was the difference between the calculation of the admitted DTA per SSAP No.10R and the old SSAP No. 10 methodology at December 31, 2011. This change in accounting principle increased surplus by a net amount of $67,503 at December 31, 2011, which has been recorded within the statements of changes in capital and surplus.

Effective December 31, 2011, the Company adopted SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets – Revised. The revisions require the Company to recognize a liability

23

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

equal to the greater of (a) the fair value of the guarantee at its inception, even if the likelihood of payment under the guarantee is remote or (b) the contingent liability amount required to be recognized if it is probable that a liability has been incurred at the financial statement date and the amount of loss can reasonably be determined. While this guidance does not exclude guarantees issued as intercompany transactions or between related parties from the initial liability recognition requirement, there are a couple exceptions. Guarantees made to/or on behalf of a wholly-owned subsidiary and related party guarantees that are considered “unlimited” (for example, in response to a rating agency’s requirement to provide a commitment to support) are exempt from the initial liability recognition. Additional disclosures are also required under this new guidance for all guarantees, whether or not they meet the criteria for initial liability recognition. The adoption of this new accounting principle had no material impact to the Company’s results of operations or financial position, but did require additional disclosures regarding these guarantees.

Effective December 31, 2011, the Company adopted non-substantive revisions to SSAP No. 100, to incorporate the provisions of ASU 2010-06, Improving Disclosures about Fair Value Measurements. This revision required a new disclosure for assets and liabilities for which fair value is not measured and reported in the statement of financial position but is otherwise disclosed. The adoption of these revisions had no impact to the Company’s results of operations or financial position. See Note 2 for further details.

Effective December 31, 2011, the Company adopted non-substantive changes to SSAP No. 32, Investments in Preferred Stock (including investments in preferred stock of subsidiary, controlled, or affiliated entities). The amendment was made to clarify the definition of preferred stock. Under the revised SSAP No. 32, a preferred stock is defined as any class or series of shares the holders of which have any preference, either as to the payment of dividends or distribution of assets on liquidation, over the holder of common stock [as defined in SSAP No. 30, Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities)] issued by an entity. This revised definition had no impact to the Company.

Effective January 1, 2011, the Company adopted SSAP No. 35R, Guaranty Fund and Other Assessments – Revised. This statement modified the conditions required for recognizing a liability for insurance-related assessments and required additional disclosures to be made in the Notes to the Financial Statements. The adoption of this accounting principle had no financial impact to the Company.

Effective January 1, 2011, the Company adopted revisions to certain paragraphs of SSAP No. 43R – Loan-backed and Structured Securities to clarify the accounting for gains and losses between AVR and IMR. The revisions clarify that an AVR/IMR bifurcation analysis should be performed when SSAP No. 43R securities are sold (not just as a result of impairment). These changes were applied on a prospective basis and had no financial impact to the Company upon adoption.

24

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Effective January 1, 2011, the Company adopted revisions to SSAP No. 43R to clarify the definitions of loan-backed and structured securities. The clarified guidance was applied prospectively and had no financial impact to the Company upon adoption.

Effective January 1, 2014, the Company will adopt SSAP No. 105, Working Capital Finance Investments, which allows working capital finance investments to be admitted assets if certain criteria are met. The adoption of this standard had no impact to the financial position or results of operations of the Company.

Effective December 31, 2014 the Company will adopt revisions to SSAP No. 104R, Share-Based Payments, which provides guidance for share-based payments transactions with non-employees. The adoption of this revision is expected to be immaterial to the financial position and results of operations of the Company.

Reclassifications

Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 presentation.

During 2013, the Company changed the presentation of derivative liabilities. As a result of these changes, $1,841 was reclassified between the Other liabilities line and the Derivatives line in the 2012 Balance Sheet to conform to the 2013 presentation.

Correction of Errors

In 2014 after the filing of the Annual Statement, the Company discovered an error in the reporting of an affiliated modified coinsurance transaction resulting in misstatements of the reserve adjustments on reinsurance ceded, commissions and expense allowances on reinsurance ceded, and benefit expenses in the Statement of Operations. The impact of this error on the aforementioned accounts as of December 31, 2011 was an understatement of net income of $7,549 ($4,907 net of tax). This was corrected and is reflected as a correction of an error in the capital and surplus accounts of the 2012 Statement of Changes in Capital and Surplus. The 2012 financial statements have been restated to properly reflect the impact of the error and the 2013 financial statements have been properly stated.

25

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Restatements

The Company identified errors in its prior year audited statutory financial statements related to affiliated reinsurance receivables. The Company has obtained approval from the Ohio Department of Insurance to restate its 2012 statutory financial statements. The following tables show the impact of the restatement.

	Year Ended December 31, 2012
Balance sheet	As Reported			Adjustment			As Restated
Total admitted assets
Net deferred income tax asset		103,071			2,070			105,141
Receivable from parent, subsidiaries and affiliates		—			10,992			10,992
Total admitted assets	$	8,600,827		$	13,062		$	8,613,889
Total liabilities
Payable to parent		15,332			(15,332	)		—
Federal income taxes payable		8,738			9,213			17,951
Total liabilities	$	8,281,592		$	(6,119	)	$	8,275,473
	Year Ended December 31, 2012
Statement of Operation	As Reported			Adjustment			As Restated
Commissions and expense allowances on reinsurance ceded		(3,415	)		(4,655	)		(8,070	)
Reserve adjustments on reinsurance ceded		(24,697	)		11,499			(13,198	)
Benefits paid or provided for: Life		70,668			273			70,941
Gain before benefit from income taxes		148,563			6,571			155,134
Expense from income taxes		13,977			6,571			20,548
Net income	$	129,995		$	—		$	129,995
	Year Ended December 31, 2012
Statement of Changes in Capital and Surplus	As Reported			Adjustment			As Restated
Balance at January 1, 2012	$	275,198		$	—		$	275,198
Net income		129,995			—			129,995
Change in nonadmitted assets		(9,919	)		2,070			(7,849	)
Change in surplus as a result of reinsurance		(33,519	)		12,204			(21,315	)
Correction of error - reinsurance		—			4,907			4,907
Balance at December 31, 2012	$	319,235		$	19,181		$	338,416

26

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31, 2012
Consolidated Statement of Cash Flows	As Reported			Adjustment			As Restated
Operating activities:
Miscellaneous income received		258,494			19,048			277,542
Benefit and loss related payments		(520,765	)		(273	)		(521,038	)
Net cash provided by (used in) operating activities	$	237,321		$	18,775		$	256,096
Investing activities:
Net cash (used in) provided by investing activities	$	(227,854	)	$	—		$	(227,854	)
Financing and miscellaneous activities:
Receivable from parent, subsidiaries and affiliates		2,067			(10,992	)		(8,925	)
Payable to parent, subsidiaries and affiliates		(11,400	)		(15,332	)		(26,732	)
Other cash provided (applied)		2,147			7,549			9,696
Net cash (used in) provided by financing and miscellaneous activities	$	4,412		$	(18,775	)	$	(14,363	)

2. Fair Values of Financial Instruments

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Determination of fair value

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

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

27

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Fair value hierarchy

The Company’s financial assets and liabilities carried at fair value are classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3).The levels of the fair value hierarchy are as follows:

Level 1 -	Unadjusted quoted prices for identical assets or liabilities in active markets accessible at the measurement date.
Level 2 -	Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
	a)      Quoted prices for similar assets or liabilities in active markets
	b)      Quoted prices for identical or similar assets or liabilities in non-active markets
	c)      Inputs other than quoted market prices that are observable
	d)      Inputs that are derived principally from or corroborated by observable market data through correlation or other means
Level 3 -	Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect the Company’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

28

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Cash Equivalents and Short-Term Investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. Cash in not included in the below tables.

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

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

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

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

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

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

Derivative Financial Instruments: The estimated fair values of interest rate swaps, including interest rate and currency swaps, are based on pricing models or formulas using current assumptions.

29

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

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

Deposit-Type Contracts: The carrying amounts of deposit-type contracts reported in the accompanying balance sheets approximate their fair values.

Investment Contract Liabilities: The carrying value of the Company’s liabilities for deferred annuities with minimum guaranteed benefits is determined using a stochastic valuation as described in Note 6, which approximates the fair value. For investment contracts without minimum guarantees, fair value is estimated using discounted cash flows. For those liabilities that are short in duration, carrying amount approximates fair value. For investment contracts with no defined maturity, fair value is estimated to be the present surrender value.

Separate Account Assets and Annuity Liabilities: The fair value of separate account assets are based on quoted market prices when available. When not available, they are valued in the same manner as general account assets as further described in this note. The fair value of separate account annuity liabilities is based on the account value for separate accounts business without guarantees.

The Company accounts for its investments in affiliated common stock using the equity method of accounting; as such, they are not included in the following disclosures.

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

30

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables set forth a comparison of the estimated fair values and carrying amounts of the Company’s financial instruments, including those not measured at fair value in the balance sheets, as of December 31, 2013 and 2012, respectively:

	December 31 2013
	Estimated Fair Value		Admitted Assets		(Level 1)		(Level 2)		(Level 3)		Not Practicable (Carrying Value)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	106,781	$	106,781	$	—	$	106,781	$	—	$	—
Bonds		1,481,846		1,448,053		92,402		1,360,214		29,230		—
Mortgage loans on real estate		79,470		77,805		—		—		79,470		—
Other invested assets		500		500		—		500		—		—
Policy loans		442,800		442,800		—		442,800		—		—
Securities lending reinvested collateral		88,261		88,265		—		88,261		—		—
Receivable from parent, subsidiaries and affiliates		19,859		19,859		—		19,859		—		—
Separate account assets		6,969,477		6,969,477		6,969,477		—		—		—
Liabilities
Investment contract liabilities		415,572		408,065		—		3,735		411,837		—
Deposit-type contracts		21,520		21,520		—		21,520		—		—
Equity swaps		4,100		4,100		—		4,100		—		—
Separate account annuity liabilities		3,383,676		3,383,676		—		3,383,676		—		—
	December 31 2012 - restated
	Estimated Fair Value		Admitted Assets		(Level 1)		(Level 2)		(Level 3)		Not Practicable (Carrying Value)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	182,489	$	182,489	$	—	$	182,489	$	—	$	—
Bonds		1,205,473		1,116,229		72,215		1,124,699		8,559		—
Common stocks, other than affiliates		117		117		117		—		—		—
Mortgage loans on real estate		52,182		50,714		—		—		52,182		—
Policy loans		411,101		411,101		—		411,101		—		—
Securities lending reinvested collateral		84,804		84,899		—		84,804		—		—
Receivable from parent, subsidiaries and affiliates		10,992		10,992		—		10,992		—		—
Separate account assets		6,477,241		6,477,241		6,477,241		—		—		—
Liabilities
Investment contract liabilities		495,984		493,117		—		9,346		486,638		—
Deposit-type contracts		14,647		14,647		—		14,647		—		—
Interest rate swaps		1,841		1,841		—		1,841		—		—
Separate account annuity liabilities		3,251,991		3,251,991		—		3,251,991		—		—

31

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables provide information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2013 and 2012:

	2013
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Industrial and miscellaneous	$	—	$	1,455	$	551	$	2,006
Total bonds		—		1,455		551		2,006
Cash equivalents and short-term investments
Government		—		3		—		3
Industrial and miscellaneous		—		61,490		—		61,490
Mutual funds		—		45,194		—		45,194
Sweep accounts		—		94		—		94
Total Short-term		—		106,781		—		106,781
Separate account assets		—		—		—		—
Total assets at fair value	$	—	$	108,236	$	551	$	108,787
Liabilities:
Derivative liabilities	$	—	$	4,100	$	—	$	4,100
Total liabilities at fair value	$	—	$	4,100	$	—	$	4,100
	2012
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Industrial and miscellaneous	$	—	$	1,246	$	555	$	1,801
Total bonds		—		1,246		555		1,801
Common stock
Industrial and miscellaneous		117		—		—		117
Total common stock		117		—		—		117
Cash equivalents and short-term investments
Government		—		3		—		3
Industrial and miscellaneous		—		134,981		—		134,981
Mutual funds		—		47,260		—		47,260
Sweep accounts		—		245		—		245
Total Short-term		—		182,489		—		182,489
Separate account assets		6,477,241		—		—		6,477,241
Total assets at fair value	$	6,477,358	$	183,735	$	555	$	6,661,648

32

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Short-term investments are classified as Level 2 as they are carried at amortized cost, which approximates fair value.

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

During 2013 and 2012, there were no transfers between Level 1 and 2, respectively.

33

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables summarize the changes in assets and liabilities classified in Level 3 for 2013 and 2012:

	Balance at January 1, 2013		Transfers into Level 3		Transfers out of Level 3		Total Gains and (Losses) Included in Net income (a)		Total Gains and (Losses) Included in Surplus (b)
Bonds
Other	$	555	$	—	$	—	$	43	$	(27	)
Total	$	555	$	—	$	—	$	43	$	(27	)
	Issuances		Purchases		Sales		Settlements		Balance at December 31, 2013
Bonds
Other	$	—	$	—	$	—	$	20	$	551
Total	$	—	$	—	$	—	$	20	$	551
	Balance at January 1, 2012		Transfers into Level 3		Transfers out of Level 3		Total Gains and (Losses) Included in Net income (a)		Total Gains and (Losses) Included in Surplus (b)
Bonds
Other	$	559	$	—	$	—	$	51	$	(25	)
Total	$	559	$	—	$	—	$	51	$	(25	)
	Issuances		Purchases		Sales		Settlements		Balance at December 31, 2012
Bonds
Other	$	—	$	—	$	—	$	30	$	555
Total	$	—	$	—	$	—	$	30	$	555

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

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

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

As indicated in Note 1, real estate held for sale is measured at the lower of carrying amount or fair value less cost to sell. The Company is exploring the sale of 2 parcels of land adjacent to its home office properties. Therefore, these 2 properties are carried at fair value less cost to sell as of December 31, 2013, which amounts to $6,259. There was no real estate carried at fair value as of December 31, 2012.

34

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

3. Investments

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

					Gross		Gross
					Unrealized		Unrealized
			Gross		Losses 12		Losses less		Estimated
	Carrying		Unrealized		Months or		Than 12		Fair
	Amount		Gains		More		Months		Value
December 31, 2013
Unaffiliated bonds:
United States Government and agencies	$	82,813	$	1,150	$	10	$	2,075	$	81,878
State, municipal and other government		32,010		759		354		1,246		31,169
Hybrid securities		19,038		2,622		—		—		21,660
Industrial and miscellaneous		936,439		37,152		1,088		15,148		957,355
Mortgage and other asset-backed securities		377,753		17,489		1,079		4,379		389,784
	$	1,448,053	$	59,172	$	2,531	$	22,848	$	1,481,846
					Gross		Gross
					Unrealized		Unrealized
			Gross		Losses 12		Losses less		Estimated
	Carrying		Unrealized		Months or		Than 12		Fair
	Amount		Gains		More		Months		Value
December 31, 2012
Unaffiliated bonds:
United States Government and agencies	$	52,940	$	5,702	$	—	$	—	$	58,642
State, municipal and other government		27,378		3,421		50		—		30,749
Hybrid securities		19,055		864		1,238		—		18,681
Industrial and miscellaneous		720,424		68,173		24		1,072		787,501
Mortgage and other asset-backed securities		296,432		19,586		6,083		35		309,900
	$	1,116,229	$	97,746	$	7,395	$	1,107	$	1,205,473

At December 31, 2013 and 2012, respectively, for bonds that have been in a continuous loss position for greater than or equal to twelve months, the Company held 26 and 21 securities with a carrying amount of $49,119 and $51,454 and an unrealized loss of $2,531 and $7,394 with an

35

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

average price of 94.9 and 85.6 (fair value/amortized cost). Of this portfolio, 82.2% and 72.4% were investment grade with associated unrealized losses of $1,394 and $5,266, respectively.

At December 31, 2013 and 2012, respectively, for bonds that have been in a continuous loss position for less than twelve months, the Company held 178 and 17 securities with a carrying amount of $609,765 and $61,424 and an unrealized loss of $22,848 and $1,107 with an average price of 96.3 and 98.2 (fair value/amortized cost). Of this portfolio, 98.0% and 88.5% were investment grade with associated unrealized losses of $21,926 and $788, respectively.

The estimated fair value of bonds and common stocks with gross unrealized losses at December 31, 2013 and 2012 are as follows:

	Losses 12		Losses Less
	Months or		Than 12
	More		Months		Total
December 31, 2013
Unaffiliated bonds:
United States Government and agencies	$	540	$	64,656	$	65,196
State, municipal and other government		1,814		14,149		15,963
Industrial and miscellaneous		27,904		380,486		408,390
Mortgage and other asset-backed securities		16,330		127,625		143,955
	$	46,588	$	586,916	$	633,504
	Losses 12		Losses Less
	Months or		Than 12
	More		Months		Total
December 31, 2012
Unaffiliated bonds:
United States Government and agencies	$	—	$	550	$	550
State, municipal and other government		2,120		—		2,120
Hybrid securities		8,250		—		8,250
Industrial and miscellaneous		641		57,229		57,870
Mortgage and other asset-backed securities		33,049		2,539		35,588
		44,060		60,318		104,378
Unaffiliated common stocks		—		116		116
	$	44,060	$	60,434	$	104,494

36

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The carrying amount and estimated fair value of bonds at December 31, 2013, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepay penalties.

	Carrying Amount		Estimated Fair Value
Due in one year or less	$	25,979	$	26,476
Due after one year through five years		294,870		311,620
Due after five years through ten years		507,668		510,003
Due after ten years		241,783		243,963
	$	1,070,300	$	1,092,062
Mortgage and other asset-backed securities		377,753		389,784
	$	1,448,053	$	1,481,846

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

There were no loan-backed securities with a recognized other-than-temporary impairment (OTTI) due to intent to sell or lack of intent and ability to hold during the years ended December 31, 2013 or 2011. The following table provides the aggregate totals for loan-backed securities with a recognized OTTI due to intent to sell or lack of intent and ability to hold, in which the security is written down to fair value during the year ended December 31, 2012.

	Amortized
	Cost Basis		OTTI Recognized in Loss
	Before OTTI		Interest		Non-interest		Fair Value
Year Ended December 31, 2012
OTTI recognized 4th Quarter:
Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis	$	8,122	$	—	$	117	$	8,005
Total 4th Quarter OTTI on loan-backed securities		8,122		—		117		8,005
Aggregate total	$	8,122	$	—	$	117	$	8,005

37

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables provide the aggregate totals for loan-backed securities with a recognized OTTI due to the Company’s cash flow analysis, in which the security is written down to estimated future cash flows discounted at the security’s effective yield.

	Amortized Cost
	before Current				Amortized Cost
	Period OTTI		Recognized OTTI		After OTTI		Fair Value
Year ended December 31, 2013
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	4,934	$	244	$	4,690	$	930
2nd quarter present value of cash flows expected to be less than the amortized cost basis		3,857		64		3,793		403
3rd quarter present value of cash flows expected to be less than the amortized cost basis		6,137		505		5,632		1,815
4th quarter present value of cash flows expected to be less than the amortized cost basis		2,378		104		2,274		2,135
Aggregate total	$	17,306	$	917	$	16,389	$	5,283
	Amortized Cost
	before Current				Amortized Cost
	Period OTTI		Recognized OTTI		After OTTI		Fair Value
Year ended December 31, 2012
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	1,582	$	10	$	1,572	$	926
2nd quarter present value of cash flows expected to be less than the amortized cost basis		6,924		56		6,868		2,062
3rd quarter present value of cash flows expected to be less than the amortized cost basis		31		1		30		18
4th quarter present value of cash flows expected to be less than the amortized cost basis		14,707		317		14,390		9,570
Aggregate total	$	23,244	$	384	$	22,860	$	12,576

38

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Amortized Cost before Current Period OTTI		Recognized OTTI		Amortized Cost After OTTI		Fair Value
Year ended December 31, 2011
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	1,000	$	24	$	976	$	529
2nd quarter present value of cash flows expected to be less than the amortized cost basis		2,733		80		2,653		1,548
3rd quarter present value of cash flows expected to be less than the amortized cost basis		2,604		25		2,579		1,377
4th quarter present value of cash flows expected to be less than the amortized cost basis		3,821		108		3,713		2,307
Aggregate total	$	10,158	$	237	$	9,921	$	5,761

The following loan-backed and structured securities were held at December 31, 2013, for which an OTTI was recognized during the current reporting period:

CUSIP	Amortized Cost Before Current Period OTTI		Present Value of Projected Cash Flows		Recognized OTTI		Amortized Cost After OTTI		Fair Value at Time of OTTI		Quarter in which Impairment Occurred
35729PPC8	$	4,000	$	3,869	$	131	$	3,869	$	703		1Q 2013
759950FJ2		934		822		112		822		227		1Q 2013
35729PPC8		3,857		3,793		64		3,793		403		2Q 2013
35729PPC8		3,783		3,598		185		3,598		355		3Q 2013
759950FJ2		818		652		166		652		255		3Q 2013
12668WAC1		813		785		28		785		727		4Q 2013
759950FJ2		201		190		11		190		207		4Q 2013

The unrealized losses of loan-backed and structured securities where fair value is less than cost or amortized cost for which an OTTI has not been recognized in earnings as of December 31, 2013 and 2012 is as follows:

	Losses 12 Months or More		Losses Less Than 12 Months
Year Ended December 31, 2013
The aggregate amount of unrealized losses	$	1,974	$	4,389
The aggregate related fair value of securities with unrealized losses		18,285		127,677

39

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Losses 12 Months or More		Losses Less Than 12 Months
Year Ended December 31, 2012
The aggregate amount of unrealized losses	$	11,568	$	35
The aggregate related fair value of securities with unrealized losses		34,850		4,056

Detail of net investment income is presented below:

	Year Ended December 31
	2013			2012			2011
Income:
Bonds	$	55,638		$	47,292		$	41,739
Common stocks		15,510			13,925			18,667
Mortgage loans on real estate		2,542			2,091			1,502
Real estate		4,520			4,409			4,571
Policy loans		22,562			21,841			21,751
Cash, cash equivalents and short-term investments		213			314			386
Derivatives		23			—			(516	)
Other invested assets		(764	)		(684	)		(1,287	)
Other		1,250			1,130			515
Gross investment income		101,494			90,318			87,328
Less investment expenses		9,004			8,589			7,297
Net investment income	$	92,490		$	81,729		$	80,031

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

	Year Ended December 31
	2013			2012			2011
Proceeds	$	312,963		$	324,065		$	258,853
Gross realized gains	$	3,042		$	6,484		$	3,231
Gross realized losses		(6,545	)		(1,347	)		(2,031	)
Net realized capital gains (losses)	$	(3,503	)	$	5,137		$	1,200

The Company had gross realized losses for the years ended December 31, 2013, 2012, and 2011 of $923, $417 and $311, respectively, which relate to losses recognized on other-than-temporary declines in fair values of bonds.

40

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Realized
	Year Ended December 31
	2013			2012			2011
Bonds	$	(4,426	)	$	4,720		$	889
Common stocks		—			1			—
Mortgage loans		—			252			237
Real estate		(830	)		—			—
Cash, cash equivalents and short-term investments		—			—			5
Derivatives		13,326			(4,550	)		(13,204	)
Other		(33	)		(170	)		—
		8,037			253			(12,073	)
Federal income tax effect		968			(1,153	)		402
Transfer to interest maintenance reserve		2,098			(3,691	)		(760	)
Net realized capital gains (losses) on investments	$	11,103		$	(4,591	)	$	(12,431	)

The Company did not have any recorded investments in restructured securities at December 31, 2013 and 2011. At December 31, 2012, the Company had recorded investments in restructured securities of $118. The capital gain taken as a direct result of restructures in 2012 was $34. 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.

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

	Change in Unrealized
	Year Ended December 31
	2013			2012			2011
Bonds	$	4,581		$	765		$	(999	)
Common stocks		1			(1	)		(3,237	)
Affiliated entities		2,679			342			—
Derivatives		(2,259	)		(1,330	)		461
Other invested assets		—			222			(206	)
Change in unrealized capital gains (losses)		5,002			(2	)		(3,981	)
Taxes on unrealized capital gains/losses		—			120			261
Change in unrealized capital gains (losses), net of tax	$	5,002		$	118		$	(3,720	)

41

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The credit quality of mortgage loans by type of property for the year ended December 31, 2013 were as follows:

	Commercial		Total
AAA - AA	$	26,358	$	26,358
A		51,447		51,447
	$	77,805	$	77,805

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

During 2013, the Company issued mortgage loans with a maximum interest rate of 3.80% and a minimum interest rate of 3.60% for commercial loans. During 2012, the Company issued mortgage loans with a maximum interest rate of 3.75% and a minimum interest rate of 3.70% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated during the years ending December 31, 2013 and 2012 at the time of origination was 64% and 70%, respectively. During 2013 and 2012, no loans were transferred from affiliated entities.

42

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

			Residential				Commercial
December 31, 2013	Farm		Insured		All Other		Insured		All Other		Mezzanine		Total
Recorded Investment (All)
(a) Current	$	—	$	—	$	—	$	—	$	77,805	$	—	$	77,805
(b) 30-59 Days Past Due		—		—		—		—		—		—		—
(c) 60-89 Days Past Due		—		—		—		—		—		—		—
(d) 90-179 Days Past Due		—		—		—		—		—		—		—
(e) 180+ Days Past Due		—		—		—		—		—		—		—
			Residential				Commercial
December 31, 2012	Farm		Insured		All Other		Insured		All Other		Mezzanine		Total
Recorded Investment (All)
(a) Current	$	—	$	—	$	—	$	—	$	50,714	$	—	$	50,714
(b) 30-59 Days Past Due		—		—		—		—		—		—		-
(c) 60-89 Days Past Due		—		—		—		—		—		—		—
(d) 90-179 Days Past Due		—		—		—		—		—		—		—
(e) 180+ Days Past Due		—		—		—		—		—		—		—

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 for the years ended December 31, 2013, 2012 or 2011. The Company did not recognize any interest income on a cash basis for the years ended December 31, 2013, 2012 or 2011.

During 2013, 2012 and 2011, no mortgage loans were foreclosed and transferred to real estate. At December 31, 2013 and 2012, the Company held a mortgage loan loss reserve in the AVR of $759 and $482, respectively.

43

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Geographic Distribution							Property Type Distribution
	December 31							December 31
	2013			2012				2013			2012
South Atlantic		57	%		39	%	Retail		46	%		74	%
W. South Central		15			11		Other		34			2
Pacific		12			24		Office		20			24
Middle Atlantic		7			11
W. North Central		6			10
Mountain		3			5

At December 31, 2013, the Company had ownership interest in five LIHTC investments. The remaining years of unexpired tax credits ranged from two to eight and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from two to thirteen years. There are no contingent equity commitments expected to be paid in the future. There were no impairment losses, write-downs or reclassifications during 2013 related to these credits.

At December 31, 2012, the Company had ownership interest in five LIHTC investments. The remaining years of unexpired tax credits ranged from three to nine and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from three to fourteen years. There were no contingent equity commitments expected to be paid in the future. There were no impairment losses, write-downs or reclassifications during 2012 related to these credits.

The following tables provide the carrying value of state transferable tax credits gross of any related tax liabilities and total unused transferable tax credits by state and in total as of December 31, 2013 and 2012:

		December 31, 2013
Description of State Transferable Tax Credits	State	Carrying Value		Unused Amount*
Low-Income Housing Tax Credits	MA	$	160	$	489
Total		$	160	$	489
		December 31, 2012
Description of State Transferable Tax Credits	State	Carrying Value		Unused Amount*
Low-Income Housing Tax Credits	MA	$	426	$	755
Total		$	426	$	755

* The unused amount reflects credits that the Company deems will be realizable in the period from 2014 to 2015.

The Company had no non-transferable state tax credits.

44

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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. At December 31, 2013 and 2012, the Company does not have any contracts, aggregated at a counterparty level, with a positive fair value. At December 31, 2013 and 2012, the fair value of all contracts, aggregated at a counterparty level, with a negative fair value amount to $4,100 and $1,841, respectively.

At December 31, 2013 and 2012, respectively, the Company has recorded $(4,100) and $(1,841) 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 2013 or 2012 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

At December 31, 2013 and 2012, respectively, the Company had outstanding receive fixed - pay fixed swaps with a notional amount of $690 and $8.

At December 31, 2013 and 2012, respectively, the Company had outstanding receive fixed - pay floating swaps with a notional amount of $14,368 and $0.

The Company recognized net realized gain (losses) from swaps in the amount of $(3,558), $(3,791) and $0 for the years ended December 31, 2013, 2012, and 2011, respectively.

Under exchange traded futures and options, the Company agrees to purchase a specified number of contracts from other parties and to post a variation margin on a daily basis in an amount equal to the difference in the daily fair 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 $16,914, $758 and $13,203 for the years ended December 31, 2013, 2012 and 2011, respectively.

45

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Open futures contracts at December 31, 2013 and 2012 are as follows:

Long/Short	Number of Contracts	Contract Type	Opening Fair Value		Year-End Fair Value
December 31, 2013
		DJ EURO STOXX
Long	967	March 2014 Futures	$	28,040	$	30,054
		HANG SENG IDX
Long	140	January 2014 Futures		162,918		163,331
		S&P 500
Long	306	March 2014 Futures		134,506		140,844
		S&P 500
Short	135	March 2014 Futures		59,917		62,137
Long/Short	Number of Contracts	Contract Type	Opening Fair Value		Year-End Fair Value
December 31, 2012
		DJ EURO STOXX
Long	529	March 2013 Futures	$	18,310	$	18,290
		HANG SENG IDX
Long	60	January 2013 Futures		8,751		8,779
		S&P 500
Long	44	March 2013 Futures		15,070		15,621

46

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables show the pledged or restricted assets as of December 31, 2013 and 2012, respectively:

	Gross Restricted Current Year
Restricted Asset Category	Total General Account (G/A)		G/A Supporting Separate Account (S/A) Activity		Total S/A Restricted Assets		S/A Assets Supporting G/A Activity		Total
a. Subject to contractual obligation for which liability is not shown	$	—	$	—	$	—	$	—	$	—
b. Collateral held under security lending agreements		88,184		—		—		—		88,184
c. Subject to repurchase agreements		—		—		—		—		—
d. Subject to reverse repurchase agreements		—		—		—		—		—
e. Subject to dollar repurchase agreements		26,475		—		—		—		26,475
f. Subject to dollar reverse repurchase agreements		—		—		—		—		—
g. Placed under option contracts		—		—		—		—		—
h. Letter stock or securities restricted as to sale		—		—		—		—		—
i. On deposit with state(s)		3,526		—		—		—		3,526
j. On deposit with other regulatory bodies		—		—		—		—		—
k. Pledged as collateral not captured in other categories		18,694		—		—		—		18,694
l. Other restricted assets		—		—		—		—		—
m. Total Restricted Assets	$	136,879	$	—	$	—	$	—	$	136,879

47

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Gross Restricted							Percentage
Restricted Asset Category	Total From Prior Year		Increase/ (Decrease)			Total Current Year Admitted Restricted		Gross Restricted to Total Assets			Admitted Restricted to Total Admitted Assets
a. Subject to contractual obligation for which liability is not shown	$	—	$	—		$	—		0.00	%		0.00	%
b. Collateral held under security lending agreements		84,932		3,252			88,184		0.94			0.94
c. Subject to repurchase agreements		—		—			—		0.00			0.00
d. Subject to reverse repurchase agreements		—		—			—		0.00			0.00
e. Subject to dollar repurchase agreements		25,986		489			26,475		0.28			0.28
f. Subject to dollar reverse repurchase agreements		—		—			—		0.00			0.00
g. Placed under option contracts		—		—			—		0.00			0.00
h. Letter stock or securities restricted as to sale		—		—			—		0.00			0.00
i. On deposit with state(s)		3,567		(41	)		3,526		0.04			0.04
j. On deposit with other regulatory bodies		—		—			—		0.00			0.00
k. Pledged as collateral not captured in other categories		14,125		4,569			18,694		0.20			0.20
l. Other restricted assets		—		—			—		0.00			0.00
m. Total Restricted Assets	$	128,610	$	8,269		$	136,879		1.46	%		1.46	%

Assets pledged as collateral not captured in other categories includes invested assets with a carrying value of $18,694 and $14,125, respectively, in conjunction with derivative transactions as of December 31, 2013 and 2012, respectively.

4. Reinsurance

The Company reinsures portions of the risk on certain insurance policies which exceed its established limits, thereby providing a greater diversification of risk and minimizing exposure on larger risks. The Company remains contingently liable with respect to any insurance ceded, and

48

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

this would become an actual liability in the event that the assuming insurance company became unable to meet its obligations under the reinsurance treaty.

Premiums earned reflect the following reinsurance amounts:

	Year Ended December 31
	2013			2012			2011
Direct premiums	$	729,989		$	684,163		$	670,285
Reinsurance assumed - affiliated		—			—			763
Reinsurance ceded - affiliated		(139,956	)		(149,569	)		(143,983	)
Reinsurance ceded - non-affiliated		(48,942	)		(49,886	)		(46,466	)
Net premiums earned	$	541,091		$	484,708		$	480,599

The Company received reinsurance recoveries in the amount of $126,271, $137,800 (restated) and $129,708 during 2013, 2012 and 2011, respectively. At December 31, 2013 and 2012, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $16,802 and $18,533, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2013 and 2012 of $491,148 and $631,262, respectively. As of December 31, 2013 and 2012, the amount of reserve credits for reinsurance ceded that represented unauthorized affiliated companies were $433,483 and $571,479, respectively.

The Company would experience no reduction in surplus at December 31, 2013 if all reinsurance agreements were cancelled.

On July 1, 2013, the Company recaptured certain treaties from a non-affiliate, for which net consideration received was $1,174, life and claim reserves recaptured were $3,296, premiums recaptured were $2,004, and claims recaptured were $956, resulting in a pre-tax loss of $1,081, which was included in the Statement of Operations.

On April 26, 2011, Aegon N.V announced the divestiture of its life reinsurance operations, Transamerica Reinsurance to SCOR SE, a Societas Europaea organized under the laws of France (SCOR), which was effective August 9, 2011.

The life reinsurance business conducted by Transamerica Reinsurance was written through several of Aegon N.V.’s U.S. and international affiliates, all of which remain Aegon N.V. affiliates following the closing, except for Transamerica International Reinsurance Ireland, Limited, an Irish reinsurance company (TIRI). In preparation of the divestiture of the life reinsurance business to SCOR, during the second quarter of 2011, the Company, as well as other affiliated life insurance companies, recaptured certain business that had been reinsured to TIRI, subsequently ceding the majority of the business recaptured to Transamerica International Re

49

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

(Bermuda) Ltd. (TIRe), an affiliate. As a result of these transactions, the net impact to the Company was a pre-tax loss of $94,262, which was included in the statement of operations, and a net of tax gain of $63,421 which has been credited directly to unassigned surplus. Additional information surrounding these transactions is outlined below.

Effective April 1, 2011, the Company recaptured the traditional life business that was previously reinsured on a coinsurance funds withheld basis to TIRI, and subsequently reinsured this business to TIRe. The Company paid recapture consideration of $29,300 and released the associated funds withheld liability of $22,729 associated with the recapture, and received an initial ceding commission of $27,400 and established a funds withheld liability of $23,061 on the new cession to TIRe. Life, claim reserves and other assets associated with this block that were exchanged were $86,197, $9,563 and $2,344, respectively. The Company released into income a previously deferred unamortized gain resulting from the original cession of this business to TIRI in the amount of $175 ($120 net of tax) resulting in a pre-tax loss of $99,812 on the recapture which was included in the statement of operations as of December 31, 2011. The cession to TIRe resulted in a net of tax gain of $63,541, which was credited directly to unassigned surplus at December 31, 2011.

Effective April 1, 2011, TIRI, recaptured the BOLI/COLI catastrophic mortality risk that had previously been retro-ceded to the Company. The Company released life and claim reserves of $5,507 and $43, respectively, with no consideration exchanged, resulting in a pre-tax gain of $5,550 which was included in the statement of operations at December 31, 2011.

During 2013, 2012 and 2011, the Company amortized deferred gains from reinsurance transactions occurring prior to 2011 of $15,661, $21,315 (restated) and $21,792, respectively, into earnings on a net of tax basis with a corresponding charge to unassigned surplus.

Letters of credit held for all unauthorized reinsurers as of December 31, 2013, 2012 and 2011 were $196,300, $179,100 and $273,000, respectively.

50

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

5. Income Taxes

The net deferred income tax asset at December 31, 2013 and 2012 and the change from the prior year are comprised of the following components:

	December 31, 2013
	Ordinary		Capital		Total
Gross Deferred Tax Assets	$	188,007	$	5,014	$	193,021
Statutory Valuation Allowance Adjustment		—		—		—
Adjusted Gross Deferred Tax Assets		188,007		5,014		193,021
Deferred Tax Assets Nonadmitted		98,096		—		98,096
Subtotal (Net Deferred Tax Assets)		89,911		5,014		94,925
Deferred Tax Liabilities		6,726		1,814		8,540
Net Admitted Deferred Tax Assets	$	83,185	$	3,200	$	86,385

	December 31, 2012 – restated
	Ordinary		Capital		Total
Gross Deferred Tax Assets	$	204,072	$	5,477	$	209,549
Statutory Valuation Allowance Adjustment		—		—		—
Adjusted Gross Deferred Tax Assets		204,072		5,477		209,549
Deferred Tax Assets Nonadmitted		94,756		225		94,981
Subtotal (Net Deferred Tax Assets)		109,316		5,252		114,568
Deferred Tax Liabilities		8,074		1,353		9,427
Net Admitted Deferred Tax Assets	$	101,242	$	3,899	$	105,141

	Ordinary			Change Capital			Total
Gross Deferred Tax Assets	$	(16,065	)	$	(463	)	$	(16,528	)
Statutory Valuation Allowance Adjustment		—			—			—
Adjusted Gross Deferred Tax Assets		(16,065	)		(463	)		(16,528	)
Deferred Tax Assets Nonadmitted		3,340			(225	)		3,115
Subtotal (Net Deferred Tax Assets)		(19,405	)		(238	)		(19,643	)
Deferred Tax Liabilities		(1,348	)		461			(887	)
Net Admitted Deferred Tax Assets	$	(18,057	)	$	(699	)	$	(18,756	)

51

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Year Ended December 31
	2013		2012		Change
			Restated
Ordinary
Policyholder reserves	$	87,923	$	105,158		(17,235	)
Investments		1,436		644		792
Deferred acquisition costs		83,907		85,238		(1,331	)
Compensation and benefits accrual		458		470		(12	)
Receivables - nonadmitted		13,607		10,866		2,741
Corporate Provision		—		350		(350	)
Other (including items <5% of ordinary tax assets)		676		1,346		(670	)
Subtotal		188,007		204,072		(16,065	)
Nonadmitted		98,096		94,756		3,340
Admitted ordinary deferred tax assets		89,911		109,316		(19,405	)
Capital:
Investments		5,014		5,477		(463	)
Other (including items <5% of total total capital tax assets)		—		—		—
Subtotal		5,014		5,477		(463	)
Nonadmitted		—		225		(225	)
Admitted capital deferred tax assets		5,014		5,252		(238	)
Admitted deferred tax assets	$	94,925	$	114,568	$	(19,643	)

	Year Ended December 31
	2013		2012		Change
			Restated
Deferred Tax Liabilities:
Ordinary
Investments	$	27	$	295	$	(268	)
§807(f) adjustment		6,075		7,769		(1,694	)
Other (including items <5% of total ordinary tax liabilities)		291		10		281
Subtotal		6,393		8,074		(1,681	)
Capital
Investments		2,147		1,353		794
Other (including items <5% of total capital tax liabilities)		—		—		—
Subtotal		2,147		1,353		794
Deferred tax liabilities		8,540		9,427		(887	)
Net deferred tax assets/liabilities	$	86,385	$	105,141	$	(18,756	)

The Company did not record a valuation allowance for deferred tax assets as of December 31, 2013 and 2012.

52

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

As discussed in Note 1, for the years ended December 31, 2013 and 2012 the Company admits deferred income tax assets pursuant to SSAP No. 101. The amount of admitted adjusted gross deferred income tax assets under each component of SSAP No. 101 is as follows:

	December 31, 2013
	Ordinary		Capital		Total
Admission Calculation Components SSAP No. 101
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	59,186	$	568	$	59,754
2(b) Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		23,999		2,632		26,631
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		23,999		2,632		26,631
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX		XXX		43,246
2(c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2( a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		6,726		1,814		8,540
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	89,911	$	5,014	$	94,925

	December 31, 2012 - restated
	Ordinary		Capital		Total
Admission Calculation Components SSAP No. 101
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	78,322	$	1,538	$	79,860
2(b) Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		22,921		2,360		25,281
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		22,921		2,360		25,281
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX		XXX		32,425
2(c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2( a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		8,074		1,353		9,427
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	109,317	$	5,251	$	114,568

53

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Ordinary			Change Capital			Total
Admission Calculation Components SSAP No. 101
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	(19,136	)	$	(970	)	$	(20,106	)
2(b) Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		1,078			272			1,350
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		1,078			272			1,350
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX			XXX			10,821
2(c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		(1,348	)		461			(887	)
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	(19,406	)	$	(237	)	$	(19,643	)

	December 31
	2013			2012			Change
				Restated
Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount		660	%		629	%		31	%
Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold Limitation in 2(b)2 above	$	319,063		$	233,275		$	85,788

54

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The impact of tax planning strategies at December 31, 2013 and 2012 was as follows:

	December 31, 2013
	Ordinary			Capital
	Percent			Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	188,007		$	5,014		$	193,021
(% of Total Adjusted Gross DTAs)		0	%		89	%		2	%
Net Admitted Adjusted Gross DTAs	$	89,911		$	5,014		$	94,925
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		52	%		3	%

	December 31, 2012 - restated
	Ordinary			Capital
	Percent			Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	204,072		$	5,477		$	209,549
(% of Total Adjusted Gross DTAs)		0	%		72	%		2	%
Net Admitted Adjusted Gross DTAs	$	109,317		$	5,251		$	114,568
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		38	%		2	%

				Change
	Ordinary			Capital
	Percent			Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	(16,065	)	$	(463	)	$	(16,528	)
(% of Total Adjusted Gross DTAs)		0	%		17	%		0	%
Net Admitted Adjusted Gross DTAs	$	(19,406	)	$	(237	)	$	(19,643	)
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		14	%		1	%

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

55

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Current income taxes incurred consist of the following major components:

	Year Ended December 31
	2013			2012		Change
				Restated
Current Income Tax
Federal	$	25,592		$	20,548	$	5,044
Foreign		—			—		—
Subtotal		25,592			20,548		5,044
Federal income tax on net capital gains		(968	)		1,153		(2,121	)
Utilization of capital loss carry-forwards		—			—		—
Other		—			—		—
Federal and foreign income taxes incurred	$	24,624		$	21,701	$	2,923

	Year Ended December 31
	2012		2011			Change
	Restated
Current Income Tax
Federal	$	20,548	$	9,379		$	11,169
Foreign		—		—			—
Subtotal		20,548		9,379			11,169
Federal income tax on net capital gains		1,153		(402	)		1,555
Utilization of capital loss carry-forwards		—		—			—
Other		—		—			—
Federal and foreign income taxes incurred	$	21,701	$	8,977		$	12,724

56

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income before tax as follows:

	Year Ended December 31
	2013			2012			2011
				Restated
Current income taxes incurred	$	24,624		$	21,701		$	8,977
Change in deferred income taxes (without tax on unrealized gains and losses)		14,829			12,437			(18,337	)
Total income tax reported	$	39,453		$	34,138		$	(9,360	)
Income before taxes	$	182,335		$	155,387		$	(2,209	)
		35.00	%		35.00	%		35.00	%
Expected income tax expense (benefit) at 35% statutory rate	$	63,817		$	54,385		$	(773	)
Increase (decrease) in actual tax reported resulting from:
Dividends received deduction		(13,794	)		(9,949	)		(13,603	)
Tax credits		(499	)		(847	)		(1,817	)
Tax-exempt Income		(11	)		—			—
Tax adjustment for IMR		(269	)		(531	)		(464	)
Surplus adjustment for in-force ceded		(5,481	)		(7,460	)		14,570
Nondeductible expenses		7			9			53
Deferred tax benefit on other items in surplus		(2,725	)		(258	)		(5,245	)
Provision to return		(583	)		(569	)		(498	)
Life-owned life insurance		(809	)		(808	)		(798	)
Dividends from certain foreign corporations		124			179			165
Prior period adjustment		—			—			(810	)
Other		(324	)		(13	)		(140	)
Total income tax reported	$	39,453		$	34,138		$	(9,360	)

For federal income tax purposes, the Company joins in a consolidated income tax return filing with its indirect parent company, Transamerica Corporation, and other affiliated companies. The method of allocation between the companies is subject to a written tax allocation agreement. Under the terms of the tax allocation agreement, allocations are based on separate income tax return calculations. The Company is entitled to recoup federal income taxes paid in the event the future losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in the year generated. The Company is also entitled to recoup federal income taxes paid in the event the losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in any carryback or carryforward year when so applied. Intercompany income tax balances are settled within thirty days of payment to or filing with the Internal Revenue Service. A tax return has not yet been filed for 2013.

57

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

As of December 31, 2013 and 2012, the Company had no operating loss, capital loss or tax credit carryforwards available for tax purposes.

The Company incurred income taxes during 2013, 2012 and 2011 of $25,819, $23,920 (restated) and $10,171, respectively, which will be available for recoupment in the event of future net losses.

The amount of tax contingencies calculated for the Company as of December 31, 2013 and 2012 is $398 and $635, respectively. The total amount of tax contingencies that, if recognized, would affect the effective income tax rate is $398. The Company classifies interest and penalties related to income taxes as income tax expense. The Company’s interest expense related to income taxes for the years ending December 31, 2013, 2012 and 2011 is $17, $34 and $107, respectively. The total interest payable balance as of December 31, 2013 and 2012 is $16 and $43, respectively. The Company recorded no liability for penalties. It is not anticipated that the total amounts of unrecognized tax benefits will significantly increase within twelve months of the reporting date.

The Company’s federal income tax returns have been examined by the Internal Revenue Service and closing agreements have been executed through 2004. The examination for the years 2005 through 2006 have been completed and resulted in tax return adjustments that are currently undergoing final calculation at appeal. The examination for the years 2007 through 2008 has been completed and resulted in tax return adjustments that are currently being appealed. An examination is already in progress for the years 2009 and 2010. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions.

58

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

6. Policy and Contract Attributes

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

	December 31, 2013
	General Account		Separate Account Non-Guaranteed		Total		Percent
Subject to discretionary withdrawal
With fair value adjustment	$	6,430	$	—	$	6,430		0	%
At book value less surrender charge of 5% or more		17,134		—		17,134		0
At fair value		10,146		3,383,580		3,393,727		85
Total with adjustment or at fair value		33,710		3,383,580		3,417,291		85
At book value without adjustment (minimal or no charge or adjustment)		338,449		—		338,449		9
Not subject to discretionary withdrawal		224,984		24,398		249,381		6
Total annuity reserves and deposit liabilities		597,143		3,407,978		4,005,121		100	%
Less reinsurance ceded		176,169		—		176,169
Net annuity reserves and deposit liabilities	$	420,974	$	3,407,978	$	3,828,952

59

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	December 31, 2012
	General Account		Separate Account Non-Guaranteed		Total		Percent
Subject to discretionary withdrawal
With fair value adjustment	$	12,653	$	—	$	12,653		0	%
At book value less surrender charge of 5% or more		23,271		—		23,271		1
At fair value		10,303		3,251,952		3,262,255		79
Total with adjustment or at fair value		46,226		3,251,952		3,298,179		80
At book value without adjustment (minimal or no charge or adjustment)		356,324		—		356,324		9
Not subject to discretionary withdrawal		460,643		17,530		478,173		11
Total annuity reserves and deposit liabilities		863,193		3,269,482		4,132,676		100	%
Less reinsurance ceded		359,372		—		359,372
Net annuity reserves and deposit liabilities	$	503,822	$	3,269,482	$	3,773,304

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, 2013	$	—	$	—	$	—	$	282,851	$	282,851
Reserves for accounts with assets at fair value at December 31, 2013	$	—	$	—	$	—	$	6,751,640	$	6,751,640
Reserves for separate accounts by withdrawal characteristics as of December 31, 2013:
Subject to discretionary withdrawal:	$	—	$	—	$	—	$	—	$	—
With fair value adjustment		—		—		—		—		—
At book value without fair value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		6,727,242		6,727,242
At book value without fair value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		6,727,242		6,727,242
Not subject to discretionary withdrawal		—		—		—		24,398		24,398
Total separate account liabilities at December 31, 2013	$	—	$	—	$	—	$	6,751,640	$	6,751,640

60

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	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, 2012	$	—	$	—	$	—	$	305,221	$	305,221
Reserves for accounts with assets at fair value at December 31, 2012	$	—	$	—	$	—	$	6,184,833	$	6,184,833
Reserves for separate accounts by withdrawal characteristics as of December 31, 2012:
Subject to discretionary withdrawal:	$	—	$	—	$	—	$	—	$	—
With fair value adjustment		—		—		—		—		—
At book value without fair value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		6,167,303		6,167,303
At book value without fair value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		6,167,303		6,167,303
Not subject to discretionary withdrawal		—		—		—		17,530		17,530
Total separate account liabilities at December 31, 2012	$	—	$	—	$	—	$	6,184,833	$	6,184,833

	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, 2011	$	—	$	—	$	—	$	349,011	$	349,011
Reserves for accounts with assets at fair value at December 31, 2011	$	—	$	—	$	—	$	6,130,295	$	6,130,295
Reserves for separate accounts by withdrawal characteristics as of December 31, 2011:
Subject to discretionary withdrawal:	$	—	$	—	$	—	$	—	$	—
With fair value adjustment		—		—		—		—		—
At book value without fair value adjustment and with current surrender charge of 5% or more		—		—		—		—		—
At fair value		—		—		—		6,119,486		6,119,486
At book value without fair value adjustment and with current surrender charge of less than 5%		—		—		—		—		—
Subtotal		—		—		—		6,119,486		6,119,486
Not subject to discretionary withdrawal		—		—		—		10,809		10,809
Total separate account liabilities at December 31, 2011	$	—	$	—	$	—	$	6,130,295	$	6,130,295

61

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Year Ended December 31
	2013			2012			2011
Transfer as reported in the summary of operations of the separate accounts statement:
Transfers to separate accounts	$	282,994		$	305,223		$	349,322
Transfers from separate accounts		733,373			619,557			604,330
Net transfers from separate accounts		(450,379	)		(314,334	)		(255,008	)
Miscellaneous reconciling adjustments		169,572			206,848			192,445
Net transfers as reported in the statement of operations of the Company	$	(280,807	)	$	(107,485	)	$	(62,563	)

The legal insulation of separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account. At December 31, 2013 and 2012, the Company’s separate account statement included legally insulated assets of $6,969,476 and $6,477,236, respectively. The assets legally insulated from general account claims at December 31, 2013 and 2012 are attributed to the following products:

Product	2013		2012
Variable annuities	$	3,418,039	$	3,285,825
Variable universal life		433,847		502,202
WRL asset accumulator		13,874		19,390
Variable life		3,103,717		2,669,818
Total separate account assets	$	6,969,477	$	6,477,236

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

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with Actuarial Guideline XLIII (AG 43), which replaces Actuarial Guidelines 34 and 39. AG 43 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The AG 43 reserve calculation includes variable annuity products issued after January 1, 1981. Examples of covered guaranteed benefits include guaranteed minimum accumulation benefits, return of premium death benefits, guaranteed minimum income benefits, guaranteed minimum withdrawal benefits and guaranteed payout annuity floors. The aggregate reserve for contracts falling within the scope of AG 43 is equal to the conditional tail expectation (CTE) Amount, but not less than the standard scenario amount (SSA).

62

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

To determine the CTE Amount, the Company used 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) produced in October 2005 and prudent estimate assumptions based on Company experience. The SSA was determined using the assumptions and methodology prescribed in AG 43 for determining the SSA.

At December 31, 2013 and 2012, the Company had variable and separate account annuities with minimum guaranteed benefits as follows:

Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held		Reinsurance Reserve Credit
December 31, 2013
Minimum guaranteed death benefit	$	1,972,229	$	43,201	$	32,994
Minimum guaranteed income benefit		911,702		151,267		140,999
Minimum guaranteed withdrawal benefit		743,795		121		—
December 31, 2012
Minimum guaranteed death benefit	$	1,944,966	$	115,540	$	72,996
Minimum guaranteed income benefit		888,320		335,636		296,170
Minimum guaranteed withdrawal benefit		493,265		1,294		—

The Company offers variable and separate account annuities with minimum guaranteed benefits. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account. As of December 31, 2013 and 2012, the general account of the Company had a maximum guarantee for separate account liabilities of $397,079 and $560,717, respectively. To compensate the general account for the risk taken, the separate account paid risk charges of $9,769, $10,487 and $11,446 to the general account in 2013, 2012 and 2011, respectively. During the years ended December 31, 2013, 2012 and 2011, the general account of the Company had paid $11,952, $12,243 and $12,975, respectively, toward separate account guarantees.

63

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Reserves on the Company’s traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policies’ paid-through date to the policy’s next anniversary date. At December 31, 2013 and 2012, the gross premium and loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:

	Gross		Loading		Net
December 31, 2013
Ordinary direct renewal business	$	—	$	—	$	—
Ordinary new business		1,739		1,026		2,765
	$	1,739	$	1,026	$	2,765
December 31, 2012
Ordinary direct renewal business	$	1,631	$	1,103	$	2,734
Ordinary new business		1		—		1
	$	1,631	$	1,103	$	2,735

At December 31, 2013 and 2012, the Company had insurance in force aggregating $2,281,861 and $3,228,205, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Ohio Department of Insurance. The Company established policy reserves of $17,449 and $22,152 to cover these deficiencies at December 31, 2013 and 2012, respectively.

7. Capital and Surplus

The Company is subject to limitations, imposed by the Ohio Department of Insurance, on the payment of dividends to its stockholders. Generally, dividends during any year may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of Company’s statutory surplus as of the preceding December 31, or (b) net income 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 2014, without the prior approval of insurance regulatory authorities, is $159,809.

On December 23, 2013, the Company paid common stock dividends of $50,000 to its parent company, Aegon. The Company received dividends of $13,090 and $2,420, from its subsidiaries, Transamerica Asset Management, Inc., and Transamerica Fund Services, Inc, respectively, during 2013.

On December 21, 2012, the Company paid common stock dividends of $27,000 to its parent company, Aegon. The Company received dividends of $11,550, $2,200 and $175, from its subsidiaries, Transamerica Asset Management, Inc., Transamerica Fund Services, Inc, and Intersecurities Insurance Agency, Inc., respectively, during 2012.

64

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

On May 16, 2011, the Company paid common stock dividends of $250,000 to its parent company, Aegon. The amount consisted of $23,100 ordinary cash dividend and $226,900 extraordinary cash dividend. The Company received dividends of $11,165 and $7,502 from its subsidiaries, Transamerica Asset Management, Inc. and Transamerica Fund Services, Inc., respectively, during 2011. The Company made a capital contribution of $597 to Transamerica Asset Management, Inc. during 2011.

Life and health insurance companies are subject to certain RBC requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life or health insurance company is to be determined based on the various risk factors related to it. At December 31, 2013, the Company meets the minimum RBC requirements.

8. Securities Lending

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

At December 31, 2013 and 2012, respectively, securities in the amount of $85,026 and $81,764 were on loan under securities lending agreements. The collateral the Company received from securities lending was in the form of cash and on open terms. This cash collateral is reinvested and is not available for general corporate purposes. The reinvested cash collateral had a fair value of $88,261 and $84,804 at December 31, 2013 and 2012, respectively.

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

	Fair Value
Open	$	88,184
30 days or less		—
31 to 60 days		—
61 to 90 days		—
Greater than 90 days		—
Sub-Total		88,184
Securities received		—
Total collateral received	$	88,184

65

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

	Amortized Cost		Fair Value
Open	$	5,395	$	5,395
30 days or less		41,077		41,073
31 to 60 days		24,260		24,260
61 to 90 days		12,634		12,634
91 to 120 days		901		901
121 to 180 days		3,998		3,998
181 to 365 days		—		—
1 to 2 years		—		—
2-3 years		—		—
Greater than 3 years		—		—
Total		88,265		88,261
Securities received		—		—
Total collateral reinvested	$	88,265	$	88,261

For securities lending, the Company’s sources of cash that it uses to return the cash collateral are dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $88,267 (fair value of $88,261) that are currently tradable securities that could be sold and used to pay for the $88,184 in collateral calls that could come due under a worst-case scenario.

9. 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 and based upon actuarial participant benefit calculations. The benefits are based on years of service and the employee’s eligible annual compensation during the highest five consecutive years of employment. Pension expenses were $490, $627 and $1,255 for the years ended December 31, 2013, 2012 and 2011, 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 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

66

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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. Expense related to this plan was $260, $280 and $532 for the years ended December 31, 2013, 2012 and 2011, 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 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 2013, 2012 and 2011 was none. Aegon also sponsors an employee stock option plan/stock appreciation rights for employees of the Company and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been funded as deemed appropriate by management of 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 postretirement plan expenses are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $117, $110 and $210 for the years ended 2013, 2012 and 2011, respectively.

10. 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 companies, providing for needed services. 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 by administering the day-to-day real estate and mortgage loan operations of the Company. Aegon USA Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. The Company provides office space, marketing and administrative services to certain affiliates. The net amount received by the Company as a result of being a party to these agreements was $51,725, $44,117, and $33,717 during 2013, 2012 and 2011, respectively. The Company has an administration service agreement with Transamerica Asset Management, Inc. to provide administrative services to the Aegon/Transamerica Series Trust. The Company received $24,966, $23,814, and $24,411 from this agreement during 2013, 2012 and 2011, respectively.

Receivables from and payables to affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. At December 31, 2013, and 2012, the Company reported a net amount of $19,859 and $10,992 (restated), respectively, due from affiliates. Terms of settlement

67

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

require that these amounts are settled within 90 days. During 2013, 2012 and 2011, the Company paid net interest of $8, $12, and $39, respectively, to affiliates.

In prior years, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2013 and 2012, the cash surrender value of these policies was $75,881 and $75,295, respectively.

11. Commitments and Contingencies

The Company is a party to legal proceedings involving a variety of issues incidental to its business. Lawsuits may be brought in nearly any federal or state court in the United States or in an arbitral forum. In addition, there continues to be significant federal and state regulatory activity relating to financial services companies. The Company’s legal proceedings are subject to many variables, and given its complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company except where right of offset against other taxes paid is allowed by law. Amounts available for future offsets are recorded as an asset on the Company’s balance sheet. The future obligation for known insolvencies has been accrued based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Association. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $448 and $1,624 and an offsetting premium tax benefit of $222 and $809 at December 31, 2013 and 2012, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense was $252, $60 and $(1,824) for 2013, 2012 and 2011, respectively.

The Company had no contingent commitments or LIHTC commitments as of December 31, 2013 and 2012.

The Company is required by the Commodity Futures Trading Commission (CFTC) to maintain assets on deposit with brokers for futures trading activity done on behalf of the Company. The broker has a secured interest with priority in the pledged assets, however, the Company has the right to recall and substitute the pledged assets. At December 31, 2013 and 2012, respectively, the Company pledged assets in the amount of $18,694 and $14,125 to satisfy the requirements of futures trading accounts.

68

Western Reserve Life Assurance Co. of Ohio

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2013 and 2012, the Company had dollar repurchase agreements outstanding in the amount of $26,475 and $25,986, respectively. The Company had an outstanding liability for borrowed money in the amount $26,718 and $26,355 at December 31, 2013 and 2012, respectively due to participation in dollar repurchase agreements which includes accrued interest. The Company did not participate in dollar repurchase agreements at December 31, 2011.

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

	Fair Value
Open	$	26,624
30 days or less		—
31 to 60 days		—
61 to 90 days		—
Greater than 90 days		—
Sub-Total		26,624
Securities received		—
Total collateral received	$	26,624

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. There were no securities of NAIC designation 3 or below sold during 2013 and reacquired within 30 days of the sale date.

13. Subsequent Events

The financial statements are adjusted to reflect events that occurred between the balance sheet date and the date when the financial statements are issued, provided they give evidence of conditions that existed at the balance sheet date (Type I). Events that are indicative of conditions that arose after the balance sheet date are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). The Company has not identified any Type I or Type II subsequent events for the year ended December 31, 2013 through the date the financial statements are issued.

The Company is not subject to the annual fee imposed under section 9010 of the Affordable Care Act due to the Company’s health insurance premium falling below the $25 million threshold at which the fee applies.

69

Statutory-Basis Financial

Statement Schedules

Western Reserve Life Assurance Co. of Ohio

Summary of Investments – Other Than

Investments in Related Parties

(Dollars in Thousands)

December 31, 2013

Schedule I

Type of Investment	Cost (1)		Fair Value		Amount at Which Shown in the Balance Sheet (2)
Fixed maturities
Bonds:
United States government and government agencies and authorities	$	112,477 $		112,950	$	112,477
States, municipalities and political subdivisions		53,342		52,613		53,342
Foreign governments		20,728		20,645		20,728
Hybrid securities		19,038		21,660		19,038
All other corporate bonds		1,243,373		1,273,978		1,242,468
Total fixed maturities		1,448,958		1,481,846		1,448,053
Mortgage loans on real estate		77,805				77,805
Real estate		33,641				33,641
Cash, cash equivalents and short-term investments		110,547				110,547
Policy loans		442,800				442,800
Securities lending reinvested collateral assets		88,265				88,265
Other invested assets		3,012				3,012
Total investments	$	2,205,028			$	2,204,123

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

(2) Corporate bonds of $2,006 are held at fair value rather than amortized cost due to having and NAIC 6 rating.

70

Western Reserve Life Assurance Co. of Ohio

Supplementary Insurance Information

(Dollars in Thousands)

Schedule III

	Future Policy Benefits and Expenses		Policy and Contract Liabilities		Premium Revenue		Net Investment Income*		Benefits, Claims, Losses and Settlement Expenses		Other Operating Expenses*
Year ended December 31, 2013
Individual life	$	1,478,901	$	24,359	$	515,740	$	69,314	$	563,939	$	345,287
Group life and health		42,505		84		12,399		1,834		12,357		4,341
Annuity		389,341		642		12,952		21,342		187,631		(367,480	)
	$	1,910,747	$	25,085	$	541,091	$	92,490	$	763,927	$	(17,852	)
Year ended December 31, 2012 - restated
Individual life	$	1,269,626	$	24,833	$	458,257	$	57,260	$	301,282	$	358,243
Group life and health		32,078		313		12,904		1,296		9,674		9,421
Annuity		481,279		1,193		13,547		23,173		243,747		(210,941	)
	$	1,782,983	$	26,339	$	484,708	$	81,729	$	554,703	$	156,723
Year ended December 31, 2011
Individual life	$	1,182,368	$	27,384	$	447,724	$	54,583	$	248,384	$	428,545
Group life and health		24,599		313		10,631		1,016		8,035		7,554
Annuity		540,352		1,617		22,244		24,432		341,509		(222,539	)
	$	1,747,319	$	29,314	$	480,599	$	80,031	$	597,928	$	213,560

* 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.

71

Western Reserve Life Assurance Co. of Ohio

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, 2013
Life insurance in force	$	90,587,615	$	22,500,865	$	—	$	68,086,750		0	%
Premiums:
Individual life	$	674,998	$	159,258	$	—	$	515,740		0	%
Group life and health		28,039		15,640		—		12,399		0	%
Annuity		26,952		14,000		—		12,952		0	%
	$	729,989	$	188,898	$	—	$	541,091		0	%
Year ended December 31, 2012
Life insurance in force	$	119,611,140	$	63,828,956	$	—	$	55,782,184		0	%
Premiums:
Individual life	$	633,538	$	175,282	$	—	$	458,256		0	%
Group life and health		26,038		13,133		—		12,905		0	%
Annuity		24,587		11,040		—		13,547		0	%
	$	684,163	$	199,455	$	—	$	484,708		0	%
Year ended December 31, 2011
Life insurance in force	$	115,294,179	$	64,174,427	$	—	$	51,119,752		0	%
Premiums:
Individual life	$	612,636	$	165,675	$	763	$	447,724		0	%
Group life		23,890		13,259		—		10,631		0	%
Annuity		33,760		11,516		—		22,244		0	%
	$	670,286	$	190,450	$	763	$	480,599		0	%

72

F I N A N C I A L S T A T E M E N T S A N D S C H E D U L E S – S T A T U T O R Y B A S I S

Monumental Life Insurance Company

Years Ended December 31, 2013, 2012 and 2011

Mon Life 2013 SEC

Monumental Life Insurance Company

Financial Statements and Schedules – Statutory Basis

Years Ended December 31, 2013, 2012 and 2011

Contents

Report of Independent Auditors	1
Audited Financial Statements
Balance Sheets – Statutory Basis	3
Statements of Operations – Statutory Basis	5
Statements of Changes in Capital and Surplus – Statutory Basis	7
Statements of Cash Flow – Statutory Basis	9
Notes to Financial Statements – Statutory Basis	11
Statutory-Basis Financial Statement Schedules
Summary of Investments – Other Than Investments in Related Parties	102
Supplementary Insurance Information	103
Reinsurance	104

Mon Life 2013 SEC

Report of Independent Auditors

The Board of Directors

Monumental Life Insurance Company

We have audited the accompanying statutory-basis financial statements of Monumental Life Insurance Company, which comprise the balance sheets as of December 31, 2013 and 2012, 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, 2013, and the related notes to the financial statements. Our audits also included the statutory-basis financial statement schedules required by Regulation S-X, Article 7.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting practices prescribed or permitted by the Insurance Division, Department of Commerce, of the State of Iowa. Management also is responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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

As described in Note 1, to meet the requirements of Iowa the 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 U.S. generally accepted accounting principles. The variances between such practices and U.S. generally accepted accounting principles are described in Note 1. The effects on the accompanying financial statements of these variances are not reasonably determinable but are presumed to be material.

Mon Life 2013 SEC 1

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the effects of the matter described in the preceding paragraph, the statutory-basis financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of Monumental Life Insurance Company at December 31, 2013 and 2012, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2013.

Opinion on Statutory-Basis of Accounting

However, in our opinion, the statutory-basis financial statements referred to above present fairly, in all material respects, the financial position of Monumental Life Insurance Company at December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013 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.

/s/ Ernst & Young LLP

April 25, 2014

Mon Life 2013 SEC 2

Monumental Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2013		2012
Admitted assets
Cash and invested assets:
Cash, cash equivalents and short-term investments	$	558,923	$	1,355,524
Bonds:
Affiliated entities		57,200		57,200
Unaffiliated entities		12,324,799		12,391,672
Preferred stocks		9,541		8,418
Common stocks:
Affiliated entities (Cost: 2013- $32,862; 2012- $37,366)		16,599		25,872
Unaffiliated (Cost: 2013- $44,500; 2012- $76,945)		45,669		79,006
Mortgage loans on real estate		1,692,860		1,864,851
Real estate, at cost less allowance for depreciation (2013—$26; 2012—$26)		385		411
Real estate held for sale		6,900		4,792
Policy loans		470,549		477,665
Receivables for securities		—		2,798
Collateral balance		8,787		11,367
Derivatives		186,389		129,733
Securities lending reinvested collateral assets		322,209		350,329
Other invested assets		796,575		851,509
Total cash and invested assets		16,497,385		17,611,147
Premiums deferred and uncollected		178,129		201,418
Accrued investment income		166,253		170,354
Federal and foreign income tax recoverable		5,496		46,400
Net deferred income tax asset		162,711		199,932
Receivable from parent, subsidiaries and affiliates		30,774		1,788
Cash surrender value of life insurance policies		79,733		77,229
Reinsurance receivable		18,708		25,459
Goodwill		6,582		7,773
Contribution receivable from parent		135,000		—
Other assets		46,466		46,172
Separate account assets		14,526,003		12,669,510
Total admitted assets	$	31,853,240	$	31,057,182

Mon Life 2013 SEC 3

Monumental Life Insurance Company

Balance Sheets – Statutory Basis (continued)

(Dollars in Thousands, Except per Share Amounts)

	December 31
	2013			2012
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life	$	5,833,288		$	5,840,790
Annuity		3,425,826			3,629,809
Accident and health		716,358			562,271
Policy and contract claim reserves:
Life		127,459			78,293
Accident and health		110,669			120,190
Liability for deposit-type contracts		675,895			889,345
Other policyholders’ funds		6,596			6,872
Remittances and items not allocated		4,159			4,504
Reinsurance in unauthorized companies		1,980			2,167
Asset valuation reserve		243,972			191,992
Interest maintenance reserve		302,888			361,935
Funds held under reinsurance agreements		4,274,529			5,104,202
Payable for securities		—			2
Payable to parent, subsidiaries and affiliates		—			34,378
Transfers from separate accounts due or accrued		(29,291	)		(265	)
Deferred derivative gain		3,616			3,822
Derivatives		25,231			72,512
Payable for securities lending		322,209			350,329
Payable for derivative cash collateral		150,115			213,947
Borrowed money		53,453			6,222
Other liabilities		107,061			103,035
Separate account liabilities		14,526,003			12,669,510
Total liabilities		30,882,016			30,245,862
Capital and surplus:
Common stock:
Class A common stock, $750 par value, 10,000 shares authorized, 9,818.93 issued and outstanding		7,364			7,364
Class B common stock, $750 par value, 10,000 shares authorized, 3,697.27 issued and outstanding		2,773			2,773
Surplus notes		160,000			160,000
Paid-in surplus		757,199			621,273
Unassigned surplus		43,888			19,910
Total capital and surplus		971,224			811,320
Total liabilities and capital and surplus	$	31,853,240		$	31,057,182

See accompanying notes.

Mon Life 2013 SEC 4

Monumental Life Insurance Company

Statements of Operations – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
Revenues:
Premiums and other considerations, net of reinsurance:
Life	$	449,210		$	333,981		$	262,979
Annuity		701,427			606,706			546,479
Accident and health		555,840			581,030			593,764
Net investment income		729,329			822,314			842,041
Amortization of interest maintenance reserve		15,572			11,029			4,412
Commissions and expense allowances on reinsurance ceded		209,400			377,804			529,883
Income from fees associated with investment management, administration and contract guarantees for separate accounts		40,883			36,701			34,847
Reserve adjustments on reinsurance ceded		(226,238	)		(762,679	)		(151,484	)
Consideration on reinsurance transaction		692			34			(3,039	)
Other income		14,666			8,463			8,885
		2,490,781			2,015,383			2,668,767
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health benefits		511,898			465,017			488,759
Annuity benefits		313,064			306,295			275,877
Surrender benefits		1,019,522			824,936			731,102
Other benefits		84,131			66,556			67,452
Increase (decrease) in aggregate reserves for policies and contracts:
Life		(7,502	)		(315,073	)		71,596
Annuity		(203,983	)		(210,254	)		(180,075	)
Accident and health		154,087			41,635			15,919
		1,871,217			1,179,112			1,470,630
Insurance expenses:
Commissions		318,089			307,592			320,563
General insurance expenses		220,220			218,792			223,933
Taxes, licenses and fees		46,267			31,215			28,925
Net transfers from separate accounts		(312,793	)		(189,380	)		(136,670	)
Change in provision for liquidity guarantees		(1,485	)		(2,050	)		1,120
Reinsurance reserve adjustment		(10	)		(10	)		(21	)
Funds withheld ceded investment income		138,640			213,973			211,608
Experience refunds		247			(319	)		(140	)
Other expenses		6,918			662			5,347
		416,093			580,475			654,665
Total benefits and expenses		2,287,310			1,759,587			2,125,295
Gain from operations before dividends to policyholders, federal income tax expense and net realized capital losses on investments	$	203,471		$	255,796		$	543,472

Mon Life 2013 SEC 5

Monumental Life Insurance Company

Statements of Operations – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
Dividends to policyholders	$	1,259		$	1,279		$	1,342
Gain from operations before federal income tax expense and net realized capital losses on investments		202,212			254,517			542,130
Federal income tax expense		23,987			103,095			31,580
Gain from operations before net realized capital losses on investments		178,225			151,422			510,550
Net realized capital losses on investments (net of related federal income taxes and amounts tranferred to/from interest maintenance reserve)		(11,351	)		(7,876	)		(28,842	)
Net income	$	166,874		$	143,546		$	481,708

See accompanying notes.

Mon Life 2013 SEC 6

Monumental Life Insurance Company

Statements of Changes in Capital and Surplus – Statutory Basis

(Dollars in Thousands)

	Class A Common Stock		Class B Common Stock		Write-Ins for Other than Special Surplus Funds			Surplus Notes		Paid-in Surplus		Unassigned Surplus (Deficit)			Total Capital and Surplus
Balance at January 1, 2011	$	7,364	$	2,773	$	97,381		$	160,000	$	620,616	$	286,288			1,174,422
Net income		—		—		—			—		—		481,708			481,708
Change in net unrealized capital gains/losses, net of taxes		—		—		—			—		—		(12,083	)		(12,083	)
Change in nonadmitted assets		—		—		—			—		—		(246,969	)		(246,969	)
Change in liability for reinsurance in unauthorized companies		—		—		—			—		—		(234	)		(234	)
Change in net deferred income tax asset		—		—		—			—		—		218,165			218,165
Change in asset valuation reserve		—		—		—			—		—		(30,847	)		(30,847	)
Change in surplus as a result of reinsurance		—		—		—			—		—		(321,587	)		(321,587	)
Increase in admitted deferred tax assets pursuant to SSAP No. 10R		—		—		23,739			—		—		—			23,739
Dividends to stockholders		—		—		—			—		—		(300,000	)		(300,000	)
Correction of funds withheld investment income		—		—		—			—		—		(5,636	)		(5,636	)
Long-term incentive compensation		—		—		—			—		175		—			175
Balance at December 31, 2011		7,364		2,773		121,120			160,000		620,791		68,805			980,853
Net income		—		—		—			—		—		143,546			143,546
Change in net unrealized capital gains/losses, net of taxes		—		—		—			—		—		(33,259	)		(33,259	)
Change in nonadmitted assets		—		—		—			—		—		(29,674	)		(29,674	)
Change in liability for reinsurance in unauthorized companies		—		—		—			—		—		500			500
Change in net deferred income tax asset		—		—		—			—		—		823			823
Change in asset valuation reserve		—		—		—			—		—		(9,468	)		(9,468	)
Change in surplus as a result of reinsurance		—		—		—			—		—		207,517			207,517
Increase in admitted deferred tax assets pursuant to SSAP No. 10R		—		—		(121,120	)		—		—		121,120			—
Dividends to stockholders		—		—		—			—		—		(450,000	)		(450,000	)
Long-term incentive compensation		—		—		—			—		482		—			482
Balance at December 31, 2012	$	7,364	$	2,773	$	—		$	160,000	$	621,273	$	19,910		$	811,320

Mon Life 2013 SEC 7

Monumental Life Insurance Company

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

(Dollars in Thousands)

	Class A Common Stock		Class B Common Stock		Surplus Notes		Paid-in Surplus		Unassigned Surplus			Total Capital and Surplus
Balance at December 31, 2012	$	7,364	$	2,773	$	160,000	$	621,273	$	19,910		$	811,320
Net income		—		—		—		—		166,874			166,874
Capital contribution		—		—		—		135,000		—			135,000
Change in net unrealized capital gains/losses, net of taxes		—		—		—		—		95,530			95,530
Change in nonadmitted assets		—		—		—		—		3,579			3,579
Change in liability for reinsurance in unauthorized companies		—		—		—		—		187			187
Change in net deferred income tax asset		—		—		—		—		1,497			1,497
Change in asset valuation reserve		—		—		—		—		(51,980	)		(51,980	)
Change in surplus as a result of reinsurance		—		—		—		—		(63,742	)		(63,742	)
Correction of error related to deferred tax asset		—		—		—		—		7,033			7,033
Dividends to stockholders		—		—		—		—		(135,000	)		(135,000	)
Long-term incentive compensation		—		—		—		926		—			926
Balance at December 31, 2013	$	7,364	$	2,773	$	160,000	$	757,199	$	43,888		$	971,224

See accompanying notes.

Mon Life 2013 SEC 8

Monumental Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
Operating activities
Premiums collected, net of reinsurance	$	1,732,764		$	1,537,729		$	1,416,345
Net investment income		761,406			853,775			877,714
Reserve adjustments on reinsurance ceded		(226,238	)		(762,679	)		(151,484	)
Consideration on reinsurance transaction		692			34			(3,039	)
Commission and expense allowances on reinsurance ceded		145,783			586,092			715,812
Miscellaneous (loss) income		56,927			45,527			34,367
Benefit and loss related payments		(1,911,975	)		(1,594,215	)		(1,594,795	)
Net transfers from separate accounts		283,766			189,238			137,889
Commissions, expenses paid and aggregate write-ins for deductions		(800,587	)		(815,311	)		(782,498	)
Dividends paid to policyholders		(1,295	)		(1,321	)		(1,383	)
Federal income taxes paid (received)		43,860			(252,995	)		(20,870	)
Net cash provided by (used in) operating activities		85,103			(214,126	)		628,058
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds		2,194,421			5,234,590			2,889,949
Stocks		40,584			25,890			11,025
Mortgage loans		478,341			300,958			291,626
Real estate		2,950			3,570			2,828
Other invested assets		133,812			113,630			100,202
Securities lending reinvested collateral assets		—			—			98,876
Miscellaneous proceeds		15,434			4,313			24,228
Total investment proceeds		2,865,542			5,682,951			3,418,734
Costs of investments acquired:
Bonds		(2,136,260	)		(3,414,940	)		(2,112,595	)
Stocks		(4,960	)		(19,185	)		(54,748	)
Mortgage loans		(305,830	)		(37,799	)		(111,952	)
Real estate		(7,799	)		(5,071	)		(5,436	)
Other invested assets		(66,590	)		(57,944	)		(126,849	)
Securities lending reinvested collateral assets		28,210			(21,939	)		—
Derivatives		(66,568	)		(47,592	)		(115,760	)
Miscellaneous applications		(2,367	)		(1,828	)		—
Total cost of investments acquired		(2,562,164	)		(3,606,298	)		(2,527,340	)
Net decrease in policy loans		7,116			9,378			2,742
Net cost of investments acquired		(2,555,048	)		(3,596,920	)		(2,524,598	)
Net cash provided by investing activities		310,494			2,086,031			894,136

Mon Life 2013 SEC 9

Monumental Life Insurance Company

Statements of Cash Flow – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2013			2012			2011
Financing and miscellaneous activities
Net withdrawals on deposit-type contracts and other insurance liabilities	$	(1,632,098	)	$	(612,670	)	$	(801,239	)
Net change in reinsurance on deposit-type contracts and other insurance liabilities		1,292,709			456,205			588,705
Borrowed funds		47,065			6,200			—
Dividends to stockholders		(135,000	)		(450,000	)		(300,000	)
Funds held under reinsurance treaties with unauthorized reinsurers		(829,691	)		(785,005	)		(1,266,655	)
Receivable from parent, subsidiaries and affiliates		(28,986	)		102,834			(6,744	)
Payable to parent, subsidiaries and affiliates		(34,378	)		(86,405	)		16,142
Payable for securities lending		(28,120	)		21,939			(98,876	)
Other cash provided (applied)		156,302			144,115			(375,531	)
Net cash used in financing and miscellaneous activities		(1,192,197	)		(1,202,787	)		(2,244,198	)
Net (decrease) increase in cash, cash equivalents and short-term investments		(796,601	)		669,118			(722,004	)
Cash, cash equivalents and short-term investments:
Beginning of year		1,355,524			686,406			1,408,410
End of year	$	558,923		$	1,355,524		$	686,406

See accompanying notes.

Mon Life 2013 SEC 10

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands)

1. Organization and Summary of Significant Accounting Policies

Organization

Monumental Life Insurance Company (the Company) is a stock life insurance company owned by Commonwealth General Corporation (CGC) (87.7%) and Aegon USA, LLC (Aegon) (12.3%). Both CGC and Aegon are indirect, wholly owned subsidiaries of Aegon N.V., a holding company organized under the laws of The Netherlands.

Effective December 19, 2011, Capital General Development Corporation (CGDC), which previously owned 99.8% of the Company, merged into Capital General Development Corporation, LLC (CGDC, LLC), a wholly-owned subsidiary of the Company. The merger resulted in the 9,791.64 shares of Class A common stock and 3,686.99 shares of Class B common stock of the Company owned by CGDC transferring to CGDC, LLC. These shares of Class A and Class B common stock were deemed cancelled as a result of the merger. CGDC, LLC was formed on December 16, 2011 for purposes of this merger and dissolved effective December 31, 2011.

Prior to the merger, CGDC was owned by CGC (87.7%) and Aegon (12.3%). As consideration of the merger of CGDC into CGDC, LLC, the Company issued 8,585.39 shares of Class A common stock and 3,232.78 shares of Class B common stock to CGC, and 1,206.25 shares of Class A common stock and 454.21 shares of Class B common stock to Aegon. There was no impact to the Company’s total number of Class A and Class B common stock shares issued and outstanding, only a change in ownership of those shares. As such, this transaction had no impact on the Company’s balance sheets.

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 as well as investment products, including guaranteed interest contracts and funding agreements. The Company is licensed in 49 states, the District of Columbia, Guam and Puerto Rico. Sales of the Company’s products are primarily through agents, brokers, financial institutions and direct response methods.

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.

Mon Life 2013 SEC 11

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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, including affiliated bonds and mandatory redeemable preferred stocks are reported at amortized cost or fair value based on their National Association of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity investments would be designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity fixed investments would be reported at amortized cost, and the remaining fixed maturity investments would be reported at fair value with unrealized holding gains and losses reported in earnings for those designated as trading and as a separate component of other comprehensive income (OCI) for those designated as available-for-sale. Fair value for GAAP is based on indexes, third party pricing services, brokers, external fund managers and internal models. For statutory reporting, the NAIC allows insurance companies to report the fair value determined by the Securities Valuation Office of the NAIC (SVO) or determine the fair value by using a permitted valuation method.

All single class and multi-class mortgage-backed/asset-backed securities (e.g., CMOs) are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium of such securities using either the retrospective or prospective methods. If the fair value of the mortgage-backed/asset-backed security is less than amortized cost, an entity shall assess whether the impairment is other-than-temporary. An other-than-temporary impairment is also considered to have occurred if the fair value of the mortgage-backed/asset-backed security is less than its amortized cost basis and the entity intends to sell the security or the entity does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis. An other-than-temporary impairment is also considered to have occurred if the discounted estimated future cash flows are less than the amortized cost basis of the security.

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

For GAAP, all securities, purchased or retained, that represent beneficial interests in securitized assets (e.g., CMO, CBO, CDO, CLO, MBS and ABS securities), other than high credit quality securities, are adjusted using the prospective method when there is a change in estimated future cash flows. If high credit quality securities are adjusted, the retrospective method is used. If it is determined that a decline in fair value is other-than-temporary and the entity intends to sell the

Mon Life 2013 SEC 12

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

Derivative instruments are also used in replication 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 the changes in the fair value reported in income.

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

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

Mon Life 2013 SEC 13

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, 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 based on groupings of individual securities sold in five-year bands. That net deferral is reported as the interest maintenance reserve (IMR) in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the statement of operations on a pre-tax basis in the period that the assets giving rise to the gains or losses are sold.

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

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

Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, incremental costs directly related to the successful acquisition of 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. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account. These separate accounts are included in the general account for GAAP due to the nature of the guaranteed return.

Nonadmitted Assets: Certain assets designated as “nonadmitted”, primarily net deferred tax assets and other assets not specifically identified as an admitted asset within the NAIC

Mon Life 2013 SEC 14

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Accounting Practices and Procedures Manual (NAIC SAP), are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent they are not impaired.

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

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

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

Losses associated with an indemnity reinsurance transaction are reported within income when incurred rather than being deferred and amortized over the remaining life of the underlying reinsured contracts as would be required under GAAP. Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as would be required under GAAP.

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

Deferred Income Taxes: The Company computes deferred income taxes in accordance with Statement of Statutory Accounting Principle (SSAP) No. 101, Income Taxes, A Replacement of

Mon Life 2013 SEC 15

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

SSAP No. 10R and SSAP No. 10. Under SSAP No. 101, admitted adjusted deferred income tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of adjusted gross deferred income tax assets expected to be realized within three years limited to an amount that is no greater than 15% of current period’s adjusted statutory capital and surplus, plus 3) the amount of remaining adjusted gross deferred income tax assets that can be offset against existing gross deferred income tax liabilities after considering the character (i.e., ordinary versus capital) and reversal patterns of the deferred tax assets and liabilities. The remaining adjusted deferred income tax assets are nonadmitted.

Deferred 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.

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

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

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

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.

Mon Life 2013 SEC 16

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

Other significant accounting policies are as follows:

Investments

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

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

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

The Company closely monitors below investment grade holdings and those investment grade issuers where the Company has concerns. The Company also regularly monitors industry sectors. The Company considers relevant facts and circumstances in evaluating whether the impairment is other-than-temporary including: (1) the probability of the Company collecting all amounts due according to the contractual terms of the security in effect at the date of acquisition; (2) the Company’s decision to sell a security prior to its maturity at an amount below its carrying amount; and (3) the Company’s ability to hold a structured security for a period of time to allow for recovery of the value to its carrying amount. Additionally, financial condition, near term prospects of the issuer and nationally recognized credit rating changes are monitored. Non-

Mon Life 2013 SEC 17

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

structured securities in unrealized loss positions that are considered other-than-temporary are written down to fair value. Structured securities considered other-than-temporarily impaired are written down to discounted estimated cash flows if the impairment is the result of cash flow analysis. If the Company has an intent to sell or lack of ability to hold a structured security, it is written down to fair value. For structured securities, cash flow trends and underlying levels of collateral are monitored. The Company will record a charge to the statement of operations to the extent that these securities are determined to be other-than-temporarily impaired.

Investments in preferred stocks in good standing are reported at cost or amortized cost. Investments in preferred stocks not in good standing are reported at the lower of cost or fair value, and the related net unrealized capital gains (losses) are reported in unassigned surplus along with any adjustment for federal income taxes.

Common stocks of unaffiliated companies are reported at fair value and the related net unrealized capital gains or losses are reported in unassigned surplus along with any adjustment for federal income taxes.

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

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

There are no restrictions on common or preferred stock.

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

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

Mortgage loans are reported at unpaid principal balances, less an allowance for impairment. A mortgage loan is considered to be impaired when it is probable that the Company will be unable

Mon Life 2013 SEC 18

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

to collect all principal and interest amounts due according to the contractual terms of the mortgage agreement. When management determines that the impairment is other-than-temporary, the mortgage loan is written down to realizable value and a realized loss is recognized.

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

Policy loans are reported at unpaid principal balances.

The Company has minority ownership interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying audited GAAP equity of the investee. For a decline in the fair value of an investment in a joint venture or limited partnership which is determined to be other-than-temporary, the Company writes it down to fair value as the new cost basis and the amount of the write down is accounted for as a realized loss in the statement of operations. The Company considers an impairment to have occurred if it is probable that the Company will be unable to recover the carrying amount of the investment or if there is evidence indicating inability of the investee to sustain earnings which would justify the carrying amount of the investment.

The Company’s investment in reverse mortgages is recorded net of an appropriate actuarial reserve. The actuarial reserve is calculated using the projected cash flows from the reverse mortgage product. Assumptions used in the actuarial model include an estimate of current home values, projected cash flows from the realization of the appreciated value of the property from its eventual sale (subject to certain limitations in the contract), mortality and termination rates based on group annuity mortality tables adjusted for the Company’s experience and a constant interest rate environment. The carrying amount of the investment in reverse mortgages of $31,763 and $35,444 at December 31, 2013 and 2012, respectively, is net of the reserve of $12,375 and $26,128, respectively. Interest income of $1,969 and $2,758 was recognized for the years ended December 31, 2013 and 2012 respectively. The Company’s commitment includes making advances to the borrower until termination of the contract. The contract is terminated at the time

Mon Life 2013 SEC 19

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

the borrower moves, sells the property, dies, repays the loan balance or violates the provisions of the loan contract.

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, as required or permitted by the Iowa Insurance Laws.

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

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. Income is also not accrued when collection is uncertain. In addition, accrued interest is excluded from investment income when payment exceeds 90 days past due. At December 31, 2013 and 2012, the Company excluded investment income due and accrued for bonds in default of $210 and $155, respectively, with respect to such practices.

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

Derivative Instruments

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

Mon Life 2013 SEC 20

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Derivative instruments used in hedging relationships are accounted for on a basis that is consistent with the hedged item (amortized cost or fair value). Derivative instruments used in replication relationships are accounted for on a basis that is consistent with the cash instrument and the replicated asset (amortized cost or fair value). Derivative instruments used in income generation relationships are accounted for on a basis that is consistent with the associated covered asset or underlying interest to which the derivative indicates (amortized cost or fair value). Derivative instruments held for other investment/risk management activities receive fair value accounting.

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

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

Mon Life 2013 SEC 21

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Cross currency swaps are utilized to mitigate risks when the Company holds foreign denominated assets or liabilities therefore converting the asset or liability to a U.S. dollar (USD) denominated security. These cross currency swap agreements involve the exchange of two principal amounts in two different currencies at the prevailing currency rate at contract inception. During the life of the swap, the counterparties exchange fixed or floating rate interest payments in the swapped currencies. At maturity, the principal amounts are again swapped at a pre-determined rate of exchange. Each asset or liability is hedged individually where the terms of the swap must meet the terms of the hedged instrument. For swaps qualifying for hedge accounting, the premium or discount is amortized into income over the life of the contract and the foreign currency translation adjustment is recorded as unrealized gain/loss in 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.

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

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

Mon Life 2013 SEC 22

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

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

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

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

A replication transaction is a derivative transaction entered into in conjunction with a cash instrument to reproduce the investment characteristics of an otherwise permissible investment. The Company replicates investment grade corporate bonds or sovereign debt by combining a highly rated security as a cash component with a credit default swap which, in effect, converts

Mon Life 2013 SEC 23

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

the high quality asset into a lower rated investment grade asset or sovereign debt. The benefits of using the swap market to replicate credit include possible enhanced relative values as well as ease of executing larger transactions in a shortened time frame. Generally, a premium is received by the Company on a periodic basis and recognized in investment income. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment equal to the notional of the contract will be made by the Company and recognized as a capital loss.

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

The Company holds some warrants linked to an Argentina Government GDP as part of an authorized workout from the Argentina Brady Bonds. The Company was put into these warrants and did not voluntarily transact into these types of instruments. The Company does not have any downside risk to the warrants, and only receives a payment if the GDP is above a specific threshold. These swaps are marked to fair value in the balance sheet and the fair value adjustment is recorded in capital and surplus.

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 consist of shares in funds, considered common stock investments, which are valued daily and carried 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 $569,933, $466,320 and $402,855 in 2013, 2012 and 2011, respectively. In addition, the Company received $40,883, $36,701 and $34,847, in 2013, 2012 and 2011, respectively, related to fees associated with investment management, administration and contractual guarantees for separate accounts.

Separate account assets and liabilities reported in the accompanying financial statements consist of three types: guaranteed indexed, non-indexed guaranteed and nonguaranteed. Guaranteed indexed separate accounts represent funds invested by the Company for the benefit of contract holders who are guaranteed returns based on published indices. Non-indexed guaranteed separate

Mon Life 2013 SEC 24

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

accounts represent funds invested by the Company for the benefit of contract holders who are guaranteed certain returns as specified in the contracts. Separate account asset performance different than guaranteed requirements is either transferred to or received from the general account and reported in the statements of operations. Guaranteed indexed and non-indexed guaranteed separate account assets and liabilities are carried at fair value.

The nonguaranteed separate account assets and liabilities represent group annuity funds segregated by the Company for the benefit of contract owners, who bear the investment risks. The assets and liabilities of the nonguaranteed separate accounts are carried at fair value.

Aggregate Reserves for Policies and Contracts

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

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioner’s Standard Ordinary Mortality Tables, the 1912, 1941 and 1961 Standard Industrial Mortality Tables, the 1960 Commissioner’s Standard Group Mortality Table, and the American Men, Actuaries and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 2.0 to 6.5 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 Commissioner’s Reserve Valuation Method.

Additional premiums are charged or additional mortality charges are assessed for policies issued on substandard lives according to underwriting classification. Generally, mean reserves are

Mon Life 2013 SEC 25

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

determined by computing the regular mean reserve for the plan at the true age and holding, in addition, one-half (1/2) of the extra premium charge for the year. For certain flexible premium and fixed premium universal life insurance products, reserves are calculated utilizing the Commissioner’s Reserve Valuation Method for universal life policies and recognizing any substandard ratings.

Deferred annuity reserves are calculated according to the Commissioner’s Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest. Reserves for immediate annuities and supplementary contracts with and without life contingencies are equal to the present value of future payments assuming interest rates ranging from 2.5 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.

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

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

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

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.

Mon Life 2013 SEC 26

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Liability for Deposit-Type Contracts

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

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

Municipal Repurchase Agreements

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

These municipal repurchase agreements require a minimum of 95% of the fair value of the securities transferred to be maintained as collateral. The Company did not participate in repurchase agreements during 2013 or 2012.

Premiums and Annuity Considerations

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

Claims and Claim Adjustment Expense

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

Mon Life 2013 SEC 27

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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, 2013
2013	$	—	$	287,548		$	175,537	$	112,011
2012 and prior		195,349		(7,707	)		106,262		81,380
		195,349	$	279,841		$	281,799		193,391
Active life reserve		487,112							633,636
Total accident and health reserves	$	682,461						$	827,027
	Unpaid Claims Liability Beginning of Year		Claims Incurred			Claims Paid		Unpaid Claims Liability End of Year
Year ended December 31, 2012
2012	$	—	$	297,471		$	177,262	$	120,209
2011 and prior		192,420		(8,435	)		108,845		75,140
		192,420	$	289,036		$	286,107		195,349
Active life reserve		453,015							487,112
Total accident and health reserves	$	645,435						$	682,461

The Company’s unpaid claims reserve was decreased by $7,707 and $8,435 for the years ended December 31, 2013 and 2012, respectively, for health claims that occurred prior to those balance sheet dates. The change in 2013 and 2012 resulted primarily from variances in the estimated frequency of claims and claim severity.

The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2013 and 2012 was $2,367 and $2,096, respectively. The Company incurred $3,895 and paid $3,624 of claim adjustment expenses during 2013, of which $1,972 of the paid amount was attributable to insured or covered events of prior years. The Company incurred $3,036 and paid $3,066 of claim adjustment expenses during 2012, of which $1,475 of the paid amount was attributable to insured or covered events of prior years. The Company did not

Mon Life 2013 SEC 28

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

increase or decrease the claim adjustment expense provision for insured events of prior years during 2013 or 2012.

Reinsurance

Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies and the terms of the reinsurance contracts. Gains associated with reinsurance of in force blocks of business are included in unassigned surplus and amortized into income as earnings emerge on the reinsured block of business. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively. Policy liabilities and accruals are reported in the accompanying financial statements net of reinsurance ceded.

Stock Option Plan, Long-Term Incentive Compensation and Stock Appreciation Rights Plans

Certain management employees of the Company participate in a stock-based long-term incentive compensation plan issued by the Company’s indirect parent. In accordance with SSAP No. 13, Stock Options and Stock Purchase Plans, the expense or benefit related to this plan for the Company’s management employees has been charged to the Company, with an offsetting amount credit to paid-in surplus. The Company recorded an accrued expense in the amount of $926, $482 and $175 for the years ended December 31, 2013, 2012 and 2011, respectively.

Recent Accounting Pronouncements

Effective December 31, 2013, the Company adopted revisions to SSAP No. 35R, Guaranty Fund and Other Assessments – Revised which incorporates subsequent event (Type II) disclosures for entities subject to Section 9010 of the Patient Protection and Affordable Care Act related to assessments payable. The adoption of this revision did not impact the financial position or results of operations of the Company as revisions relate to disclosures only. See Note 16 for further discussion.

Effective January 1, 2013, the Company adopted SSAP No. 92, Accounting for Postretirement Benefits Other Than Pensions, A Replacement of SSAP No. 14 and SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89. This guidance impacts accounting for defined benefit pension plans or other postretirement plans, along with related disclosures. SSAP No. 102 requires recognition of the funded status of the plan based on the projected benefit obligation instead of the accumulated benefit obligation as under SSAP No. 89. In addition, SSAP No. 92 and SSAP No. 102 require consideration of non-vested participants. The adoption of these standards did not impact the Company’s results of operations, financial position or disclosures as

Mon Life 2013 SEC 29

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

the Company does not sponsor the pension plan and is not directly liable under the plan. See Note 11 for further discussion of the Company’s pension plan and other postretirement plans as sponsored by Aegon.

Effective January 1, 2013, the Company adopted SSAP No. 103, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities which adopts with modifications the guidance in ASU 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets and supersedes SSAP No. 91R, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The adoption of this standard did not impact the financial position or results of operation of the Company.

Effective January 1, 2013, the Company adopted non-substantive revisions to SSAP No. 36, Troubled Debt Restructuring. These revisions adopt guidance from ASU 2011-02, Receivables – A Creditors’ Determination of Whether a Restructuring is a Troubled Debt Restructuring, which clarifies what constitutes a troubled debt restructuring and adopts with modification troubled debt restructuring disclosures for creditors from ASU 2010-20: Receivables (Topic 310), Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The adoption of this revision did not impact the financial position or results of operations of the Company.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 86 to require disclosure of embedded credit derivatives within a financial instrument that expose the holder to the possibility of making future payments, and adopted guidance from Accounting Standards Update (ASU) 2010-11, Derivatives and Hedging – Scope Exception Related to Embedded Credit Derivatives, to clarify that seller credit derivative disclosures do not apply to embedded derivative features related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another. The adoption of these revisions had no impact to the Company’s results of operations or financial position.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 86 to move one aspect of the criteria for a hedged forecasted transaction and incorporate it as criteria for a fair value hedge. The adoption of this revision had no impact to the Company’s results of operations or financial position.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 27, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk, Financial Instruments with Concentrations of Credit Risk and Disclosures about Fair Value of Financial Instruments, which clarifies that embedded derivatives, which are not separately recognized as derivatives under statutory accounting, are included in the disclosures of financial instruments

Mon Life 2013 SEC 30

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

with off-balance-sheet risk. The adoption of this revision had no impact to the Company’s results of operations or financial position.

Effective December 31, 2012, the Company adopted non-substantive revisions to SSAP No. 1, Disclosures of Accounting Policies, Risks and Uncertainties and Other Disclosures. These revisions require reference to the accounting policy and procedure footnote that describes permitted or prescribed practices when an individual note is impacted by such practices. The adoption of this requirement had no impact to the Company’s results of operation or financial position and did not require any additional disclosures. See Note 8 Policy and Contract Attributes for further details.

Effective January 1, 2012, the Company adopted revisions to SSAP No. 100, Fair Value Measurements (SSAP No. 100). These revisions require new disclosures of fair value hierarchy and the method used to obtain the fair value measurement, a new footnote that summarizes hierarchy levels by type of financial instrument and gross presentation of purchases, sales, issues and settlements within the reconciliation for fair value measurements categorized within Level 3 of the hierarchy. The adoption of these revisions had no impact to the Company’s results of operations or financial position, but did require additional disclosures. See Note 4 Fair Values of Financial Instruments for further details.

Effective January 1, 2012, the Company began computing current and deferred income taxes in accordance with SSAP No. 101. This statement established statutory accounting principles for current and deferred federal and foreign income taxes and current state income taxes. The adoption of this statement resulted in the transfer of $121,120 from Aggregate Write-Ins for Other than Special Surplus Funds to Unassigned Funds and updates to the Company’s income tax disclosures. See Note 7 Income Taxes for further details.

For the year ended December 31, 2011, the Company adopted SSAP No. 10R, Income Taxes – Revised, A Temporary Replacement of SSAP No. 10 (SSAP No. 10R). This statement established statutory accounting principles for current and deferred federal and foreign income taxes and current state income taxes. The SSAP temporarily superseded SSAP No. 10, Income Taxes. SSAP No. 10R allowed an entity to elect to admit additional deferred tax assets (DTAs) utilizing a three year loss carryback provision, plus the lesser of a look-forward of three years on gross DTAs expected to be realized or 15% of statutory capital and surplus if the entity’s risk-based capital is above the 250% risk-based capital level where an action level could occur as a result of a trend test utilizing the old SSAP No. 10 provisions to calculate the DTA. Prior to the adoption of SSAP No. 10R, the admitted DTA was calculated by taking into consideration a one year loss carryback and look-forward on gross DTAs that can be expected to be realized and a 10% capital and surplus limit on the admitted amount of the DTA. The Company elected to admit additional deferred tax assets pursuant to SSAP No. 10R and as a result, the cumulative effect of the

Mon Life 2013 SEC 31

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

adoption of this standard was the difference between the calculation of the admitted DTA per SSAP No.10R and the old SSAP No. 10 methodology at December 31, 2011. This change in accounting principle increased surplus by a net amount of $121,120, at December 31, 2011, which has been recorded within the statements of changes in capital and surplus.

Effective December 31, 2011, the Company adopted SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets – Revised. The revisions require the Company to recognize a liability equal to the greater of (a) the fair value of the guarantee at its inception, even if the likelihood of payment under the guarantee is remote or (b) the contingent liability amount required to be recognized if it is probable that a liability has been incurred at the financial statement date and the amount of loss can reasonably be determined. While this guidance does not exclude guarantees issued as intercompany transactions or between related parties from the initial liability recognition requirement, there are certain exceptions. Guarantees made to/or on behalf of a wholly-owned subsidiary and related party guarantees that are considered “unlimited” (for example, in response to a rating agency’s requirement to provide a commitment to support) are exempt from the initial liability recognition. Additional disclosures are also required under this new guidance for all guarantees, whether or not they meet the criteria for initial liability recognition. The adoption of this new accounting principle had no material impact to the Company’s results of operations or financial position, but did require additional disclosures regarding these guarantees. See Note 14 on Commitments and Contingencies for further details.

Effective December 31, 2011, the Company adopted non-substantive revisions to SSAP No. 100, to incorporate the provisions of ASU 2010-06, Improving Disclosures about Fair Value Measurements. This revision required a new disclosure for assets and liabilities for which fair value is not measured and reported in the statement of financial position but is otherwise disclosed. The adoption of these revisions had no impact to the Company’s results of operations or financial position. See Note 4 for further details.

Effective December 31, 2011, the Company adopted non-substantive changes to SSAP No. 32, Investments in Preferred Stock (including investments in preferred stock of subsidiary, controlled, or affiliated entities). The amendment was made to clarify the definition of preferred stock. Under the revised SSAP No. 32, a preferred stock is defined as any class or series of shares the holders of which have any preference, either as to the payment of dividends or distribution of assets on liquidation, over the holder of common stock [as defined in SSAP No. 30, Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities)] issued by an entity. This revised definition had no impact to the Company.

Effective January 1, 2011, the Company adopted SSAP No. 35R, Guaranty Fund and Other Assessments – Revised. This statement modified the conditions required for recognizing a

Mon Life 2013 SEC 32

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

liability for insurance-related assessments and required additional disclosures. The adoption of this accounting principle had no financial impact to the Company. See Note 14 for disclosures related to guaranty fund assessments. The adoption of this accounting principle had no financial impact to the Company.

Effective January 1, 2011, the Company adopted revisions to certain paragraphs of SSAP No. 43R, Loan-backed and Structured Securities to clarify the accounting for gains and losses between AVR and IMR. The revisions clarify that an AVR/IMR bifurcation analysis should be performed when SSAP No. 43R securities are sold (not just as a result of impairment). These changes were applied on a prospective basis and had no financial impact to the Company upon adoption.

Effective January 1, 2011, the Company adopted revisions to SSAP No. 43R to clarify the definitions of loan-backed and structured securities. The clarified guidance was applied prospectively and had no financial impact to the Company upon adoption.

Effective January 1, 2014, the Company will adopt SSAP No. 105, Working Capital Finance Investments, which allows working capital finance investments to be admitted assets if certain criteria are met. The adoption of this standard had no impact to the financial position or results of operations of the Company.

Effective December 31, 2014, the Company will adopt revisions to SSAP No. 104R, Share-Based Payments, which provides guidance for share-based payments transactions with non-employees. The adoption of this revision is expected to be immaterial to the financial position and results of operations of the Company.

Reclassifications

Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 presentation.

During 2013, the Company changed the presentation of derivative liabilities. As a result of this change, $72,512 was reclassified between the Other liabilities line and the Derivatives line in the 2012 Balance Sheet to conform to the 2013 presentation.

During 2013, the Company changed the presentation of deposit-type contract fund deposit and withdrawal activity within the Statement of Cash Flow. As a result of this change, $613,183 was reclassified from Other cash provided (applied) to Net withdrawals on deposit-type contracts and other insurance liabilities within the 2012 Statement of Cash Flow to conform to the 2013 presentation.

Mon Life 2013 SEC 33

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

On the 2012 Statements of Operations, $10,786 was reclassified from Premiums and other considerations, net of reinsurance: Annuity to Premiums and other considerations, net of reinsurance: Life as it was determined that this amount represented considerations for supplementary contracts with life contingencies and should be shown accordingly.

2. Prescribed and Permitted Statutory Accounting Practices

The State of Iowa 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 for determining its solvency under Iowa Insurance Law.

The NAIC SAP has been adopted as a component of prescribed or permitted practices by the State of Iowa. The State of Iowa adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to reserve credits and 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 by the State of Iowa is shown below:

	2013			2012			2011
Net income (loss) State of Iowa basis	$	166,874		$	143,456		$	481,708
State prescribed practice for secondary guarantee reinsurance		—			—			—
Net income (loss), NAIC SAP	$	166,874		$	143,456		$	481,708
Statutory surplus, State of Iowa basis	$	971,224		$	811,320		$	980,853
State prescribed practice for secondary guarantee reinsurance		(38,696	)		(36,211	)		(33,734	)
Statutory surplus, NAIC SAP	$	932,528		$	775,109		$	947,119

Mon Life 2013 SEC 34

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

3. Accounting Changes and Correction of Errors

During 2013, the Company determined the mark-to-market adjustment on certain swap unwinds within its synthetic asset mortgage loan program were incorrectly not made for purposes of determining taxable income at December 31, 2011. Upon reviewing the impact on the prior years, an adjustment of $7,033 was designated as a prior year correction of an error and presented as a change in unassigned surplus for the year ended December 31, 2013.

During the first quarter of 2011, it was determined that the investment income credit calculation that was utilized at year end 2010 to determine the amount of income to remit to an affiliated reinsurer was incorrect. This prior year error resulted in an understatement of the amount of funds withheld investment income that should have been remitted to the affiliated reinsurer for the year of 2010 in the amount of $5,636. This correction has been presented as a change in unassigned surplus.

4. Fair Values of Financial Instruments

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Determination of fair value

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

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

Mon Life 2013 SEC 35

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

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

Fair value hierarchy

The Company’s financial assets and liabilities carried at fair value are classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

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

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

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

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

c) Inputs other than quoted market prices that are observable

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

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

Mon Life 2013 SEC 36

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Cash Equivalents and Short-Term Investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. Cash is not included in the below tables.

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

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

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

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

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

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

Mon Life 2013 SEC 37

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Derivative Financial Instruments: The estimated fair values of interest rate caps and options are based upon the latest quoted market price at the balance sheet date. The estimated fair values of swaps, including interest rate and currency swaps are based on pricing models or formulas using current assumptions. The estimated fair value of credit default swaps are based upon the pricing differential as of the balance sheet date for similar swap agreements. The Company accounts for derivatives that receive and pass hedge accounting in the same manner as the underlying hedged instrument. If that instrument is held at amortized cost, then the derivative is also held at amortized cost.

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

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

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

Separate Account Assets and Annuity Liabilities: The fair value of separate account assets are based on quoted market prices when available. When not available, they are valued in the same manner as general account assets as further described in this note. The fair value of separate account annuity liabilities is based on the account value for separate accounts business without guarantees. For separate accounts with guarantees, fair value is based on discounted cash flows.

Investment Contract Liabilities: Fair value for the Company’s liabilities under investment contracts, which include deferred annuities, GICs and funding agreements, are estimated using discounted cash flow calculations. The carrying value of the Company’s liabilities for deferred annuities with minimum guaranteed benefits is determined using a stochastic valuation as described in Note 8, which approximates the fair value. For investment contracts without minimum guarantees, fair value is estimated using discounted cash flows. For those liabilities that are short in duration, carrying amount approximates fair value.

Deposit-Type Contracts: The carrying amounts of deposit-type contracts reported in the accompanying balance sheets approximate their fair values.

Mon Life 2013 SEC 38

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

The Company accounts for its investments in affiliated common stock using the equity method of accounting; as such, they are not included in the following disclosures.

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

Mon Life 2013 SEC 39

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables set forth a comparison of the estimated fair values and carrying amounts of the Company’s financial instruments, including those not measured at fair value in the balance sheets, as of December 31, 2013 and 2012, respectively:

	December 31 2013
	Aggregate Fair Value			Admitted Assets		(Level 1)		(Level 2)			(Level 3)		Not practicable (Carrying Value)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	471,024		$	471,024	$	—	$	471,024		$	—	$	—
Bonds		12,966,536			12,381,999		805,464		11,658,490			502,582		—
Preferred stocks, other than affiliates		8,955			9,541		—		8,819			136		—
Common stocks, other than affiliates		45,668			45,668		4,313		1			41,354		—
Mortgage loans on real estate		1,750,784			1,692,860		—		—			1,750,784		—
Other invested assets		139,312			132,528		—		132,614			6,698		—
Options		175,442			174,065		238		170,009			5,195		—
Interest rate swaps		4,890			4,215		—		4,890			—		—
Currency swaps		11,725			6,153		—		11,725			—		—
Credit default swaps		3,864			1,955		—		3,864			—		—
Policy loans		470,549			470,549		—		470,549			—		—
Securities lending reinvested collateral		322,142			322,209		—		322,142			—		—
Receivable from parent, subsidiaries and affiliates		30,774			30,774		—		57,108			—		—
Separate account assets		13,637,553			13,637,553		11,637,283		1,998,253			2,017		—
Liabilities
Investment contract liabilities		3,660,871			3,644,500		—		47,704			3,613,167		—
Interest rate swaps		(141,882	)		4,164		—		(141,882	)		—		—
Currency swaps		19,741			13,783		—		19,741			—		—
Credit default swaps		(4,576	)		7,285		—		(4,576	)		—		—
Separate account annuity liabilities		14,413,405			14,416,133		—		14,337,451			75,954		—
Surplus notes		168,622			160,000		—		—			168,622		—

Mon Life 2013 SEC 40

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	December 31 2012
	Aggregate Fair Value		Admitted Assets		(Level 1)		(Level 2)		(Level 3)		Not practicable (Carrying Value)
Admitted assets
Cash equivalents and short-term investments, other than affiliates	$	1,340,103	$	1,340,103	$	—	$	1,340,103	$	—	$	—
Bonds		13,724,625		12,448,872		657,112		12,371,746		695,767		—
Preferred stocks, other than affiliates		7,715		8,418		—		7,579		136		—
Common stocks, other than affiliates		79,006		79,006		5,773		—		73,233		—
Mortgage loans on real estate		1,964,977		1,864,851		—		—		1,964,977		—
Other invested assets		145,019		135,696		—		136,328		8,691		—
Floors, caps, options and swaptions		96,009		96,009		65		95,944		—		—
Interest rate swaps		474,682		27,728		—		474,682		—		—
Currency swaps		13,552		5,960		—		13,552		—		—
Credit default swaps		1,283		36		—		1,283		—		—
Policy loans		477,665		477,665		—		477,665		—		—
Securities lending reinvested collateral		350,162		350,329		—		350,162		—		—
Receivable from parent, subsidiaries and affiliates		1,788		1,788		—		1,788		—		—
Separate account assets		11,548,616		12,669,510		9,723,879		1,800,699		24,038		—
Liabilities
Investment contract liabilities		4,522,569		4,619,786		—		435,540		4,087,029		—
Interest rate swaps		146,339		26,853		—		146,339		—		—
Currency swaps		37,673		39,587		—		37,673		—		—
Credit default swaps		2,616		6,072		—		2,616		—		—
Payable to parent, subsidiaries and affiliates		34,378		34,378		—		34,378		—		—
Separate account annuity liabilities		12,605,439		12,605,099		—		12,435,092		170,347		—
Surplus notes		178,570		160,000		—		—		178,570		—

Mon Life 2013 SEC 41

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables provide information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2013 and 2012:

	2013
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Government	$	—	$	15,835	$	—	$	15,835
Industrial and miscellaneous		—		12,688		42,852		55,540
Total bonds		—		28,523		42,852		71,375
Preferred stock
Industrial and miscellaneous		—		—		136		136
Total preferred stock		—		—		136		136
Common stock
Industrial and miscellaneous		4,313		1		41,354		45,668
Total common stock		4,313		1		41,354		45,668
Short-term
Government		—		2		—		2
Industrial and miscellaneous		—		285,271		—		285,271
Mutual funds		—		185,481		—		185,481
Sweep accounts		—		270		—		270
Total short-term		—		471,024		—		471,024
Derivative assets		238		186,624		5,195		192,057
Separate account assets		11,637,283		1,998,253		13,923		13,649,459
Total assets	$	11,641,834	$	2,684,425	$	103,460	$	14,429,719
Liabilities:
Derivative liabilities	$	—	$	122,024	$	—	$	122,024
Separate account liabilities		538		1,129		—		1,667
Total liabilities	$	538	$	123,153	$	—	$	123,691

Mon Life 2013 SEC 42

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	2012
	Level 1		Level 2		Level 3		Total
Assets:
Bonds
Industrial and miscellaneous	$	—	$	27,052	$	15,467	$	42,519
Total bonds		—		27,052		15,467		42,519
Preferred stock
Industrial and miscellaneous		—		—		136		136
Total preferred stock		—		—		136		136
Common stock
Industrial and miscellaneous		5,773		—		73,233		79,006
Total common stock		5,773		—		73,233		79,006
Short-term investments
Government		—		2		—		2
Industrial and miscellaneous		—		1,098,015		—		1,098,015
Mutual funds		—		166,890		—		166,890
Sweep accounts		—		75,196		—		75,196
Total short-term investments		—		1,340,103		—		1,340,103
Derivative assets		66		97,509		—		97,575
Separate account assets		9,723,879		1,800,700		24,038		11,548,617
Total assets	$	9,729,718	$	3,265,364	$	112,874	$	13,107,956
Liabilities:
Derivative liabilities	$	—	$	21,020	$	—	$	21,020
Separate account liabilities		—		1,722		—		1,722
Total liabilities	$	—	$	22,742	$	—	$	22,742

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

Preferred stock in Level 3 is being internally calculated.

Common stock in Level 3 is comprised primarily of shares in the Federal Home Loan Bank (FHLB) of Des Moines, which are valued at par as a proxy for fair value as they can only be redeemed by the bank. In addition, the Company owns common stock being carried at book value and some warrants that are valued using broker quotes.

Mon Life 2013 SEC 43

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Short-term investments are classified as Level 2 as they are carried at amortized cost, which approximates fair value.

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

Derivatives classified as Level 3 represent OTC contracts valued using internal pricing models based on observable bond market prices and other market observable data or third party pricing and broker quotes.

Separate account assets are valued and classified in the same way as general account assets (described above). For example, separate account assets in Level 3 are those valued using non-binding broker quotes, which cannot be corroborated by other market observable data or internal modeling which utilize inputs that are not market observable.

Separate account liabilities consist of derivative liabilities held on the separate accounts. They are valued in the same way as the general account derivatives (described above).

During 2013 and 2012, there were no transfers between Level 1 and 2, respectively.

Mon Life 2013 SEC 44

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables summarize the changes in assets classified in Level 3 for 2013 and 2012:

	Balance at January 1, 2013		Transfers into Level 3		Transfers out of Level 3		Total Gains and (Losses) Included in Net income (a)			Total Gains and (Losses) Included in Surplus (b)
Bonds
RMBS	$	247	$	—	$	—	$	(128	)	$	95
Other		15,220		12,501		—		(569	)		17,686
Preferred stock		136		—		—		—			—
Common stock		73,233		84		—		(13	)		(1,005	)
Derivatives		—		—		—		2,753			—
Separate account assets		24,038		—		11,839		78			2,777
Total	$	112,874	$	12,585	$	11,839	$	2,121		$	19,553
	Purchases		Issuances		Sales		Settlements			Balance at December 31, 2013
Bonds
RMBS	$	—	$	—	$	—	$	—		$	214
Other		142		—		—		2,342			42,638
Preferred stock		—		—		—		—			136
Common stock		15		—		18,725		12,234			41,355
Derivatives		—		2,442		—		—			5,195
Separate account assets		—		—		—		1,131			13,923
Total	$	157	$	2,442	$	18,725	$	15,707		$	103,461

Mon Life 2013 SEC 45

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Balance at January 1, 2012		Transfers into Level 3		Transfers out of Level 3		Total Gains and (Losses) Included in Net income (a)			Total Gains and (Losses) Included in Surplus (b)
Bonds
RMBS	$	1,219	$	621	$	1,047	$	(198	)	$	(236	)
Other		13,224		3,149		2,993		(1,835	)		3,127
Preferred stock		136		—		—		—			—
Common stock		78,106		—		788		—			(2,486	)
Derivatives		—		4,257		—		—			1,400
Separate account assets		31,150		1,145		1,033		104			(6,422	)
Total	$	123,835	$	9,172	$	5,861	$	(1,929	)	$	(4,617	)
	Purchases		Issuances		Sales		Settlements			Balance at December 31, 2012
Bonds
RMBS	$	—	$	—	$	—	$	112		$	247
Other		30		2,610		—		2,092			15,220
Preferred stock		—		—		—		—			136
Common stock		—		2,116		—		3,715			73,233
Derivatives		6,369		—		—		12,026			—
Separate account assets		—		—		—		906			24,038
Total	$	6,399	$	4,726	$	—	$	18,851		$	112,874

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

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

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

Transfers in for bonds were attributed to securities being valued using third party vendor inputs at December 31, 2012 and 2011, subsequently changing to being internally modeled during 2013 and 2012. In addition, transfers in for bonds were attributed to securities being carried at amortized cost at December 31, 2012 and 2011, subsequently being carried at fair value during 2013 and 2012. Transfers in for bonds were also attributed to securities being valued using broker quotes which utilize observable inputs at December 31, 2011, subsequently changing to being valued using broker quotes which utilize unobservable inputs during 2012.

Mon Life 2013 SEC 46

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Transfers out for bonds were attributed to securities being carried at fair value at December 31, 2011, subsequently changing to being carried at amortized cost during 2012. Also, transfers out for bonds were the result of securities being valued using internal models at December 31, 2011, subsequently changing to being valued using third party vendor inputs during 2012.

Transfers in for common stock were attributed to securities being valued using third party vendor inputs at December 31, 2012, subsequently changing to being internally modeled during 2013.

Transfers out for common stock were attributed to securities being valued using a stale price at December 31, 2011, subsequently changing to being valued using third party vendor inputs during 2012.

Transfers in for derivatives were attributed to securities being carried at amortized cost at December 31, 2011, subsequently changing to being carried at fair value during 2012.

Transfers in for separate account bonds were partly attributed to securities being valued using third party vendor inputs at December 31, 2011, subsequently changing to being valued using a stale price, thus causing the transfer into Level 3 during 2012. Transfers in for separate account bonds were also attributed to securities being carried at amortized cost at December 31, 2011, subsequently changing to being carried at fair value during 2012.

Transfers out for separate account bonds were partly attributed to securities being valued using non-binding broker quotes or internal modeling which utilize unobservable inputs at December 21, 2012, subsequently changing to being valued using third party vendor inputs during 2013. Transfers out for separate account bonds were attributed to securities being valued using internal modeling at December 31, 2011, subsequently changing to being valued using third party vendor inputs during 2012.

Nonrecurring fair value measurements

As indicated in Note 1, real estate held for sale is measured at the lower of carrying amount or fair value less cost to sell. As of December 31, 2013 and 2012, the Company has several properties that are held for sale. Therefore, these properties are carried at fair value less cost to sell, which amounts to $6,900 and $4,792 as of December 31, 2013 and 2012, respectively.

The properties held for sale include one home office property with a fair value of $3,500 as of December 31, 2013 and 2012. Fair value of this property was determined based upon an external appraisal following the income approach. In addition, several residential properties are held for sale with a fair value of $3,400 and $1,292 as of December 31, 2013 and 2012, respectively. Fair value for these residential properties was also determined based upon external appraisals.

Mon Life 2013 SEC 47

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The fair value measurements are classified in Level 3 as the external appraisals utilize inputs and adjustments for the specific attributes of these properties that are not market observable.

5. Investments

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

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses less Than 12 Months		Estimated Fair Value
December 31, 2013
Unaffiliated bonds:
United States Government and agencies	$	603,161	$	11,257	$	3,328	$	16,419	$	594,671
State, municipal and other government		407,239		36,555		1,818		8,507		433,469
Hybrid securities		405,592		7,433		53,637		73		359,315
Industrial and miscellaneous		8,507,349		752,983		64,818		93,914		9,101,600
Mortgage and other asset-backed securities		2,401,458		115,242		60,791		24,903		2,431,006
		12,324,799		923,470		184,392		143,816		12,920,061
Unaffiliated preferred stocks		9,541		411		997		—		8,955
	$	12,334,340	$	923,881	$	185,389	$	143,816	$	12,929,016

Mon Life 2013 SEC 48

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses 12 Months or More		Gross Unrealized Losses less Than 12 Months		Estimated Fair Value
December 31, 2012
Unaffiliated bonds:
United States Government and agencies	$	374,681	$	69,908	$	71	$	32	$	444,486
State, municipal and other government		439,755		80,688		6,794		83		513,566
Hybrid securities		407,536		10,892		102,392		—		316,036
Industrial and miscellaneous		8,568,198		1,242,136		12,199		14,798		9,783,337
Mortgage and other asset-backed securities		2,601,502		139,599		118,613		1,714		2,620,774
		12,391,672		1,543,223		240,069		16,627		13,678,199
Unaffiliated preferred stocks		8,418		275		978		—		7,715
	$	12,400,090	$	1,543,498	$	241,047	$	16,627	$	13,685,914

At December 31, 2013 and 2012, respectively, for bonds and preferred stocks that have been in a continuous loss position for greater than or equal to twelve months, the Company held 219 and 192 securities with a carrying amount of $1,506,148 and $1,524,672 and an unrealized loss of $185,389 and $241,047 with an average price of 87.7 and 84.2 (fair value/amortized cost). Of this portfolio, 76.4% and 66.6% were investment grade with associated unrealized losses of $124,981 and $107,124, respectively.

At December 31, 2013 and 2012, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 461 and 144 securities with a carrying amount of $3,079,455 and $874,294 and an unrealized loss of $143,816 and $16,627 with an average price of 95.3 and 98.1 (fair value/amortized cost). Of this portfolio, 97.3% and 96.8% were investment grade with associated unrealized losses of $140,339 and $15,035, respectively.

At December 31, 2013 and 2012, respectively, for common stocks that have been in a continuous loss position for greater than or equal to twelve months, the Company held 3 and 3 securities with a cost of $14 and $14 and an unrealized loss of $1 and $1 with an average price of 96.9 and 96.9 (fair value/cost).

At December 31, 2013 and 2012, respectively, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 2 and 5 securities with a cost of $14,052 and $28,665 and an unrealized loss of $1 and $78 with an average price of 100.0 and 99.7 (fair value/cost).

Mon Life 2013 SEC 49

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2013 and 2012 is as follows:

	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2013
Unaffiliated bonds:
United States Government and agencies	$	15,070	$	372,247	$	387,317
State, municipal and other government		9,976		110,669		120,645
Hybrid securities		197,309		22,080		219,389
Industrial and miscellaneous		590,431		1,823,597		2,414,028
Mortgage and other asset-backed securities		505,970		607,046		1,113,016
		1,318,756		2,935,639		4,254,395
Unaffiliated preferred stocks		2,003		—		2,003
Unaffiliated common stocks		14		14,051		14,065
	$	1,320,773	$	2,949,690	$	4,270,463
	Losses 12 Months or More		Losses Less Than 12 Months		Total
December 31, 2012
Unaffiliated bonds:
United States Government and agencies	$	3,328	$	14,923	$	18,251
State, municipal and other government		35,022		3,614		38,636
Hybrid securities		202,462		—		202,462
Industrial and miscellaneous		189,141		781,804		970,945
Mortgage and other asset-backed securities		851,649		57,326		908,975
		1,281,602		857,667		2,139,269
Unaffiliated preferred stocks		2,022		—		2,022
Unaffiliated common stocks		14		28,588		28,602
	$	1,283,638	$	886,255	$	2,169,893

Mon Life 2013 SEC 50

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The carrying amount and estimated fair value of bonds at December 31, 2013, 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	$	216,702	$	219,687
Due after one year through five years		1,968,356		2,103,074
Due after five years through ten years		2,014,564		2,117,004
Due after ten years		5,723,719		6,049,290
		9,923,341		10,489,055
Mortgage and other asset-backed securities		2,401,458		2,431,006
	$	12,324,799	$	12,920,061

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

Banking

At December 31, 2013 the Company’s banking sector portfolio had investments in an unrealized loss position which had a fair value of $651,783 and a carrying value of $746,112, resulting in a gross unrealized loss of $94,329. The gross unrealized losses in the banking sub-sector primarily reflect low floating rate coupons on some securities, credit spread widening since the time of acquisition due to the Sovereign debt crisis in Europe, residual impact from the U.S. financial crisis, and global economic uncertainty. Following the implementation of new, more stringent global legislation on bank capital and liquidity requirements, credit spreads in the sector have outperformed the broader corporate market in 2013. Decisive steps by EU leaders and world central banks continue to stabilize the euro and improve funding conditions for most banks. Globally, there remain pockets of concentrated risk on bank balance sheets, and ratings for some countries and banks remain under pressure, but the banking sub-sector has largely been strengthened and oversight increased.

The value of the Company’s investments in deeply subordinated securities in the financial services sector may be significantly impacted if issuers of certain securities with optional deferral features exercise the option to defer coupon payments or are required to defer as a condition of receiving government aid. The deeply subordinated securities issued by non-US Banks are broadly referred to as capital securities which can be categorized as Tier 1 or Upper Tier 2. Capital securities categorized as “Tier 1” are typically perpetual with a non-cumulative coupon that can be deferred under certain conditions. Capital securities categorized as “Upper Tier 2” are

Mon Life 2013 SEC 51

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

generally perpetual with a cumulative coupon that is deferrable under certain conditions. The deeply subordinated securities issued by US Banks can be categorized as Trust Preferred or Hybrid. Capital securities categorized as trust preferred typically have an original maturity of 30 years with call features after 10 years with a cumulative coupon that is deferrable under certain conditions. Capital securities categorized as hybrid typically have an original maturity of more than 30 years, may be perpetual and are generally subordinate to traditional trust preferred securities.

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, 2013.

Subprime Mortgages

At December 31, 2013, the Company’s asset-backed securities (ABS) subprime mortgages portfolio had investments in an unrealized loss position which had a fair value of $382,043 and a carrying value of $418,865, resulting in a gross unrealized loss of $36,822. ABS – housing securities are secured by pools of residential mortgage loans primarily those which are categorized as subprime. The unrealized loss is primarily due to decreased liquidity and increased credit spreads in the market combined with significant increases in expected losses on loans within the underlying pools.

The Company does not currently invest in or originate whole loan residential mortgages. The Company categorizes ABS issued by a securitization trust as having subprime mortgage exposure when the average credit score of the underlying mortgage borrowers in a securitization trust is below 660 at issuance. The Company also categorizes ABS issued by a securitization trust with second lien mortgages as subprime mortgage exposure, even though a significant percentage of second lien mortgage borrowers may not necessarily have credit scores below 660 at issuance. The Company does not have any “direct” residential mortgages to subprime borrowers outside of the ABS structures.

All ABS subprime mortgage securities are monitored and reviewed on a monthly basis. Detailed cash flow models using the current collateral pool and capital structure on the portfolio are updated and are reviewed quarterly. Model output is generated under base and stress-case scenarios. The Company’s internal ABS-housing asset specialists utilize widely recognized industry modeling software to perform a loan-by-loan, bottom-up approach to modeling. Key assumptions used in the models are projected defaults, loss severities and prepayments. Each of these key assumptions varies greatly based on the significantly diverse characteristics of the current collateral pool for each security. Loan-to-value, loan size and borrower credit history are some of the key characteristics used to determine the level of assumption that is utilized. Defaults

Mon Life 2013 SEC 52

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

were estimated by identifying the loans that are in various delinquency buckets and defaulting a certain percentage of them over the near-term and long-term. Assumed defaults on delinquent loans are dependent on the specific security’s collateral attributes and historical performance.

Loss severity assumptions were determined by observing historical rates from broader market data and by adjusting those rates for vintage specific pool performance, collateral type, mortgage insurance and estimated loan modifications. Prepayments were estimated by examining historical averages of prepayment activity on the underlying collateral. Once the entire pool is modeled, the results are closely analyzed by the Company’s internal asset specialist to determine whether or not the particular tranche or holding is at risk for not collecting all contractual cash flows, taking into account the seniority and other terms of the tranches held.

If cash flow models indicate a credit event will impact future cash flows and the Company does not have the intent to sell the tranche or holding and does have the intent and ability to hold the security, the security is impaired to discounted cash flows. As the remaining unrealized losses in the ABS subprime mortgage portfolio relate to holdings where the Company expects to receive full principal and interest, the Company does not consider the underlying investments to be impaired as of December 31, 2013.

There were no loan-backed securities with a recognized other-than-temporary impairment (OTTI) due to intent to sell or lack of intent and ability to hold during the years ended December 31, 2103, 2012 or 2011.

Mon Life 2013 SEC 53

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following tables provide the aggregate totals for loan-backed securities with a recognized OTTI due to the Company’s cash flow analysis, in which the security is written down to estimated future cash flows discounted at the security’s effective yield.

	Amortized Cost before Current Period OTTI		Recognized OTTI		Amortized Cost After OTTI		Fair Value
Year ended December 31, 2013
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	64,235	$	4,238	$	59,997	$	29,895
2nd quarter present value of cash flows expected to be less than the amortized cost basis		63,316		23,474		39,842		23,109
3rd quarter present value of cash flows expected to be less than the amortized cost basis		51,903		6,627		45,276		23,345
4th quarter present value of cash flows expected to be less than the amortized cost basis		42,936		6,503		36,433		22,696
Aggregate total	$	222,390	$	40,842	$	181,548	$	99,045
	Amortized Cost before Current Period OTTI		Recognized OTTI		Amortized Cost After OTTI		Fair Value
Year ended December 31, 2012
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	39,343	$	1,922	$	37,421	$	25,549
2nd quarter present value of cash flows expected to be less than the amortized cost basis		49,355		3,300		46,055		21,984
3rd quarter present value of cash flows expected to be less than the amortized cost basis		36,667		2,145		34,522		20,556
4th quarter present value of cash flows expected to be less than the amortized cost basis		36,404		885		35,519		17,847
Aggregate total	$	161,769	$	8,252	$	153,517	$	85,936

Mon Life 2013 SEC 54

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Amortized Cost before Current Period OTTI		Recognized OTTI		Amortized Cost After OTTI		Fair Value
Year ended December 31, 2011
1st quarter present value of cash flows expected to be less than the amortized cost basis	$	70,530	$	5,417	$	65,113	$	32,730
2nd quarter present value of cash flows expected to be less than the amortized cost basis		78,321		4,614		73,707		32,487
3rd quarter present value of cash flows expected to be less than the amortized cost basis		58,385		3,162		55,223		35,076
4th quarter present value of cash flows expected to be less than the amortized cost basis		54,581		7,175		47,406		39,648
Aggregate total	$	261,817	$	20,368	$	241,449	$	139,941

Mon Life 2013 SEC 55

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The following loan-backed and structured securities were held at December 31, 2013, for which an OTTI was recognized during the current reporting period:

CUSIP	Amortized Cost before Current Period OTTI		Present Value of Projected Cash Flows		Recognized OTTI		Amortized Cost After OTTI		Fair Value at Time of OTTI		Quarter in which Impairment Occurred
00075XAG2	$	9,270	$	8,751	$	519	$	8,751	$	341		1Q 2013
00442LAD1		2,454		2,325		129		2,325		2,088		1Q 2013
02148YAJ3		84		82		2		82		45		1Q 2013
02149QAD2		3,277		3,234		43		3,234		2,721		1Q 2013
045427AE1		753		311		442		311		169		1Q 2013
05953YAG6		215		209		6		209		159		1Q 2013
14984WAA8		11,205		10,969		236		10,969		10,570		1Q 2013
35729PPC8		4,000		3,869		131		3,869		703		1Q 2013
39539KAF0		213		205		8		205		199		1Q 2013
46628SAJ2		2,367		2,247		120		2,247		2,287		1Q 2013
55308LAB2		5,692		5,230		462		5,230		3,740		1Q 2013
65536PAA8		15		14		1		14		10		1Q 2013
75971EAF3		4,666		4,576		90		4,576		3,462		1Q 2013
761118VY1		3,127		3,065		62		3,065		2,444		1Q 2013
81379EAD4		47		—		47		—		1		1Q 2013
83612TAF9		7,863		7,176		687		7,176		358		1Q 2013
86358EZU3		8,849		7,653		1,196		7,653		525		1Q 2013
3622NAAC4		82		81		1		81		72		1Q 2013
00075XAG2		8,737		4,832		3,905		4,832		298		2Q 2013
05953YAG6		202		199		3		199		149		2Q 2013
126670ZN1		7,108		3,498		3,610		3,498		6,137		2Q 2013
126694A32		1,710		1,698		12		1,698		1,432		2Q 2013
14984WAA8		10,701		10,522		179		10,522		10,201		2Q 2013
24763LDE7		190		189		1		189		147		2Q 2013
35729PPC8		3,857		3,793		64		3,793		403		2Q 2013
68400DAG9		5,917		547		5,370		547		8		2Q 2013
68403HAF9		2,226		4		2,222		4		2		2Q 2013
83611MMM7		7,430		7,128		302		7,128		408		2Q 2013
83612TAC6		7,498		6,902		596		6,902		3,863		2Q 2013
83612TAF9		7,159		18		7,141		18		18		2Q 2013

Mon Life 2013 SEC 56

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

CUSIP	Amortized Cost before Current Period OTTI		Projected Cash Flows		Recognized OTTI		Amortized Cost After OTTI		Fair Value		Quarter in which Impairment Occurred
86358EZU3		554		486		68		486		28		2Q 2013
61753NAC4		28		27		1		27		15		2Q 2013
00075XAG2		4,819		2,950		1,869		2,950		90		3Q 2013
00442LAD1		2,163		2,055		108		2,055		2,627		3Q 2013
02146QAB9		64		63		1		63		108		3Q 2013
02149QAD2		3,087		3,083		4		3,083		2,600		3Q 2013
045427AE1		291		283		8		283		383		3Q 2013
059515AC0		555		528		27		528		402		3Q 2013
05953YAG6		193		183		10		183		145		3Q 2013
35729PPC8		3,783		3,598		185		3,598		355		3Q 2013
36245RAA7		719		714		5		714		540		3Q 2013
39539KAF0		151		151		—		151		127		3Q 2013
61754HAB8		352		341		11		341		245		3Q 2013
68400DAG9		543		4		539		4		2		3Q 2013
75970QAJ9		3,245		3,162		83		3,162		2,691		3Q 2013
75971EAF3		4,459		4,398		61		4,398		3,532		3Q 2013
761118VY1		3,497		3,273		224		3,273		2,843		3Q 2013
83611MMM7		7,118		6,863		255		6,863		356		3Q 2013
83612TAC6		6,899		6,751		148		6,751		3,855		3Q 2013
86358EZU3		7,508		4,477		3,031		4,477		329		3Q 2013
52524YAF0		2,430		2,373		57		2,373		2,102		3Q 2013
61753NAC4		26		26		—		26		14		3Q 2013
00075XAG2		2,937		1,013		1,924		1,013		57		4Q 2013
00442LAD1		1,980		1,931		49		1,931		2,724		4Q 2013
02149QAD2		2,983		2,902		81		2,902		2,589		4Q 2013
045427AE1		270		218		52		218		169		4Q 2013
24763LDE7		189		164		25		164		154		4Q 2013
35729PPC8		3,589		3,174		415		3,174		343		4Q 2013
75970QAJ9		3,127		2,974		153		2,974		2,684		4Q 2013
75971EAF3		4,325		4,127		198		4,127		3,599		4Q 2013
761118RM2		1,818		1,490		328		1,490		1,620		4Q 2013
83611MMM7		6,854		6,457		397		6,457		757		4Q 2013
83612TAC6		6,716		6,518		198		6,518		4,026		4Q 2013
86358EZU3		4,443		1,936		2,507		1,936		279		4Q 2013
12640WAG5		1,995		1,851		144		1,851		2,111		4Q 2013
61753NAC4		25		24		1		24		15		4Q 2013
45660LKW8		1,685		1,652		33		1,652		1,571		4Q 2013

Mon Life 2013 SEC 57

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The unrealized losses of loan-backed and structured securities where fair value is less than cost or amortized cost for which an OTTI has not been recognized in earnings as of December 31, 2013 and 2012 is as follows:

	Losses 12 Months or More		Losses Less Than 12 Months
Year ended December 31, 2013
The aggregate amount of unrealized losses	$	115,229	$	24,886
The aggregate related fair value of securities with unrealized losses		605,686		607,046
	Losses 12 Months or More		Losses Less Than 12 Months
Year ended December 31, 2012
The aggregate amount of unrealized losses	$	235,956	$	7,106
The aggregate related fair value of securities with unrealized losses		917,808		79,785

Detail of net investment income is presented below:

	Year Ended December 31
	2013			2012		2011
Income:
Bonds	$	608,872		$	665,143	$	698,531
Preferred stocks		4,516			3,791		3,007
Common stocks		1,893			3,599		3,305
Mortgage loans on real estate		98,876			119,979		123,944
Real estate		1,247			1,018		1,095
Policy loans		29,032			29,076		30,126
Cash, cash equivalents and short-term investments		1,353			2,203		2,440
Derivatives		12,632			15,357		5,840
Other invested assets		3,991			13,212		8,697
Other		(738	)		3,441		1,121
Gross investment income		761,674			856,819		878,106
Less investment expenses		32,345			34,505		36,065
Net investment income	$	729,329		$	822,314	$	842,041

Mon Life 2013 SEC 58

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Year Ended December 31
	2013			2012			2011
Proceeds	$	1,582,738		$	4,357,730		$	2,597,080
Gross realized gains	$	12,758		$	417,006		$	66,223
Gross realized losses		(13,236	)		(27,531	)		(22,934	)
Net realized capital gains (losses)	$	(478	)	$	389,475		$	43,289

The Company had gross realized losses for the years ended December 31, 2013, 2012 and 2011 of $41,176, $22,898 and $33,707, respectively, which relate to losses recognized on other-than-temporary declines in the fair value of bonds and preferred stocks.

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

	Realized
	Year Ended December 31
	2013			2012			2011
Bonds	$	(41,648	)	$	366,392		$	9,633
Preferred stocks		—			185			(51	)
Common stocks		(203	)		181			2,699
Mortgage loans on real estate		(30	)		(3,240	)		(8,533	)
Real estate		(2,742	)		(3,704	)		(1,869	)
Cash, cash equivalents and short-term investments		1			1			14
Derivatives		(66,568	)		(47,592	)		(115,760	)
Other invested assets		20,448			24,655			14,586
		(90,742	)		336,878			(99,281	)
Federal income tax effect		35,916			(128,376	)		24,360
Transfer to (from) interest maintenance reserve		43,475			(216,378	)		46,079
Net realized capital losses on investments	$	(11,351	)	$	(7,876	)	$	(28,842	)

At December 31, 2013 and 2012, the Company had recorded investments in restructured securities of $320 and $7,170, respectively. The capital (losses) taken as a result of restructures in 2013, 2012 and 2011 were $(156), $(368) and $(6,868), respectively. 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.

Mon Life 2013 SEC 59

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Change in Unrealized
	Year Ended December 31
	2013			2012			2011
Bonds	$	50,095		$	(16,551	)	$	4,454
Preferred stocks		—			1,408			(1,408	)
Common stocks		(892	)		(4,558	)		(5,607	)
Affiliated entities		(4,768	)		(5,899	)		(570	)
Mortgage loans on real estate		253			1,255			(1,637	)
Derivatives		94,576			26,867			3,422
Other invested assets		18,545			(38,135	)		(4,716	)
Change in unrealized capital gains (losses), before tax		157,809			(35,613	)		(6,062	)
Taxes on unrealized capital gains/loss		(62,279	)		2,354			(6,021	)
Change in unrealized capital gains (losses), net of tax	$	95,530		$	(33,259	)	$	(12,083	)

The Company’s investments in mortgage loans principally involve commercial real estate.

The credit quality of mortgage loans by type of property for the year ended December 31, 2013 were as follows:

	Farm		Commercial		Total
AAA - AA	$	755	$	1,151,315	$	1,152,070
A		40,812		330,399		371,211
BBB		6,719		22,496		29,215
BB		—		131,804		131,804
B		—		3,352		3,352
	$	48,286	$	1,639,366	$	1,687,652

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

During 2013, the maximum and minimum lending rates for mortgage loans during were 5.87% and 3.00%, respectively. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated during the year ending December 31, 2013 at the time of

Mon Life 2013 SEC 60

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

origination was 77%. During 2013, the Company did not reduce interest rates on any outstanding mortgages. At December 31, 2013, mortgage loans with a carrying value of $1,061 were non-income producing for the previous 180 days. There was no accrued interest related to these mortgage loans that required excluding the amount from investment income at December 31, 2013. The Company did not have any taxes, assessments and other amounts advanced not included in the mortgage loan total for the year ended December 31, 2013.

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

			Residential				Commercial
December 31, 2013	Farm		Insured		All Other		Insured		All Other		Mezzanine		Total
Recorded Investment (All)
(a) Current	$	48,286	$	—	$	3,930	$	—	$	1,505,460	$	133,906	$	1,691,582
(b) 30-59 Days Past Due		—		—		217		—		—		—		217
(c) 60-89 Days Past Due		—		—		—		—		—		—		—
(d) 90-179 Days Past Due		—		—		—		—		—		—		—
(e) 180+ Days Past Due		—		—		1,061		—		—		—		1,061
			Residential				Commercial
December 31, 2012	Farm		Insured		All Other		Insured		All Other		Mezzanine		Total
Recorded Investment (All)
(a) Current	$	74,872	$	—	$	4,176	$	—	$	1,608,517	$	175,705	$	1,863,270
(b) 30-59 Days Past Due		—		—		190		—		—		—		190
(c) 60-89 Days Past Due		—		—		125		—		—		—		125
(d) 90-179 Days Past Due		—		—		138		—		—		—		138
(e) 180+ Days Past Due		—		—		1,128		—		—		—		1,128

During 2012, the maximum and minimum lending rates for mortgage loans during were 5.00% and 3.65%, respectively. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated during the year ending December 31, 2012 at the time of origination was 67%. During 2012, the Company did not reduce interest rates on any outstanding mortgages. At December 31, 2012, mortgage loans with a carrying value of $1,128 were non-income producing for the previous 180 days. Accrued interest of $152 related to these mortgage loans was excluded from investment income at December 31, 2012. The Company did not have any taxes, assessments and other amounts advanced not included in the mortgage loan total for the year ended December 31, 2012.

At December 31, 2013 and 2012, respectively, the net admitted asset value in impaired loans with a related allowance for credit losses was $7,983 and $7,926. The Company held an allowance for credit losses on mortgage loans in the amount of $247 and $499 at December 31, 2013 and 2012, respectively. The average recorded investment in impaired loans during 2013 and 2012 was $7,915 and $7,735, respectively. There was no recorded investment in impaired loans without an allowance for credit losses during 2013 or 2012.

Mon Life 2013 SEC 61

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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
	2013			2012			2011
Balance at beginning of period	$	499		$	1,754		$	117
Additions, net charged to operations		—			—			1,754
Recoveries in amounts previously charged off		(252	)		(1,255	)		(117	)
Balance at end of period	$	247		$	499		$	1,754

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 $540, $552 and $312 of interest income on impaired loans for the years ended December 31, 2013, 2012 and 2011, respectively. The Company recognized interest income on a cash basis of $540, $552 and $312 for the years ended December 31, 2013, 2012 and 2011, respectively.

The fair value of property is determined based on an appraisal from a third-party appraiser, along with information obtained from discussions with internal asset managers and a listing broker regarding recent comparable sales data and other relevant property information. Impairment losses of $2,768, $3,996 and $2,373 were taken on real estate in 2013, 2012 and 2011, respectively, to write the book value down to the current fair value and were reflected as realized losses in the statements of operations.

During 2013 and 2012, respectively, mortgage loans of $7,754 and $4,690 were foreclosed or acquired by deed and transferred to real estate. At December 31, 2013 and 2012, the Company held a mortgage loan loss reserve in the AVR of $21,969 and $17,693, respectively.

Mon Life 2013 SEC 62

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

Geographic Distribution
	December 31
	2013			2012
Pacific		25	%		22	%
South Atlantic		19			18
Middle Atlantic		16			24
E. South Central		13			12
W. South Central		10			8
Mountain		7			6
E. North Central		5			4
W. North Central		4			4
New England		1			2

Property Type Distribution
	December 31
	2013			2012
Office		47	%		48	%
Retail		18			18
Apartment		14			15
Industrial		10			9
Other		4			3
Medical		4			3
Agricultural		3			4
Residential		0			0

At December 31, 2013, 2012 and 2011, the Company held mortgage loans with a total net admitted value of $378, $137 and $137, respectively, which had been restructured in accordance with SSAP No. 36, Troubled Debt Restructuring. There were no realized losses during the years ended December 31, 2013, 2012 and 2011 related to such restructurings. There were no commitments to lend additional funds to debtors owing receivables at December 31, 2013, 2012 or 2011.

During 2012, the Company recorded an impairment of $694 for its investment in Green Mountain Partners II, L.P. The impairment was taken because the decline in fair value of the fund was deemed to be other than temporary and a recovery in value from the remaining underlying investments in the fund was not anticipated. The write-down was included in net realized capital gains (losses) within the statements of operations.

During 2011, the Company recorded an impairment of $1,982 for its investment in Ridge Capital Fund I, L.P. The impairment was taken because the decline in fair value of the fund was deemed to be other than temporary and a recovery in value from the remaining underlying investments in the fund was not anticipated. The write-down was included in net realized capital gains (losses) within the statements of operations.

On December 31, 2010, the Company acquired two real estate related limited liability company interests (Transamerica Pyramid Properties, LLC and Transamerica Realty Properties, LLC) from Transamerica Life Insurance Company (TLIC), an affiliate, for a combined purchase price of $252,975. The price paid was based predominantly on the valuations of the properties within each of those entities. This transaction was accounted for as a business combination using the statutory purchase method and resulted in goodwill of $100,674, which was included in the

Mon Life 2013 SEC 63

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

carrying amount of these other invested assets. Amortization in the amount of $10,067 was recorded during each of the years ending December 31, 2013 and 2012, which is reflected in the carrying value of these other invested assets with an offset to the change in net unrealized capital gains/losses. As the carrying amount of the total positive goodwill of the Company exceeded 10% of the September 30, 2013 capital and surplus, adjusted to exclude positive goodwill and net deferred tax assets as of September 30, 2013, goodwill in the amount of $10,702 associated with this transaction was nonadmitted at December 31, 2013. The entire goodwill balance associated with this transaction was admitted at December 31, 2012.

For the year ending December 31, 2013, the Company had ownership interests in forty-eight LIHTC properties. The remaining years of unexpired tax credits ranged from one to nine and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from one to fourteen years. The amount of contingent equity commitments expected to be paid during the years 2014 to 2025 is $2,032. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

For the year ending December 31, 2012, the Company had ownership interests in fifty-seven LIHTC properties. The remaining years of unexpired tax credits ranged from one to thirteen and none of the properties were subject to regulatory review. The length of time remaining for holding periods ranged from one to fifteen years. The amount of contingent equity commitments expected to be paid during the years 2013 to 2025 is $7,640. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

The following tables provide the carrying value of state transferable tax credits gross of any related tax liabilities and total unused transferable tax credits by state and in total as of December 31, 2013 and 2012:

			December 31, 2013
Description of State Transferable and Non-transferable Tax Credits	State		Carrying Value		Unused Amount*
Low-Income Housing Tax Credits		MA	$	462	$	1,033
Total			$	462	$	1,033
			December 31, 2012
Description of State Transferable and Non-transferable Tax Credits	State		Carrying Value		Unused Amount
Low-Income Housing Tax Credits		MA	$	810	$	1,381
Total			$	810	$	1,381

*The unused amount reflects credits that the Company deems will be realizable in the period from 2014 to 2015.

Mon Life 2013 SEC 64

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The Company had no non-transferable state tax credits.

The Company estimated the utilization of the remaining state transferable tax credits by projecting a future tax liability based on projected premium, tax rates and tax credits and comparing the projected future tax liability to the availability of remaining state transferable tax credits. The Company had no impairment losses related to state transferable tax credits as of December 31, 2013, 2012 and 2011.

Derivatives

The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets (cash or securities) on the Company’s behalf in an amount equal to the difference between the net positive fair value of the contracts and an agreed upon threshold based on the credit rating of the counterparty. If the net fair value of all contracts with this counterparty is negative, then the Company is required to post similar assets (cash or securities).

At December 31, 2013 and 2012, the fair value of all derivative contracts, aggregated at a counterparty level, with a positive fair value amounted to $370,542 and $585,525, respectively.

At December 31, 2013 and 2012, the fair value of all derivative contracts, aggregated at a counterparty level, with a negative fair value amounted to $47,904 and $186,630, respectively.

For the years ended December 31, 2013, 2012 and 2011, the Company has recorded $88,048, $287 and $(14,830), respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized gain (loss).

The Company did not recognize any unrealized gains or losses during 2013, 2012 or 2011 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

The maximum term over which the Company is hedging its exposure to the variability of future cash flows is approximately 20 years for forecasted hedge transactions.

For the years ended December 31, 2013, 2012 and 2011 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.

Mon Life 2013 SEC 65

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

As of December 31, 2013 and 2012, the company has accumulated deferred gains in the amount of $3,616 and $3,822, respectively, related to the termination of swaps that were hedging forecasted transactions. It is expected that these gains will be used as basis adjustments on futures asset purchases expected to transpire throughout 2026.

At December 31, 2013 and 2012, the Company had replicated assets with a fair value of $562,373 and $469,474, respectively, and credit default and forward starting interest rate swaps with a fair value of $8,188 and $(26,540), respectively.

For the year ended December 31, 2013 and 2012, the Company recognized $77 and $1,639 in capital losses related to replication transactions.

As stated in Note 1, the Company replicates investment grade corporate bonds by writing credit default swaps. As a writer of credit swaps, the Company actively monitors the underlying asset, being careful to note any events (default or similar credit event) that would require the Company to perform on the credit swap. If such events would take place, the Company has recourse provisions from the proceeds of the bankruptcy settlement of the underlying entity or by the sale of the underlying bond.

Mon Life 2013 SEC 66

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

As of December 31, 2013, credit default swaps, used in replicating corporate bonds are as follows:

	Maximum Future
	Maturity		Payout		Current Fair
Deal, Receive (Pay), Underlying	Date		(Estimated)		Value
43231,SWAP, USD 1 / (USD 0), :912810PX0		12/20/2015	$	10,000	$	111
43285,SWAP, USD 1 / (USD 0), :CDXIG 17		12/20/2016		7,500		154
43286,SWAP, USD 1 / (USD 0), :CDXIG17		12/20/2016		3,500		72
43299,SWAP, USD 1 / (USD 0), :JP1200551248		3/20/2017		12,000		293
43302,SWAP, USD 1 / (USD 0), :US50064FAD69		3/20/2017		10,000		198
43307,SWAP, USD 1 / (USD 0), :US731011AN26		3/20/2017		15,000		264
43310,SWAP, USD 1 / (USD 0), :US50064FAD69		3/20/2017		10,000		198
43321,SWAP, USD 1 / (USD 0), :USY6826RAA06		3/20/2017		5,000		57
43347,SWAP, USD 1 / (USD 0), :US416515AY06		6/20/2017		25,000		437
47295,SWAP, USD 1 / (USD 0), :US59156RAN89		6/20/2017		25,000		418
47296,SWAP, USD 1 / (USD 0), :US172967ES69		6/20/2017		25,000		420
47297,SWAP, USD 1 / (USD 0), :US743410AW27		6/20/2017		25,000		345
43374,SWAP, USD 1 / (USD 0), :CDX IG 18		6/20/2017		10,000		215
43394,SWAP, USD 1 / (USD 0), :XS0114288789		9/20/2017		10,000		(113	)
43601,SWAP, USD 1 / (USD 0), :US88322LAA70		9/20/2017		5,100		10
43613,SWAP, USD 1 / (USD 0), :US455780AQ93		9/20/2017		7,800		(206	)
46410,SWAP, USD 1 / (USD 0), :912810QL5		12/20/2017		20,000		426
46411,SWAP, USD 1 / (USD 0), :912810QL5		12/20/2017		19,000		405
46915,SWAP, USD 1 / (USD 0), :61761DAD4		12/20/2017		20,000		247
47037,SWAP, USD 1 / (USD 0), :12624PAE5		12/20/2017		5,000		106
47657,SWAP, USD 1 / (USD 0), :92939RBB7		12/20/2017		12,500		209
48775,SWAP, USD 1 / (USD 0), :12624QAR4		12/20/2017		12,500		266
49952,SWAP, USD 1 / (USD 0), :94987MAB7		12/20/2017		5,000		73
53497,SWAP, USD 1 / (USD 0), :20048EAY7		12/20/2017		15,000		319
53821,SWAP, USD 1 / (USD 0), :92937EAZ7		3/20/2018		22,000		432
54329,SWAP, USD 1 / (USD 0), :76116FAG2		3/20/2018		10,000		30
54865,SWAP, USD 5 / (USD 0), :61761QAE3		3/20/2018		15,000		2408
55127,SWAP, USD 1 / (USD 0), :36228CUV3		3/20/2018		2,300		(95	)
60519,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		20,000		275
60520,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		20,000		(7	)
60521,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		10,000		(1	)
59110,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		20,000		200
59117,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		10,000		(1	)
59280,SWAP, USD 1 / (USD 0), :912828TY6		6/20/2018		20,000		275

Mon Life 2013 SEC 67

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

At December 31, 2013 and 2012, the Company held options with a fair value of $5,432 and $66, respectively.

At December 31, 2013 and 2012, the Company’s outstanding derivative financial instruments with on and off balance sheet risks, shown in notional amounts, are summarized as follows:

	Notional Amount
	2013		2012
Interest rate and currency swaps:
Receive floating—pay floating	$	—	$	31,620
Receive fixed—pay floating		43,970		88,562
Receive floating—pay fixed		19,500		19,500
Receive fixed—pay fixed		482,442		—
Swaps:
Receive fixed—pay floating		1,701,576		2,748,946
Receive fixed—pay fixed		53,003		—
Receive floating—pay fixed		179,200		664,840
Receive floating—pay floating		39,200		39,200

The Company recognized net realized gains (losses) from futures contracts in the amount of $3,578, $1,917 and $(399), for the years ended December 31, 2013, 2012 and 2011, respectively.

Open futures contracts at December 31, 2013 and 2012 were as follows:

				Opening		Year-End
				Fair		Fair
Long/Short	Number of Contracts		Contract Type	Value		Value
December 31, 2013
Long		50	S&P 500 March 2014 Futures	$	22,253	$	23,013
Short		116	S&P 500 E-MINI March 2014 Futures		10,325		10,678
Long		10	NASDAQ 100 E-MINI March 2014 Futures		693		716

Mon Life 2013 SEC 68

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Long/Short	Number of Contracts	Contract Type	Opening Fair Value			Year-End Fair Value
December 31, 2012
Long	46	S&P 500 March 2013 Futures	$	16,262		$	16,331
Short	(69)	S&P 500 E-MINI March 2013 Futures		(4,857	)		(4,774	)
Long	3	NASDAQ 100 E-MINI March 2013 Futures	$	157		$	159

The following tables show the pledged or restricted assets as of December 31, 2013 and 2012, respectively:

	Gross Restricted
Restricted Asset Category	Total General Account (G/A)		G/A Supporting Separate Account (S/A) Activity		Total S/A Restricted Assets		S/A Assets Supporting G/A Activity		Total
a. Subject to contractual obligation for which liability is not shown	$	—	$	—	$	—	$	—	$	—
b. Collateral held under security lending agreements		322,169		—		—		—		322,169
c. Subject to repurchase agreements		—		—		—		—		—
d. Subject to reverse repurchase agreements		—		—		—		—		—
e. Subject to dollar repurchase agreements		52,930		—		—		—		52,930
f. Subject to dollar reverse repurchase agreements		—		—		—		—		—
g. Placed under option contracts		—		—		—		—		—
h. Letter stock or securities restricted as to sale		—		—		—		—		—
i. On deposit with state(s)		9,184		—		—		—		9,184
j. On deposit with other regulatory bodies		—		—		—		—		—
k. Pledged as collateral not captured in other categories		587,282		—		—		—		587,282
l. Other restricted assets - reinsurance		189,895		—		—		—		189,895
m. Total Restricted Assets	$	1,161,460	$	—	$	—	$	—	$	1,161,460

Mon Life 2013 SEC 69

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Gross Restricted							Percentage
Restricted Asset Category	Total From Prior Year		Increase/ (Decrease)			Total Current Year Admitted Restricted		Gross Restricted to Total Assets			Admitted Restricted to Total Admitted Assets
a. Subject to contractual obligation for which liability is not shown	$	—	$	—		$	—		0.00	%		0.00	%
b. Collateral held under security lending agreements		347,440		(25,271	)		322,169		1.01			1.01
c. Subject to repurchase agreements		—		—			—		0.00			0.00
d. Subject to reverse repurchase agreements		—		—			—		0.00			0.00
e. Subject to dollar repurchase agreements		6,422		46,508			52,930		0.17			0.17
f. Subject to dollar reverse repurchase agreements		—		—			—		0.00			0.00
g. Placed under option contracts		—		—			—		0.00			0.00
h. Letter stock or securities restricted as to sale		—		—			—		0.00			0.00
i. On deposit with state(s)		10,498		(1,314	)		9,184		0.03			0.03
j. On deposit with other regulatory bodies		—		—			—		0.00			0.00
k. Pledged as collateral not captured in other categories		1,346,969		(759,687	)		587,282		1.84			1.84
l. Other restricted assets - reinsurance		200,281		(10,386	)		189,895		0.60			0.60
m. Total Restricted Assets	$	1,911,610	$	(750,150	)	$	1,161,460		3.65	%		3.65	%

Assets pledged as collateral not captured in other categories includes the following:

Invested assets with a carrying value of $15,185 and $14,443 pledged in conjunction with derivative transactions as of December 31, 2013 and 2012, respectively.

Mon Life 2013 SEC 70

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Invested assets with a carrying amount of $572,097 and $1,332,526 pledged in conjunction with funding agreement transactions as of December 31, 2013 and 2012, respectively.

6. Reinsurance

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

Premiums earned reflect the following reinsurance amounts:

	Year Ended December 31
	2013			2012			2011
Direct premiums	$	2,068,373		$	1,867,885		$	1,794,666
Reinsurance assumed—non affiliates		131,992			178,530			190,059
Reinsurance assumed—affiliates		25,047			28,940			22,874
Reinsurance ceded—non affiliates		(62,896	)		(61,142	)		(61,076	)
Reinsurance ceded—affiliates		(456,039	)		(492,496	)		(543,301	)
Net premiums earned	$	1,706,477		$	1,521,717		$	1,403,222

The Company received reinsurance recoveries in the amount of $405,026, $450,571 and $455,081 during 2013, 2012 and 2011, respectively. At December 31, 2013 and 2012, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $28,006 and $27,288, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2013 and 2012 of $6,610,550 and $8,221,493, respectively, of which $6,523,603 and $8,112,442, respectively, were ceded to affiliates.

At December 31, 2013 and 2012, amounts recoverable from unaffiliated unauthorized reinsurers totaled $2,885 and $3,590, respectively, and reserve credits for reinsurance ceded totaled $10,367 and $13,406, respectively. The reinsurers hold collateral under these reinsurance agreements in the form of trust agreements totaling $19,539 and $18,269 at December 31, 2013 and 2012, respectively, that can be drawn on for amounts that remain unpaid for more than 120 days. There would be no reduction in surplus at December 31, 2013 if all reinsurance agreements were cancelled.

Mon Life 2013 SEC 71

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

During 2013, the Company did not enter into any new reinsurance agreements in which a reserve credit was taken.

Effective September 30, 2012, the Company agreed to amend and restate the indemnity reinsurance treaty originally effective October 1, 2009 with MLIC Re, Inc., an affiliate. The amended and restated treaty now includes an experience refund mechanism and a revised schedule of coinsurance reserves. The Company received consideration of $425,000, paid a treaty settlement equal to the change in modified coinsurance reserves of $497,500 and increased ceded coinsurance reserves by $497,500 resulting in a pre-tax gain of $425,000 ($276,250 net of tax) which has been credited directly to unassigned surplus on a net of tax basis.

On April 26, 2011, Aegon N.V. announced the divestiture of its life reinsurance operations, Transamerica Reinsurance, to SCOR SE (SCOR), a Societas Europaea organized under the laws of France, which was effective August 9, 2011. The life reinsurance business conducted by Transamerica Reinsurance was written through several of Aegon N.V.’s U.S. and international affiliates, all of which remain Aegon N.V. affiliates following the closing, except for Transamerica International Reinsurance Ireland, Limited (TIRI), an Irish reinsurance company. In preparation of the disposition of the life reinsurance business to SCOR, during the second quarter of 2011, the Company, as well as other affiliated life insurance companies, recaptured certain business that had been reinsured to TIRI, subsequently ceding the majority of the business recaptured to Transamerica International Re (Bermuda) Ltd. (TIRe), an affiliate. As a result of these transactions, the net impact to the Company was a pre-tax loss of $20,567 which was included in the statement of operations, and a net of tax gain of $15,885 which was credited directly to unassigned surplus. These amounts include current year amortization of previously deferred gains, as well as releases of previously deferred gains from unassigned surplus into earnings. Additional information surrounding these transactions is outlined below.

Effective April 1, 2011, the Company recaptured the life, military universal life, final settlement and Korean accidental death business that was previously reinsured on a coinsurance and a coinsurance funds withheld basis to affiliates. The Company paid recapture consideration of $15,400, received invested assets of $12,200, released the associated funds withheld liability of $2,130, recaptured reserves of $24,805, assumed other assets of $5,248 and released into income a previously deferred unamortized gain resulting from the original transaction in the amount of $60 ($39 after-tax). The resulting pre-tax loss of $20,567 was included in the statement of operations.

Subsequently, effective April 1, 2011, the Company ceded the life and military universal life business on a coinsurance funds withheld basis to an affiliate. The Company received an initial ceding commission of $12,100, transferred other assets of $4,159, established a funds withheld

Mon Life 2013 SEC 72

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

liability of $4,796 and released reserves of $20,770, resulting in a pre-tax gain of $23,915 ($15,545 on a net of tax basis) which was credited directly to unassigned surplus.

Effective December 31, 2011, the Company recaptured the credit life and credit disability business that was previously reinsured on a coinsurance funds withheld basis to an unaffiliated party. The Company released the associated funds withheld liability of $2,428, recaptured reserves of $4,466 and exchanged no consideration resulting in a pre-tax loss of $2,038 which was included in the statement of operations.

Subsequently, December 31, 2011, the Company ceded that credit life and credit disability business, as well as additional in force business written and assumed by the Company as well as all new policies issued thereafter, on a coinsurance funds withheld basis to an affiliate. The Company established a funds withheld liability of $19,980, released reserves of $39,420 and exchanged no consideration resulting in a pre-tax gain of $19,440 ($12,637 after-tax) which was credited directly to unassigned surplus on a net of tax basis.

Effective September 30, 2011, the Company recaptured the term life business previously coinsured to an affiliate. Also effective September 30, 2011, the same block of business was recaptured by an affiliate, from which it had been assumed. The Company recaptured reserves of $402,985, released reserves of the same amount and released into income a previously deferred unamortized gain resulting from the original cession of the business to an affiliate in the amount of $421,601 ($274,041 net of tax) resulting in a pre-tax gain of $421,601 was included in the statement of operations.

The Company entered into an assumption reinsurance transaction with TLIC effective September 30, 2008. TLIC was the issuer of a series of corporate-owned life insurance policies issued to Life Investors Insurance Company of America (LIICA), an affiliate. The assumption reinsurance transaction resulted in the Company assuming all liabilities of TLIC arising under these policies. The Company assumed reserves of $138,025 and received consideration of $125,828. The Company recorded $12,197 of goodwill related to this transaction. The Company amortized $1,130 and $1,073 of this balance during 2012 and 2011, respectively.

During 2013, 2012 and 2011, the Company amortized deferred gains from reinsurance transactions of $63,742, $68,733 and $59,795, respectively, into earnings on a net of tax basis with a corresponding charge to unassigned surplus.

Mon Life 2013 SEC 73

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

7. Income Taxes

The net deferred income tax asset at December 31, 2013 and 2012 and the change from the prior year are comprised of the following components:

				December 31, 2013
	Ordinary			Capital			Total
Gross Deferred Tax Assets	$	349,840		$	137,099		$	486,939
Statutory Valuation Allowance Adjustment		—			—			—
Adjusted Gross Deferred Tax Assets		349,840			137,099			486,939
Deferred Tax Assets Nonadmitted		187,165			15,215			202,380
Subtotal (Net Deferred Tax Assets)		162,675			121,884			284,559
Deferred Tax Liabilities		64,832			57,016			121,848
Net Admitted Deferred Tax Assets	$	97,843		$	64,868		$	162,711
				December 31, 2012
	Ordinary			Capital			Total
Gross Deferred Tax Assets	$	345,565		$	167,073		$	512,638
Statutory Valuation Allowance Adjustment		—			—			—
Adjusted Gross Deferred Tax Assets		345,565			167,073			512,638
Deferred Tax Assets Nonadmitted		202,027			14,941			216,968
Subtotal (Net Deferred Tax Assets)		143,538			152,132			295,670
Deferred Tax Liabilities		39,461			56,277			95,738
Net Admitted Deferred Tax Assets	$	104,077		$	95,855		$	199,932
	Ordinary			Change Capital			Total
Gross Deferred Tax Assets	$	4,275		$	(29,974	)	$	(25,699	)
Statutory Valuation Allowance Adjustment		—			—			—
Adjusted Gross Deferred Tax Assets		4,275			(29,974	)		(25,699	)
Deferred Tax Assets Nonadmitted		(14,862	)		274			(14,588	)
Subtotal (Net Deferred Tax Assets)		19,137			(30,248	)		(11,111	)
Deferred Tax Liabilities		25,371			739			26,110
Net Admitted Deferred Tax Assets	$	(6,234	)	$	(30,987	)	$	(37,221	)

Mon Life 2013 SEC 74

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Year Ended December 31
	2013		2012		Change
Ordinary
Policyholder reserves	$	206,923	$	196,726	$	10,197
Investments		15,714		12,069		3,645
Deferred acquisition costs		108,377		113,728		(5,351	)
Compensation and benefits accrual		308		1,432		(1,124	)
Receivables—nonadmitted		13,879		16,270		(2,391	)
Section 197 Intangible Amortization		570		629		(59	)
Corporate Provision		105		202		(97	)
Other (including items <5% of ordinary tax assets)		3,964		4,509		(545	)
Subtotal		349,840		345,565		4,275
Nonadmitted		187,165		202,027		(14,862	)
Admitted ordinary deferred tax assets		162,675		143,538		19,137
Capital:
Investments		137,099		167,073		(29,974	)
Subtotal		137,099		167,073		(29,974	)
Statutory valuation allowance adjustment		—		—		—
Nonadmitted		15,215		14,941		274
Admitted capital deferred tax assets		121,884		152,132		(30,248	)
Admitted deferred tax assets	$	284,559	$	295,670	$	(11,111	)

Mon Life 2013 SEC 75

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2013		2012		Change
Deferred Tax Liabilities:
Ordinary
Investments	$	46,938	$	18,864	$	28,074
§807(f) adjustment		10,617		12,766		(2,149	)
Reinsurance ceded.		2,304		2,896		(592	)
Intercompany gain amortization		4,601		4,754		(153	)
Other (including items <5% of total ordinary tax liabilities)		372		181		191
Subtotal		64,832		39,461		25,371
Capital
Investments		57,016		56,277		739
Subtotal		57,016		56,277		739
Deferred tax liabilities		121,848		95,738		26,110
Net deferred tax assets/liabilities	$	162,711	$	199,932	$	(37,221	)

As discussed in Note 1, for the years ended December 31, 2013 and 2012 the Company admits deferred income tax assets pursuant to SSAP No. 101. The amount of admitted adjusted gross deferred income tax assets under each component of SSAP No. 101 is as follows:

	December 31, 2013
	Ordinary		Capital		Total
Admission Calculation Components SSAP No. 101
2(a)  Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	97,843	$	44,058	$	141,901
2(b)  Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		—		20,810		20,810
1.      Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		—		20,810		20,810
2.      Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX		XXX		120,297
2(c)  Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		64,832		57,016		121,848
2(d)  Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	162,675	$	121,884	$	284,559

Mon Life 2013 SEC 76

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

				December 31, 2012
	Ordinary			Capital			Total
Admission Calculation Components SSAP No. 101
2(a)  Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	104,077		$	95,855		$	199,932
2(b)  Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		—			—			—
1.      Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		—			—			—
2.      Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX			XXX			107,057
2(c)  Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		39,461			56,277			95,738
2(d)  Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) +2(c))	$	143,538		$	152,132		$	295,670
	Ordinary			Change Capital			Total
Admission Calculation Components SSAP No. 101
2(a)  Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks	$	(6,234	)	$	(51,797	)	$	(58,031	)
2(b)  Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)		—			20,810			20,810
1.      Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date		—			20,810			20,810
2.      Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold		XXX			XXX			13,240
2(c)  Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities		25,371			739			26,110
2(d)  Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))	$	19,137		$	(30,248	)	$	(11,111	)

Mon Life 2013 SEC 77

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	December 31
	2013			2012			Change
Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount		578	%		564	%		14	%
Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold Limitation in 2(b)2 above	$	801,931		$	603,615		$	198,316

The impact of tax planning strategies at December 31, 2013 and 2012 was as follows:

				December 31, 2013
	Ordinary Percent			Capital Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	349,840		$	137,099		$	486,939
(% of Total Adjusted Gross DTAs)		0	%		58	%		16	%
Net Admitted Adjusted Gross DTAs	$	162,675		$	121,884		$	284,559
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		17	%		7	%
				December 31, 2012
	Ordinary Percent			Capital Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	345,565		$	167,073		$	512,638
(% of Total Adjusted Gross DTAs)		0	%		23	%		7	%
Net Admitted Adjusted Gross DTAs	$	143,538		$	152,132		$	295,670
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		0	%		0	%

Mon Life 2013 SEC 78

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Ordinary Percent			Change Capital Percent			Total Percent
Impact of Tax Planning Strategies:
Adjusted Gross DTAs	$	4,275		$	(29,974	)	$	(25,699	)
(% of Total Adjusted Gross DTAs)		0	%		35	%		9	%
Net Admitted Adjusted Gross DTAs	$	19,137		$	(30,248	)	$	(11,111	)
(% of Total Net Admitted Adjusted Gross DTAs)		0	%		17	%		7	%

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

Current income taxes incurred consist of the following major components:

	Year Ended December 31
	2013			2012			Change
Current Income Tax
Federal	$	23,987		$	103,095		$	(79,108	)
Subtotal		23,987			103,095			(79,108	)
Federal income tax on net capital gains		(35,916	)		128,376			(164,292	)
Federal and foreign income taxes incurred	$	(11,929	)	$	231,471		$	(243,400	)
	Year Ended December 31
	2012			2011			Change
Current Income Tax
Federal	$	103,095		$	31,580		$	71,515
Subtotal		103,095			31,580			71,515
Federal income tax on net capital gains		128,376			(24,360	)		152,736
Federal and foreign income taxes incurred	$	231,471		$	7,220		$	224,251
	Year Ended December 31
	2011			2010			Change
Current Income Tax
Federal	$	31,580		$	39,987		$	(8,407	)
Subtotal		31,580			39,987			(8,407	)
Federal income tax on net capital gains		(24,360	)		28,435			(52,795	)
Federal and foreign income taxes incurred	$	7,220		$	68,422		$	(61,202	)

Mon Life 2013 SEC 79

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

The Company did not report a valuation allowance for deferred income tax assets as of December 31, 2013 or 2012.

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income before tax as follows:

	Year Ended December 31
	2013			2012			2011
Current income taxes incurred	$	(11,929	)	$	231,472		$	7,220
Change in deferred income taxes		(10,470	)		(823	)		(218,165	)
(without tax on unrealized gains and losses)
Total income tax reported	$	(22,399	)	$	230,649		$	(210,945	)
Income before taxes	$	107,663		$	591,395		$	442,849
		35.00	%		35.00	%		35.00	%
Expected income tax expense (benefit) at 35% statutory rate	$	37,682		$	206,988		$	154,997
Increase (decrease) in actual tax reported resulting from:
Dividends received deduction		(3,157	)		(3,847	)		(4,257	)
Tax credits		(18,501	)		(21,244	)		(24,476	)
Tax-exempt Income		(8	)		(6	)		(182	)
Tax adjustment for IMR		(5,450	)		(3,860	)		(1,544	)
Surplus adjustment for in-force ceded		(22,310	)		72,631			(112,555	)
Nondeductible expenses		694			766			483
Deferred tax benefit on other items in surplus		(3,209	)		(7,569	)		(17,505	)
Provision to return		357			(2,625	)		9,962
Life-owned life insurance		(876	)		(856	)		(835	)
Dividends from certain foreign corporations		319			423			329
Prior period adjustment		(8,973	)		(5,876	)		(23,612	)
Pre-tax income of SMLLC’s		—			(4,441	)		(2,550	)
Change in basis due to corporate restructuring		—			—			(185,900	)
Other		1,033			165			(3,300	)
Total income tax reported	$	(22,399	)	$	230,649		$	(210,945	)

For federal income tax purposes, the Company joins in a consolidated income tax return filing with its indirect parent company, Transamerica Corporation, and other affiliated companies. The method of allocation between the companies is subject to a written tax allocation agreement. Under the terms of the tax allocation agreement, allocations are based on separate income tax return calculations. The Company is entitled to recoup federal income taxes paid in the event the future losses and credits reduce the greater of the Company’s separately computed income tax

Mon Life 2013 SEC 80

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

liability or the consolidated group’s income tax liability in the year generated. The Company is also entitled to recoup federal income taxes paid in the event the losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in any carryback or carryforward year when so applied. Intercompany income tax balances are settled within thirty days of payment to or filing with the Internal Revenue Service. A tax return has not yet been filed for 2013.

As of December 31, 2013 and 2012, the Company had no operating loss or tax credit carryforwards available for tax purposes. The Company did not have a capital loss carryforward at December 31, 2013 and 2012.

The Company incurred income taxes during 2013, 2012 and 2011 of $19,577, $224,089, and $14,014, respectively, which will be available for recoupment in the event of future net losses.

The amount of tax contingencies calculated for the Company as of December 31, 2013 and 2012 is $194 and $198, respectively. The total amount of tax contingencies that, if recognized, would affect the effective income tax rate is $194. The Company classifies interest and penalties related to income taxes as income tax expense. The Company’s interest (benefit) expense related to income taxes for the years ending December 31, 2013, 2012 and 2011 is $(525), $766 and $(136), respectively. The total interest payable balance as of December 31, 2013 and 2012 is $8 and $9, respectively. The Company recorded no liability for penalties. It is not anticipated that the total amounts of unrecognized tax benefits will significantly increase within twelve months of the reporting date.

The Company’s federal income tax returns have been examined by the Internal Revenue Service and closing agreements have been executed through 2004. The examination for the years 2005 through 2006 have been completed and resulted in tax return adjustments that are currently undergoing final calculation at appeal. The examination for the years 2007 through 2008 has been completed and resulted in tax return adjustments that are currently being appealed. An examination is already in progress for the years 2009 and 2010. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions.

8. Policy and Contract Attributes

Participating life insurance policies were issued by the Company which entitle policyholders to a share in the earnings of the participating policies, provided that a dividend distribution, which is determined annually based on mortality and persistency experience of the participating policies, is authorized by the Company. Participating insurance constituted less than 1% of ordinary life insurance in force at December 31, 2013 and 2012.

Mon Life 2013 SEC 81

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

For the years ended December 31, 2013, 2012 and 2011, premiums for participating life insurance policies were $1,185, $1,232 and $1,298, 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 $1,259, $1,279 and $1,342 to policyholders during 2013, 2012 and 2011, respectively, and did not allocate any additional income to such policyholders.

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, 2013
	General Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal
With fair value adjustment	$	28,645	$	20,697	$	—	$	49,342		0	%
At book value less surrender charge of 5% or more		13,831		—		—		13,831		0
At fair value		74		—		14,304,849		14,304,923		60
Total with adjustment or at fair value		42,550		20,697		14,304,849		14,368,096		60
At book value without adjustment
(minimal or no charge or adjustment)		3,867,503		—		—		3,867,503		16
Not subject to discretionary withdrawal		5,415,525		78,682		63,097		5,557,304		24
Total annuity reserves and deposit liabilities		9,325,578		99,379		14,367,946		23,792,903		100	%
Less reinsurance ceded		5,017,441		—		—		5,017,441
Net annuity reserves and deposit liabilities	$	4,308,137	$	99,379	$	14,367,946	$	18,775,462

Mon Life 2013 SEC 82

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	December 31, 2012
	General Account		Separate Account with Guarantees		Separate Account Non- Guaranteed		Total		Percent
Subject to discretionary withdrawal
With fair value adjustment	$	42,069	$	23,609	$	—	$	65,678		0	%
At book value less surrender charge of 5% or more		22,755		—		—		22,755		0
At fair value		111		—		12,400,461		12,400,572		52
Total with adjustment or at fair value		64,935		23,609		12,400,461		12,489,005		52
At book value without adjustment
(minimal or no charge or adjustment)		4,276,647		—		—		4,276,647		18
Not subject to discretionary withdrawal		6,934,154		170,007		54,778		7,158,939		30
Total annuity reserves and deposit liabilities		11,275,736		193,616		12,455,239		23,924,591		100	%
Less reinsurance ceded		6,637,964		—		—		6,637,964
Net annuity reserves and deposit liabilities	$	4,637,772	$	193,616	$	12,455,239	$	17,286,627

Included in the liability for deposit-type contracts at December 31, 2013 and 2012 are approximately $53,121 and $52,574, respectively, of funding agreements issued to special purpose entities in conjunction with non-recourse medium-term note programs. Under these programs, the proceeds from each note series issuance are used to purchase a funding agreement from the Company which secures that particular series of notes. In general, the payment terms of the note series match the payment terms of the funding agreement that secures that series. Claims for the principal and interest for these funding agreements are afforded equal priority as other policyholders.

At December 31, 2013 the contractual maturities were as follows:

Year	Amount
2014	$	—
2015		—
2016		—
2017		—
Thereafter		53,121

The Company’s liability for deposit-type contracts includes GIC’s and Funding Agreements assumed from Transamerica Life Insurance Company, an affiliate. The liabilities assumed are $900,065 and $900,084 at December 31, 2013 and 2012, respectively.

Mon Life 2013 SEC 83

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Certain separate and variable accounts held by the Company represent funds for which the benefit is determined by the performance and/or fair value of the investments held in the separate account. The assets and the liabilities of these are carried at fair value. These variable annuities generally provide an additional minimum guaranteed death benefit. Some variable annuities also provide a minimum guaranteed income benefit. The Company’s Guaranteed Indexed separate accounts provide customers a return based on the total performance of a specified financial index plus an enhancement. Hedging instruments that return the chosen index are purchased by the Company and held within the separate account. The assets in the accounts, carried at fair value, consist primarily of long-term bonds. Information regarding the separate accounts of the Company are as follows:

	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonguaranteed		Total
Premiums, deposits and other considerations for the year ended December 31, 2013	$	—	$	132	$	569,801	$	569,933
Reserves for separate accounts as of December 31, 2013 with assets at fair value	$	78,682	$	20,697	$	14,377,033	$	14,476,412
Total	$	78,682	$	20,697	$	14,377,033	$	14,476,412
Reserves by withdrawal characteristics as of December 31, 2013:
With fair value adjustment	$	78,682	$	20,697	$	—	$	99,379
At fair value		—		—		14,313,937		14,313,937
Not subject to discretionary withdrawal		—		—		63,096		63,096
Total separate account liabilities at December 31, 2013	$	78,682	$	20,697	$	14,377,033	$	14,476,412

Mon Life 2013 SEC 84

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonguaranteed		Total
Premiums, deposits and other considerations for the year ended December 31, 2012	$	—	$	120	$	466,200	$	466,320
Reserves for separate accounts as of December 31, 2012 with assets at fair value	$	170,007	$	23,609	$	12,462,862	$	12,656,478
Total as of December 31, 2012	$	170,007	$	23,609	$	12,462,862	$	12,656,478
Reserves by withdrawal characteristics as of December 31, 2012:
With fair value adjustment	$	170,007	$	23,609	$	—	$	193,616
At fair value		—		—		12,408,084		12,408,084
Not subject to discretionary withdrawal		—		—		54,778		54,778
Total separate account liabilities at December 31, 2012	$	170,007	$	23,609	$	12,462,862	$	12,656,478
	Guaranteed Indexed		Nonindexed Guaranteed Less Than 4%		Nonguaranteed		Total
Premiums, deposits and other considerations for the year ended December 31, 2011	$	—	$	107	$	402,748	$	402,855
Reserves for separate accounts as of December 31, 2011 with assets at fair value	$	170,658	$	25,929	$	11,260,745	$	11,457,332
Total as of December 31, 2011	$	170,658	$	25,929	$	11,260,745	$	11,457,332
Reserves by withdrawal characteristics as of December 31, 2011:
With fair value adjustment	$	170,658	$	25,929	$	—	$	196,587
At fair value		—		—		11,203,196		11,203,196
Not subject to discretionary withdrawal	$	—		—		57,549		57,549
Total separate account liabilities at December 31, 2011	$	170,658	$	25,929	$	11,260,745	$	11,457,332

Mon Life 2013 SEC 85

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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

	Year Ended December 31
	2013			2012			2011
Transfer as reported in the summary of operations of the separate accounts statement:
Transfers to separate accounts	$	569,933		$	466,321		$	402,855
Transfers from separate accounts		(888,332	)		(656,788	)		(540,288	)
Net transfers from separate accounts		(318,399	)		(190,467	)		(137,433	)
Miscellaneous reconciling adjustments		5,606			1,087			763
Net transfers as reported in the statement of operations of the life, accident and health annual statement	$	(312,793	)	$	(189,380	)	$	(136,670	)

The legal insulation of separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account. At December 31, 2013 and 2012, the Company’s separate account statement included legally insulated assets of $14,524,270 and $12,530,256, respectively. The assets legally insulated from general account claims at December 31, 2013 and 2012 are attributed to the following products:

Product	2013		2012
Variable annuities	$	12,390,614		10,609,856
Group annuities		1,993,324		1,715,754
Modified separate account		131,244		197,024
Variable life		9,088		7,623
Total separate account assets	$	14,524,270	$	12,530,256

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

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with Actuarial Guideline XLIII (AG 43), which replaces Actuarial Guidelines 34 and 39. AG 43 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The AG 43 reserve calculation includes variable annuity products issued after January 1, 1981. Examples of covered guaranteed benefits include guaranteed minimum accumulation benefits, return of premium death benefits, guaranteed minimum income benefits, guaranteed minimum withdrawal benefits and guaranteed payout annuity floors. The aggregate

Mon Life 2013 SEC 86

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

reserve for contracts falling within the scope of AG 43 is equal to the conditional tail expectation (CTE) Amount, but not less than the standard scenario amount (SSA).

To determine the CTE Amount, the Company used 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) produced in October 2005 and prudent estimate assumptions based on company experience. The SSA was determined using the assumptions and methodology prescribed in AG 43 for determining the SSA.

At December 31, 2013 and 2012, the Company had variable and separate account annuities with minimum guaranteed benefits as follows:

Benefit and Type of Risk	Subjected Account Value		Amount of Reserve Held		Reinsurance Reserve Credit
December 31, 2013
Minimum guaranteed death benefit	$	7,417,616	$	2,889	$	—
Minimum guaranteed income benefit		11,336		1,018		—
Minimum guaranteed withdrawal benefit		160,497		—		—
December 31, 2012
Minimum guaranteed death benefit	$	6,541,811	$	3,495	$	—
Minimum guaranteed income benefit		9,960		1,602		—
Minimum guaranteed withdrawal benefit		102,022		—		—

The Company offers variable and separate account annuities with minimum guaranteed benefits. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account. As of December 31, 2013 and 2012, the general account of the Company had a maximum guarantee for separate account liabilities of $107,007 and $170,007, respectively. To compensate the general account for the risk taken, the separate account paid risk charges of $1,392, $545 and $104 to the general account in 2013, 2012 and 2011, respectively. During the years ended December 31, 2013, 2012 and 2011, the general account of the Company had paid $501, $239 and $613, respectively, toward separate account guarantees.

Mon Life 2013 SEC 87

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Reserves on the Company’s traditional life insurance products are computed using mean reserving methodologies. These methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policies’s paid-through date to the policy’s next anniversary date. At December 31, 2013 and 2012, the gross premium and loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:

	Gross			Loading		Net
December 31, 2013
Life and annuity:
Ordinary direct first year business	$	16,769		$	12,176	$	4,593
Ordinary direct renewal business		194,579			51,318		143,261
Group life direct business		13,030			3,386		9,644
Credit direct business		440			—		440
Reinsurance ceded		(20,766	)		—		(20,766	)
Total life and annuity		204,052			66,880		137,172
Accident and health:
Direct		35,888			—		35,888
Reinsurance assumed		6,714			—		6,714
Reinsurance ceded		(1,645	)		—		(1,645	)
Total accident and health		40,957			—		40,957
	$	245,009		$	66,880	$	178,129
	Gross			Loading		Net
December 31, 2012
Life and annuity:
Ordinary direct first year business	$	17,360		$	12,774	$	4,586
Ordinary direct renewal business		201,276			53,166		148,110
Group life direct business		14,508			3,775		10,733
Credit direct business		508			—		508
Reinsurance ceded		(19,565	)		—		(19,565	)
Total life and annuity		214,087			69,715		144,372
Accident and health:
Direct		47,336			—		47,336
Reinsurance assumed		11,786			—		11,786
Reinsurance ceded		(2,076	)		—		(2,076	)
Total accident and health		57,046			—		57,046
	$	271,133		$	69,715	$	201,418

Mon Life 2013 SEC 88

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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. At December 31, 2013 and 2012, the Company established a premium deficiency reserve of $117,300 and $0, respectively.

At December 31, 2013 and 2012, the Company had insurance in force aggregating $4,156,319 and $4,262,496, 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 $50,445 and $42,640 to cover these deficiencies at December 31, 2013 and 2012, respectively.

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

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business. The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2013 and 2012 was $2,367 and $2,096, respectively.

9. Capital and Surplus

The Company is subject to limitations, imposed by the State of Iowa, on the payment of dividends to its stockholders. Generally, dividends during any twelve-month period may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of 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 Company can make a dividend payment of up to $178,225 without the prior approval of insurance regulatory authorities in 2014.

The Company paid an ordinary common stock dividend of $118,422 and $16,578 to its parent companies, CGC and Aegon, respectively, on December 26, 2013. The Company reported a contribution receivable from parent companies of $135,000 at December 31, 2013. Capital

Mon Life 2013 SEC 89

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

contributions of $118,422 and $16,578 were received from CGC and Aegon, respectively, on February 14, 2014. The Company paid a capital contribution of $368 to its subsidiary, Aegon Direct Marketing Services, Inc., on December 31, 2013.

The Company paid an ordinary common stock dividend of $394,560 and $55,440 to its parent companies, CGC and Aegon, respectively, on December 21, 2012. The Company paid a capital contribution of $368 to its subsidiary, Aegon Direct Marketing Services, Inc., on December 31, 2012.

On December 23, 2011, the Company paid a common stock dividend of $300,000 to its parent companies. Of this amount, $117,400 was an ordinary cash dividend and $182,600 was an extraordinary cash dividend. CGC received $263,100 and Aegon received $36,900.

Life and health insurance companies are subject to certain RBC requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life or health insurance company is to be determined based on the various risk factors related to it. At December 31, 2013, the Company meets the minimum RBC requirements.

The Company has two classes of common stock, Class A and Class B. Each outstanding share of Class A is entitled to four votes for any matter submitted to a vote at a meeting of stockholders, whereas each outstanding share of Class B is entitled to on such vote.

On December 23, 2004, the Company received $117,168 from CGDC and $42,832 from Aegon, both affiliates, in exchange for surplus notes. Prior to the merger discussed in Note 1, CGDC dividended the Company’s surplus notes to its direct shareholders in the amount of $102,734 to CGC and $14,434 to Aegon. 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, full payment of the surplus notes shall be made before the holders of common stock become entitled to any distribution of the remaining assets of the Company. The Company received approval from the Insurance Division, Department of Commerce, of the State of Iowa prior to paying quarterly interest payments.

Mon Life 2013 SEC 90

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Additional information related to the surplus notes at December 31, 2013 and 2012 is as follows:

For Year Ending	Balance Outstanding		Interest Paid Current Year		Cumulative Interest Paid		Accrued Interest
2013
CGC	$	102,734	$	6,164	$	61,695	$	514
AEGON		57,266		3,436		24,918		286
Total	$	160,000	$	9,600	$	86,613	$	800
2012
CGC	$	102,734	$	6,164	$	55,531	$	514
AEGON		57,266		3,436		21,483		286
Total	$	160,000	$	9,600	$	77,014	$	800

10. Securities Lending

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

At December 31, 2013 and 2012, respectively, securities in the amount of $310,280 and $333,420 were on loan under securities lending agreements as part of this program. At December 31, 2013, the collateral the Company received from securities lending activities was in the form of cash and on open terms. This cash collateral is reinvested and is not available for general corporate purposes. The reinvested cash collateral has a fair value of $322,142 and $350,162 at December 31, 2013 and 2012, respectively.

Mon Life 2013 SEC 91

Monumental Life Insurance Company

Notes to Financial Statements —  Statutory Basis (continued)

(Dollars in Thousands)

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

	Fair Value
Open	$	322,169
30 days or less		—
31 to 60 days		—
61 to 90 days		—
Greater than 90 days		—
Total		322,169
Securities received		—
Total collateral received	$	322,169

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

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

	Amortized Cost		Fair Value
Open	$	31,493	$	31,493
30 days or less		107,759		107,759
31 to 60 days		100,576		100,576
61 to 90 days		61,175		61,175
91 to 120 days		1,516		1,516
121 to 180 days		18,394		18,394
Greater than 3 years		1,296		1,229
Total		322,209		322,142
Securities received		—		—
Total collateral reinvested	$	322,209	$	322,142

For securities lending, the Company’s sources of cash that it uses to return the cash collateral is dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $322,254 (fair value of $322,142) that are currently tradable securities that could be sold and used to pay for the $322,169 in collateral calls that could come due under a worst-case scenario.

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

Mon Life 2013 SEC 92

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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 and based upon actuarial participant benefit calculations. The benefits are based on years of service and the employee’s eligible annual compensation. Pension expenses were $4,311, $4,350 and $5,134, for the years ended December 31, 2013, 2012 and 2011, respectively. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974.

The Company’s employees also participate in a defined contribution plan sponsored by 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 25% 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 $1,219, $1,276 and $1,682, for the years ended December 31, 2013, 2012 and 2011, 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, 2013, 2012 and 2011 was insignificant. Aegon also sponsors an employee stock option plan/stock appreciation rights for employees of the company and a stock purchase plan for its producers, with the participating affiliated companies establishing their own eligibility criteria, producer contribution limits and company matching formula. These plans have been accrued or funded as deemed appropriate by management of 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 postretirement plan expenses are charged to affiliates in accordance with an intercompany cost sharing arrangement. The Company expensed $1,246, $1,285 and $1,307 related to these plans for the years ended December 31, 2013, 2012 and 2011, respectively.

Mon Life 2013 SEC 93

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

12. Related Party Transactions

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

The Company is party to a common cost allocation service arrangement between Aegon 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 2013, 2012 and 2011, the Company paid $108,918, $100,736 and $47,194, respectively, for these services, which approximates their costs to the affiliates.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $61, $71 and $64 for the years ended December 31, 2013, 2012 and 2011, respectively.

At December 31, 2013 and 2012, the Company reported a net amount of $30,774 and $32,590 due to parent, subsidiary and affiliated companies, respectively. Terms of settlement require that these amounts be settled within 90 days. Receivables from and payables to affiliates bear interest at the thirty-day commercial paper rate. During 2013, 2012 and 2011, the Company paid net interest of $26, $40 and $111, respectively, to affiliates.

The Company has an administration service agreement with Transamerica Asset Management, Inc. to provide administrative services to the Aegon/Transamerica Series Trust. The Company received $471, $436 and $385 for these services during 2013, 2012 and 2011, respectively.

The Company had no short-term notes receivable at December 31, 2013 and 2012.

In prior years, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2013 and 2012, the cash surrender value of these policies was $79,733 and $77,229, respectively.

During 1998, TLIC issued life insurance policies to LIICA, covering the lives of certain LIICA employees. As discussed in Note 6—Reinsurance, the Company entered into an assumption reinsurance transaction with TLIC effective September 30, 2008, resulting in the Company assuming all liabilities of TLIC arising under these policies. Accordingly, the Company held

Mon Life 2013 SEC 94

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

aggregate reserves for policies and contracts related to these policies of $161,384 and $156,981 at December 31, 2013 and 2012, respectively.

13. Managing General Agents

The Company utilizes managing general agents and third-party administrators in its operation. Information regarding these entities for the year ended December 31, 2013 is as follows:

Name and Address of Managing General Agent or Third-Party Administrator	FEIN		Exclusive Contract		Types of Business Written	Types of Authority Granted		Total Direct Premiums Written/ Produced By
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355		23-1945930		No	Deferred and Income Annuities		C, B, P, U	$	522,058
Gallagher Bollinger, Inc. 101 JFK Parkway Short Hills, NJ 07078		22-0781130		No	Group A&H, Life		C, CA, P, U		91,233
All Other TPA Premiums									184
Total								$	613,475

C- Claims Payment

CA- Claims Adjustment

B- Binding Authority

P- Premium Collection

U- Underwriting

For years ended December 31, 2013, 2012 and 2011, the Company had $522,058, $422,874 and $345,517, respectively, of direct premiums written by The Vanguard Group, Inc. For years ended December 31, 2013, 2012 and 2011, the Company had $91,233, $93,480 and $104,706, respectively, of direct premiums written by Gallagher Bollinger, Inc. For years ended December 31, 2013, 2012 and 2011, the Company had $184, $146 and $576, respectively, of direct premiums written by all other managing general agents.

14. Commitments and Contingencies

The Company has issued synthetic GIC contracts to benefit plan sponsors on assets totaling $59,317,033 and $58,306,775 as of December 31, 2013 and 2012, respectively. A synthetic GIC is an off-balance sheet fee-based product sold primarily to tax qualified plans. The plan sponsor retains ownership and control of the related plan assets. The Company provides book value benefit responsiveness in the event that qualified plan benefit requests exceed plan cash flows. In

Mon Life 2013 SEC 95

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

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. A contract reserve has been established for the possibility of unexpected benefit payments at below market interest rates of $127 and $1,612 at December 31, 2013 and 2012, respectively.

At December 31, 2013 and 2012, the Company has no mortgage loan commitments. At December 31, 2011, the Company had mortgage loan commitments of $4,160. The Company has contingent commitments of $42,822 and $46,975 at December 31, 2013 and 2012, respectively, to provide additional funding for various joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $2,032 and $7,640, respectively.

At December 31, 2013 and 2012, the Company has private placement commitments outstanding of $24,000 and $0, respectively.

At December 31, 2013 and 2012, no securities were acquired (sold) on a “to be announced” (TBA) basis.

The Company may pledge assets as collateral for derivative transactions. At December 31, 2013 and 2012, the Company has pledged invested assets with a carrying value of $15,185 and $14,443, respectively, and fair value of $15,853 and $17,892, respectively, in conjunction with these transactions.

Cash collateral received from derivative counterparties as well as the obligation to return the collateral is recorded on the Company’s balance sheet. The amount of cash collateral posted as of December 31, 2013 and 2012, respectively, was $149,006 and $213,917. In addition, securities in the amount of $206,338 and $224,372 were posted to the Company as of December 31, 2013 and 2012, respectively, which were not included on the balance sheet of the Company as the Company does not have the ability to sell or repledge the collateral. A portion of the cash collateral received by the Company has been reposted as collateral to other counterparties. The amount of cash collateral reposted was $0 and $2,580 as of December 31, 2013 and 2012, respectively.

The Company may pledge assets as collateral for transactions involving funding agreements. At December 31, 2013 and 2012, the Company has pledged invested assets with a carrying amount

Mon Life 2013 SEC 96

Monumental Life Insurance Company

Notes to Financial Statements —  Statutory Basis (continued)

(Dollars in Thousands)

of $14,780 and $245,905 respectively, and fair value of $14,564 and $276,565 respectively, in conjunction with these transactions.

The Company has provided back-stop guarantees for the performance of non-insurance affiliates or subsidiaries that are involved in the guaranteed sale of investments in low-income housing tax credit partnerships. The nature of the obligation is to provide third party investors with a minimum guaranteed annual and cumulative return on their contributed capital which is based on tax credits and tax losses generated from the low income housing tax credit partnerships. Guarantee payments arise if low income housing tax credit partnerships experience unexpected significant decreases in tax credits and tax losses or there are compliance issues with the partnerships. A significant portion of the remaining term of the guarantees is between 13-21 years. In accordance with SSAP No. 5R, the Company did not recognize a liability for the low income housing tax credit since the amount is considered immaterial to the Company’s financial results. The maximum potential amount of future payments (undiscounted) that the Company could be required to make under these guarantees was $173 and $245 at December 31, 2013 and 2012, respectively. No payments are required as of December 31, 2013. The current assessment of risk of making payments under these guarantees is remote.

The following table provides an aggregate compilation of guarantee obligations as of December 31, 2013 and 2012:

	December 31
	2013		2012
Aggregate maximum potential of future payments of all guarantees (undiscounted)	$	173	$	245
Current liability recognized in financial statements:
Noncontingent liabilities	$	—	$	—
Contingent liabilities	$	—	$	—
Ultimate financial statement impact if action required:
Other	$	173	$	245
Total impact if action required	$	173	$	245

The Company has issued funding agreements to FHLB, and the funds received are reported as deposit-type liabilities per SSAP No. 52, Deposit-Type Contracts. Total reserves are equal to the funding agreements balance. These funding agreements are used for investment spread management purposes and are subject to the same asset/liability management practices as other deposit-type business. All of the funding agreements issued to FHLB are classified in the general account as it is a general obligation of the Company. Collateral is required by FHLB to support repayment of the funding agreements. In addition, FHLB requires their common stock to be purchased.

Mon Life 2013 SEC 97

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

	Year Ended December 31
	2013		2012
FHLB stock purchased/owned as part of the agreement	$	26,000	$	27,800
Collateral pledged to the FHLB		557,317		1,086,622
Borrowing capacity currently available		897,824		560,000
Agreement General Account
Assets		1,742,275		1,690,805
Liabilities		1,300,000		1,300,130

The Company has provided guarantees 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. The guarantees made by the Company are specific to each structured settlement contract and vary in date and duration of the obligation. These are numerous and are backed by the reserves established by the Company to represent the present value of the future payments for those contracts. The statutory reserve established at December 31, 2012 for the total payout block is $2,383,901. As this reserve is already recorded on the balance sheet of the Company, there was no additional liability recorded due to the adoption of SSAP No. 5R.

The Company is a party to legal proceedings involving a variety of issues incidental to its business, including class actions. Lawsuits may be brought in nearly any federal or state court in the United States or in an arbitral forum. In addition, there continues to be significant federal and state regulatory activity relating to financial services companies. The Company’s legal proceedings are subject to many variables, and given its complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

In addition, the insurance industry has increasingly and routinely been the subject of litigation, investigations, regulatory activity and challenges by various governmental and enforcement authorities and policyholder advocate groups concerning certain practices. For example, unclaimed property administrators and state insurance regulators are performing unclaimed property examinations of the life insurance industry in the U.S., including the Company. These are in some cases multi-state examinations that include the collective action of many of the states. Additionally, some states are conducting separate examinations or instituting separate enforcement actions in regard to unclaimed property laws and related claims practices. As other insurers in the United States have done, the Company identified certain additional internal processes that it has implemented or is in the process of implementing. As of December 31, 2013 and 2012, the Company’s reserves related to this matter were $45,219 and $10,297, respectively.

Mon Life 2013 SEC 98

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

Also, various major insurers in the U.S. have entered into settlements with insurance regulators recently regarding claims settlement practices. Certain examinations are still ongoing.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company except where right of offset against other taxes paid is allowed by law. Amounts available for future offsets are recorded as an asset on the Company’s balance sheet. The future obligation for known insolvencies has been accrued based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $2,212 and $3,395 and an offsetting premium tax benefit of $847 and $1,347 at December 31, 2013 and 2012, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund expense (benefit) was $990, $(2,874) and $(8,063), at December 31, 2013, 2012 and 2011, respectively.

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

Municipal repurchase agreements require a minimum of 95% of the fair value of the securities transferred to be maintained as collateral. At December 31, 2013 and 2012, the Company had no recorded liabilities for municipal repurchase agreements.

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2013 and 2012, the Company had dollar repurchase agreements outstanding in the amount of $52,930 and $5,825, respectively. The Company had an outstanding liability for borrowed money in the amount $53,453 and $6,222 at December 31, 2013 and 2012, respectively due to participation in dollar repurchase agreements which includes accrued interest.

Mon Life 2013 SEC 99

Monumental Life Insurance Company

Notes to Financial Statements —  Statutory Basis (continued)

(Dollars in Thousands)

The contractual maturities of dollar repurchase agreements are as follows:

	Fair Value
Open	$	53,266
30 days or less		—
31 to 60 days		—
61 to 90 days		—
Greater than 90 days		—
Total		53,266
Securities received		—
Total collateral received	$	53,266

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 2013 and reacquired within 30 days of the sale date are:

	Number of Transactions		Book Value of Securities Sold		Cost of Securities Repurchased		Gain/(Loss)
Bonds:
NAIC 6		1	$	36	$	72	$	3

16. Subsequent Events

The financial statements are adjusted to reflect events that occurred between the balance sheet date and the date when the financial statements are issued, provided they give evidence of conditions that existed at the balance sheet date (Type I). Events that are indicative of conditions that arose after the balance sheet date are disclosed, but do not result in an adjustment of the financial statements themselves (Type II). With the exception of the Affordable Care Act annual fee described below, the Company has not identified any Type I or Type II subsequent events for the year ended December 31, 2013 through the date the financial statements are issued.

On January 1, 2014, the Company will be subject to an annual fee under section 9010 of the Affordable Care Act (ACA). This annual fee will be allocated to individual health insurers based on the ratio of the amount of the entity’s net premiums written during the preceding calendar year to the amount of health insurance for any U.S. health risk that is written during the preceding calendar year. A health insurance entity’s portion of the annual fee becomes payable once the entity provides health insurance for any U.S. health risk for each calendar year beginning on or after January 1, 2014. As of December 31, 2013, the Company has written health insurance

Mon Life 2013 SEC 100

Monumental Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands)

subject to the ACA assessment, expects to conduct health insurance business in 2014, and estimates their portion of the annual health insurance industry fee to be payable on September 30, 2014 to be $1,381. This assessment is not expected to have a material impact on risk based capital in 2014.

Mon Life 2013 SEC 101

Statutory-Basis

Financial Statement Schedules

Mon Life 2013 SEC

Monumental Life Insurance Company

Summary of Investments – Other Than Investments in Related Parties

(Dollars in Thousands)

December 31, 2013

Schedule I

Type of Investment	Cost (1)		Market Value		Amount at Which Shown in the Balance Sheet (2)
Fixed maturities
Bonds:
United States government and government agencies and authorities	$	702,488	$	698,416	$	702,757
States, municipalities and political subdivisions		365,585		397,439		365,585
Foreign governments		196,331		188,850		192,500
Hybrid Securities		654,097		582,931		654,097
All other corporate bonds		10,453,434		11,052,424		10,409,860
Redeemable preferred stocks		9,541		8,955		9,541
Total fixed maturities		12,381,476		12,929,015		12,334,340
Equity securities
Common stocks:
Industrial, miscellaneous and all other		44,500		45,669		45,669
Total equity securities		44,500		45,669		45,669
Mortgage loans on real estate		1,692,860				1,692,860
Real estate		7,285				7,285
Policy loans		470,549				470,549
Other long-term investments		336,388				336,388
Securities Lending		322,209				322,209
Cash, cash equivalents and short-term investments		558,923				558,923
Total investments	$	15,814,190			$	15,768,223

(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.

(2) United States government and corporate bonds of $71,375 are held at fair value rather than amortized cost due to having an NAIC 6 rating.

Mon Life 2013 SEC 102

Monumental Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

December 31, 2013

Schedule III

	Future Policy Benefits and Expenses		Unearned Premiums		Policy and Contract Liabilities		Premium Revenue		Net Investment Income*		Benefits, Claims Losses and Settlement Expenses			Other Operating Expenses*
Year ended December 31, 2013
Individual life	$	5,234,408	$	—	$	105,825	$	400,933	$	285,191	$	249,758		$	301,105
Individual health		616,993		24,181		43,741		163,907		30,895		221,766			83,668
Group life and health		643,125		30,939		88,494		440,210		34,434		271,048			175,801
Annuity		3,425,826		—		68		701,427		378,809		1,128,645			(144,481	)
	$	9,920,352	$	55,120	$	238,128	$	1,706,477	$	729,329	$	1,871,217		$	416,093
Year ended December 31, 2012
Individual life	$	5,237,303	$	—	$	62,480	$	270,263	$	310,669	$	(133,512	)	$	274,367
Individual health		456,177		25,536		48,467		175,625		29,136		113,040			60,804
Group life and health		646,721		37,324		87,409		458,397		37,114		270,127			201,138
Annuity		3,629,809		—		127		617,432		445,395		929,457			44,166
	$	9,970,010	$	62,860	$	198,483	$	1,521,717	$	822,314	$	1,179,112		$	580,475
Year ended December 31, 2011
Individual life	$	5,530,556	$	—	$	52,163	$	208,344	$	306,133	$	245,580		$	260,215
Individual health		410,107		29,906		49,827		174,245		24,563		95,201			71,698
Group life and health		667,286		38,644		93,530		474,154		37,963		297,090			210,966
Annuity		3,840,063		—		41		546,479		470,382		832,759			111,786
	$	10,448,012	$	68,550	$	195,561	$	1,403,222	$	839,041	$	1,470,630		$	654,665

* 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.

Mon Life 2013 SEC 103

Monumental Life Insurance Company

Reinsurance

(Dollars in Thousands)

December 31, 2013

Schedule IV

	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
Year ended December 31, 2013
Life insurance in force	$	53,926,362	$	34,924,942	$	3,588,743		22,590,163		16	%
Premiums:
Individual life	$	786,161	$	396,054	$	10,826	$	400,933		3	%
Individual health		116,968		8,564		55,503		163,907		34	%
Group life and health		461,308		86,001		64,902		440,209		15	%
Annuity		703,936		28,317		25,808		701,427		4	%
	$	2,068,373	$	518,936	$	157,039	$	1,706,476		9	%
Year ended December 31, 2012
Life insurance in force	$	59,790,366	$	39,457,731	$	2,789,989	$	23,122,624		12	%
Premiums:
Individual life	$	678,988	$	421,821	$	13,096	$	270,263		5	%
Individual health		120,598		7,260		62,287		175,625		35	%
Group life and health		470,794		93,042		80,645		458,397		18	%
Annuity		597,505		31,514		51,441		617,432		8	%
	$	1,867,885	$	553,637	$	207,469	$	1,521,717		14	%
Year ended December 31, 2011
Life insurance in force	$	62,029,782	$	41,743,562	$	2,686,755	$	22,972,975		12	%
Premiums:
Individual life	$	657,650	$	456,986	$	7,679	$	208,343		4	%
Individual health		124,649		22,292		71,889		174,246		41	%
Group life and health		487,397		93,904		80,661		474,154		17	%
Annuity		524,970		31,195		52,704		546,479		10	%
	$	1,794,666	$	604,377	$	212,933	$	1,403,222		15	%

Mon Life 2013 SEC 104

FINANCIAL STATEMENTS

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Years Ended December 31, 2013 and 2012

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Financial Statements

Years Ended December 31, 2013 and 2012

Contents

Report of Independent Registered Public Accounting Firm	1
Financial Statements
Statements of Assets and Liabilities	2
Statements of Operations and Changes in Net Assets	4
Notes to Financial Statements	10

	Ernst & Young LLP	Tel: +1 515 243 2727
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	Des Moines, IA 50309-2764

The Board of Directors and Contract Owners

Of Separate Account VA AA

Western Reserves Life Assurance Co. of Ohio

We have audited the accompanying statements of assets and liabilities of the subaccounts of Western Reserves Life Assurance Co. of Ohio Separate Account VA AA (the Separate Account), comprised of subaccounts as listed in the accompanying statements of assets and liabilities, as of December 31, 2013, 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, 2013 by correspondence with the fund companies or their 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 of Western Reserve Life Assurance Co. of Ohio Separate Account VA AA, at December 31, 2013, 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.

Des Moines, Iowa

April 28, 2014

A member firm of Ernst & Young Global Limited

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Assets and Liabilities

December 31, 2013

Subaccount	Number of Shares		Cost		Assets at Market Value		Due (to)/from General Account		Net Assets		Units Outstanding		Range of Unit Values
AllianceBernstein Balanced Wealth Strategy Class B Shares		-	$	-	$	-	$	-	$	-		-		$    1.688050	$	1.722846
Fidelity® VIP Index 500 Service Class 2		-		-		-		-		-		-		1.282853		1.314705
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares		-		-		-		-		-		-		1.893932		1.932980
ProFund Access VP High Yield		1,597.921		46,891		47,954		-		47,954		29,460		1.596108		1.635768
ProFund VP Asia 30		142.428		7,714		7,973		-		7,973		11,567		0.676248		0.693086
ProFund VP Basic Materials		13.736		701		762		(1)		761		725		1.027026		1.052575
ProFund VP Bull		704.564		25,400		26,689		(1)		26,688		22,343		1.168143		1.197203
ProFund VP Consumer Services		-		-		-		-		-		-		1.715218		1.757871
ProFund VP Emerging Markets		1,179.669		29,925		28,170		(1)		28,169		44,564		0.617546		0.632891
ProFund VP Europe 30		-		-		-		-		-		-		0.884837		0.906856
ProFund VP Falling U.S. Dollar		104.325		2,902		2,898		-		2,898		3,285		0.863463		0.884916
ProFund VP Financials		-		-		-		-		-		-		0.746127		0.764734
ProFund VP International		521.047		12,317		12,505		-		12,505		15,421		0.793031		0.812780
ProFund VP Japan		458.754		7,615		8,670		-		8,670		10,920		0.778943		0.798336
ProFund VP Mid-Cap		1,401.738		44,725		47,953		(1)		47,952		35,177		1.333602		1.366744
ProFund VP Money Market		783,899.600		783,900		783,900		(6)		783,894		795,288		0.963344		0.987045
ProFund VP NASDAQ-100		515.741		13,762		15,720		-		15,720		10,458		1.469836		1.506417
ProFund VP Oil & Gas		14.022		709		750		1		751		681		1.079230		1.106050
ProFund VP Pharmaceuticals		-		-		-		-		-		-		1.496509		1.533675
ProFund VP Precious Metals		153.277		5,751		3,610		1		3,611		7,534		0.467678		0.479311
ProFund VP Short Emerging Markets		-		-		-		-		-		-		0.532601		0.545845
ProFund VP Short International		-		-		-		-		-		-		0.531115		0.544321
ProFund VP Short NASDAQ-100		-		-		-		-		-		-		0.356876		0.365765
ProFund VP Short Small-Cap		-		-		-		-		-		-		0.305539		0.313129
ProFund VP Small-Cap		932.998		33,952		37,143		1		37,144		27,155		1.337001		1.370272
ProFund VP Small-Cap Value		1,921.818		73,938		80,294		(1)		80,293		57,358		1.369564		1.403600
ProFund VP Telecommunications		-		-		-		-		-		-		0.971037		0.995146
ProFund VP U.S. Government Plus		-		-		-		-		-		-		1.293691		1.325812
ProFund VP UltraSmall-Cap		-		-		-		-		-		-		1.116962		1.144823
ProFund VP Utilities		21.057		733		739		(1)		738		693		1.042978		1.068898
TA Aegon High Yield Bond Service Class		15,929.856		136,661		132,218		1		132,219		86,609		1.491338		1.528404
TA Aegon Money Market Service Class		142,132.470		142,132		142,132		2		142,134		141,898		0.977140		1.001727
TA Aegon Tactical Vanguard ETF - Conservative Service Class		-		-		-		-		-		-		1.130374		1.139677
TA Aegon Tactical Vanguard ETF - Growth Service Class		-		-		-		-		-		-		1.256794		1.267147
TA Aegon U.S. Government Securities Service Class		921.341		12,045		11,590		-		11,590		9,218		1.230640		1.261215
TA AllianceBernstein Dynamic Allocation Service Class		-		-		-		-		-		-		0.940197		0.963571
TA Barrow Hanley Dividend Focused Service Class		1,166.617		20,028		22,422		-		22,422		19,613		1.117716		1.145504
TA Clarion Global Real Estate Securities Service Class		374.426		4,726		4,553		-		4,553		4,927		0.904466		0.926966
TA Hanlon Income Service Class		-		-		-		-		-		-		1.065733		1.083304
TA Janus Balanced Service Class		-		-		-		-		-		-		1.174258		1.193637
TA Jennison Growth Service Class		1,344.917		13,362		14,095		-		14,095		8,596		1.616512		1.640322
TA JPMorgan Core Bond Service Class		382.207		5,359		5,129		1		5,130		3,811		1.317477		1.350216

See accompanying notes. 2

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Assets and Liabilities

December 31, 2013

Subaccount	Number of Shares		Cost		Assets at Market Value		Due (to)/from General Account		Net Assets		Units Outstanding		Range of Unit Values
TA JPMorgan Enhanced Index Service Class		1,246.051	$	15,481	$	21,918	$	-	$	21,918		16,579	$	1.289919	$	1.321991
TA JPMorgan Tactical Allocation Service Class		961.973		13,051		13,391		(1)		13,390		11,780		1.112562		1.140236
TA MFS International Equity Service Class		398.548		3,077		3,424		-		3,424		3,020		1.109493		1.137089
TA Morgan Stanley Capital Growth Service Class		990.379		13,888		14,856		-		14,856		9,610		1.509304		1.546844
TA Morgan Stanley Mid-Cap Growth Service Class		2,459.548		81,997		91,397		-		91,397		62,256		1.437639		1.473425
TA Multi-Managed Balanced Service Class		1,262.781		15,971		16,909		-		16,909		12,293		1.346236		1.379697
TA PIMCO Tactical - Balanced Service Class		-		-		-		-		-		-		1.039944		1.057104
TA PIMCO Tactical - Conservative Service Class		-		-		-		-		-		-		0.983802		1.000042
TA PIMCO Tactical - Growth Service Class		-		-		-		-		-		-		1.019842		1.036688
TA PIMCO Total Return Service Class		-		-		-		-		-		-		1.286457		1.318411
TA Systematic Small/Mid Cap Value Service Class		956.905		18,630		22,305		(1)		22,304		14,634		1.491737		1.528789
TA T. Rowe Price Small Cap Service Class		13,705.649		162,521		189,275		(3)		189,272		104,328		1.775748		1.819884
TA Vanguard ETF - Balanced Initial Class		-		-		-		-		-		-		1.261028		1.289811
TA Vanguard ETF - Growth Initial Class		-		-		-		-		-		-		1.286904		1.316249
TA Vanguard ETF - Growth Service Class		-		-		-		-		-		-		1.092512		1.095428
TA WMC Diversified Growth Service Class		-		-		-		-		-		-		1.076964		1.103767

See accompanying notes. 3

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2012

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2012:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)			Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2012
AllianceBernstein Balanced Wealth Strategy Class B Shares	$	-	$	-	$	-	$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Fidelity® VIP Index 500 Service Class 2		-		-		-		-			-		-			-			-			-			-			-			-			-
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund Access VP High Yield		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Asia 30		-		-		13		(13	)		-		(1,432	)		(1,432	)		(1	)		(1,433	)		(1,446	)		1,446			-			-
ProFund VP Basic Materials		-		19		20		(1	)		-		(3,313	)		(3,313	)		2			(3,311	)		(3,312	)		4,020			708			708
ProFund VP Bull		28,443		-		149		(149	)		-		4,819			4,819			(689	)		4,130			3,981			(15,461	)		(11,480	)		16,963
ProFund VP Consumer Services		-		-		4		(4	)		-		(708	)		(708	)		-			(708	)		(712	)		712			-			-
ProFund VP Emerging Markets		20,511		329		147		182			-		(2,834	)		(2,834	)		4,909			2,075			2,257			54,439			56,696			77,207
ProFund VP Europe 30		-		-		16		(16	)		-		425			425			779			1,204			1,188			24,302			25,490			25,490
ProFund VP Falling U.S. Dollar		-		-		12		(12	)		-		(338	)		(338	)		-			(338	)		(350	)		350			-			-
ProFund VP Financials		-		-		13		(13	)		-		2,891			2,891			-			2,891			2,878			(2,878	)		-			-
ProFund VP International		17,605		-		108		(108	)		-		620			620			1,360			1,980			1,872			1,311			3,183			20,788
ProFund VP Japan		13,478		-		5		(5	)		-		(937	)		(937	)		612			(325	)		(330	)		(13,148	)		(13,478	)		-
ProFund VP Mid-Cap		32,970		-		243		(243	)		-		7,856			7,856			1,200			9,056			8,813			7,583			16,396			49,366
ProFund VP Money Market		691,997		121		2,852		(2,731	)		-		-			-			-			-			(2,731	)		(169,918	)		(172,649	)		519,348
ProFund VP NASDAQ-100		72,122		-		241		(241	)		-		20,008			20,008			(2,254	)		17,754			17,513			(75,094	)		(57,581	)		14,541
ProFund VP Oil & Gas		-		4		23		(19	)		320		(578	)		(258	)		(3	)		(261	)		(280	)		2,339			2,059			2,059
ProFund VP Pharmaceuticals		-		-		34		(34	)		-		2,208			2,208			-			2,208			2,174			(2,174	)		-			-
ProFund VP Precious Metals		9,336		-		60		(60	)		-		(4,442	)		(4,442	)		(30	)		(4,472	)		(4,532	)		1,475			(3,057	)		6,279

See Accompanying Notes. ⁽¹⁾  See Footnote 1 4

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2012

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2012:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)			Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2012
ProFund VP Short Emerging Markets	$	-	$	-	$	-	$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
ProFund VP Short International		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Short NASDAQ-100		-		-		2		(2	)		-		(83	)		(83	)		2			(81	)		(83	)		1,447			1,364			1,364
ProFund VP Short Small-Cap		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Small-Cap		21,791		-		114		(114	)		373		220			593			4			597			483			(5,237	)		(4,754	)		17,037
ProFund VP Small-Cap Value		-		-		171		(171	)		-		(1,343	)		(1,343	)		1,334			(9	)		(180	)		59,602			59,422			59,422
ProFund VP Telecommunications		-		-		7		(7	)		-		(1,588	)		(1,588	)		-			(1,588	)		(1,595	)		1,595			-			-
ProFund VP U.S. Government Plus		-		-		149		(149	)		280		(297	)		(17	)		282			265			116			112,766			112,882			112,882
ProFund VP UltraSmall-Cap		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Utilities		-		-		46		(46	)		-		(1,123	)		(1,123	)		(8	)		(1,131	)		(1,177	)		1,857			680			680
TA Aegon High Yield Bond Service Class		558,069		34,907		3,009		31,898			-		33,851			33,851			20,442			54,293			86,191			(49,510	)		36,681			594,750
TA Aegon Money Market Service Class		143,403		7		649		(642	)		-		-			-			-			-			(642	)		6			(636	)		142,767
TA Aegon Tactical Vanguard ETF - Conservative Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Aegon Tactical Vanguard ETF - Growth Service Class		3,937		28		21		7			-		1			1			402			403			410			(5	)		405			4,342
TA Aegon U.S. Government Securities Service Class		132,557		1,882		497		1,385			3,060		1,559			4,619			(3,572	)		1,047			2,432			(28,608	)		(26,176	)		106,381
TA AllianceBernstein Dynamic Allocation Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Barrow Hanley Dividend Focused Service Class		59,352		824		260		564			-		9,260			9,260			473			9,733			10,297			4,302			14,599			73,951
TA Clarion Global Real Estate Securities Service Class		-		65		11		54			-		(48	)		(48	)		139			91			145			1,989			2,134			2,134
TA Hanlon Income Service Class		20,559		446		104		342			-		1			1			264			265			607			(22	)		585			21,144
TA Janus Balanced Service Class		3,905		-		21		(21	)		-		-			-			486			486			465			(4	)		461			4,366

See Accompanying Notes. ⁽¹⁾  See Footnote 1 5

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2012

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2012:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)			Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2012
TA Jennison Growth Service Class	$	85,731	$	-	$	314	$	(314	)	$	5,872	$	12,226		$	18,098		$	2,556		$	20,654		$	20,340		$	(84,985	)	$	(64,645	)	$	21,086
TA JPMorgan Core Bond Service Class		105,266		2,340		503		1,837			37		1,283			1,320			1,283			2,603			4,440			(36,336	)		(31,896	)		73,370
TA JPMorgan Enhanced Index Service Class		36,329		102		77		25			-		662			662			1,993			2,655			2,680			(22,185	)		(19,505	)		16,824
TA JPMorgan Tactical Allocation Service Class		58,950		267		259		8			-		3,565			3,565			193			3,758			3,766			12,759			16,525			75,475
TA MFS International Equity Service Class		-		-		10		(10	)		-		-			-			1,038			1,038			1,028			24,479			25,507			25,507
TA Morgan Stanley Capital Growth Service Class		21,723		-		66		(66	)		-		1,543			1,543			2,430			3,973			3,907			(25,630	)		(21,723	)		-
TA Morgan Stanley Mid-Cap Growth Service Class		82,292		-		130		(130	)		677		(14,472	)		(13,795	)		5,263			(8,532	)		(8,662	)		(67,351	)		(76,013	)		6,279
TA Multi-Managed Balanced Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA PIMCO Tactical - Balanced Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA PIMCO Tactical - Conservative Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA PIMCO Tactical - Growth Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA PIMCO Total Return Service Class		116,594		844		149		695			-		2,299			2,299			(470	)		1,829			2,524			(97,733	)		(95,209	)		21,385
TA Systematic Small/Mid Cap Value Service Class		5,999		25		121		(96	)		2,266		2,899			5,165			608			5,773			5,677			19,878			25,555			31,554
TA T. Rowe Price Small Cap Service Class		11,158		-		316		(316	)		7,620		(8,695	)		(1,075	)		540			(535	)		(851	)		(3,990	)		(4,841	)		6,317
TA Vanguard ETF - Balanced Initial Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Vanguard ETF - Growth Initial Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Vanguard ETF - Growth Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA WMC Diversified Growth Service Class		13,535		-		1		(1	)		-		197			197			146			343			342			(13,877	)		(13,535	)		-

See Accompanying Notes. ⁽¹⁾  See Footnote 1 6

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2013, Except as Noted

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2013:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)			Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2013
AllianceBernstein Balanced Wealth Strategy Class B Shares	$	-	$	-	$	-	$	-		$	-	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Fidelity® VIP Index 500 Service Class 2		-		-		-		-			-		-			-			-			-			-			-			-			-
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund Access VP High Yield		-		285		61		224			-		7			7			1,062			1,069			1,293			46,661			47,954			47,954
ProFund VP Asia 30		-		-		13		(13	)		-		27			27			259			286			273			7,700			7,973			7,973
ProFund VP Basic Materials		708		21		10		11			-		(151	)		(151	)		60			(91	)		(80	)		133			53			761
ProFund VP Bull		16,963		-		190		(190	)		664		2,507			3,171			1,605			4,776			4,586			5,139			9,725			26,688
ProFund VP Consumer Services		-		-		23		(23	)		-		(376	)		(376	)		-			(376	)		(399	)		399			-			-
ProFund VP Emerging Markets		77,207		145		269		(124	)		-		(7,411	)		(7,411	)		(4,888	)		(12,299	)		(12,423	)		(36,615	)		(49,038	)		28,169
ProFund VP Europe 30		25,490		-		122		(122	)		-		(2,000	)		(2,000	)		(779	)		(2,779	)		(2,901	)		(22,589	)		(25,490	)		-
ProFund VP Falling U.S. Dollar		-		-		12		(12	)		-		(108	)		(108	)		(4	)		(112	)		(124	)		3,022			2,898			2,898
ProFund VP Financials		-		-		16		(16	)		-		(1,847	)		(1,847	)		-			(1,847	)		(1,863	)		1,863			-			-
ProFund VP International		20,788		-		163		(163	)		2,638		(7,973	)		(5,335	)		(134	)		(5,469	)		(5,632	)		(2,651	)		(8,283	)		12,505
ProFund VP Japan		-		-		45		(45	)		-		111			111			1,055			1,166			1,121			7,549			8,670			8,670
ProFund VP Mid-Cap		49,366		-		410		(410	)		5,610		10,964			16,574			1,563			18,137			17,727			(19,141	)		(1,414	)		47,952
ProFund VP Money Market		519,348		135		3,136		(3,001	)		-		-			-			-			-			(3,001	)		267,547			264,546			783,894
ProFund VP NASDAQ-100		14,541		-		48		(48	)		-		379			379			3,067			3,446			3,398			(2,219	)		1,179			15,720
ProFund VP Oil & Gas		2,059		9		36		(27	)		82		(1,046	)		(964	)		44			(920	)		(947	)		(361	)		(1,308	)		751
ProFund VP Pharmaceuticals		-		-		41		(41	)		-		996			996			-			996			955			(955	)		-			-
ProFund VP Precious Metals		6,279		-		19		(19	)		-		(1,502	)		(1,502	)		(912	)		(2,414	)		(2,433	)		(235	)		(2,668	)		3,611
ProFund VP Short Emerging Markets		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Short International		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Short NASDAQ-100		1,364		-		2		(2	)		-		(188	)		(188	)		(2	)		(190	)		(192	)		(1,172	)		(1,364	)		-
ProFund VP Short Small-Cap		-		-		-		-			-		-			-			-			-			-			-			-			-

See Accompanying Notes. ⁽¹⁾  See Footnote 1 7

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2013, Except as Noted

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2013:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)			Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2013
ProFund VP Small-Cap	$	17,037	$	-	$	192	$	(192	)	$	1,189	$	4,973		$	6,162		$	2,555		$	8,717		$	8,525		$	11,582		$	20,107		$	37,144
ProFund VP Small-Cap Value		59,422		185		243		(58	)		-		9,708			9,708			5,023			14,731			14,673			6,198			20,871			80,293
ProFund VP Telecommunications		-		-		29		(29	)		-		(753	)		(753	)		-			(753	)		(782	)		782			-			-
ProFund VP U.S. Government Plus		112,882		-		9		(9	)		31		(3,558	)		(3,527	)		(282	)		(3,809	)		(3,818	)		(109,064	)		(112,882	)		-
ProFund VP UltraSmall-Cap		-		-		-		-			-		-			-			-			-			-			-			-			-
ProFund VP Utilities		680		63		38		25			-		(1,103	)		(1,103	)		14			(1,089	)		(1,064	)		1,122			58			738
TA Aegon High Yield Bond Service Class		594,750		18,084		1,951		16,133			-		32,811			32,811			(34,380	)		(1,569	)		14,564			(477,095	)		(462,531	)		132,219
TA Aegon Money Market Service Class		142,767		7		641		(634	)		-		-			-			-			-			(634	)		1			(633	)		142,134
TA Aegon Tactical Vanguard ETF - Conservative Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Aegon Tactical Vanguard ETF - Growth Service Class		4,342		-		4		(4	)		-		605			605			(359	)		246			242			(4,584	)		(4,342	)		-
TA Aegon U.S. Government Securities Service Class		106,381		159		160		(1	)		176		(2,019	)		(1,843	)		1,912			69			68			(94,859	)		(94,791	)		11,590
TA AllianceBernstein Dynamic Allocation Service Class		-		-		-		-			-		-			-			-			-			-			-			-			-
TA Barrow Hanley Dividend Focused Service Class		73,951		914		153		761			-		7,342			7,342			39			7,381			8,142			(59,671	)		(51,529	)		22,422
TA Clarion Global Real Estate Securities Service Class		2,134		270		28		242			-		59			59			(313	)		(254	)		(12	)		2,431			2,419			4,553
TA Hanlon Income Service Class		21,144		-		21		(21	)		-		650			650			(388	)		262			241			(21,385	)		(21,144	)		-
TA Janus Balanced Service Class		4,366		-		4		(4	)		-		600			600			(357	)		243			239			(4,605	)		(4,366	)		-
TA Jennison Growth Service Class		21,086		-		8		(8	)		-		440			440			762			1,202			1,194			(8,185	)		(6,991	)		14,095
TA JPMorgan Core Bond Service Class		73,370		140		269		(129	)		-		(1,109	)		(1,109	)		(1,870	)		(2,979	)		(3,108	)		(65,132	)		(68,240	)		5,130
TA JPMorgan Enhanced Index Service Class		16,824		99		87		12			131		77			208			5,065			5,273			5,285			(191	)		5,094			21,918
TA JPMorgan Tactical Allocation Service Class		75,475		351		118		233			-		1,393			1,393			(683	)		710			943			(63,028	)		(62,085	)		13,390
TA MFS International Equity Service Class		25,507		33		120		(87	)		-		1,891			1,891			(692	)		1,199			1,112			(23,195	)		(22,083	)		3,424
TA Morgan Stanley Capital Growth Service Class		-		-		12		(12	)		-		795			795			968			1,763			1,751			13,105			14,856			14,856
TA Morgan Stanley Mid-Cap Growth Service Class		6,279		391		231		160			1,347		4,094			5,441			9,257			14,698			14,858			70,260			85,118			91,397
TA Multi-Managed Balanced Service Class		-		226		64		162			521		-			521			937			1,458			1,620			15,289			16,909			16,909

See Accompanying Notes. ⁽¹⁾  See Footnote 1 8

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Statements of Operations and Change in Net Assets

Year Ended December 31, 2013, Except as Noted

			Investment Income:		Investment Expense:		Increase (Decrease) in Net Assets from Operations:
Subaccount	Net Assets as of January 1, 2013:		Reinvested Dividends		Mortality and Expense Risk and Administrative Charges		Net Investment Income (Loss)			Capital Gain Distributions		Realized Gain (Loss) on Investments			Net Realized Capital Gains (Losses) on Investments			Net Change in Unrealized Appreciation (Depreciation)		Net Gain (Loss) on Investment			Net Increase (Decrease) in Net Assets Resulting from Operations			Increase (Decrease) in Net Assets from Contract Transactions			Total Increase (Decrease) in Net Assets			Net Assets as of December 31, 2013
TA PIMCO Tactical - Balanced Service Class	$	-	$	-	$	-	$	-		$	-	$	-		$	-		$	-	$	-		$	-		$	-		$	-		$	-
TA PIMCO Tactical - Conservative Service Class		-		-		-		-			-		-			-			-		-			-			-			-			-
TA PIMCO Tactical - Growth Service Class		-		-		-		-			-		-			-			-		-			-			-			-			-
TA PIMCO Total Return Service Class		21,385		239		86		153			150		(2,124	)		(1,974	)		313		(1,661	)		(1,508	)		(19,877	)		(21,385	)		-
TA Systematic Small/Mid Cap Value Service Class		31,554		127		309		(182	)		87		13,243			13,330			3,119		16,449			16,267			(25,517	)		(9,250	)		22,304
TA T. Rowe Price Small Cap Service Class		6,317		-		509		(509	)		7,330		2,852			10,182			26,523		36,705			36,196			146,759			182,955			189,272
TA Vanguard ETF - Balanced Initial Class		-		-		-		-			-		-			-			-		-			-			-			-			-
TA Vanguard ETF - Growth Initial Class		-		-		-		-			-		-			-			-		-			-			-			-			-
TA Vanguard ETF - Growth Service Class(1)		-		-		-		-			-		-			-			-		-			-			-			-			-
TA WMC Diversified Growth Service Class		-		-		-		-			-		-			-			-		-			-			-			-			-

See Accompanying Notes. ⁽¹⁾ See Footnote 1 9

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

1.   Organization and Summary of Significant Accounting Policies

Organization

Separate Account VA AA (the Separate Account) is a segregated investment account of Western Reserve Life Assurance Co. of Ohio (WRL), an indirect wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.

The Separate Account is registered with the Securities and Exchange Commission as a Unit Investment Trust pursuant to provisions of the Investment Company Act of 1940. The Separate Account consists of multiple investment subaccounts. Each subaccount invests exclusively in the corresponding portfolio of a Mutual Fund. Each Mutual Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. Activity in these specified investment subaccounts is available to contract owners of Transamerica WRL Freedom Advisor.

Subaccount Investment by Mutual Fund:

Subaccount	Mutual Fund
AllianceBernstein Variable Products Series Fund, Inc.	AllianceBernstein Variable Products Series Fund, Inc.
AllianceBernstein Balanced Wealth Strategy Class B Shares	AllianceBernstein Balanced Wealth Strategy Portfolio Class B Shares
Fidelity® Variable Insurance Products Fund	Fidelity® Variable Insurance Products Fund
Fidelity® VIP Index 500 Service Class 2	Fidelity® VIP Index 500 Portfolio Service Class 2
Franklin Templeton Variable Insurance Products Trust	Franklin Templeton Variable Insurance Products Trust
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares	Franklin Templeton VIP Founding Funds Allocation Fund Class 4 Shares
Access One Trust	Access One Trust
ProFund Access VP High Yield	ProFund Access VP High Yield Fund
Profunds	Profunds
ProFund VP Asia 30	ProFund VP Asia 30
ProFund VP Basic Materials	ProFund VP Basic Materials
ProFund VP Bull	ProFund VP Bull
ProFund VP Consumer Services	ProFund VP Consumer Services
ProFund VP Emerging Markets	ProFund VP Emerging Markets
ProFund VP Europe 30	ProFund VP Europe 30
ProFund VP Falling U.S. Dollar	ProFund VP Falling U.S. Dollar
ProFund VP Financials	ProFund VP Financials
ProFund VP International	ProFund VP International
ProFund VP Japan	ProFund VP Japan
ProFund VP Mid-Cap	ProFund VP Mid-Cap
ProFund VP Money Market	ProFund VP Money Market
ProFund VP NASDAQ-100	ProFund VP NASDAQ-100
ProFund VP Oil & Gas	ProFund VP Oil & Gas
ProFund VP Pharmaceuticals	ProFund VP Pharmaceuticals
ProFund VP Precious Metals	ProFund VP Precious Metals
ProFund VP Short Emerging Markets	ProFund VP Short Emerging Markets
ProFund VP Short International	ProFund VP Short International
ProFund VP Short NASDAQ-100	ProFund VP Short NASDAQ-100
ProFund VP Short Small-Cap	ProFund VP Short Small-Cap
ProFund VP Small-Cap	ProFund VP Small-Cap
ProFund VP Small-Cap Value	ProFund VP Small-Cap Value
ProFund VP Telecommunications	ProFund VP Telecommunications
ProFund VP U.S. Government Plus	ProFund VP U.S. Government Plus

10

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

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

Subaccount Investment by Mutual Fund:

Subaccount	Mutual Fund
Profunds	Profunds
ProFund VP UltraSmall-Cap	ProFund VP UltraSmall-Cap
ProFund VP Utilities	ProFund VP Utilities
Transamerica Series Trust	Transamerica Series Trust
TA Aegon High Yield Bond Service Class	Transamerica Aegon High Yield Bond VP Service Class
TA Aegon Money Market Service Class	Transamerica Aegon Money Market VP Service Class
TA Aegon Tactical Vanguard ETF - Conservative Service Class	Transamerica Aegon Tactical Vanguard ETF - Conservative VP Service Class
TA Aegon Tactical Vanguard ETF - Growth Service Class	Transamerica Aegon Tactical Vanguard ETF - Growth VP Service Class
TA Aegon U.S. Government Securities Service Class	Transamerica Aegon U.S. Government Securities VP Service Class
TA AllianceBernstein Dynamic Allocation Service Class	Transamerica AllianceBernstein Dynamic Allocation VP Service Class
TA Barrow Hanley Dividend Focused Service Class	Transamerica Barrow Hanley Dividend Focused VP Service Class
TA Clarion Global Real Estate Securities Service Class	Transamerica Clarion Global Real Estate Securities VP Service Class
TA Hanlon Income Service Class	Transamerica Hanlon Income VP Service Class
TA Janus Balanced Service Class	Transamerica Janus Balanced VP Service Class
TA Jennison Growth Service Class	Transamerica Jennison Growth VP Service Class
TA JPMorgan Core Bond Service Class	Transamerica JPMorgan Core Bond VP Service Class
TA JPMorgan Enhanced Index Service Class	Transamerica JPMorgan Enhanced Index VP Service Class
TA JPMorgan Tactical Allocation Service Class	Transamerica JPMorgan Tactical Allocation VP Service Class
TA MFS International Equity Service Class	Transamerica MFS International Equity VP Service Class
TA Morgan Stanley Capital Growth Service Class	Transamerica Morgan Stanley Capital Growth VP Service Class
TA Morgan Stanley Mid-Cap Growth Service Class	Transamerica Morgan Stanley Mid-Cap Growth VP Service Class
TA Multi-Managed Balanced Service Class	Transamerica Multi-Managed Balanced VP Service Class
TA PIMCO Tactical - Balanced Service Class	Transamerica PIMCO Tactical - Balanced VP Service Class
TA PIMCO Tactical - Conservative Service Class	Transamerica PIMCO Tactical - Conservative VP Service Class
TA PIMCO Tactical - Growth Service Class	Transamerica PIMCO Tactical - Growth VP Service Class
TA PIMCO Total Return Service Class	Transamerica PIMCO Total Return VP Service Class
TA Systematic Small/Mid Cap Value Service Class	Transamerica Systematic Small/Mid Cap Value VP Service Class
TA T. Rowe Price Small Cap Service Class	Transamerica T. Rowe Price Small Cap VP Service Class
TA Vanguard ETF - Balanced Initial Class	Transamerica Vanguard ETF - Balanced VP Initial Class
TA Vanguard ETF - Growth Initial Class	Transamerica Vanguard ETF - Growth VP Initial Class
TA Vanguard ETF - Growth Service Class	Transamerica Vanguard ETF - Growth VP Service Class
TA WMC Diversified Growth Service Class	Transamerica WMC Diversified Growth VP Service Class

Each period reported on reflects a full twelve month period except as follows:

Subaccount	Inception Date
TA Vanguard ETF - Growth Service Class	April 30, 2013
TA Aegon Tactical Vanguard ETF - Conservative Service Class	December 9, 2011
TA Aegon Tactical Vanguard ETF - Growth Service Class	December 9, 2011
TA Jennison Growth Service Class	April 29, 2010
TA Hanlon Income Service Class	November 19, 2009
TA Janus Balanced Service Class	November 19, 2009
TA PIMCO Tactical - Balanced Service Class	November 19, 2009
TA PIMCO Tactical - Conservative Service Class	November 19, 2009
TA PIMCO Tactical - Growth Service Class	November 19, 2009

11

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

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

The following subaccount name changes were made effective during the fiscal year ended December 31, 2013:

Subaccount	Formerly
TA Barrow Hanley Dividend Focused Initial Class	TA BlackRock Large Cap Value Initial Class
TA TS&W International Equity Initial Class	TA Morgan Stanley Active International Initial Class
TA Vanguard ETF - Balanced Initial Class	TA Vanguard ETF Index - Balanced Initial Class
TA Vanguard ETF - Growth Initial Class	TA Vanguard ETF Index - Growth Initial Class

During the current year the following subaccounts were liquidated and subsequently reinvested:

Reinvested Subaccount	Liquidated Subaccount
TA Systematic Small/Mid Cap Value Service Class	TA Third Avenue Value Sevice Class
TA Vanguard ETF - Growth Service Class	TA Efficent Markets Service Class

Investments

Net purchase payments received by the Separate Account are invested in the portfolios of the Mutual Funds as selected by the contract owner. Investments are stated at the closing net asset values per share on December 31, 2013.

Realized capital gains and losses from sales of shares in the Separate Account are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the Mutual Funds are included in the Statements of Operations and Changes in Net Assets.

Dividend Income

Dividends received from the Mutual Fund investments are reinvested to purchase additional mutual fund shares.

Accounting Policy

The financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for variable annuity separate accounts registered as unit investment trusts. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions regarding matters that affect the reported amount of assets and liabilities. Actual results could differ from those estimates.

12

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

2. Investments

The aggregate cost of purchases and proceeds from sales of investments for the period ended December 31, 2013 were as follows:

Subaccount	Purchases		Sales
AllianceBernstein Balanced Wealth Strategy Class B Shares	$	-	$	-
Fidelity® VIP Index 500 Service Class 2		-		-
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares		-		-
ProFund Access VP High Yield		47,251		367
ProFund VP Asia 30		15,684		7,997
ProFund VP Basic Materials		38,527		38,381
ProFund VP Bull		781,529		775,916
ProFund VP Consumer Services		447,391		447,015
ProFund VP Emerging Markets		133,134		169,873
ProFund VP Europe 30		468,731		491,443
ProFund VP Falling U.S. Dollar		309,626		306,616
ProFund VP Financials		569,444		567,597
ProFund VP International		1,341,603		1,341,779
ProFund VP Japan		489,067		481,563
ProFund VP Mid-Cap		354,458		368,398
ProFund VP Money Market		6,769,714		6,505,194
ProFund VP NASDAQ-100		37,093		39,362
ProFund VP Oil & Gas		659,504		659,811
ProFund VP Pharmaceuticals		761,428		762,424
ProFund VP Precious Metals		23,299		23,552
ProFund VP Short Emerging Markets		-		-
ProFund VP Short International		-		-
ProFund VP Short NASDAQ-100		1,496		2,670
ProFund VP Short Small-Cap		-		-
ProFund VP Small-Cap		202,815		190,238
ProFund VP Small-Cap Value		202,974		196,832
ProFund VP Telecommunications		361,826		361,074
ProFund VP U.S. Government Plus		851		109,892
ProFund VP UltraSmall-Cap		-		-
ProFund VP Utilities		668,567		667,420
TA Aegon High Yield Bond Service Class		359,722		820,684
TA Aegon Money Market Service Class		16		639
TA Aegon Tactical Vanguard ETF - Conservative Service Class		-		-
TA Aegon Tactical Vanguard ETF - Growth Service Class		1		4,588
TA Aegon U.S. Government Securities Service Class		8,307		102,989
TA AllianceBernstein Dynamic Allocation Service Class		-		-

13

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

2. Investments (continued)

Subaccount	Purchases		Sales
TA Barrow Hanley Dividend Focused Service Class	$	65,041	$	123,948
TA Clarion Global Real Estate Securities Service Class		8,377		5,705
TA Hanlon Income Service Class		1		21,408
TA Janus Balanced Service Class		1		4,609
TA Jennison Growth Service Class		13,369		21,563
TA JPMorgan Core Bond Service Class		28,726		93,984
TA JPMorgan Enhanced Index Service Class		298		346
TA JPMorgan Tactical Allocation Service Class		58,749		121,544
TA MFS International Equity Service Class		68,233		91,516
TA Morgan Stanley Capital Growth Service Class		26,961		13,868
TA Morgan Stanley Mid-Cap Growth Service Class		134,199		62,432
TA Multi-Managed Balanced Service Class		16,035		64
TA PIMCO Tactical - Balanced Service Class		-		-
TA PIMCO Tactical - Conservative Service Class		-		-
TA PIMCO Tactical - Growth Service Class		-		-
TA PIMCO Total Return Service Class		57,956		77,529
TA Systematic Small/Mid Cap Value Service Class		104,381		129,992
TA T. Rowe Price Small Cap Service Class		197,534		43,953
TA Vanguard ETF - Balanced Initial Class		-		-
TA Vanguard ETF - Growth Initial Class		-		-
TA Vanguard ETF - Growth Service Class		-		-
TA WMC Diversified Growth Service Class		-		-

14

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

3. Change in Units

The change in units outstanding were as follows:

	Year Ended December 31, 2013								Year Ended December 31, 2012
Subaccount	Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)			Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)
AllianceBernstein Balanced Wealth Strategy Class B Shares		-		-			-			-		-			-
Fidelity® VIP Index 500 Service Class 2		-		-			-			83		(83	)		-
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares		-		-			-			-		-			-
ProFund Access VP High Yield		-		29,460			29,460			-		-			-
ProFund VP Asia 30		18		11,549			11,567			-		-			-
ProFund VP Basic Materials		-		(70	)		(70	)		-		795			795
ProFund VP Bull		-		4,010			4,010			-		(16,503	)		(16,503	)
ProFund VP Consumer Services		-		-			-			-		-			-
ProFund VP Emerging Markets		-		(69,168	)		(69,168	)		-		81,662			81,662
ProFund VP Europe 30		-		(34,059	)		(34,059	)		-		34,059			34,059
ProFund VP Falling U.S. Dollar		3,285		-			3,285			-		-			-
ProFund VP Financials		-		-			-			-		-			-
ProFund VP International		-		(15,053	)		(15,053	)		-		696			696
ProFund VP Japan		1		10,919			10,920			-		(30,574	)		(30,574	)
ProFund VP Mid-Cap		-		(11,978	)		(11,978	)		217		10,774			10,991
ProFund VP Money Market		146,047		125,262			271,309			7		(171,403	)		(171,396	)
ProFund VP NASDAQ-100		-		(2,488	)		(2,488	)		-		(61,276	)		(61,276	)
ProFund VP Oil & Gas		-		(1,624	)		(1,624	)		-		2,305			2,305
ProFund VP Pharmaceuticals		-		-			-			-		-			-
ProFund VP Precious Metals		-		(560	)		(560	)		-		(2,163	)		(2,163	)
ProFund VP Short Emerging Markets		-		-			-			-		-			-
ProFund VP Short International		-		-			-			-		-			-
ProFund VP Short NASDAQ-100		-		(2,627	)		(2,627	)		-		2,627			2,627
ProFund VP Short Small-Cap		-		-			-			-		-			-
ProFund VP Small-Cap		-		10,146			10,146			-		(7,833	)		(7,833	)
ProFund VP Small-Cap Value		2,501		(3,323	)		(822	)		-		58,180			58,180
ProFund VP Telecommunications		-		-			-			-		-			-

15

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

3. Change in Units (continued)

	Year Ended December 31, 2013								Year Ended December 31, 2012
Subaccount	Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)			Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)
ProFund VP U.S. Government Plus		-		(68,765	)		(68,765	)		-		68,765			68,765
ProFund VP UltraSmall-Cap		-		-			-			-		-			-
ProFund VP Utilities		-		(27	)		(27	)		-		720			720
TA Aegon High Yield Bond Service Class		-		(326,582	)		(326,582	)		-		(38,323	)		(38,323	)
TA Aegon Money Market Service Class		-		(3	)		(3	)		-		(2	)		(2	)
TA Aegon Tactical Vanguard ETF - Conservative Service Class		-		-			-			-		-			-
TA Aegon Tactical Vanguard ETF - Growth Service Class		-		(3,976	)		(3,976	)		-		(4	)		(4	)
TA Aegon U.S. Government Securities Service Class		-		(72,904	)		(72,904	)		3		(24,643	)		(24,640	)
TA AllianceBernstein Dynamic Allocation Service Class		-		-			-			-		-			-
TA Barrow Hanley Dividend Focused Service Class		-		(64,124	)		(64,124	)		580		8,648			9,228
TA Clarion Global Real Estate Securities Service Class		-		2,544			2,544			-		2,383			2,383
TA Hanlon Income Service Class		-		(20,033	)		(20,033	)		-		(20	)		(20	)
TA Janus Balanced Service Class		-		(4,341	)		(4,341	)		-		(4	)		(4	)
TA Jennison Growth Service Class		4,843		(13,839	)		(8,996	)		769		(65,306	)		(64,537	)
TA JPMorgan Core Bond Service Class		-		(49,284	)		(49,284	)		-		(26,305	)		(26,305	)
TA JPMorgan Enhanced Index Service Class		-		(161	)		(161	)		-		(25,037	)		(25,037	)
TA JPMorgan Tactical Allocation Service Class		-		(57,796	)		(57,796	)		386		11,104			11,490
TA MFS International Equity Service Class		-		(23,296	)		(23,296	)		-		26,316			26,316
TA Morgan Stanley Capital Growth Service Class		5,232		4,378			9,610			885		(24,597	)		(23,712	)
TA Morgan Stanley Mid-Cap Growth Service Class		-		56,366			56,366			1,296		(79,125	)		(77,829	)
TA Multi-Managed Balanced Service Class		-		12,293			12,293			-		-			-
TA PIMCO Tactical - Balanced Service Class		-		-			-			-		-			-
TA PIMCO Tactical - Conservative Service Class		-		-			-			-		-			-
TA PIMCO Tactical - Growth Service Class		-		-			-			-		-			-
TA PIMCO Total Return Service Class		-		(15,732	)		(15,732	)		565		(76,311	)		(75,746	)
TA Systematic Small/Mid Cap Value Service Class		-		(13,408	)		(13,408	)		204		21,700			21,904
TA T. Rowe Price Small Cap Service Class		1,997		97,366			99,363			-		(5,112	)		(5,112	)

16

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

3. Change in Units (continued)

	Year Ended December 31, 2013							Year Ended December 31, 2012
Subaccount	Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)		Units Purchased		Units Redeemed and Transferred to/from			Net Increase (Decrease)
TA Vanguard ETF - Balanced Initial Class		-		-			-		-		-			-
TA Vanguard ETF - Growth Initial Class		-		-			-		-		-			-
TA Vanguard ETF - Growth Service Class		5		(5	)		-		-		-			-
TA WMC Diversified Growth Service Class		-		-			-		-		(18,171	)		(18,171	)

17

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights

The Separate Account offers various death benefit options, which have differing fees that are charged against the contract owner’s account balance. These charges are discussed in more detail in the individual’s policy. Differences in the fee structures for these units result in different unit values, expense ratios, and total returns.

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
AllianceBernstein Balanced Wealth Strategy Class B Shares
	12/31/2013		-		$1.72	to	$1.69	$	-		-	%		0.65	%	to	1.05	%		15.52		%	to	15.07		%
	12/31/2012		-		1.49	to	1.47		-		-			0.65		to	1.05			12.64			to	12.19
	12/31/2011		-		1.32	to	1.31		-		-			0.65		to	1.05			(3.68	)		to	(4.06	)
	12/31/2010		-		1.37	to	1.36		-		-			0.65		to	1.05			9.58			to	9.15
	12/31/2009		-		1.25	to	1.25		-		-			0.65		to	1.05			23.65			to	23.16
Fidelity® VIP Index 500 Service Class 2
	12/31/2013		-		1.31	to	1.28		-		-			0.45		to	0.85			31.32			to	30.80
	12/31/2012		-		1.00	to	0.98		-		-			0.45		to	0.85			15.11			to	14.65
	12/31/2011		-		0.87	to	0.86		-		-			0.45		to	0.85			1.33			to	0.93
	12/31/2010		-		0.86	to	0.85		-		-			0.45		to	0.85			14.21			to	13.76
	12/31/2009		-		0.75	to	0.75		-		-			0.45		to	0.85			25.73			to	25.24
Franklin Templeton VIP Founding Funds Allocation Class 4 Shares
	12/31/2013		-		1.93	to	1.89		-		-			0.60		to	1.00			22.94			to	22.46
	12/31/2012		-		1.57	to	1.55		-		-			0.60		to	1.00			14.48			to	14.02
	12/31/2011		-		1.37	to	1.36		-		-			0.60		to	1.00			(2.26	)		to	(2.64	)
	12/31/2010		-		1.41	to	1.39		-		-			0.60		to	1.00			9.58			to	9.15
	12/31/2009		-		1.28	to	1.28		-		-			0.60		to	1.00			29.29			to	28.78
ProFund Access VP High Yield
	12/31/2013		29,460		1.64	to	1.60		47,954		2.59			0.45		to	0.85			9.53			to	9.09
	12/31/2012		-		1.49	to	1.46		-		-			0.45		to	0.85			13.61			to	13.16
	12/31/2011		-		1.31	to	1.29		-		-			0.45		to	0.85			2.29			to	1.88
	12/31/2010		-		1.29	to	1.27		-		-			0.45		to	0.85			15.85			to	15.39
	12/31/2009		438,409		1.11	to	1.10		485,899		8.99			0.45		to	0.85			16.39			to	15.93
ProFund VP Asia 30
	12/31/2013		11,567		0.69	to	0.68		7,973		-			0.45		to	0.85			14.46			to	14.00
	12/31/2012		-		0.61	to	0.59		-		-			0.45		to	0.85			14.96			to	14.50
	12/31/2011		-		0.53	to	0.52		-		-			0.45		to	0.85			(27.32	)		to	(27.61	)
	12/31/2010		10,061		0.72	to	0.72		7,292		-			0.45		to	0.85			13.40			to	12.95
	12/31/2009		59,869		0.64	to	0.63		38,208		0.99			0.45		to	0.85			53.51			to	52.90
ProFund VP Basic Materials
	12/31/2013		725		1.05	to	1.03		761		1.40			0.45		to	0.85			17.90			to	17.43
	12/31/2012		795		0.89	to	0.87		708		0.68			0.45		to	0.85			8.00			to	7.57
	12/31/2011		-		0.83	to	0.81		-		0.13			0.45		to	0.85			(16.53	)		to	(16.86	)
	12/31/2010		117,541		0.99	to	0.98		116,341		0.57			0.45		to	0.85			29.12			to	28.60
	12/31/2009		66,839		0.77	to	0.76		51,225		1.57			0.45		to	0.85			61.65			to	61.01
ProFund VP Bull
	12/31/2013		22,343		1.20	to	1.17		26,688		-			0.45		to	0.85			29.17			to	28.66
	12/31/2012		18,333		0.93	to	0.91		16,963		-			0.45		to	0.85			13.38			to	12.92
	12/31/2011		34,836		0.82	to	0.80		28,443		-			0.45		to	0.85			(0.45	)		to	(0.84	)
	12/31/2010		213,424		0.82	to	0.81		175,014		0.18			0.45		to	0.85			12.07			to	11.63
	12/31/2009		258,225		0.73	to	0.73		189,046		1.57			0.45		to	0.85			23.79			to	23.30
ProFund VP Consumer Services
	12/31/2013		-		1.76	to	1.72		-		-			0.45		to	0.85			39.24			to	38.69
	12/31/2012		-		1.26	to	1.24		-		-			0.45		to	0.85			21.55			to	21.07
	12/31/2011		-		1.04	to	1.02		-		-			0.45		to	0.85			5.03			to	4.61
	12/31/2010		-		0.99	to	0.98		-		-			0.45		to	0.85			20.84			to	20.37
	12/31/2009		-		0.82	to	0.81		-		-			0.45		to	0.85			30.22			to	29.70

18

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
ProFund VP Emerging Markets
	12/31/2013		44,564		$0.63	to	$0.62	$	28,169		0.25	%		0.45	%	to	0.85	%		(6.84	)	%	to	(7.21	)	%
	12/31/2012		113,732		0.68	to	0.67		77,207		0.97			0.45		to	0.85			6.09			to	5.67
	12/31/2011		32,070		0.64	to	0.63		20,511		-			0.45		to	0.85			(20.06	)		to	(20.38	)
	12/31/2010		374,069		0.80	to	0.79		299,259		-			0.45		to	0.85			9.28			to	8.84
	12/31/2009		133,545		0.73	to	0.73		97,802		0.15			0.45		to	0.85			61.63			to	60.99
ProFund VP Europe 30
	12/31/2013		-		0.91	to	0.88		-		-			0.45		to	0.85			21.09			to	20.61
	12/31/2012		34,059		0.75	to	0.73		25,490		-			0.45		to	0.85			16.07			to	15.61
	12/31/2011		-		0.65	to	0.63		-		-			0.45		to	0.85			(9.29	)		to	(9.65	)
	12/31/2010		-		0.71	to	0.70		-		-			0.45		to	0.85			2.17			to	1.77
	12/31/2009		7,114		0.70	to	0.69		4,953		-			0.45		to	0.85			31.70			to	31.18
ProFund VP Falling U.S. Dollar
	12/31/2013		3,285		0.88	to	0.86		2,898		-			0.45		to	0.85			(2.45	)		to	(2.84	)
	12/31/2012		-		0.91	to	0.89		-		-			0.45		to	0.85			(1.22	)		to	(1.61	)
	12/31/2011		-		0.92	to	0.90		-		-			0.45		to	0.85			(3.16	)		to	(3.54	)
	12/31/2010		-		0.95	to	0.94		-		-			0.45		to	0.85			(3.02	)		to	(3.41	)
	12/31/2009		-		0.98	to	0.97		-		-			0.45		to	0.85			2.85			to	2.45
ProFund VP Financials
	12/31/2013		-		0.76	to	0.75		-		-			0.45		to	0.85			31.49			to	30.96
	12/31/2012		-		0.58	to	0.57		-		-			0.45		to	0.85			24.17			to	23.67
	12/31/2011		-		0.47	to	0.46		-		-			0.45		to	0.85			(14.22	)		to	(14.56	)
	12/31/2010		-		0.55	to	0.54		-		-			0.45		to	0.85			10.43			to	10.00
	12/31/2009		-		0.49	to	0.49		-		-			0.45		to	0.85			14.50			to	14.04
ProFund VP International
	12/31/2013		15,421		0.81	to	0.79		12,505		-			0.45		to	0.85			18.96			to	18.49
	12/31/2012		30,474		0.68	to	0.67		20,788		-			0.45		to	0.85			15.41			to	14.95
	12/31/2011		29,778		0.59	to	0.58		17,605		-			0.45		to	0.85			(14.72	)		to	(15.06	)
	12/31/2010		448,355		0.69	to	0.69		311,016		-			0.45		to	0.85			7.32			to	6.89
	12/31/2009		163,992		0.65	to	0.64		105,994		0.03			0.45		to	0.85			24.09			to	23.60
ProFund VP Japan
	12/31/2013		10,920		0.80	to	0.78		8,670		-			0.45		to	0.85			47.57			to	46.99
	12/31/2012		-		0.54	to	0.53		-		-			0.45		to	0.85			22.40			to	21.91
	12/31/2011		30,574		0.44	to	0.43		13,478		-			0.45		to	0.85			(18.90	)		to	(19.23	)
	12/31/2010		-		0.55	to	0.54		-		-			0.45		to	0.85			(6.95	)		to	(7.32	)
	12/31/2009		-		0.59	to	0.58		-		-			0.45		to	0.85			9.84			to	9.40
ProFund VP Mid-Cap
	12/31/2013		35,177		1.37	to	1.33		47,952		-			0.45		to	0.85			30.20			to	29.69
	12/31/2012		47,155		1.05	to	1.03		49,366		-			0.45		to	0.85			15.02			to	14.56
	12/31/2011		36,164		0.91	to	0.90		32,970		-			0.45		to	0.85			(4.61	)		to	(4.99	)
	12/31/2010		29,921		0.96	to	0.94		28,563		-			0.45		to	0.85			23.49			to	23.00
	12/31/2009		188,770		0.77	to	0.77		146,093		-			0.45		to	0.85			32.28			to	31.76
ProFund VP Money Market
	12/31/2013		795,288		0.99	to	0.96		783,894		0.02			0.45		to	0.85			(0.43	)		to	(0.83	)
	12/31/2012		523,979		0.99	to	0.97		519,348		0.02			0.45		to	0.85			(0.44	)		to	(0.83	)
	12/31/2011		695,375		1.00	to	0.98		691,997		0.02			0.45		to	0.85			(0.43	)		to	(0.82	)
	12/31/2010		171,736		1.00	to	0.99		171,584		0.02			0.45		to	0.85			(0.43	)		to	(0.82	)
	12/31/2009		415,164		1.00	to	1.00		416,787		0.04			0.45		to	0.85			(0.42	)		to	(0.82	)
ProFund VP NASDAQ-100
	12/31/2013		10,458		1.51	to	1.47		15,720		-			0.45		to	0.85			33.67			to	33.14
	12/31/2012		12,946		1.13	to	1.10		14,541		-			0.45		to	0.85			15.71			to	15.25
	12/31/2011		74,222		0.97	to	0.96		72,122		-			0.45		to	0.85			1.00			to	0.60
	12/31/2010		-		0.96	to	0.95		-		-			0.45		to	0.85			17.71			to	17.25
	12/31/2009		19,123		0.82	to	0.81		15,665		-			0.45		to	0.85			51.33			to	50.73

19

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
ProFund VP Oil & Gas
	12/31/2013		681		$1.11	to	$1.08	$	751		0.55	%		0.45	%	to	0.85	%		23.51		%	to	23.03		%
	12/31/2012		2,305		0.90	to	0.88		2,059		0.16			0.45		to	0.85			2.43			to	2.03
	12/31/2011		-		0.87	to	0.86		-		-			0.45		to	0.85			1.79			to	1.39
	12/31/2010		95,724		0.86	to	0.85		82,211		-			0.45		to	0.85			17.23			to	16.77
	12/31/2009		-		0.73	to	0.73		-		-			0.45		to	0.85			14.98			to	14.53
ProFund VP Pharmaceuticals
	12/31/2013		-		1.53	to	1.50		-		-			0.45		to	0.85			31.04			to	30.52
	12/31/2012		-		1.17	to	1.15		-		-			0.45		to	0.85			11.35			to	10.91
	12/31/2011		-		1.05	to	1.03		-		-			0.45		to	0.85			15.61			to	15.15
	12/31/2010		-		0.91	to	0.90		-		-			0.45		to	0.85			0.03			to	(0.37	)
	12/31/2009		-		0.91	to	0.90		-		-			0.45		to	0.85			16.37			to	15.91
ProFund VP Precious Metals
	12/31/2013		7,534		0.48	to	0.47		3,611		-			0.45		to	0.85			(38.22	)		to	(38.47	)
	12/31/2012		8,094		0.78	to	0.76		6,279		-			0.45		to	0.85			(14.93	)		to	(15.27	)
	12/31/2011		10,257		0.91	to	0.90		9,336		-			0.45		to	0.85			(19.58	)		to	(19.89	)
	12/31/2010		29,295		1.13	to	1.12		33,222		-			0.45		to	0.85			32.33			to	31.81
	12/31/2009		-		0.86	to	0.85		-		-			0.45		to	0.85			34.72			to	34.19
ProFund VP Short Emerging Markets
	12/31/2013		-		0.55	to	0.53		-		-			0.45		to	0.85			(0.68	)		to	(1.07	)
	12/31/2012		-		0.55	to	0.54		-		-			0.45		to	0.85			(13.43	)		to	(13.78	)
	12/31/2011		-		0.63	to	0.62		-		-			0.45		to	0.85			10.17			to	9.73
	12/31/2010		-		0.58	to	0.57		-		-			0.45		to	0.85			(18.78	)		to	(19.11	)
	12/31/2009		-		0.71	to	0.70		-		-			0.45		to	0.85			(48.94	)		to	(49.15	)
ProFund VP Short International
	12/31/2013		-		0.54	to	0.53		-		-			0.45		to	0.85			(21.36	)		to	(21.67	)
	12/31/2012		-		0.69	to	0.68		-		-			0.45		to	0.85			(20.51	)		to	(20.83	)
	12/31/2011		-		0.87	to	0.86		-		-			0.45		to	0.85			1.35			to	0.95
	12/31/2010		-		0.86	to	0.85		-		-			0.45		to	0.85			(15.08	)		to	(15.42	)
	12/31/2009		-		1.01	to	1.00		-		-			0.45		to	0.85			(30.59	)		to	(30.87	)
ProFund VP Short NASDAQ-100
	12/31/2013		-		0.37	to	0.36		-		-			0.45		to	0.85			(29.72	)		to	(30.00	)
	12/31/2012		2,627		0.52	to	0.51		1,364		-			0.45		to	0.85			(19.16	)		to	(19.48	)
	12/31/2011		-		0.64	to	0.63		-		-			0.45		to	0.85			(10.88	)		to	(11.23	)
	12/31/2010		-		0.72	to	0.71		-		-			0.45		to	0.85			(21.54	)		to	(21.85	)
	12/31/2009		-		0.92	to	0.91		-		-			0.45		to	0.85			(40.93	)		to	(41.16	)
ProFund VP Short Small-Cap
	12/31/2013		-		0.31	to	0.31		-		-			0.45		to	0.85			(31.56	)		to	(31.83	)
	12/31/2012		-		0.46	to	0.45		-		-			0.45		to	0.85			(19.33	)		to	(19.65	)
	12/31/2011		-		0.57	to	0.56		-		-			0.45		to	0.85			(9.50	)		to	(9.85	)
	12/31/2010		-		0.63	to	0.62		-		-			0.45		to	0.85			(29.26	)		to	(29.54	)
	12/31/2009		-		0.89	to	0.88		-		-			0.45		to	0.85			(32.68	)		to	(32.94	)
ProFund VP Small-Cap
	12/31/2013		27,155		1.37	to	1.34		37,144		-			0.45		to	0.85			36.57			to	36.03
	12/31/2012		17,009		1.00	to	0.98		17,037		-			0.45		to	0.85			14.23			to	13.78
	12/31/2011		24,842		0.88	to	0.86		21,791		-			0.45		to	0.85			(6.08	)		to	(6.45	)
	12/31/2010		-		0.94	to	0.92		-		-			0.45		to	0.85			24.23			to	23.74
	12/31/2009		-		0.75	to	0.75		-		-			0.45		to	0.85			25.50			to	25.01
ProFund VP Small-Cap Value
	12/31/2013		57,358		1.40	to	1.37		80,293		0.37			0.45		to	0.85			37.06			to	36.52
	12/31/2012		58,180		1.02	to	1.00		59,422		-			0.45		to	0.85			15.63			to	15.17
	12/31/2011		-		0.89	to	0.87		-		-			0.45		to	0.85			(4.53	)		to	(4.91	)
	12/31/2010		-		0.93	to	0.92		-		0.13			0.45		to	0.85			21.55			to	21.07
	12/31/2009		33,218		0.76	to	0.76		25,313		0.07			0.45		to	0.85			19.86			to	19.39

20

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
ProFund VP Telecommunications
	12/31/2013		-		$1.00	to	$0.97	$	-		-	%		0.45	%	to	0.85	%		11.57		%	to	11.13		%
	12/31/2012		-		0.89	to	0.87		-		-			0.45		to	0.85			15.99			to	15.53
	12/31/2011		-		0.77	to	0.76		-		-			0.45		to	0.85			1.41			to	1.01
	12/31/2010		82,502		0.76	to	0.75		62,559		50.43			0.45		to	0.85			15.17			to	14.71
	12/31/2009		-		0.66	to	0.65		-		-			0.45		to	0.85			6.84			to	6.42
ProFund VP U.S. Government Plus
	12/31/2013		-		1.33	to	1.29		-		-			0.45		to	0.85			(19.47	)		to	(19.79	)
	12/31/2012		68,765		1.65	to	1.61		112,882		-			0.45		to	0.85			0.52			to	0.12
	12/31/2011		-		1.64	to	1.61		-		0.10			0.45		to	0.85			42.87			to	42.31
	12/31/2010		-		1.15	to	1.13		-		0.67			0.45		to	0.85			9.62			to	9.19
	12/31/2009		-		1.05	to	1.04		-		0.06			0.45		to	0.85			(32.92	)		to	(33.19	)
ProFund VP UltraSmall-Cap
	12/31/2013		-		1.14	to	1.12		-		-			0.45		to	0.85			85.82			to	85.09
	12/31/2012		-		0.62	to	0.60		-		-			0.45		to	0.85			28.93			to	28.42
	12/31/2011		-		0.48	to	0.47		-		-			0.45		to	0.85			(19.19	)		to	(19.52	)
	12/31/2010		-		0.59	to	0.58		-		-			0.45		to	0.85			47.78			to	47.19
	12/31/2009		-		0.40	to	0.40		-		-			0.45		to	0.85			39.55			to	39.00
ProFund VP Utilities
	12/31/2013		693		1.07	to	1.04		738		2.45			0.45		to	0.85			12.81			to	12.36
	12/31/2012		720		0.95	to	0.93		680		-			0.45		to	0.85			(0.31	)		to	(0.71	)
	12/31/2011		-		0.95	to	0.93		-		-			0.45		to	0.85			16.98			to	16.52
	12/31/2010		-		0.81	to	0.80		-		-			0.45		to	0.85			5.47			to	5.06
	12/31/2009		-		0.77	to	0.76		-		-			0.45		to	0.85			10.24			to	9.80
TA Aegon High Yield Bond Service Class
	12/31/2013		86,609		1.53	to	1.49		132,219		4.58			0.45		to	0.85			5.85			to	5.43
	12/31/2012		413,191		1.44	to	1.41		594,750		5.99			0.45		to	0.85			16.57			to	16.11
	12/31/2011		451,514		1.24	to	1.22		558,069		2.62			0.45		to	0.85			4.07			to	3.66
	12/31/2010		723,989		1.19	to	1.18		860,709		13.14			0.45		to	0.85			11.67			to	11.22
	12/31/2009		402,204		1.07	to	1.06		428,269		12.95			0.45		to	0.85			46.20			to	45.62
TA Aegon Money Market Service Class
	12/31/2013		141,898		1.00	to	0.98		142,134		0.00			0.45		to	0.85			(0.44	)		to	(0.85	)
	12/31/2012		141,901		1.01	to	0.99		142,767		0.00			0.45		to	0.85			(0.44	)		to	(0.85	)
	12/31/2011		141,903		1.01	to	0.99		143,403		0.01			0.45		to	0.85			(0.44	)		to	(0.84	)
	12/31/2010		183,773		1.02	to	1.00		186,456		0.01			0.45		to	0.85			(0.44	)		to	(0.83	)
	12/31/2009		383,243		1.02	to	1.01		390,452		5.01			0.45		to	0.85			(0.43	)		to	(0.82	)
TA TA Aegon Tactical Vanguard ETF - Conservative Service Class
	12/31/2013		-		1.14	to	1.13		-		-			0.45		to	0.85			6.59			to	6.17
	12/31/2012		-		1.07	to	1.06		-		-			0.45		to	0.85			6.30			to	5.88
	12/31/2011(1)		-		1.01	to	1.01		-		-			0.45		to	0.85			0.58			to	0.56
TA TA Aegon Tactical Vanguard ETF - Growth Service Class
	12/31/2013		-		1.27	to	1.26		-		-			0.45		to	0.85			15.99			to	15.52
	12/31/2012		3,976		1.09	to	1.09		4,342		0.67			0.45		to	0.85			10.46			to	10.01
	12/31/2011(1)		3,980		0.99	to	0.99		3,937		-			0.45		to	0.85			(1.09	)		to	(1.11	)
TA Aegon U.S. Government Securities Service Class
	12/31/2013		9,218		1.26	to	1.23		11,590		0.43			0.45		to	0.85			(2.92	)		to	(3.31	)
	12/31/2012		82,122		1.30	to	1.27		106,381		1.86			0.45		to	0.85			4.39			to	3.98
	12/31/2011		106,762		1.24	to	1.22		132,557		3.52			0.45		to	0.85			6.81			to	6.38
	12/31/2010		112,102		1.17	to	1.15		130,389		0.93			0.45		to	0.85			3.76			to	3.35
	12/31/2009		60,795		1.12	to	1.11		68,221		2.70			0.45		to	0.85			3.73			to	3.32
TA AllianceBernstein Dynamic Allocation Service Class
	12/31/2013		-		0.96	to	0.94		-		-			0.45		to	0.85			6.41			to	5.99
	12/31/2012		-		0.91	to	0.89		-		-			0.45		to	0.85			5.32			to	4.90
	12/31/2011		-		0.86	to	0.85		-		-			0.45		to	0.85			1.21			to	0.81
	12/31/2010		-		0.85	to	0.84		-		-			0.45		to	0.85			8.66			to	8.23
	12/31/2009		-		0.78	to	0.78		-		-			0.45		to	0.85			30.58			to	30.06

21

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
TA Barrow Hanley Dividend Focused Service Class
	12/31/2013		19,613		$1.15	to	$1.12	$	22,422		2.71	%		0.45	%	to	0.85	%		29.35		%	to	28.83		%
	12/31/2012		83,737		0.89	to	0.87		73,951		1.53			0.45		to	0.85			10.97			to	10.53
	12/31/2011		74,509		0.80	to	0.78		59,352		-			0.45		to	0.85			2.00			to	1.60
	12/31/2010		-		0.78	to	0.77		-		-			0.45		to	0.85			9.66			to	9.22
	12/31/2009		14,197		0.71	to	0.71		10,130		-			0.45		to	0.85			13.20			to	12.76
TA Clarion Global Real Estate Securities Service Class
	12/31/2013		4,927		0.93	to	0.90		4,553		4.94			0.45		to	0.85			3.24			to	2.83
	12/31/2012		2,383		0.90	to	0.88		2,134		3.08			0.45		to	0.85			24.42			to	23.92
	12/31/2011		-		0.72	to	0.71		-		-			0.45		to	0.85			(6.43	)		to	(6.80	)
	12/31/2010		-		0.77	to	0.76		-		-			0.45		to	0.85			14.78			to	14.33
	12/31/2009		-		0.67	to	0.67		-		-			0.45		to	0.85			32.41			to	31.88
TA Hanlon Income Service Class
	12/31/2013		-		1.08	to	1.07		-		-			0.45		to	0.85			2.47			to	2.07
	12/31/2012		20,033		1.06	to	1.04		21,144		2.14			0.45		to	0.85			3.00			to	2.59
	12/31/2011		20,053		1.03	to	1.02		20,559		0.50			0.45		to	0.85			2.47			to	2.06
	12/31/2010		96,306		1.00	to	1.00		96,404		0.35			0.45		to	0.85			(0.33	)		to	(0.73	)
	12/31/2009(1)		20,095		1.00	to	1.00		20,192		-			0.45		to	0.85			0.49			to	0.44
TA Janus Balanced Service Class
	12/31/2013		-		1.19	to	1.17		-		-			0.45		to	0.85			18.48			to	18.02
	12/31/2012		4,341		1.01	to	1.00		4,366		-			0.45		to	0.85			11.99			to	11.55
	12/31/2011		4,345		0.90	to	0.89		3,905		0.03			0.45		to	0.85			(11.21	)		to	(11.56	)
	12/31/2010		31,736		1.01	to	1.01		32,134		0.29			0.45		to	0.85			2.64			to	2.23
	12/31/2009(1)		4,355		0.99	to	0.99		4,298		-			0.45		to	0.85			(1.30	)		to	(1.34	)
TA Jennison Growth Service Class
	12/31/2013		8,596		1.64	to	1.62		14,095		-			0.45		to	0.85			36.68			to	36.14
	12/31/2012		17,592		1.20	to	1.19		21,086		-			0.45		to	0.85			14.89			to	14.43
	12/31/2011		82,129		1.04	to	1.04		85,731		-			0.45		to	0.85			(1.22	)		to	(1.61	)
	12/31/2010(1)		-		1.06	to	1.05		-		-			0.45		to	0.85			5.74			to	5.46
TA JPMorgan Core Bond Service Class
	12/31/2013		3,811		1.35	to	1.32		5,130		0.26			0.45		to	0.85			(2.57	)		to	(2.95	)
	12/31/2012		53,095		1.39	to	1.36		73,370		2.38			0.45		to	0.85			4.28			to	3.87
	12/31/2011		79,400		1.33	to	1.31		105,266		7.59			0.45		to	0.85			6.76			to	6.34
	12/31/2010		3,824		1.24	to	1.23		4,752		2.10			0.45		to	0.85			7.51			to	7.08
	12/31/2009		341,264		1.16	to	1.15		394,848		4.81			0.45		to	0.85			8.89			to	8.46
TA JPMorgan Enhanced Index Service Class
	12/31/2013		16,579		1.32	to	1.29		21,918		0.51			0.45		to	0.85			31.54			to	31.02
	12/31/2012		16,740		1.01	to	0.98		16,824		0.55			0.45		to	0.85			15.57			to	15.11
	12/31/2011		41,777		0.87	to	0.86		36,329		4.43			0.45		to	0.85			0.03			to	(0.37	)
	12/31/2010		-		0.87	to	0.86		-		-			0.45		to	0.85			14.34			to	13.89
	12/31/2009		-		0.76	to	0.75		-		-			0.45		to	0.85			28.74			to	28.22
TA JPMorgan Tactical Allocation Service Class
	12/31/2013		11,780		1.14	to	1.11		13,390		1.32			0.45		to	0.85			4.82			to	4.40
	12/31/2012		69,576		1.09	to	1.07		75,475		0.50			0.45		to	0.85			6.98			to	6.56
	12/31/2011		58,086		1.02	to	1.00		58,950		-			0.45		to	0.85			2.98			to	2.58
	12/31/2010		-		0.99	to	0.97		-		-			0.45		to	0.85			(0.86	)		to	(1.26	)
	12/31/2009		-		1.00	to	0.99		-		-			0.45		to	0.85			3.48			to	3.07
TA MFS International Equity Service Class
	12/31/2013		3,020		1.14	to	1.11		3,424		0.14			0.45		to	0.85			17.24			to	16.78
	12/31/2012		26,316		0.97	to	0.95		25,507		-			0.45		to	0.85			21.32			to	20.84
	12/31/2011		-		0.80	to	0.79		-		-			0.45		to	0.85			(10.62	)		to	(10.97	)
	12/31/2010		8,415		0.89	to	0.88		7,526		-			0.45		to	0.85			9.81			to	9.37
	12/31/2009		-		0.81	to	0.81		-		-			0.45		to	0.85			31.64			to	31.12

22

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
TA Morgan Stanley Capital Growth Service Class
	12/31/2013		9,610		$1.55	to	$1.51	$	14,856		-	%		0.45	%	to	0.85	%		47.22		%	to	46.64		%
	12/31/2012		-		1.05	to	1.03		-		-			0.45		to	0.85			14.69			to	14.23
	12/31/2011		23,712		0.92	to	0.90		21,723		-			0.45		to	0.85			(6.41	)		to	(6.78	)
	12/31/2010		-		0.98	to	0.97		-		-			0.45		to	0.85			26.52			to	26.01
	12/31/2009		19,922		0.77	to	0.77		15,414		-			0.45		to	0.85			27.00			to	26.49
TA Morgan Stanley Mid-Cap Growth Service Class
	12/31/2013		62,256		1.47	to	1.44		91,397		0.88			0.45		to	0.85			38.21			to	37.66
	12/31/2012		5,890		1.07	to	1.04		6,279		-			0.45		to	0.85			8.29			to	7.85
	12/31/2011		83,719		0.98	to	0.97		82,292		0.23			0.45		to	0.85			(7.33	)		to	(7.70	)
	12/31/2010		59,693		1.06	to	1.05		63,329		-			0.45		to	0.85			32.98			to	32.45
	12/31/2009		-		0.80	to	0.79		-		-			0.45		to	0.85			59.40			to	58.77
TA Multi-Managed Balanced Service Class
	12/31/2013		12,293		1.38	to	1.35		16,909		1.84			0.45		to	0.85			17.23			to	16.76
	12/31/2012		-		1.18	to	1.15		-		-			0.45		to	0.85			11.89			to	11.44
	12/31/2011		-		1.05	to	1.03		-		-			0.45		to	0.85			3.29			to	2.88
	12/31/2010		-		1.02	to	1.01		-		-			0.45		to	0.85			23.33			to	22.84
	12/31/2009		-		0.83	to	0.82		-		-			0.45		to	0.85			25.37			to	24.88
TA PIMCO Tactical - Balanced Service Class
	12/31/2013		-		1.06	to	1.04		-		-			0.45		to	0.85			11.35			to	10.90
	12/31/2012		-		0.95	to	0.94		-		-			0.45		to	0.85			0.53			to	0.13
	12/31/2011		-		0.94	to	0.94		-		-			0.45		to	0.85			(3.84	)		to	(4.22	)
	12/31/2010		-		0.98	to	0.98		-		-			0.45		to	0.85			(3.89	)		to	(4.27	)
	12/31/2009(1)		-		1.02	to	1.02		-		-			0.45		to	0.85			2.19			to	2.14
TA PIMCO Tactical - Conservative Service Class
	12/31/2013		-		1.00	to	0.98		-		-			0.45		to	0.85			7.67			to	7.24
	12/31/2012		-		0.93	to	0.92		-		-			0.45		to	0.85			1.07			to	0.67
	12/31/2011		-		0.92	to	0.91		-		-			0.45		to	0.85			(7.87	)		to	(8.24	)
	12/31/2010		-		1.00	to	0.99		-		-			0.45		to	0.85			(2.56	)		to	(2.94	)
	12/31/2009(1)		-		1.02	to	1.02		-		-			0.45		to	0.85			2.37			to	2.32
TA PIMCO Tactical - Growth Service Class
	12/31/2013		-		1.04	to	1.02		-		-			0.45		to	0.85			16.28			to	15.82
	12/31/2012		-		0.89	to	0.88		-		-			0.45		to	0.85			0.24			to	(0.16	)
	12/31/2011		-		0.89	to	0.88		-		-			0.45		to	0.85			(12.01	)		to	(12.36	)
	12/31/2010		-		1.01	to	1.01		-		-			0.45		to	0.85			(1.15	)		to	(1.54	)
	12/31/2009(1)		-		1.02	to	1.02		-		-			0.45		to	0.85			2.26			to	2.21
TA PIMCO Total Return Service Class
	12/31/2013		-		1.32	to	1.29		-		1.37			0.45		to	0.85			(3.20	)		to	(3.58	)
	12/31/2012		15,732		1.36	to	1.33		21,385		2.31			0.45		to	0.85			6.84			to	6.41
	12/31/2011		91,478		1.27	to	1.25		116,594		1.57			0.45		to	0.85			5.47			to	5.06
	12/31/2010		125,739		1.21	to	1.19		151,799		3.25			0.45		to	0.85			6.46			to	6.03
	12/31/2009		455,333		1.14	to	1.13		516,587		8.59			0.45		to	0.85			15.23			to	14.77
TA Systematic Small/Mid Cap Value Service Class
	12/31/2013		14,634		1.53	to	1.49		22,304		0.21			0.45		to	0.85			35.43			to	34.89
	12/31/2012		28,042		1.13	to	1.11		31,554		0.11			0.45		to	0.85			15.52			to	15.06
	12/31/2011		6,138		0.98	to	0.96		5,999		0.04			0.45		to	0.85			(3.29	)		to	(3.68	)
	12/31/2010		-		1.01	to	1.00		-		-			0.45		to	0.85			29.47			to	28.96
	12/31/2009		-		0.78	to	0.77		-		-			0.45		to	0.85			42.26			to	41.70
TA T. Rowe Price Small Cap Service Class
	12/31/2013		104,328		1.82	to	1.78		189,272		-			0.45		to	0.85			43.05			to	42.49
	12/31/2012		4,965		1.27	to	1.25		6,317		-			0.45		to	0.85			14.89			to	14.43
	12/31/2011		10,077		1.11	to	1.09		11,158		-			0.45		to	0.85			1.06			to	0.66
	12/31/2010		126,203		1.10	to	1.08		138,084		-			0.45		to	0.85			33.46			to	32.93
	12/31/2009		31,354		0.82	to	0.81		25,703		-			0.45		to	0.85			37.71			to	37.17

23

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

4. Financial Highlights (continued)

Subaccount	Year Ended	Units		Unit Fair Value Corresponding to Lowest to Highest Expense Ratio				Net Assets		Investment Income Ratio*			Expense Ratio** Lowest to Highest						Total Return*** Corresponding to Lowest to Highest Expense Ratio
TA Vanguard ETF - Balanced Initial Class
	12/31/2013		-		$1.29	to	$1.26	$	-		-	%		0.45	%	to	0.85	%		11.26		%	to	10.82		%
	12/31/2012		-		1.16	to	1.14		-		-			0.45		to	0.85			8.18			to	7.75
	12/31/2011		-		1.07	to	1.06		-		-			0.45		to	0.85			1.11			to	0.71
	12/31/2010		-		1.06	to	1.05		-		-			0.45		to	0.85			10.57			to	10.14
	12/31/2009		-		0.96	to	0.95		-		-			0.45		to	0.85			16.10			to	15.64
TA Vanguard ETF - Growth Initial Class
	12/31/2013		-		1.32	to	1.29		-		-			0.45		to	0.85			18.55			to	18.08
	12/31/2012		-		1.11	to	1.09		-		-			0.45		to	0.85			11.29			to	10.84
	12/31/2011		-		1.00	to	0.98		-		-			0.45		to	0.85			(1.30	)		to	(1.69	)
	12/31/2010		-		1.01	to	1.00		-		-			0.45		to	0.85			12.64			to	12.20
	12/31/2009		-		0.90	to	0.89		-		-			0.45		to	0.85			23.12			to	22.64
TA Vanguard ETF - Growth Service Class(1)
	12/31/2013(1)		-		1.10	to	1.09		-		-			0.45		to	0.85			-			to	-
TA WMC Diversified Growth Service Class
	12/31/2013		-		1.10	to	1.08		-		-			0.45		to	0.85			31.54			to	31.02
	12/31/2012		-		0.84	to	0.82		-		-			0.45		to	0.85			12.35			to	11.90
	12/31/2011		18,171		0.75	to	0.73		13,535		-			0.45		to	0.85			(4.36	)		to	(4.74	)
	12/31/2010		-		0.78	to	0.77		-		-			0.45		to	0.85			16.96			to	16.49
	12/31/2009		-		0.67	to	0.66		-		1.69			0.45		to	0.85			28.32			to	27.81

    ⁽¹⁾ See footnote 1

    * These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the Mutual Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the Mutual Fund in which the subaccounts invest.

  ** These amounts represent the annualized contract expenses of the subaccount, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the Mutual Fund have been excluded.

*** These amounts represent the total return for the periods indicated, including changes in the value of the Mutual Fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. Effective 2012, total returns reflect a full twelve month period and total returns for subaccounts opened during the year have not been disclosed as they may not be indicative of a full year return. Effective 2011, expense ratios not in effect for the full twelve months are not reflected in the total return as they may not be indicative of a full year return.

24

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

5. Administrative and Mortality and Expense Risk Charges

WRL deducts a daily administrative charge equal to an annual rate of 0.15% of the daily net assets value of each subaccount for administrative expenses. WRL also deducts an annual charge during the accumulation phase, not to exceed $30, proportionately from the subaccounts’ unit values. An annual charge ranging from 0.30% to 0.70% is deducted (based on the death benefit selected) from the unit values of the subaccounts of the Separate Account for WRL’s assumption of certain mortality and expense risks incurred in connection with the contract. The charge is assessed daily based on the net asset value of the Mutual Fund. Charges for administrative and mortality and expense risk are an expense of the subaccount. Charges reflected above are those currently assessed and may be subject to change. Contract owners should see their actual policy and any related attachments to determine their specific charges.

In addition to M&E, the following subaccounts are assessed a daily charge for fund facilitation fees:

Subaccount	Additional Fund Facilitation Fee Assessed
AllianceBernstein Balanced Wealth Strategy	0.20%
Franklin Templeton VIP Founding Funds Allocation	0.15%

6. Income Tax

Operations of the Separate Account form a part of WRL, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986, as amended (the Code). The operations of the Separate Account are accounted for separately from other operations of WRL for purposes of federal income taxation. The Separate Account is not separately taxable as a regulated investment company under Subchapter M of the Code and is not otherwise taxable as an entity separate from WRL. Under existing federal income tax laws, the income of the Separate Account is not taxable to WRL, as long as earnings are credited under the variable annuity contracts.

7. Dividend Distributions

Dividends are not declared by the Separate Account, since the increase in the value of the underlying investment in the Mutual Funds is reflected daily in the accumulation unit price used to calculate the equity value within the Separate Account. Consequently, a dividend distribution by the Mutual Funds does not change either the accumulation unit price or equity values within the Separate Account.

25

Western Reserve Life Assurance Co. of Ohio

Separate Account VA AA

Notes to Financial Statements

December 31, 2013

8. Fair Value Measurements and Fair Value Hierarchy

The Accounting Standards Codification™ (ASC) 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the nature of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

The Separate Account has categorized its financial instruments into a three level hierarchy which is based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the Statements of Assets and Liabilities are categorized as follows:

Level 1. Unadjusted quoted prices for identical assets or liabilities in an active market.

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

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

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

c) Inputs other than quoted market prices that are observable

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

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

All investments in the Mutual Funds included in the Statements of Assets and Liabilities are stated at fair value and are based upon daily unadjusted quoted prices, therefore are considered Level 1.

9. Subsequent Events

The Separate Account has evaluated the financial statements for subsequent events through the date which the financial statements were issued. During this period, there were no subsequent events requiring recognition or disclosure in the financial statements.

26

STATEMENT OF ADDITIONAL INFORMATION

FLEXIBLE PREMIUM VARIABLE ANNUITY - M

Issued through

SEPARATE ACCOUNT VA AA

Offered by

WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

This Statement of Additional Information expands upon subjects discussed in the current prospectus for the Flexible Premium Variable Annuity - M offered by Western Reserve Life Assurance Co. of Ohio. You may obtain a copy of the current prospectus, dated May 1, 2009, by calling (800) 851-9777, or write us at: Western Reserve Life Assurance Co. of Ohio, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001. The prospectus sets forth information that a prospective investor should know before investing in a policy. Terms used in the current prospectus for the policy are incorporated in this Statement of Additional Information.

This Statement of Additional Information (SAI) is not a prospectus and should be read only in conjunction with the prospectuses for the policy and the underlying fund portfolios.

Dated: May 1, 2009

TABLE OF CONTENTS

GLOSSARY OF TERMS	3
THE POLICY — GENERAL PROVISIONS	6
Owner	6
Entire Policy	6
Misstatement of Age or Sex	7
Reallocation of Annuity Units After the Annuity Commencement Date	7
Annuity Payment Options	7
Death Benefit	8
Death of Owner	9
Assignment	9
Evidence of Survival	9
Non-Participating	9
Amendments	9
Employee and Agent Purchases	10
Present Value of Future Variable Payments	10
Stabilized Payments	10
CERTAIN FEDERAL INCOME TAX CONSEQUENCES	11
Tax Status of the Policy	11
Taxation of Annuities	12
Taxation of the Company	15
INVESTMENT EXPERIENCE	15
Accumulation Units	15
Annuity Unit Value and Annuity Payment Rates	17
HISTORICAL PERFORMANCE DATA	19
Money Market Yields	19
Total Returns	20
Other Performance Data	21
Adjusted Historical Performance Data	21
PUBLISHED RATINGS	21
STATE REGULATION OF WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO	22
ADMINISTRATION	22
RECORDS AND REPORTS	22
DISTRIBUTION OF THE POLICIES	22
VOTING RIGHTS	23
OTHER PRODUCTS	24
CUSTODY OF ASSETS	24
LEGAL MATTERS	24
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	24
OTHER INFORMATION	24
FINANCIAL STATEMENTS	25
APPENDIX A
CONDENSED FINANCIAL INFORMATION	26

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GLOSSARY OF TERMS

Accumulation Unit — An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.

Adjusted Policy Value — The policy value increased or decreased by any excess interest adjustment.

Administrative and Service Office — Western Reserve Life Assurance Co. of Ohio, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001, (800) 851-9777. All premium payments, loan repayments, correspondence and notices should be sent to this address.

Annuitant — The person on whose life any annuity payments involving life contingencies will be based.

Annuity Commencement Date — The date upon which annuity payments are to commence. This date may be any date after the policy date and may not be later than the last day of the policy month following the month after the annuitant attains age 95. The earliest annuity commencement date is at least thirty days after you purchase your policy. The annuity commencement date may have to be earlier for qualified policies and may be earlier if required by state law.

Annuity Payment Option — A method of receiving a stream of annuity payments selected by the owner.

Annuity Unit — An accounting unit of measure used in the calculation of the amount of the second and each subsequent variable annuity payment.

Assumed Investment Return or AIR — The annual effective rate shown in the contract specifications section of the contract that is used in the calculation of each variable annuity payment.

Beneficiary — The person who has the right to the death benefit as set forth in the policy.

Business Day — A day when the New York Stock Exchange is open for regular trading.

Cash Value — The adjusted policy value less any rider fees (imposed upon surrender).

Code — The Internal Revenue Code of 1986, as amended.

Enrollment form — A written application, order form, or any other information received electronically or otherwise upon which the policy is issued and/or is reflected on the data or specifications page.

Excess Interest Adjustment — A positive or negative adjustment to amounts surrendered (both partial or full surrenders and transfers) or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by the Company since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon full surrender or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively.

Excess Partial Surrender — The portion of a partial surrender (surrender) that exceeds the free amount.

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Fixed Account — One or more investment choices under the policy that are part of the Company’s general assets and are not in the separate account.

Free Amount — The amount that can be withdrawn each year without incurring any excess interest adjustment.

Guaranteed Period Options — The various guaranteed interest rate periods of the fixed account which the Company may offer and into which premium payments may be paid or amounts transferred.

Nonqualified Policy — A policy other than a qualified policy.

Owner (You, Your) — The person who may exercise all rights and privileges under the policy. The owner during the lifetime of the annuitant and prior to the annuity commencement date is the person designated as the owner in the information provided to us to issue a policy.

Policy Date — The date shown on the policy data page attached to the policy and the date on which the policy becomes effective.

Policy Value — On or before the annuity commencement date, the policy value is equal to the owner’s:

— premium payments; minus

— gross partial surrenders (partial surrenders minus excess interest adjustments); plus

— interest credited in the fixed account; plus

— accumulated gains in the separate account; minus

— accumulated losses in the separate account; minus

— service charges, rider fees, premium taxes, transfer fees, and other charges, if any.

Policy Year — A policy year begins on the policy date and on each anniversary thereof.

Premium Payment — An amount paid to the Company by the owner or on the owner’s behalf as consideration for the benefits provided by the policy.

Qualified Policy — A policy issued in connection with retirement plans that qualify for special federal income tax treatment under the Code.

Separate Account — Separate Account VA AA, a separate account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the “1940 Act”), to which premium payments under the policies may be allocated.

Separate Account Value — The portion of the policy value that is invested in the separate account.

Service Charge — An annual charge on each policy anniversary (and a charge at the time of surrender during any policy year) for policy maintenance and related administrative expenses. This annual charge is $30, but will not exceed 2% of the policy value.

Subaccount — A subdivision within the separate account, the assets of which are invested in a specified underlying fund portfolios.

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Supportable Payment — The amount equal to the sum of the variable annuity unit values multiplied by the number of variable annuity units in each of the selected subaccounts.

Surrender Charge — A percentage of each premium payment that depends upon the length of time from the date of each premium payment. The surrender charge is assessed on full or partial surrenders from the policy. A surrender charge may also be referred to as a “contingent deferred sales charge.”

Valuation Period — The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of values. Such determination shall be made on each business day.

Variable Annuity Payments — Payments made pursuant to an annuity payment option which fluctuate as to dollar amount or payment term in relation to the investment performance of the specified subaccounts within the separate account.

Written Notice — Written notice, signed by the owner, that gives the Company the information it requires and is received at the administrative and service office. For some transactions, the Company may accept an electronic notice, such as telephone instructions, instead of written notice. Such written or electronic notice must meet the requirements the Company establishes for such notices.

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In order to supplement the description in the prospectus, the following provides additional information about Western Reserve Life Assurance Co. of Ohio (the Company, we, us or our) and the policy, which may be of interest to a prospective purchaser.

THE POLICY — GENERAL PROVISIONS

Owner

The policy shall belong to the owner upon issuance of the policy after completion of an enrollment form and delivery of the initial premium payment. While the annuitant is living, the owner may: (1) assign the policy; (2) surrender the policy; (3) amend or modify the policy with the Company’s consent; (4) receive annuity payments or name a payee to receive the payments; and (5) exercise, receive and enjoy every other right and benefit contained in the policy. The exercise of these rights may be subject to the consent of any assignee or irrevocable beneficiary; and of your spouse in a community or marital property state.

Unless the Company has been notified of a community or marital property interest in the policy, it will rely on its good faith belief that no such interest exists and will assume no responsibility for inquiry.

Note carefully. If the owner predeceases the annuitant and no joint owner, primary beneficiary, or contingent beneficiary is alive or in existence on the date of death, the owner’s estate will become the new owner. If no probate estate is opened because the owner has precluded the opening of a probate estate by means of a trust or other instrument, that trust may not exercise ownership rights to the policy. It may be necessary to open a probate estate in order to exercise ownership rights to the policy.

The owner may change the ownership of the policy in a written notice. When this change takes effect, all rights of ownership in the policy will pass to the new owner. A change of ownership may have tax consequences.

When there is a change of owner, the change will not be effective until it is recorded in our records. Once recorded, it will take effect as of the date the owner signs the written notice, subject to any payment the Company has made or action the Company has taken before recording the change. Changing the owner does not change the designation of the beneficiary or the annuitant.

If ownership is transferred to a new owner (except to the owner’s spouse) because the owner dies before the annuitant, then (a) the cash value generally must be distributed to the new owner within five years of the owner’s death, or (b) annuity payments must be made for a period certain or for the new owner’s lifetime so long as any period certain does not exceed that new owner’s life expectancy, if the first payment begins within one year of your death.

Entire Policy

The policy, any endorsements or riders thereon, the enrollment form, or information provided in lieu thereof, constitute the entire contract between the Company and the owner. All statements in the enrollment form are representations and not warranties. No statement will cause the policy to be void or to be used in defense of a claim unless contained in the enrollment form or information provided in lieu thereof.

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Misstatement of Age or Sex

If the age or sex of the annuitant or owner has been misstated, the Company will change the annuity benefit payable to that which the premium payments would have purchased for the correct age or sex. The dollar amount of any underpayment made by the Company shall be paid in full with the next payment due such person or the beneficiary. The dollar amount of any overpayment made by the Company due to any misstatement shall be deducted from payments subsequently accruing to such person or beneficiary. Any underpayment or overpayment will include interest at 5% per year, from the date of the wrong payment to the date of the adjustment. The age of the annuitant or owner may be established at any time by the submission of proof satisfactory to the Company.

Reallocation of Annuity Units After the Annuity Commencement Date

After the annuity commencement date, you may reallocate the value of a designated number of annuity units of a subaccount then credited to a policy into an equal value of annuity units of one or more other subaccounts or the fixed account. The reallocation shall be based on the relative value of the annuity units of the account(s) or subaccount(s) at the end of the business day on the next payment date. The minimum amount which may be reallocated is the lesser of (1) $10 of monthly income or (2) the entire monthly income of the annuity units in the account or subaccount from which the transfer is being made. If the monthly income of the annuity units remaining in an account or subaccount after a reallocation is less than $10, the Company reserves the right to include the value of those annuity units as part of the transfer. The request must be in writing to the Company’s administrative and service office. There is no charge assessed in connection with such reallocation. A reallocation of annuity units may be made up to four times in any given policy year.

After the annuity commencement date, no transfers may be made from the fixed account to the separate account.

Annuity Payment Options

Note: Portions of the following discussion do not apply to annuity payments under the Initial Payment Guarantee. See the “Stabilized Payments” section of this SAI.

During the lifetime of the annuitant and before the annuity commencement date, the owner may choose an annuity payment option or change the election, but notice of any election or change of election must be received by the Company in good order at its Administrative and Service Office at least thirty (30) days before the annuity commencement date (elections less than 30 days require prior approval). If no election is made before the annuity commencement date, annuity payments will be made under (1) life income with level (fixed) payments for 10 years certain, using the existing policy value of the fixed account, or (2) life income with variable payments for 10 years certain using the existing policy value of the separate account, or (3) a combination of (1) and (2).

The person who elects an annuity payment option can also name one or more successor payees to receive any unpaid amount the Company has at the death of a payee. Naming these payees cancels any prior choice of a successor payee.

A payee who did not elect the annuity payment option does not have the right to advance or assign payments, take the payments in one sum, or make any other change. However, the payee may be given the right to do one or more of these things if the person who elects the option tells the Company in writing and the Company agrees.

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Variable Payment Options. The dollar amount of the first variable annuity payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the policy. For annuity payments the tables are based on a 5% effective annual Assumed Investment Return and the “2000 Table”, using an assumed annuity commencement date of 2005 (static projection to this point) with dynamic projection using scale G from that point (100% of G for male, 50% of G for females). The dollar amount of additional variable annuity payments will vary based on the investment performance of the subaccount(s) of the separate account selected by the annuitant or beneficiary.

Determination of the First Variable Payment. The amount of the first variable payment depends upon the sex (if consideration of sex is allowed under state law) and adjusted age of the annuitant. For regular annuity payments, the adjusted age is the annuitant’s actual age nearest birthday, on the annuity commencement date, adjusted as described in your policy. This adjustment assumes an increase in life expectancy, and therefore it results in lower payments than without such an adjustment.

Determination of Additional Variable Payments. All variable annuity payments other than the first are calculated using annuity units which are credited to the policy. The number of annuity units to be credited in respect of a particular subaccount is determined by dividing that portion of the first variable annuity payment attributable to that subaccount by the annuity unit value of that subaccount on the annuity commencement date. The number of annuity units of each particular subaccount credited to the policy then remains fixed, assuming no transfers to or from that subaccount occur. The dollar value of variable annuity units in the chosen subaccount will increase or decrease reflecting the investment experience of the chosen subaccount. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant. This amount is equal to the sum of the amounts determined by multiplying the number of annuity units of each particular subaccount credited to the policy by the annuity unit value for the particular subaccount on the date the payment is made.

Death Benefit

Due proof of death of the annuitant is proof that the annuitant died prior to the commencement of annuity payments. A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by the attending physician, or any other proof satisfactory to the Company will constitute due proof of death.

Upon receipt in good order (at our Administrative and Service Office) of this proof and an election of a method of settlement and return of the policy, the death benefit generally will be paid within seven days, or as soon thereafter as the Company has sufficient information about the beneficiary(ies) to make the payment. The beneficiary may receive the amount payable in a lump sum cash benefit, or, subject to any limitation under any state or federal law, rule, or regulation, under one of the annuity payment options described above, unless a settlement agreement is effective at the death of the owner preventing such election.

If an owner is not an annuitant, and dies prior to the annuity commencement date, the new owner may surrender the policy at any time for the amount of the policy value. If the new owner is not the deceased owner’s spouse, however, (1) the policy value must be distributed within five years after the date of the deceased owner’s death, or (2) payments under an annuity payment option must begin no later than one year after the deceased owner’s death and must be made for the new owner’s lifetime or for a period certain (so long as any period certain does not exceed the new owner’s life expectancy). If the sole new owner is the deceased owner’s surviving spouse, such spouse may elect to continue the policy as the new owner instead of receiving the death benefit.

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Beneficiary. The beneficiary designation in the enrollment form will remain in effect until changed. The owner may change the designated beneficiary by sending written notice to the Company. The beneficiary’s consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the owner may then designate a new beneficiary.) The change will take effect as of the date the owner signs the written notice, whether or not the owner is living when the notice is received by the Company. The Company will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If upon the death of the annuitant there is a surviving owner(s), the surviving owner(s) automatically takes the place of any beneficiary designation.

Death of Owner

Federal tax law requires that if any owner (including any joint owner who has become a current owner) dies before the annuity commencement date, then the entire value of the policy must generally be distributed within five years of the date of death of such owner. Certain rules apply where (1) the spouse of the deceased owner is the sole beneficiary, (2) the owner is not a natural person and the primary annuitant dies or is changed, or (3) any owner dies after the annuity commencement date. See “Certain Federal Income Tax Consequences” for more information about these rules. Other rules may apply to qualified policies.

Assignment

During the lifetime of the annuitant you may assign any rights or benefits provided by the policy if your policy is a nonqualified policy. An assignment will not be binding on the Company until a copy has been filed at its administrative and service office. Your rights and benefits and those of the beneficiary are subject to the rights of the assignee. The Company assumes no responsibility for the validity or effect of any assignment. Any claim made under an assignment shall be subject to proof of interest and the extent of the assignment. An assignment may have tax consequences.

Unless you so direct by filing written notice with the Company, no beneficiary may assign any payments under the policy before they are due. To the extent permitted by law, no payments will be subject to the claims of any beneficiary’s creditors.

Ownership under qualified policies is restricted to comply with the Code.

Evidence of Survival

The Company reserves the right to require satisfactory evidence that a person is alive if a payment is based on that person being alive. No payment will be made until the Company receives such evidence.

Non-Participating

The policy will not share in the Company’s surplus earnings; no dividends will be paid.

Amendments

No change in the policy is valid unless made in writing by the Company and approved by one of the Company’s officers. No registered representative has authority to change or waive any provision of the policy.

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The Company reserves the right to amend the policies to meet the requirements of the Code, regulations or published rulings. You can refuse such a change by giving written notice, but a refusal may result in adverse tax consequences.

Employee and Agent Purchases

The policy may be acquired by an employee or registered representative of any broker/dealer authorized to sell the policy or their immediate family, or by an officer, director, trustee or bona-fide full-time employee of the Company or its affiliated companies or their immediate family. In such a case, the Company in its discretion, may credit an amount equal to a percentage of each premium payment to the policy due to lower acquisition costs the Company experiences on those purchases. The Company may offer certain employer sponsored savings plans, reduced fees and charges including, but not limited to, the annual service charge, the surrender charges, the mortality and expense risk fee and the administrative charge for certain sales under circumstances which may result in savings of certain costs and expenses. In addition, there may be other circumstances of which the Company is not presently aware which could result in reduced sales or distribution expenses. Credits to the policy or reductions in these fees and charges will not be unfairly discriminatory against any owner.

Present Value of Future Variable Payments

The present value of future period certain variable payments is calculated by taking (a) the supportable payment on the business day we receive the surrender request (in good order at our Administrative and Service Office), multiplied by (b) the number of payments remaining, multiplied by a discount rate (such as the assumed investment rate or “AIR”).

Stabilized Payments

If you have selected a payout feature that provides for stabilized payments (e.g., the Initial Payment Guarantee), please note that the stabilized payments remain level throughout each year and are adjusted on your annuitization anniversary. Without stabilized payments, each payment throughout the year would fluctuate based on the performance of your selected subaccounts. To reflect the difference in these payments we adjust (both increase and decrease as appropriate) the number of annuity units. The annuity units are adjusted when we calculate the supportable payment. Supportable payments are used in the calculation of surrender values, death benefits and transfers. On the anniversary of your annuity commencement date we set the new stabilized payment equal to the current supportable payment. In the case of an increase in the number of variable annuity units, your participation in the future investment performance of the subaccounts will be increased because more variable annuity units are credited to you. Conversely, in the case of a reduction of the number of variable annuity units, your participation in the future investment performance of the subaccounts will be decreased because fewer variable annuity units are credited to you. If the Initial Payment Guarantee is chosen, then the stabilized variable annuity payment will equal the greater of the guaranteed payment or the supportable payment at that time.

The following table demonstrates, on a purely hypothetical basis, the changes in the number of variable annuity units. The changes in the variable annuity unit values reflect the investment performance of the applicable subaccounts as well as the separate account charge.

Hypothetical Changes in Annuity Units with Stabilized Payments*
Assumed Investment Rate	5.0%
Life & 10 Year Certain

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	Hypothetical Changes in Annuity Units with Stabilized Payments*
Male aged 65
First Variable Payment			$500
		Beginning Annuity Units	Annuity Unit Values	Monthly Payment Without Stabilization	Monthly Stabilized Payment	Adjustments In Annuity Units	Cumulative Adjusted Annuity Units
At Issue:	January 1	400.0000	1.250000	$500.00	$500.00	0.0000	400.0000
	February 1	400.0000	1.252005	$500.80	$500.00	0.0041	400.0041
	March 1	400.0000	1.252915	$501.17	$500.00	0.0059	400.0100
	April 1	400.0000	1.245595	$498.24	$500.00	(0.0089)	400.0011
	May 1	400.0000	1.244616	$497.85	$500.00	(0.0108)	399.9903
	June 1	400.0000	1.239469	$495.79	$500.00	(0.0212)	399.9691
	July 1	400.0000	1.244217	$497.69	$500.00	(0.0115)	399.9576
	August 1	400.0000	1.237483	$494.99	$500.00	(0.0249)	399.9327
	September 1	400.0000	1.242382	$496.95	$500.00	(0.0150)	399.9177
	October 1	400.0000	1.242382	$496.95	$500.00	(0.0149)	399.9027
	November 1	400.0000	1.249210	$499.68	$500.00	(0.0016)	399.9012
	December 1	400.0000	1.252106	$500.84	$500.00	0.0040	399.9052
	January 1	399.9052	1.255106	$501.92	$501.92	0.0000	399.9052

* The total separate account expenses and portfolio expenses included in the calculations are 2.25% (2.25% is a hypothetical figure). If higher (or lower) expenses were charged, the numbers would be lower (or higher).

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following summary does not constitute tax advice. It is a general discussion of certain of the expected federal income tax consequences of investment in and distributions with respect to a policy, based on the Code, Regulations thereunder, judicial authority, and current administrative rulings and practice. This summary discusses only certain federal income tax consequences to “United States Persons,” and does not discuss state, local, or foreign tax consequences. United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships and trusts, or estates that are subject to United States federal income tax regardless of the source of their income.

Tax Status of the Policy

Diversification Requirements. Section 817(h) of the Code provides that in order for a non-qualified variable contract which is based on a segregated asset account to qualify as an annuity contract under the Code, the investments made by such account must be “adequately diversified” in accordance with Treasury Regulations. The Regulations issued under Section 817(h) (Treas. Reg. Section 1.817-5) apply a diversification requirement to each of the subaccounts. The separate account, through its underlying fund portfolios and their portfolios, intends to comply with the diversification requirements of the Regulations. We have entered into agreements with each underlying fund portfolio company that require the portfolios to be operated in compliance with the Regulations.

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Owner Control. In some circumstances, owners of variable contracts who retain excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets and may be subject to tax on income produced by those assets. Although there is little guidance in this area and published guidance does not address certain aspects of the policies, we believe that the owner of a policy should not be treated as the owner of the underlying assets. We reserve the right to modify the policies to bring them into conformity with applicable standards should such modification be necessary to prevent owners of the policies from being treated as the owners of the underlying separate account assets.

Distribution Requirements. The Code requires that nonqualified policies contain specific provisions for distribution of policy proceeds upon the death of any owner. In order to be treated as an annuity contract for federal income tax purposes, the Code requires that such policies provide that if any owner dies on or after the annuity commencement date and before the entire interest in the policy has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such owner’s death. If any owner dies before the annuity commencement date, the entire interest in the policy must generally be distributed within 5 years after such owner’s date of death or be used to provide payments to a designated beneficiary beginning within one year of such owner’s death and will be made for the life of the beneficiary or for a period not extending beyond the life expectancy of the beneficiary. However, if upon such owner’s death prior to the annuity commencement date, such owner’s surviving spouse becomes the sole new owner under the policy, then the policy may be continued with the surviving spouse as the new owner. Under the policy, the beneficiary is the person(s) designated by an owner/annuitant and the surviving joint owner is the beneficiary of an owner who is not the annuitant. If any owner is not a natural person, then for purposes of these distribution requirements, the primary annuitant shall be treated as an owner and any death or change of such primary annuitant shall be treated as the death of an owner. The nonqualified policies contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the policies satisfy all such Code requirements. The provisions contained in the policies will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise.

The following discussion is based on the assumption that the policy qualifies as an annuity contract for federal income tax purposes.

Taxation of Annuities

In General. Code Section 72 governs taxation of annuities in general. We believe that an owner who is an individual will not be taxed on increases in the value of a policy until such amounts are surrendered or distributed. For this purpose, the assignment, pledge, or agreement to assign or pledge any portion of the policy value, and in the case of a qualified policy, any portion of an interest in the plan, generally will be treated as a distribution. The taxable portion of a distribution is taxable as ordinary income.

Non-Natural Persons. Pursuant to Section 72(u) of the Code, a nonqualified policy held by a taxpayer other than a natural person generally will not be treated as an annuity contract under the Code; accordingly, an owner who is not a natural person will recognize as ordinary income for a taxable year the excess, if any, of the policy value over the “investment in the contract”. There are some exceptions to this rule and a prospective purchaser of the policy that is not a natural person should discuss these with a competent tax adviser.

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Withholding. The portion of any distribution under a policy that is includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld. Election forms will be provided at the time distributions are requested or made. For certain qualified policies, the withholding rate varies according to the type of distribution and the owner’s tax status. For qualified policies taxable, “eligible rollover distributions” from Section 401(a) plans, Section 403(a) annuities, Section 403(b) tax-sheltered annuities, and governmental 457 plans are subject to a mandatory federal income tax withholding of 20%. For this purpose, an eligible rollover distribution is any distribution to an employee (or an employee’s spouse or former spouse as beneficiary or alternate payee) from such a plan, other than specified distributions such as distributions required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, if the owner chooses a “direct rollover” from the plan to another tax-qualified plan or IRA. Different withholding requirements may apply in the case of non-United States persons.

Qualified Policies. The qualified policy is designed for use with several types of tax-qualified retirement plans. The tax rules applicable to participants and beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits, distributions prior to age 59 ¹⁄₂ (subject to certain exceptions), distributions that do not conform to specified commencement and minimum distribution rules, and in other specified circumstances. Some retirement plans are subject to distribution and other requirements that are not incorporated into the policies or our policy administration procedures. Owners, participants, and beneficiaries are responsible for determining that contributions, distributions, and other transactions with respect to the policies comply with applicable law.

For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the owner (or plan participant) (i) reaches age 70 ¹⁄₂ or (ii) retires, and must be made in a specified form or manner. If a participant in a Section 401(a) plan is a “5 percent owner” (as defined in the Code), or in the case of an IRA (other than a Roth IRA), distributions generally must begin no later than April 1 of the calendar year in which the owner (or plan participant) reaches age 70 ¹⁄₂. Each owner is responsible for requesting distributions under the policy that satisfy applicable tax rules. Pursuant to special legislation, required minimum distributions for the 2009 tax year generally are not required, and 2009 distributions that otherwise would be required minimum distributions may be eligible for rollover.

We may make available, as options under the policy, certain guaranteed lifetime withdrawal benefits and other optional benefits. The tax rules for qualified policies may limit the value of these optional benefits. Consult a qualified tax advisor before electing any of these benefits for a qualified policy.

We do not attempt to provide more than general information about use of the policy with the various types of retirement plans. Purchasers of policies for use with any retirement plan should consult their legal counsel and tax adviser regarding the suitability of the policy.

Traditional Individual Retirement Annuities. In order to qualify as a traditional individual retirement annuity under Section 408(b) of the Code, a policy must satisfy certain conditions: (i) the owner must be the annuitant; (ii) the policy generally is not transferable by the owner, e.g., the owner may not designate a new owner, designate a contingent owner or assign the policy as collateral security; (iii) subject to special rules, the total premium payments for any calendar year may not exceed the amount specified in the Code ($5,000 for 2009, $6,000 if age 50 or older), except in the case of a rollover amount or contribution under Section 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) or 457(e)(16) of the Code; (iv) annuity payments or partial surrenders must begin no later than April 1 of the calendar year following the calendar year in which the annuitant attains age 70 ¹⁄₂; (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the annuitant and the beneficiary may not be

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selected; (vi) certain payments of death benefits must be made in the event the annuitant dies prior to the distribution of the policy value; (vii) the entire interest of the owner is non-forfeitable; and (viii) the premiums must not be fixed. Policies intended to qualify as traditional individual retirement annuities under Section 408(b) of the Code contain such provisions. Amounts in the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. Distributions prior to age 59 ¹⁄₂ (unless certain exceptions apply) are subject to a 10% penalty tax.

The Internal Revenue Service has not reviewed the policy for qualification as an IRA and has not addressed in a ruling of general applicability whether the death benefit options and riders available with the policies comport with IRA qualification requirements.

Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax and other special rules may apply to the rollover or conversion and to distributions attributable thereto. The Roth IRA is available to individuals with earned income and whose modified adjusted gross income is under $120,000 for single filers, $176,000 for married filing jointly, and $10,000 for married filing separately. Subject to special rules, the amount per individual that may be contributed to all IRAs (Roth and traditional) is the deductible amount specified in the Code ($5,000 for 2009, $6,000 if age 50 or older). Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made 5 tax years after the first contribution to any Roth IRA of the individual and made after attaining age 59 ¹⁄₂, to pay for qualified first time homebuyer expenses (lifetime maximum of $10,000), or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a penalty tax unless an exception applies. Unlike the traditional IRA, there are no minimum required distributions during the owner’s lifetime; however, required distributions at death are generally the same as for traditional IRAs.

Section 403(b) Plans. Under Section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase policies for their employees are excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to FICA (Social Security) taxes. The policy includes a death benefit that in some cases may exceed the greater of the premium payments or the policy value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in any tax-sheltered annuity under Section 403(b). Therefore, employers using the policy in connection with such plans should consult their tax adviser. Additionally, in accordance with the requirements of the Code, Section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, and (ii) earnings on those contributions, and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989. Distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59 ¹⁄₂, severance from employment, disability, or financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. These rules may prevent the payment of guaranteed withdrawals under a guaranteed lifetime withdrawal benefit prior to age 59 ¹⁄₂.

For contracts issued after 2008, amounts attributable to nonelective contributions may be subject to distribution restrictions specified in the employer’s section 403(b) plan.

Pursuant to new tax regulations, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders you request from a 403(b) policy comply with applicable tax requirements before we process your request.

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Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans. Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the policies to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the policy is assigned or transferred to any individual as a means to provide benefit payments. The policy includes a death benefit that in some cases may exceed the greater of the premium payments or the policy value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in a pension or profit sharing plan. Therefore, employers using the policy in connection with such plans should consult their tax adviser.

Deferred Compensation Plans. Section 457 of the Code, while not actually providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans with respect to service for state governments, local governments, political subdivisions, agencies, instrumentalities, and certain affiliates of such entities, and tax exempt organizations. The policies can be used with such plans. Under such plans a participant may specify the form of investment in which his or her participation will be made. For non-governmental Section 457 plans, all such investments, however, are owned by, and are subject to, the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-government employer may be entitled to draw on deferred amounts for purposes unrelated to its Section 457 plan obligations. In general, all amounts received under a non-governmental Section 457 plan are taxable and are subject to federal income tax withholding as wages.

Taxation of the Company

The Company at present is taxed as a life insurance company under part I of Subchapter L of the Code. The separate account is treated as part of the Company and, accordingly, will not be taxed separately as a “regulated investment company” under Subchapter M of the Code. We do not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the separate account retained as part of the reserves under the policy. Based on this expectation, it is anticipated that no charges will be made against the separate account for federal income taxes. If, in future years, any federal income taxes are incurred by us with respect to the separate account, we may make a charge to that account.

INVESTMENT EXPERIENCE

A “net investment factor” is used to determine the value of accumulation units and annuity units, and to determine annuity payment rates.

Accumulation Units

Allocations of a premium payment directed to a subaccount are credited in the form of accumulation units. Each subaccount has a distinct accumulation unit value. The number of units credited is determined by dividing the premium payment or amount transferred to the subaccount by the accumulation unit value of the subaccount as of the end of the valuation period during which the allocation is made. For each subaccount, the accumulation unit value for a given business day is based on the net asset value of a share of the corresponding portfolio of the underlying fund portfolios less any applicable charges or fees. The investment performance of the portfolio, expenses, and deductions of certain charges affect the value of an accumulation unit.

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Upon allocation to the selected subaccount, premium payments are converted into accumulation units of the subaccount. The number of accumulation units to be credited is determined by dividing the dollar amount allocated to each subaccount by the value of an accumulation unit for that subaccount as next determined after the premium payment is received at the administrative and service office or, in the case of the initial premium payment, when the enrollment form is completed, whichever is later. The value of an accumulation unit for each subaccount was arbitrarily established at $1 at the inception of each subaccount. Thereafter, the value of an accumulation unit is determined as of the close of trading on each day the New York Stock Exchange is open for regular trading.

An index (the “net investment factor”) which measures the investment performance of a subaccount during a valuation period, is used to determine the value of an accumulation unit for the next subsequent valuation period. The net investment factor may be greater or less than or equal to one; therefore, the value of an accumulation unit may increase, decrease, or remain the same from one valuation period to the next. You bear this investment risk. The net investment performance of a subaccount and deduction of certain charges affect the accumulation unit value.

The net investment factor for any subaccount for any valuation period is determined by dividing (a) by (b) and subtracting (c) from the result, where:

(a) is the net result of:

(1) the net asset value per share of the shares held in the subaccount determined at the end of the current valuation period, plus

(2) the per share amount of any dividend or capital gain distribution made with respect to the shares held in the subaccount if the ex-dividend date occurs during the current valuation period, plus or minus

(3) a per share credit or charge for any taxes determined by the Company to have resulted during the valuation period from the investment operations of the subaccount;

(b) is the net asset value per share of the shares held in the subaccount determined as of the end of the immediately preceding valuation period; and

(c) is an amount representing the separate account charge and any optional benefit fees, if applicable.

Illustration of Separate Account Accumulation Unit Value Calculations

Formula and Illustration for Determining the Net Investment Factor

Net Investment Factor =     (A + B - C) - E

                                                     D

Where:
A =	The net asset value of an underlying fund portfolio share as of the end of the current valuation period.
	Assume	A = $11.57
B =	The per share amount of any dividend or capital gains distribution since the end of the immediately
	preceding valuation period.
	Assume	B = 0
C =	The per share charge or credit for any taxes reserved for at the end of the current valuation period.
	Assume	C = 0

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D =	The net asset value of an underlying fund portfolio share at the end of the immediately preceding
	valuation period.
	Assume	D = $11.40
E =	The daily deduction for the mortality and expense risk fee and the administrative charge, and any optional
	benefit fees. Assume E totals 0.85% on an annual basis; On a daily basis, this equals 0.000023190.

Then, the net investment factor =     (11.57 + 0 – 0) - 0.000023190 = Z = 1.014889091
	(11.40)

Formula and Illustration for Determining Accumulation Unit Value

Accumulation Unit Value = A * B

Where:
A =	The accumulation unit value for the immediately preceding valuation period.
		Assume = $X
B =	The net investment factor for the current valuation period.
		Assume = Y

Then, the accumulation unit value = $X * Y = $Z

Annuity Unit Value and Annuity Payment Rates

The amount of variable annuity payments will vary with annuity unit values. Annuity unit values rise if the net investment performance of the subaccount exceeds the assumed investment return of 5% annually. Conversely, annuity unit values fall if the net investment performance of the subaccount is less than the annual assumed investment return. The value of a variable annuity unit in each subaccount was established at $1 on the date operations began for that subaccount. The value of a variable annuity unit on any subsequent business day is equal to (a) multiplied by (b) multiplied by (c), where:

(a) is the variable annuity unit value for the subaccount on the immediately preceding business day;

(b) is the net investment factor for that subaccount for the valuation period; and

(c) is the investment result adjustment factor for the valuation period.

The investment result adjustment factor for the valuation period is the product of discount factors of .99986634 per day to recognize the 5% effective annual assumed investment return. The valuation period is the period from the close of the immediately preceding business day to the close of the current business day.

The net investment factor for the policy used to calculate the value of a variable annuity unit in each subaccount for the valuation period is determined by dividing (i) by (ii) and subtracting (iii) from the result, where:

(i) is the result of:

(1) the net asset value of a fund share held in that subaccount determined at the end of the current valuation period; plus

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(2) the per share amount of any dividend or capital gain distributions made by the fund for shares held in that subaccount if the ex-dividend date occurs during the valuation period; plus or minus

(3) a per share charge or credit for any taxes reserved for, which the Company determines to have resulted from the investment operations of the subaccount.

(ii) is the net asset value of a fund share held in that subaccount determined as of the end of the immediately preceding valuation period.

(iii) is a factor representing the mortality and expense risk fee and administrative charge. This factor is equal, on an annual basis, to 0.50% of the policy value held in that subaccount (For calculating Initial Payment Guarantee annuity payments, the factor is higher at a rate of 1.75%).

The dollar amount of subsequent variable annuity payments will depend upon changes in applicable annuity unit values.

The annuity payment rates generally vary according to the annuity option elected and the gender and adjusted age of the annuitant at the annuity commencement date. The policy also contains a table for determining the adjusted age of the annuitant.

Illustration of Calculations for Annuity Unit

Value and Variable Annuity Payments

Formula and Illustration for Determining Annuity Unit Value

Annuity Unit Value = A * B * C

Where:
A =	annuity unit value for the immediately preceding valuation period.
	Assume = $X
B =	Net investment factor for the valuation period for which the annuity unit
	value is being calculated.
	Assume = Y
C =	A factor to neutralize the annual assumed investment return of 5% built into
	the Annuity Tables used.
	Assume = Z

Then, the annuity unit value is:

$X * Y * Z = $Q

Formula and Illustration for Determining Amount of

First Monthly Variable Annuity Payment

First monthly variable annuity payment =   A * B

                                                                       $1,000

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Where:
A =	The adjusted policy value as of the annuity commencement date.
	Assume = $X
B =	The annuity purchase rate per $1,000 of adjusted policy value based upon the option selected, the sex and adjusted age of the annuitant according to the tables contained in the policy.
	Assume = $Y

Then, the first monthly variable annuity payment =     $X * $Y = $Z

                                                                                            1,000

Formula and Illustration for Determining the Number of Annuity Units

Represented by Each Monthly Variable Annuity Payment

Number of annuity units =     A

                                                 B

Where:
A =	The dollar amount of the first monthly variable annuity payment.
	Assume = $X
B =	The annuity unit value for the valuation date on which the first monthly
	payment is due.
	Assume = $Y

Then, the number of annuity units =     $X = Z

                                                                $Y

HISTORICAL PERFORMANCE DATA

Money Market Yields

The Company may from time to time disclose the current annualized yield of the money market subaccount, which invests in the corresponding money market portfolio, for a 7-day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the corresponding money market portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the 7-day period in the value of a hypothetical account having a balance of 1 unit of the money market subaccount at the beginning of the 7-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing this quotient on a 365-day basis. The net change in account value reflects (i) net income from the portfolio attributable to the hypothetical account; and (ii) charges and deductions imposed under a policy that are attributable to the hypothetical account. The charges and deductions include the per unit charges for the hypothetical account for (i) the administrative charges and (ii) the mortality and expense risk fee. Current yield will be calculated according to the following formula:

Current Yield = ((NCS * ES)/UV) * (365/7)

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Where:
NCS	=	The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and
		unrealized appreciation and depreciation and income other than investment income) for the 7-day period
		attributable to a hypothetical account having a balance of 1 subaccount unit.
ES	=	Per unit expenses of the subaccount for the 7-day period.
UV	=	The unit value on the first day of the 7-day period.

Because of the charges and deductions imposed under a policy, the yield for the money market subaccount will be lower than the yield for the corresponding money market portfolio. The yield calculations do not reflect the effect of any premium taxes.

The Company may also disclose the effective yield of the money market subaccount for the same 7-day period, determined on a compounded basis. The effective yield is calculated by compounding the base period return according to the following formula:

Effective Yield = (1 + ((NCS - ES)/UV))^365/7 - 1

Where:
NCS	=	The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and
		unrealized appreciation and depreciation and income other than investment income) for the 7-day period
		attributable to a hypothetical account having a balance of 1 subaccount unit.
ES	=	Per unit expenses of the subaccount for the 7-day period.
UV	=	The unit value on the first day of the 7-day period.

The yield on amounts held in the money market subaccount normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The money market subaccount’s actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the corresponding money market portfolio, the types and quality of portfolio securities held by the corresponding money market portfolio and its operating expenses.

Total Returns

The Company may from time to time also advertise or disclose total returns for one or more of the subaccounts for various periods of time. One of the periods of time will include the period measured from the date the subaccount commenced operations. When a subaccount has been in operation for 1, 5 and 10 years, respectively, the total return for these periods will be provided. Total returns for other periods of time may from time to time also be disclosed. Total returns represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods. The ending date for each period for which total return quotations are provided will be for the most recent month end practicable, considering the type and media of the communication and will be stated in the communication.

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Total returns will be calculated using subaccount unit values which the Company calculates on each business day based on the performance of the separate account’s underlying fund portfolio and the deductions for the mortality and expense risk fee and the administrative charges. The total return will then be calculated according to the following formula:

P (1 + T)^N = ERV

Where:
T	=	The average annual total return net of subaccount recurring charges.
ERV	=	The ending redeemable value of the hypothetical account at the end of the period.
P	=	A hypothetical initial payment of $1,000.
N	=	The number of years in the period.

Other Performance Data

The Company may from time to time also disclose average annual total returns in a non-standard format in conjunction with the standard format described above. The non-standard format will be identical to the standard format.

The Company may from time to time also disclose cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formula:

CTR = (ERV / P)-1

Where:
CTR	=	The cumulative total return net of subaccount recurring charges for the period.
ERV	=	The ending redeemable value of the hypothetical investment at the end of the period.
P	=	A hypothetical initial payment of $1,000.

All non-standard performance data will only be advertised if the standard performance data is also disclosed.

Adjusted Historical Performance Data

From time to time, sales literature or advertisements may quote average annual total returns for periods prior to the date a particular subaccount commenced operations. Such performance information for the subaccounts will be calculated based on the performance of the various portfolios and the assumption that the subaccounts were in existence for the same periods as those indicated for the portfolios, with the level of policy charges that are currently in effect.

PUBLISHED RATINGS

The Company may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to it by one or more independent rating organizations such as A.M. Best Company, Standard & Poor’s Insurance Ratings Services, Moody’s Investors Service and Fitch Financial Ratings. The purpose of the ratings is to reflect the financial strength of the Company. The ratings should not be considered as bearing on the investment performance of assets held in the separate account or of the safety or riskiness of an investment in the separate account. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of

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Best’s Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, these ratings may be referred to in advertisements or sales literature or in reports to owners. These ratings are opinions of an operating insurance company’s financial capacity to meet the obligations of its insurance policies in accordance with their terms.

STATE REGULATION OF WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO

The Company is subject to the laws of Ohio governing insurance companies and to regulation by the Ohio Department of Insurance. An annual statement in a prescribed form is filed with the Department of Insurance each year covering the operation of the Company for the preceding year and its financial condition as of the end of such year. Regulation by the Department of Insurance includes periodic examination to determine the Company’s contract liabilities and reserves so that the Department may determine the items are correct. The Company’s books and accounts are subject to review by the Department of Insurance at all times, and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. In addition, the Company is subject to regulation under the insurance laws of other jurisdictions in which it may operate.

ADMINISTRATION

The Company performs administrative services for the policies. These services include issuance of the policies, maintenance of records concerning the policies, and certain valuation services.

RECORDS AND REPORTS

All records and accounts relating to the separate account will be maintained by the Company. As presently required by the 1940 Act, as amended, and regulations promulgated thereunder, the Company will mail to all owners at their last known address of record, at least annually, reports containing such information as may be required under that Act or by any other applicable law or regulation. Owners will also receive confirmation of each financial transaction and any other reports required by law or regulation. However, for certain routine transactions (for example, regular monthly premiums deducted from your checking account, or regular annuity payments the Company sends to you) you may only receive quarterly confirmations.

DISTRIBUTION OF THE POLICIES

We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (“TCI”), for the distribution and sale of the policies. We may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies (e.g., commissions payable to selling firms selling the Policies, as described below.)

Effective May 1, 2007 TCI replaced our affiliate AFSG Securities Corporation (“AFSG”) as principal underwriter for the policies. 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.

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We currently offer the policies on a continuous basis. We anticipate continuing to offer the policies, but reserve the right to discontinue the offering. The policies are offered to the public through sales representatives of broker-dealers (“selling firms”) that have entered into selling agreements with us and with TCI. TCI compensates these selling firms for their services. Sales representatives with these selling firms are appointed as our insurance agents.

We and our affiliates provide paid-in capital to TCI and pay for TCI’s operating and other expenses, including overhead, legal and accounting fees. We also pay TCI and “override” payment based on the pricing of the product which becomes part of TCI’s assets. In addition, we pay commission to TCI for policy sales; these commissions are passed through to the selling firms with TCI not retaining any portion of the commissions. During fiscal year, the amounts paid to TCI in connection with all policies sold through the separate account were.

During fiscal years, 2007, and, the amounts paid to AFSG in connection with all policies sold through the separate account were $0, $0, and $0, respectively. AFSG passes through commissions it receives to selling firms for their sales and does not retain any portion of them.

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

VOTING RIGHTS

To the extent required by law, the Company will vote the underlying fund portfolios’ shares held by the separate account at regular and special shareholder meetings of the underlying fund portfolios in accordance with instructions received from persons having voting interests in the portfolios, although none of the underlying fund portfolios hold regular annual shareholder meetings. If, however, the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result the Company determines that it is permitted to vote the underlying fund portfolios shares in its own right, it may elect to do so.

Before the annuity commencement date, you hold the voting interest in the selected portfolios. The number of votes that you have the right to instruct will be calculated separately for each subaccount. The number of votes that you have the right to instruct for a particular subaccount will be determined by dividing your policy value in the subaccount by the net asset value per share of the corresponding portfolio in which the subaccount invests. Fractional shares will be counted.

After the annuity commencement date, the person receiving annuity payments has the voting interest, and the number of votes decreases as annuity payments are made and as the reserves for the policy decrease. The person’s number of votes will be determined by dividing the reserve for the policy allocated to the applicable subaccount by the net asset value per share of the corresponding portfolio. Fractional shares will be counted.

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The number of votes that you or the person receiving income payments has the right to instruct will be determined as of the date established by the underlying fund portfolio for determining shareholders eligible to vote at the meeting of the underlying fund portfolio. The Company will solicit voting instructions by sending you, or other persons entitled to vote, requests for instructions prior to that meeting in accordance with procedures established by the underlying fund portfolio. Portfolio shares as to which no timely instructions are received, and shares held by the Company in which you, or other persons entitled to vote have no beneficial interest, will be voted in proportion to the voting instructions that are received with respect to all policies participating in the same subaccount.

Each person having a voting interest in a subaccount will receive proxy material, reports, and other materials relating to the appropriate portfolio.

OTHER PRODUCTS

The Company makes other variable annuity policies available that may also be funded through the separate account. These variable annuity policies may have different features, such as different investment choices or charges.

CUSTODY OF ASSETS

The Company holds assets of each of the subaccounts. The assets of each of the subaccounts are segregated and held separate and apart from the assets of the other subaccounts and from the Company’s general account assets. The Company maintains records of all purchases and redemptions of shares of the underlying fund portfolios held by each of the subaccounts. Additional protection for the assets of the separate account is afforded by the Company’s fidelity bond, presently in the amount of $5,000,000, covering the acts of officers and employees of the Company.

LEGAL MATTERS

Sutherland Asbill & Brennan LLP, of Washington D.C. has provided legal advice to the Company regarding to certain matters under the federal securities laws that relate to the policies.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The financial statements of the Separate Account VA AA, at December 31, 2008 and for the periods disclosed in the financial statements, and the statutory-basis financial statements and schedules of Western Reserve Life Assurance Co. of Ohio at December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008, appearing herein, have been audited by Ernst & Young LLP, Suite 3000, 801 Grand Avenue, Des Moines, Iowa 50309, Independent Registered Public Accounting Firm, as set forth in their respective reports thereon appearing elsewhere herein, and are included in reliance upon their reports given on their authority as experts in accounting and auditing.

OTHER INFORMATION

A registration statement has been filed with the SEC, under the Securities Act of 1933 as amended, with respect to the policies discussed in this SAI. Not all of the information set forth in the registration statement and the amendments and exhibits thereto has been included in the prospectus or this SAI. Statements contained in the prospectus and this SAI concerning the content of the policies and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC.

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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 AA, which are available for investment by Flexible Premium Variable Annuity - M policy owners, are contained herein. The statutory-basis financial statements and schedules of Western Reserve Life Assurance Co. of Ohio, which are included in this SAI, should be considered only as bearing on the ability of the Company to meet its obligations under the policies. They should not be considered as bearing on the investment performance of the assets held in the separate account.

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APPENDIX A

CONDENSED FINANCIAL INFORMATION

The accumulation unit values and the number of accumulation units outstanding for each subaccount from the date of inception are shown in the following tables.

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.959573	$0.627361	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959573	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902013	$0.539459	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902013	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.885821	$0.505072	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.885821	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013206	$0.957934	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013206	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014043	$1.058278	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014043	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.948925	$0.587869	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.948925	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.963696	$0.606394	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963696	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.981858	$0.725652	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981858	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.963499	$0.615802	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963499	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.964749	$0.563143	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964749	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.919719	$0.513510	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919719	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.020403	$0.980678	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.020403	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.954664	$0.603977	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954664	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.940996	$0.593375	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.940996	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.968904	$0.539780	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.968904	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.924807	$0.538407	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.924807	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.037772	0.000
Transamerica Balanced VP – Service Class	2008	$0.980563	$0.655572	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980563	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.953988	$0.595946	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953988	0.000
Transamerica Equity VP – Service Class	2008	$0.970361	$0.517878	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.970361	0.000

26

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica Growth Opportunities VP – Service Class	2008	$0.930793	$0.543925	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.930793	0.000
Transamerica Money Market VP – Service Class	2008	$1.006008	$1.019092	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006008	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955278	$0.484272	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955278	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934236	$0.546074	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934236	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.011777	$1.077611	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.011777	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.959854	$0.659539	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959854	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.939360	$0.498871	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.939360	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.823317	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.726861	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.013901	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.954770	$0.594911	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954770	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991198	0.000
ProFund VP Asia 30	2008	$0.849883	$0.414415	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.849883	0.000
ProFund VP Basic Materials	2008	$0.980513	$0.472266	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980513	0.000
ProFund VP Bull	2008	$0.953190	$0.589118	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953190	0.000
ProFund VP Consumer Services	2008	$0.919366	$0.625507	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919366	0.000
ProFund VP Emerging Markets	2008	$0.912286	$0.451446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912286	0.000
ProFund VP Europe 30	2008	$0.947594	$0.526117	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.947594	0.000
ProFund VP Falling US Dollar	2008	$1.005807	$0.946292	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.005807	0.000
ProFund VP Financials	2008	$0.876460	$0.429808	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.876460	0.000
ProFund VP International	2008	$0.941170	$0.518844	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941170	0.000
ProFund VP Japan	2008	$0.904932	$0.530790	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.904932	0.000
ProFund VP Mid-Cap	2008	$0.953907	$0.582935	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953907	0.000

27

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.85%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Money Market	2008	$1.003989	$1.003861	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003989	0.000
ProFund VP Oil & Gas	2008	$1.014356	$0.634153	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014356	0.000
ProFund VP NASDAQ-100	2008	$0.944750	$0.538800	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.944750	0.000
ProFund VP Pharmaceuticals	2008	$0.974065	$0.777412	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974065	0.000
ProFund VP Precious Metals	2008	$0.922185	$0.633126	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922185	0.000
ProFund VP Short Emerging Markets	2008	$1.055106	$1.383367	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055106	0.000
ProFund VP Short International	2008	$1.058704	$1.451062	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.058704	0.000
ProFund VP Short NASDAQ-100	2008	$1.055884	$1.551202	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055884	0.000
ProFund VP Short Small-Cap	2008	$1.064491	$1.309675	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.064491	0.000
ProFund VP Small-Cap	2008	$0.932068	$0.597003	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932068	0.000
ProFund VP Small-Cap Value	2008	$0.922045	$0.633727	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922045	0.000
ProFund VP Telecommunications	2008	$0.943332	$0.613403	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943332	0.000
ProFund VP UltraSmall-Cap	2008	$0.851219	$0.285394	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851219	0.000
ProFund VP U.S. Government Plus	2008	$1.045021	$1.551803	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045021	0.000
ProFund VP Utilities	2008	$1.012180	$0.695535	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012180	0.000
Access VP High Yield FundSM	2008	$1.003395	$0.948702	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003395	0.000
		0.75%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.959740	$0.628091	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959740	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902169	$0.540086	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902169	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.885974	$0.505665	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.885974	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013379	$0.959055	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013379	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014215	$1.059513	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014215	0.000

28

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.75%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.949090	$0.588553	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.949090	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.963863	$0.607106	475.666
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963863	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.982027	$0.726515	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.982027	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.963668	$0.616532	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963668	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.964916	$0.563799	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964916	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.919881	$0.514109	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919881	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.020574	$0.981817	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.020574	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.954830	$0.604689	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954830	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.941162	$0.594074	4,531.997
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941162	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.969070	$0.540417	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.969070	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.924966	$0.539040	3,277.590
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.924966	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.037918	0.000
Transamerica Balanced VP – Service Class	2008	$0.980734	$0.656333	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980734	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.954145	$0.596642	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954145	0.000
Transamerica Equity VP – Service Class	2008	$0.970533	$0.518489	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.970533	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.930953	$0.544554	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.930953	0.000
Transamerica Money Market VP – Service Class	2008	$1.006175	$1.020267	18,837.384
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006175	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955438	$0.484843	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955438	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934400	$0.546715	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934400	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.011951	$1.078866	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.011951	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.960020	$0.660311	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960020	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.939525	$0.499462	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.939525	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.823868	0.000

29

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.75%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.727352	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.014043	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.954932	$0.595608	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954932	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991338	0.000
ProFund VP Asia 30	2008	$0.850034	$0.414909	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.850034	0.000
ProFund VP Basic Materials	2008	$0.980681	$0.472819	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980681	0.000
ProFund VP Bull	2008	$0.953352	$0.589804	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953352	0.000
ProFund VP Consumer Services	2008	$0.919525	$0.626236	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919525	0.000
ProFund VP Emerging Markets	2008	$0.912445	$0.451973	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912445	0.000
ProFund VP Europe 30	2008	$0.947758	0.526741	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.947758	0.000
ProFund VP Falling US Dollar	2008	$1.005974	$0.947390	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.005974	0.000
ProFund VP Financials	2008	$0.876609	$0.430316	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.876609	0.000
ProFund VP International	2008	$0.941329	$0.519449	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941329	0.000
ProFund VP Japan	2008	$0.905091	$0.531418	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.905091	0.000
ProFund VP Mid-Cap	2008	$0.954069	$0.583619	3,075.088
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954069	0.000
ProFund VP Money Market	2008	$1.004162	$1.005055	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004162	0.000
ProFund VP Oil & Gas	2008	$1.014531	$0.634890	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014531	0.000
ProFund VP NASDAQ-100	2008	$0.944914	$0.539432	1,055.677
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.944914	0.000
ProFund VP Pharmaceuticals	2008	$0.974228	$0.778318	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974228	0.000
ProFund VP Precious Metals	2008	$0.922345	$0.633866	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922345	0.000
ProFund VP Short Emerging Markets	2008	$1.055283	$1.384976	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055283	0.000
ProFund VP Short International	2008	$1.058882	$1.452758	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.058882	0.000
ProFund VP Short NASDAQ-100	2008	$1.056061	$1.552997	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.056061	0.000

30

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.75%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Short Small-Cap	2008	$1.064674	$1.311202	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.064674	0.000
ProFund VP Small-Cap	2008	$0.932228	$0.597700	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932228	0.000
ProFund VP Small-Cap Value	2008	$0.922199	$0.634463	2,889.283
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922199	0.000
ProFund VP Telecommunications	2008	$0.943494	$0.614120	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943494	0.000
ProFund VP UltraSmall-Cap	2008	$0.851369	$0.285731	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851369	0.000
ProFund VP U.S. Government Plus	2008	$1.045204	$1.553607	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045204	0.000
ProFund VP Utilities	2008	$1.012354	$0.696358	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012354	0.000
Access VP High Yield FundSM	2008	$1.003566	$0.949807	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003566	0.000
		0.70%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.959818	$0.628456	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.959818	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902245	$0.540402	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902245	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.886056	$0.505963	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.886056	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013466	$0.959610	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013466	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014301	$1.060124	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014301	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.949171	$0.588894	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.949171	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.963946	$0.607458	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963946	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.982108	$0.726931	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.982108	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.963747	$0.616888	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.963747	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.964996	$0.564130	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964996	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.919960	$0.514418	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919960	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.020663	$0.982396	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.020663	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.954912	$0.605044	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954912	0.000

31

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.70%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.941242	$0.594422	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941242	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.969156	$0.540733	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.969156	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.925044	$0.539355	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.925044	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.037990	0.000
Transamerica Balanced VP – Service Class	2008	$0.980818	$0.656716	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980818	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.954233	$0.596986	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954233	0.000
Transamerica Equity VP – Service Class	2008	$0.970616	$0.518789	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.970616	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.931031	$0.544878	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.931031	0.000
Transamerica Money Market VP – Service Class	2008	$1.006263	$1.020875	61,820.600
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006263	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955520	$0.485124	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955520	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934478	$0.547027	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934478	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.012039	$1.079494	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012039	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.960099	$0.660680	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960099	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.824143	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.727587	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.014113	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.939603	$0.499754	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.939603	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.955015	$0.595954	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955015	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991405	0.000
ProFund VP Asia 30	2008	$0.850107	$0.415151	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.850107	0.000
ProFund VP Basic Materials	2008	$0.980766	$0.473097	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.980766	0.000
ProFund VP Bull	2008	$0.953432	$0.590148	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953432	0.000
ProFund VP Consumer Services	2008	$0.919604	$0.626598	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919604	0.000

32

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.70%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Emerging Markets	2008	$0.912522	$0.452240	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912522	0.000
ProFund VP Europe 30	2008	$0.947839	$0.527047	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.947839	0.000
ProFund VP Falling US Dollar	2008	$1.006061	$0.947949	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006061	0.000
ProFund VP Financials	2008	$0.876684	$0.430567	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.876684	0.000
ProFund VP International	2008	$0.941413	$0.519754	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941413	0.000
ProFund VP Japan	2008	$0.905165	$0.531730	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.905165	0.000
ProFund VP Mid-Cap	2008	$0.954151	$0.583964	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954151	0.000
ProFund VP Money Market	2008	$1.004246	$1.005613	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004246	0.000
ProFund VP Oil & Gas	2008	$1.014617	$0.635262	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014617	0.000
ProFund VP NASDAQ-100	2008	$0.944997	$0.539748	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.944997	0.000
ProFund VP Pharmaceuticals	2008	$0.974315	$0.778781	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974315	0.000
ProFund VP Precious Metals	2008	$0.922425	$0.634232	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922425	0.000
ProFund VP Short Emerging Markets	2008	$1.055376	$1.385772	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055376	0.000
ProFund VP Short International	2008	$1.058968	$1.453594	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.058968	0.000
ProFund VP Short NASDAQ-100	2008	$1.056152	$1.553915	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.056152	0.000
ProFund VP Short Small-Cap	2008	$1.064763	$1.311958	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.064763	0.000
ProFund VP Small-Cap	2008	$0.932307	$0.598049	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932307	0.000
ProFund VP Small-Cap Value	2008	$0.922282	$0.634828	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922282	0.000
ProFund VP Telecommunications	2008	$0.943573	$0.614478	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943573	0.000
ProFund VP UltraSmall-Cap	2008	$0.851443	$0.285910	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851443	0.000
ProFund VP U.S. Government Plus	2008	$1.045292	$1.554510	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045292	0.000
ProFund VP Utilities	2008	$1.012438	$0.696749	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012438	0.000
Access VP High Yield FundSM	2008	$1.003657	$0.950367	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003657	0.000

33

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.50%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.960152	$0.629931	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960152	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902557	$0.541671	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902557	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.886360	$0.507141	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.886360	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013813	$0.961868	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013813	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014648	$1.062601	26,151.894
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014648	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.949500	$0.590283	32,305.282
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.949500	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.964274	$0.608887	1,746.797
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964274	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.982455	$0.728638	26,754.878
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.982455	0.000
Transamerica MFS International Equity VP – Service Class	2008	$0.964082	$0.618332	44,100.191
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964082	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.965333	$0.565460	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.965333	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.920274	$0.515620	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.920274	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.021014	$0.984691	22,007.251
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.021014	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.955242	$0.606458	31,908.552
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955242	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.941570	$0.595817	18,875.091
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941570	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.969488	$0.541999	42,223.099
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.969488	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.925365	$0.540622	36,486.658
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.925365	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.038278	0.000
Transamerica Balanced VP – Service Class	2008	$0.981151	$0.658249	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981151	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.954560	$0.598392	16,129.201
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954560	0.000
Transamerica Equity VP – Service Class	2008	$0.970951	$0.520015	22,768.710
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.970951	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.931353	$0.546155	24,029.047
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.931353	0.000
Transamerica Money Market VP – Service Class	2008	$1.006609	$1.023252	317,585.609
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006609	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955852	$0.486266	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955852	0.000

34

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.50%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934797	$0.548317	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934797	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.012383	$1.082013	68,294.964
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012383	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.960433	$0.662238	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960433	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.939936	$0.500938	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.939936	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.825237	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.728560	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.014392	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.955343	$0.597357	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955343	0.000
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991677	0.000
ProFund VP Asia 30	2008	$0.850399	$0.416120	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.850399	0.000
ProFund VP Basic Materials	2008	$0.981106	$0.474206	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981106	0.000
ProFund VP Bull	2008	$0.953763	$0.591539	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953763	0.000
ProFund VP Consumer Services	2008	$0.919919	$0.628076	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.919919	0.000
ProFund VP Emerging Markets	2008	$0.912841	$0.453304	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912841	0.000
ProFund VP Europe 30	2008	$0.948168	$0.528284	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.948168	0.000
ProFund VP Falling US Dollar	2008	$1.006408	$0.950157	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006408	0.000
ProFund VP Financials	2008	$0.876985	$0.431587	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.876985	0.000
ProFund VP International	2008	$0.941743	$0.520976	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941743	0.000
ProFund VP Japan	2008	$0.905480	$0.532974	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.905480	0.000
ProFund VP Mid-Cap	2008	$0.954482	$0.585334	13,146.048
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954482	0.000
ProFund VP Money Market	2008	$1.004594	$1.007977	615,451.550
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004594	0.000
ProFund VP Oil & Gas	2008	$1.014967	$0.636748	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014967	0.000
ProFund VP NASDAQ-100	2008	$0.945324	$0.541016	4,993.145
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.945324	0.000

35

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.50%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Pharmaceuticals	2008	$0.974651	$0.780604	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974651	0.000
ProFund VP Precious Metals	2008	$0.922746	$0.635729	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922746	0.000
ProFund VP Short Emerging Markets	2008	$1.055734	$1.389014	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055734	0.000
ProFund VP Short International	2008	$1.059338	$1.456998	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.059338	0.000
ProFund VP Short NASDAQ-100	2008	$1.056515	$1.557553	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.056515	0.000
ProFund VP Short Small-Cap	2008	$1.065130	$1.315035	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.065130	0.000
ProFund VP Small-Cap	2008	$0.932628	$0.599455	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932628	0.000
ProFund VP Small-Cap Value	2008	$0.922601	$0.636330	12,145.486
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922601	0.000
ProFund VP Telecommunications	2008	$0.943897	$0.615916	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943897	0.000
ProFund VP UltraSmall-Cap	2008	$0.851738	$0.286575	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851738	0.000
ProFund VP U.S. Government Plus	2008	$1.045648	$1.558142	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045648	0.000
ProFund VP Utilities	2008	$1.012783	$0.698381	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012783	0.000
Access VP High Yield FundSM	2008	$1.003992	$0.952582	514,621.511
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.003992	0.000
		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica BlackRock Large Cap Value VP – Service Class	2008	$0.960236	$0.630298	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960236	0.000
Transamerica Capital Guardian Value VP – Service Class	2008	$0.902633	$0.541986	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.902633	0.000
Transamerica Clarion Global Real Estate Securities VP – Service Class	2008	$0.886432	$0.507446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.886432	0.000
Transamerica Federated Market Opportunity VP – Service Class	2008	$1.013901	$0.962432	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.013901	0.000
Transamerica JPMorgan Core Bond VP - Service Class	2008	$1.014738	$1.063225	158,805.596
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.014738	0.000
Transamerica JPMorgan Enhanced Index VP – Service Class	2008	$0.949579	$0.590625	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.949579	0.000
Transamerica Legg Mason Partners All Cap VP – Service Class	2008	$0.964363	$0.609239	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964363	0.000
Transamerica MFS High Yield VP – Service Class	2008	$0.982536	$0.729052	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.982536	0.000

36

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Transamerica MFS International Equity VP – Service Class	2008	$0.964161	$0.618694	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.964161	0.000
Transamerica Marsico Growth VP – Service Class	2008	$0.965413	$0.565789	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.965413	0.000
Transamerica Munder Net50 VP – Service Class	2008	$0.920358	$0.515926	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.920358	0.000
Transamerica PIMCO Total Return VP – Service Class	2008	$1.021103	$0.985271	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.021103	0.000
Transamerica T. Rowe Price Equity Income VP – Service Class	2008	$0.955323	$0.606817	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955323	0.000
Transamerica T. Rowe Price Small Cap VP – Service Class	2008	$0.941647	$0.596164	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941647	0.000
Transamerica Templeton Global VP – Service Class	2008	$0.969572	$0.542320	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.969572	0.000
Transamerica Third Avenue Value VP – Service Class	2008	$0.925444	$0.540939	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.925444	0.000
Transamerica Efficient Markets VP - Service Class
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.038351	0.000
Transamerica Balanced VP – Service Class	2008	$0.981241	$0.658643	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981241	0.000
Transamerica Convertible Securities VP – Service Class	2008	$0.954640	$0.598736	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954640	0.000
Transamerica Equity VP – Service Class	2008	$0.971034	$0.520319	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.971034	0.000
Transamerica Growth Opportunities VP – Service Class	2008	$0.931433	$0.546482	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.931433	0.000
Transamerica Money Market VP – Service Class	2008	$1.006699	$1.023867	484,158.697
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006699	0.000
Transamerica Science & Technology VP – Service Class	2008	$0.955935	$0.486557	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955935	0.000
Transamerica Small/Mid Cap Value VP – Service Class	2008	$0.934880	$0.548637	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.934880	0.000
Transamerica U.S. Government Securities VP – Service Class	2008	$1.012472	$1.082652	128,929.556
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012472	0.000
Transamerica Value Balanced VP – Service Class	2008	$0.960514	$0.662622	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.960514	0.000
Transamerica Van Kampen Mid-Cap Growth VP – Service Class	2008	$0.940013	$0.501219	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.940013	0.000
Transamerica Index 50 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.825517	0.000
Transamerica Index 75 VP - Initial Class
Subaccount Inception Date May 1, 2008	2008	$1.000000	$0.728804	0.000
AllianceBernstein Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date November 10, 2008	2008	$1.000000	$1.014465	0.000
Fidelity - VIP Index 500 Portfolio – Service Class 2	2008	$0.955425	$0.597702	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.955425	0.000

37

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
Franklin Templeton VIP Founding Funds Allocation Fund - Class 4
Subaccount Inception Date November 10, 2008	2008	$1.000000	$0.991747	0.000
ProFund VP Asia 30	2008	$0.850475	$0.416368	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.850475	0.000
ProFund VP Basic Materials	2008	$0.981187	$0.474483	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.981187	9,453.012
ProFund VP Bull	2008	$0.953846	$0.591881	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.953846	0.000
ProFund VP Consumer Services	2008	$0.920000	$0.628446	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.920000	0.000
ProFund VP Emerging Markets	2008	$0.912915	$0.453562	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.912915	0.000
ProFund VP Europe 30	2008	$0.948249	$0.528596	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.948249	14,704.591
ProFund VP Falling US Dollar	2008	$1.006492	$0.950709	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.006492	0.000
ProFund VP Financials	2008	$0.877063	$0.431838	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.877063	0.000
ProFund VP International	2008	$0.941817	$0.521286	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.941817	0.000
ProFund VP Japan	2008	$0.905555	$0.533287	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.905555	0.000
ProFund VP Mid-Cap	2008	$0.954563	$0.585680	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.954563	0.000
ProFund VP Money Market	2008	$1.004680	$1.008564	214,040.120
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004680	9,313.419
ProFund VP Oil & Gas	2008	$1.015052	$0.637124	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.015052	0.000
ProFund VP NASDAQ-100	2008	$0.945402	$0.541332	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.945402	0.000
ProFund VP Pharmaceuticals	2008	$0.974733	$0.781055	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.974733	0.000
ProFund VP Precious Metals	2008	$0.922823	$0.636094	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922823	0.000
ProFund VP Short Emerging Markets	2008	$1.055827	$1.389829	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.055827	0.000
ProFund VP Short International	2008	$1.059426	$1.457857	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.059426	0.000
ProFund VP Short NASDAQ-100	2008	$1.056600	$1.558447	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.056600	0.000
ProFund VP Short Small-Cap	2008	$1.065220	$1.315797	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.065220	0.000
ProFund VP Small-Cap	2008	$0.932709	$0.599806	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.932709	0.000
ProFund VP Small-Cap Value	2008	$0.922681	$0.636701	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.922681	0.000

38

CONDENSED FINANCIAL INFORMATION — (Continued)

		0.45%
Subaccount	Year	Beginning AUV	Ending AUV	# Units
ProFund VP Telecommunications	2008	$0.943978	$0.616270	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.943978	0.000
ProFund VP UltraSmall-Cap	2008	$0.851818	$0.286747	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$0.851818	0.000
ProFund VP U.S. Government Plus	2008	$1.045739	$1.559049	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.045739	0.000
ProFund VP Utilities	2008	$1.012876	$0.698798	0.000
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.012876	13,740.172
Access VP High Yield FundSM	2008	$1.004084	$0.953142	76,797.461
Subaccount Inception Date October 29, 2007	2007	$1.000000	$1.004084	0.000

39

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 establishing the Separate Account VA AA. Note 1
				(b	)	Resolution of Board of Directors of Transamerica Premier Life Insurance Company re-domesticating Separate Account VA AA. Note 15
				(c	)	Resolution of Board of Directors of Transamerica Premier Life Insurance Company Approving Plan of Merger with Western Reserve Life Assurance Co. of Ohio. Note 15
				(d	)	Resolution of Board of Directors of Western Reserve Life Assurance Co. of Ohio Approving Plan of Merger with Transamerica Premier Life Insurance Company. Note 15
		(2	)			Not Applicable.
		(3	)	(a	)	Amended and Restated Principal Underwriting Agreement - Monumental Life Insurance Company and Transamerica Capital, Inc. Note 2
				(b	)	Amendment to Amended and Restated Principal Underwriting Agreement. Note 15
				(c	)	Form of Broker/Dealer Life Insurance Company Product Sales Agreement by and between TCI Securities Corporation and the Broker/Dealer. Note 3
		(4	)	(a	)	Form of Policy. Note 1
				(b	)	Form of Death Benefit Rider (Return of Premium). Note 4
				(c	)	Form of Policy Rider (Bee-Extra II). Note 4
				(d	)	Form of Death Benefit Rider (Annual Step-Up). Note 4
				(e	)	Form of Policy Endorsement (Fund Facilitation Fee). Note 5
		(5	)	(a	)	Form of Application. Note 1
		(6	)	(a	)	Restated Articles of Incorporation and Articles of Re-domestication of Transamerica Premier Life Insurance Company. Note 15
				(b	)	Amended and Restated By-Laws Transamerica Premier Life Insurance Company. Note 15
		(7	)			(Not Applicable)
		(8	)	(a	)	Participation Agreement (Access One and ProFunds). Note 6
				(a	)(1)	Amendment No. 1 to Participation Agreement (Access One and ProFunds). Note 15
				(a	)(2)	Amendment No. 2 to Participation Agreement (Access One and ProFunds). Note 7

		(a	)(3)	Amendment to Agreements (Confidential Information Access One and ProFunds). Note 8
		(a	)(4)	Amendment No. 6 to Participation Agreement (Access One and ProFunds). Note 9
	(8)	(b	)	Participation Agreement (AllianceBernstein). Note 10
		(b	)(1)	Amendment to Participation Agreement (AllianceBernstein) Note 11
	(8)	(c	)	Participation Agreement (Fidelity). Note 12
	(8)	(d	)	Participation Agreement (Franklin Templeton). Note 10
		(d	)(1)	Amendment No. 2 to Participation Agreement (Franklin Templeton). Note 13
		(d	)(2)	Participation Agreement Addendum (Franklin Templeton). Note 15
		(d	)(3)	Amendment No. 3 to Participation Agreement (Franklin Templeton). Note 11
		(d	)(4)	Amendment to Participation Agreements (Franklin Templeton). Note 15
		(d	)(5)	Amendment No. 6 to Participation Agreement (Franklin Templeton). Note 12
	(8)	(e	)	Participation Agreement (TST). Note 14
		(e	)(1)	Amendment No. 1 to Participation Agreement (TST). Note 9
		(e	)(2)	Amended Schedule A 07-01-14 to Participation Agreement (TST). Note 15
	(9)			Opinion of Counsel. Note 15
	(10)			Consent of Independent Registered Public Accounting Firm. Note 15
	(11)			Not applicable.
	(12)			Not applicable.
	(13)			Powers of Attorney. Brenda K. Clancy, Scott W. Ham, C. Michiel van Katwijk, Robert J. Kontz, Mark W. Mullin, Arthur C. Schneider, Jason Orlandi, and Eric J. Martin. Note 15
Note 1.	Incorporated herein by reference to the Initial Filing of Form N-4 Registration Statement (File No. 333-145461) filed on August 15, 2007.
Note 2.	Incorporated herein by reference to Post-Effective Amendment No. 9 to Form N-4 Registration Statement (File No. 333-146323) filed on April 25, 2013.
Note 3.	Incorporated herein by reference to Initial Filing to Form N-4 Registration Statement (File No. 333-185574) filed on December 20, 2012.
Note 4.	Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-108525) filed on September 5, 2003.
Note 5.	Incorporated herein by reference to the Initial Filing to Form N-4 Registration Statement (File No. 333-145461) filed on November 6, 2008.

Note 6.	Incorporated herein by reference to Post-Effective Amendment No. 8 to Form N-4 Registration Statement (File No. 333-108525) filed on February 13, 2007.
Note 7.	Incorporated herein by reference to the Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-145461) filed on October 23, 2007.
Note 8.	Incorporated herein by reference to Post-Effective Amendment No. 23 to Form N-4 Registration Statement (File No. 333-108525) filed on April 22, 2013.
Note 9.	Incorporated herein by reference to Post-Effective Amendment No. 24 to Form N-4 Registration Statement (File No. 333-108525) filed on August 16, 2013.
Note 10.	Incorporated herein by reference to Post-Effective Amendment No. 14 to Form N-4 Registration Statement (File No. 333-108525) filed on February 3, 2009.
Note 11.	Incorporated herein by reference to Post-Effective Amendment No. 21 to Form N-4 Registration Statement (File No. 333-108525) filed on April 16, 2012.
Note 12.	Incorporated herein by reference to Post-Effective Amendment No. 28 to Form N-4 Registration Statement (Filed No. 333-108525) dated April 30, 2014.
Note 13.	Incorporated herein by reference to Post-Effective Amendment No. 20 to Form N-4 Registration Statement (File No. 333-108525) filed on April 29, 2011.
Note 14.	Incorporated herein by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-185573) filed on April 10, 2013.
Note 15.	Filed herewith.

Item 25.   Directors and Officers of the Depositor (Transamerica Premier Life Insurance Company)
Name and Business Address	Principal Positions and Offices with Depositor
Brenda K. Clancy 4333 Edgewood Road NE Cedar Rapids, IA 52499	Director, Chairman of the Board, President and Chief Executive Officer
Scott W. Ham 4333 Edgewood Road NE Cedar Rapids, IA 52499	Director and Division President – Life & Protection
C. Michiel van Katwijk 100 Light Street Baltimore, MD 21202	Director, Chief Financial Officer, Treasurer and Senior Vice President
Robert J. Kontz 4333 Edgewood Road NE Cedar Rapids, IA 52499	Director and Vice President
Mark W. Mullin 100 Light Street Baltimore, MD 21202	Director
Arthur C. Schneider 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director, Chief Tax Officer and Senior Vice President
Jason Orlandi 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Director, Senior Vice President, Secretary and General Counsel
Eric J. Martin 4333 Edgewood Road, N.E. Cedar Rapids, Iowa 52499-0001	Corporate Controller and Senior Vice President
Alison Ryan 1150 S. Olive St. Los Angeles, CA 90015	Vice President

Item 26. Persons Controlled by or under Common Control with the Depositor or Registrant.

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
25 East 38th Street, LLC	Delaware	Sole Member: Yarra Rapids, LLC	Real estate investments
239 West 20th Street, LLC	Delaware	Sole Member: Yarra Rapids, LLC	Real estate investments
313 East 95th Street, LLC	Delaware	Sole Member: Yarra Rapids, LLC	Real estate investments
319 East 95th Street, LLC	Delaware	Sole Member: Yarra Rapids, LLC	Real estate investments
44764 Yukon Inc.	Canada	100% Creditor Resources, Inc.	Holding company
AEGON Alliances, Inc.	Virginia	100% Commonwealth General Corporation	Insurance company marketing support
AEGON Asset Management Services, Inc.	Delaware	100% AUSA Holding Company	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 ULC	Canada	AEGON Canada Holding B.V. owns 174,588,712 shares of Common Stock; 1,500 shares of Series II Preferred stock; 2 shares of Series III Preferred stock. TIHI Canada Holding, LLC owns 1,441,941.26 shares of Class B - Series I Preferred stock.	Holding company
AEGON Capital Management Inc.	Canada	100% AEGON Asset Management (Canada) B.V.	Portfolio management company/investment advisor
AEGON Direct & Affinity Marketing Services Australia Pty Limited	Australia	100% Transamerica Direct Marketing Asia Pacific Pty Ltd.	Marketing/operations company
AEGON Direct & Affinity Marketing Services Co., Ltd.	Japan	100% AEGON DMS Holding B.V.	Marketing company
AEGON Direct & Affinity Marketing Services Limited	Hong Kong	100% AEGON DMS Holding B.V.	Provide consulting services ancillary to the marketing of insurance products overseas.
AEGON Direct & Affinity Marketing Services (Thailand) Limited	Thailand	97% Transamerica International Direct Marketing Consultants, LLC; remaining 3% held by various AEGON employees	Marketing of insurance products in Thailand
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 Europe Ltd.	United Kingdom	100% Cornerstone International Holdings, Ltd.	Marketing
AEGON Direct Marketing Services Insurance Broker (HK) Limited	Hong Kong	100% AEGON Direct Marketing Services Hong Kong Limited	Brokerage company
AEGON Direct Marketing Services International, Inc.	Maryland	100% AUSA Holding Company	Marketing arm for sale of mass marketed insurance coverage
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.

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
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 Financial Services Group, Inc.	Minnesota	100% Transamerica Life Insurance Company	Marketing
AEGON Fund Management Inc.	Canada	100% AEGON Asset Management (Canada) B.V.	Mutual fund manager
AEGON Funding Company, LLC.	Delaware	100% AEGON USA, LLC	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 Life Insurance Agency Inc.	Taiwan	100% AEGON Direct Marketing Services, Inc. (Taiwan Domiciled)	Life insurance
AEGON Managed Enhanced Cash, LLC	Delaware	Members: Transamerica Life Insurance Company (89.5727%) ; Monumental Life Insurance Company (10.4273%)	Investment vehicle for securities lending cash collateral
AEGON Management Company	Indiana	100% AEGON U.S. Holding Corporation	Holding company
AEGON N.V.	Netherlands	22.446% of Vereniging AEGON Netherlands Membership Association	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. Holding Corporation	Delaware	100% Transamerica Corporation	Holding company
AEGON USA Asset Management Holding, LLC	Iowa	100% AUSA Holding Company	Holding company
AEGON USA Investment Management, LLC	Iowa	100% AEGON USA Asset Management Holding, LLC	Investment advisor
AEGON USA Real Estate Services, Inc.	Delaware	100% AEGON USA Realty Advisors, Inc.	Real estate and mortgage holding company
AEGON USA Realty Advisors, LLC	Iowa	Sole Member - AEGON USA Asset Management Holding, LLC	Administrative and investment services
AEGON USA Realty Advisors of California, Inc.	Iowa	100% AEGON USA Realty Advisors, Inc.	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
AEGON USA, LLC	Iowa	100% AEGON U.S. Holding Corporation	Holding company
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 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
AMTAX HOLDINGS 308, LLC	Ohio	TAHP Fund II, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 347, LLC	Ohio	TAHP Fund II, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 388, LLC	Ohio	TAHP Fund II, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 483, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 546, LLC	Ohio	TAHP Fund II, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 559, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 561, LLC	Ohio	TAHP Fund VII, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 567, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
AMTAX HOLDINGS 588, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 613, LLC	Ohio	Garnet LIHTC Fund VII, LLC - 99% member; Cupples State LIHTC Investors, LLC - 1% member; TAH Pentagon Funds, LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 639, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 649, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 672, LLC	Ohio	TAHP Fund I, LLC - 100% MEMBER; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
AMTAX HOLDINGS 713, LLC	Ohio	TAHP Fund II, LLC - 100% member; TAH Pentagon Funds LLC - non-owner manager	Affordable housing
Apollo Housing Capital Arrowhead Gardens, LLC	Delaware	Garnet LIHTC Fund XXXV, LLC - sole Member	Affordable housing
Asia Investment Holding Limited	Hong Kong	99% Transamerica Life Insurance Company	Holding company
AUSA Holding Company	Maryland	100% AEGON USA, LLC	Holding company
AUSA Properties, Inc.	Iowa	100% AUSA Holding Company	Own, operate and manage real estate
AXA Equitable AgriFinance, LLC	Delaware	Members: AEGON USA Realty Advisors, LLC (50%); AXA Equitable Life Insurance Company, a non-affiliate of AEGON (50%)	Agriculturally-based real estate advisory services
Bay Area Community Investments I, LP	California	Partners: 69.995% Transamerica Life Insurance Company; 29.995% Monumental Life Insurance Company; 0.01% Transamerica Affordable housing, Inc.	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
Canadian Premier Life Insurance Company	Canada	100% Transamerica Life Canada	Insurance company
CBC Insurance Revenue Securitization, LLC	Delaware	100% Clark Consulting, LLC	Special purpose
Cedar Funding, Ltd.	Cayman Islands	100% Transamerica Life Insurance Company	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Clark, LLC	Delaware	Sole Member - Diversified Retirement Corporation	Holding company
Clark Consulting, LLC	Delaware	100% Clark, LLC	Financial consulting firm
Clark Investment Strategies, Inc.	Delaware	100% Clark Consulting, LLC	Registered investment advisor
Clark Securities, Inc.	California	100% Clark Consulting, LLC	Broker-Dealer
Commonwealth General Corporation	Delaware	100% AEGONUSA, LLC	Holding company
Consumer Membership Services Canada Inc.	Canada	100% AEGON Canada ULC	Marketing of credit card protection membership services in Canada
Cornerstone International Holdings Ltd.	UK	100% AEGON DMS Holding B.V.	Holding company
CRG Insurance Agency, Inc.	California	100% Clark Consulting, Inc.	Insurance agency
Creditor Resources, Inc.	Michigan	100% AUSA Holding Company	Credit insurance
CRI Canada Ltd.	Canada	44764 Yukon Inc. owns all preferred shares of stock; various non-AEGON entities/investors own common shares of stock	Holding company
CRI Solutions Inc.	Maryland	100% Creditor Resources, Inc.	Sales of reinsurance and credit insurance
Cupples State LIHTC Investors, LLC	Delaware	100% Garnet LIHTC Fund VIII, LLC	Investments
Erfahrungsschatz GmbH	Germany	100% Cornerstone International Holdings, Ltd.	Marketing/membership
FD TLIC, Limited Liability Company	New York	100% Transamerica Life Insurance Company	Broadway production
FD TLIC Ltd.	United Kingdom	100% FD TLIC, LLC	Theatre production
FGH Realty Credit LLC	Delaware	100% FGH USA, 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 West Mezzanine LLC	Delaware	100% FGH USA LLC	Real estate
FGP West Street LLC	Delaware	100% FGP West Mezzanine 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
First FGP LLC	Delaware	100% FGH USA LLC	Real estate
Fong LCS Associates, LLC	Delaware	100% Investors Warranty of America, Inc.	Investments
Fourth FGP LLC	Delaware	100% FGH USA LLC	Real estate

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet Assurance Corporation	Kentucky	100%Transamerica Life Insurance Company	Investments
Garnet Assurance Corporation II	Iowa	100% Commonwealth General Corporation	Business investments
Garnet Assurance Corporation III	Iowa	100% Transamerica Life Insurance Company	Business investments
Garnet Community Investments, LLC	Delaware	100% Monumental Life Insurance Company	Investments
Garnet Community Investments II, LLC	Delaware	100% Monumental Life Insurance Company	Securities
Garnet Community Investments III, LLC	Delaware	100%Transamerica 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 Community Investments XVIII, LLC	Delaware	100% Transamerica Life Insurance Company	Investments
Garnet Community Investments XX, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXIV, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Real estate investments
Garnet Community Investments XXV, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investment XXVI, LLC	Delaware	100% Transamerica Life Insurance Company	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet Community Investments XXVII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investment XXVIII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXIX, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXX, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXI, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXIII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXIV, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXV, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXVI, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXVII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXVIII, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XXXIX, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XL, LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Investments
Garnet Community Investments XLI, LLC	Delaware	Sole Member: Transamerica Life Insurance Company	Investments
Garnet Community Investments XLII, LLC	Delaware	Sole Member: Transamerica Life Insurance Company	Investments
Garnet LIHTC Fund II, LLC	Delaware	Members: Garnet Community Investments II, LLC (99.99%); Transamerica Life Insurance Company (0.01%)	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

Company 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%); J.P. Morgan Chase Bank, N.A., a non-AEGON affiliate(99.99%)	Investments
Garnet LIHTC Fund VIII, LLC	Delaware	Members: Garnet Community Investments VIII, LLC (0.01%); J.P. Morgan Chase Bank, N.A., 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	Members: Garnet Community Investments XI, LLC (0.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)	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%); J.P. Morgan Chase Bank, N.A. (13.30%); NorLease, Inc. (13.30%)	Investments
Garnet LIHTC Fund XII-A, LLC	Delaware	Garnet Community Investments XII, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XII-B, LLC	Delaware	Garnet Community Investments XII, LLC (0.01%); J.P. Morgan Chase Bank, N.A., 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

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet LIHTC Fund XIII, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); and the following non-AEGON affiliates: Bank of America, N.A.( 73.39%); J.P. Morgan Chase Bank, N.A. (13.30%); NorLease, Inc. (13.30%)	Investments
Garnet LIHTC Fund XIII-A, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); J.P. Morgan Chase Bank, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XIII-B, LLC	Delaware	Garnet Community Investments XII, LLC (.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XIV, LLC	Delaware	0.01% Garnet Community Investments, LLC; 49.995% Wells Fargo Bank, N.A.; and 49.995% Goldenrod Asset Management, Inc.	Investments
Garnet LIHTC Fund XV, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XVI, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); FNBC Leasing Corporation, a non-AEGON entity (99.99%)	Investments
Garnet LIHTC Fund XVII, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); ING USA Annuity and Life Insurance company, a non-affiliate of AEGON (12.999%), and ReliaStar Life Insurance Company, a non-affiliate of AEGON (86.991%).	Investments
Garnet LIHTC Fund XVIII, LLC	Delaware	Members: Garnet Community Investments XVIII, LLC (0.01%); Verizon Capital Corp., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XIX, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Bank of America, N.A., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XX, LLC	Delaware	Sole Member - Garnet Community Investments XX, LLC	Investments
Garnet LIHTC Fund XXI, LLC	Delaware	100% Garnet Community Investments, LLC	Investments
Garnet LIHTC Fund XXII, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet LIHTC Fund XXIII, LLC	Delaware	Members: Garnet Community Investments, LLC (0.01%); Idacorp Financial Services, Inc., a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XXIV, LLC	Delaware	Members: Garnet Community Investments XXIV, LLC (0.01% as Managing Member); Transamerica Life Insurance Company (21.26%); non-affiliates of AEGON: New York Life Insurance Company (25.51%), New York Life Insurance and Annuity Corporation (21.73%) and Principal Life Insurance Company (31.49%)	Investments
Garnet LIHTC Fund XXV, LLC	Delaware	Members: Garnet Community Investment XXV, LLC (0.01%); Garnet LIHTC Fund XXVIII LLC (1%); non-affiliates of AEGON: Mt. Hamilton Fund, LLC (97.99%); Google Affordable housing I LLC (1%)	Investments
Garnet LIHTC Fund XXVI, LLC	Delaware	Members: Garnet Community Investments XXVI, LLC (0.01%); American Income Life Insurance Company, a non-affiliate of AEGON (99.99%)	Investments
Garnet LIHTC Fund XXVII, LLC	Delaware	Members: Garnet Community Investments XXVII, LLC (0.01%); Transamerica Life Insurance Company (16.7045%); non-affiliates of AEGON: Aetna Life Insurance Company (30.2856%); New York Life Insurance Company (22.7142%); ProAssurance Casualty Company (3.6343%); ProAssurance Indemnity Company (8.4800%); State Street Bank and Trust Company (18.1714%)	Investments
Garnet LIHTC Fund XXVIII, LLC	Delaware	Members: Garnet Community Investments XXVIII LLC (0.01%); non-affiliates of AEGON: USAA Casualty Insurance Company (17.998%); USAA General Indemnity Company (19.998%); USAA Life Insurance Company (3.999%); United Services Automobile Association (57.994%)	Real estate investments
Garnet LIHTC Fund XXIX, LLC	Delaware	Members: Garnet Community Investments XXIX, LLC (.01%); non-affiliate of AEGON: Bank of America, N.A. (99.99%)	Investments
Garnet LIHTC Fund XXX, LLC	Delaware	Garnet Community Investments XXX, LLC (0.01%); non-affiliate of AEGON, New York Life Insurance Company (99.99%)	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Garnet LIHTC Fund XXXI, LLC	Delaware	Members: Garnet Community Investments XXXI, LLC (0.1%); non-affiliates of AEGON: Thunderbolt Peak Fund, LLC (98.99%); Google Affordable housing I, LLC (1%)	Investments
Garnet LIHTC Fund XXXII, LLC	Delaware	Sole Member: Garnet Community Investments XXXVII, LLC.	Investments
Garnet LIHTC Fund XXXIII, LLC	Delaware	Members: Garnet Community Investment XXXIII, LLC (0.01%); non-affiliate of AEGON, NorLease, Inc. (99.99%)	Investments
Garnet LIHTC Fund XXXIV, LLC	Delaware	Members: non-AEGON affiliate, U.S. Bancorp Community Development Corporation (99.99%); Garnet Community Investments XXXIV, LLC (.01%)	Investments
Garnet LIHTC Fund XXXV, LLC	Delaware	Members: Garnet Community Investment XXXV, LLC (0.01%); non-affiliate of AEGON, Microsoft Corporation (99.99%)	Investments
Garnet LIHTC Fund XXXVI, LLC	Delaware	Members: Garnet Community Investments XXXVI, LLC (1%) as managing member; JPM Capital Corporation, a non-AEGON affiliate (99%) as investor member	Investments
Garnet LIHTC Fund XXXVII, LLC	Delaware	Members: Garnet Community Investments XXXVII, LLC (.01%); LIH Realty Corporation, a non-AEGON affiliate (99.99%)	Investments
Garnet LIHTC Fund XXXVIII, LLC	Delaware	Sole Member - Garnet Community Investments XXXVIII, LLC	Investments
Garnet LIHTC Fund XXXIX, LLC	Delaware	Members: Garnet Community Investments XXXIX, LLC at 1% managing member and non-AEGON affiliate, FNBC Leasing Corporation as the 99% investor member.	Investments
Garnet LIHTC Fund XL, LLC	Delaware	Members: Garnet Community Investments XL, LLC as a .01% member and non-AEGON affiliate, Partner Reinsurance Company of the U.S. as the 99.99% member.	Investments
Garnet LIHTC Fund XLI, LLC	Delaware	Sole Member - Garnet Community Investment XLI, LLC	Investments

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Ganet LIHTC Fund XLII, LLC	Delaware	Members: Garnet Community Investments XLII, LLC (.01%) managing member; non-affiliates of AEGON: Community Trust Bank (83.33%) investor member; Metropolitan Bank (16.66%) investor member.	Investmetns
Global Preferred Re Limited	Bermuda	100% AEGON USA, LLC	Reinsurance
Harbor View Re Corp.	Hawaii	100% Commonwealth General Corporation	Captive insurance company
Horizons Acquisition 5, LLC	Florida	Sole Member - PSL Acquisitions Operating, LLC	Development company
Horizons St. Lucie Development, LLC	Florida	Sole Member - PSL Acquisitions Operating, LLC	Development company
Imani Fe, LP	California	Partners: Garnet LIHTC Fund XIV, LL (99.99% investor limited partner); Transamerica Affordable housing, Inc. (non-owner manager); non-affiliates of AEGON: ABS Imani Fe, LLC (.0034% class A limited partner); Central Valley Coalition for Affordable housing (.0033% co-managing general partner); Grant Housing and Economic Development Corporation (.0033% managing partner)	Affordable housing
Intersecurities Insurance Agency, Inc.	California	100% Western Reserve Life Assurance Co. of Ohio	Insurance agency
Interstate North Office Park GP, LLC	Delaware	100% Interstate North Office Park Owner, LLC	Investments
Interstate North Office Park, LP	Delaware	100% Interstate North Office Park Owner, LLC	Investments
Interstate North Office Park Owner, LLC	Delaware	100% Investors Warranty of America, Inc.	Investments
Interstate North Office Park (Land) GP, LLC	Delaware	100% Interstate North Office Park Owner, LLC	Investments
Interstate North Office Park (Land) LP	Delaware	100% Interstate North Office Park Owner, LLC	Investments
Investors Warranty of America, Inc.	Iowa	100% AUSA Holding Company	Leases business equipment
LCS Associates, LLC	Delaware	100% Investors Warranty of America, Inc.	Investments
Legacy General Insurance Company	Canada	100% AEGON Canada ULC	Insurance company

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Life Investors Alliance LLC	Delaware	Sole Member - Transamerica Life Insurance Company	Purchase, own, and hold the equity interest of other entities
LIICA Holdings, LLC	Delaware	Sole Member: Transamerica Life Insurance Company	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% Transamerica Life Insurance Company	Captive insurance company
Massachusetts Fidelity Trust Company	Iowa	100% AUSA Holding Company	Trust company
McDonald Corporate Tax Credit Fund IV Limited Partnership	Delaware	Partners: Monumental Life Insurance Company - 99.9% General Partner; TAH-McD IV, LLC - 0.10% General Partner	Tax credit fund
MLIC Re I, Inc.	Vermont	100% Stonebridge Life Insurance Company	Captive insurance company
Money Services, Inc.	Delaware	100% AUSA Holding Company	Provides financial counseling for employees and agents of affiliated companies
Monumental Financial Services, Inc.	Maryland	100% AEGON USA, LLC	DBA in the State of West Virginia for United Financial Services, Inc.
Monumental General Administrators, Inc.	Maryland	100% AUSA Holding Company	Provides management services to unaffiliated third party administrator
nVISION Financial, Inc.	Iowa	100% AUSA Holding Company	Special-purpose subsidiary
New Markets Community Investment Fund, LLC	Iowa	50% AEGON Institutional Markets, Inc.; 50% AEGON USA Realty Advisors, Inc.	Community development entity
Oncor Insurance Services, LLC	Iowa	Sole Member - Life Investors Financial Group, Inc.	Direct sales of term life insurance
Pearl Holdings, Inc. I	Delaware	100% AEGON USA Asset Management Holding, LLC	Holding company
Pearl Holdings, Inc. II	Delaware	100% AEGON USA Asset Management Holding, LLC	Holding company
Peoples Benefit Services, LLC	Pennsylvania	Sole Member - Stonebridge Life Insurance Company	Special-purpose subsidiary
Pine Falls Re, Inc.	Vermont	100% Stonebridge Life Insurance Company	Captive insurance company
Primus Guaranty, Ltd.	Bermuda	Members: Transamerica Life Insurance Company (20% 13.1%) and non-affiliates of AEGON and the public holders own the remainder.	Provides protection from default risk of investment grade corporate and sovereign issues of financial obligations.
PSL Acquisitions Operating, LLC	Iowa	Sole Member: Investors Warranty of America, Inc.	Owner of Core subsidiary entities
Pyramid Insurance Company, Ltd.	Hawaii	100% Transamerica Corporation	Property & Casualty Insurance

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
RCC North America LLC	Delaware	100% AEGON USA, LLC	Real estate
Real Estate Alternatives Portfolio 1 LLC	Delaware	Members: Transamerica Life Insurance Company (90.96%); Monumental Life Insurance Company (6.30%); Transamerica Financial Life Insurance Company (2.74%). Manager: AEGON USA Realty Advisors, Inc.	Real estate alternatives investment
Real Estate Alternatives Portfolio 2 LLC	Delaware	Members are: Transamerica Life Insurance Company (90.25%); Transamerica Financial Life Insurance Company (7.5%); Stonebridge Life Insurance Company (2.25%). Manager: AEGON USA Realty Advisors, Inc.	Real estate alternatives investment
Real Estate Alternatives Portfolio 3 LLC	Delaware	Members are: Transamerica Life Insurance Company (73.4%); Monumental Life Insurance Company (25.6%); Stonebridge Life Insurance Company (1%). Manager: AEGON USA Realty Advisors, Inc.	Real estate alternatives investment
Real Estate Alternatives Portfolio 3A, Inc.	Delaware	Members: Monumental Life Insurance Company (37%); Transamerica Financial Life Insurance Company (9.4%); Transamerica Life Insurance Company (52.6%); Stonebridge Life Insurance Company (1%)	Real estate alternatives investment
Real Estate Alternatives Portfolio 4 HR, LLC	Delaware	Members are: Transamerica Life Insurance Company (64%); Monumental Life Insurance Company (32%); Transamerica Financial Life Insurance Company (4%). Manager: AEGON USA Realty Advisors, Inc.	Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
Real Estate Alternatives Portfolio 4 MR, LLC	Delaware	Members are: Transamerica Life Insurance Company (64%); Monumental Life Insurance Company (32%); Transamerica Financial Life Insurance Company (4%). Manager: AEGON USA Realty Advisors, Inc.	Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment
River Ridge Insurance Company	Vermont	100% AEGON Management Company	Captive insurance company
SB Frazer Owner, LLC	Delaware	100% Stonebridge Life Insurance Company	Investments
Second FGP LLC	Delaware	100% FGH USA LLC	Real estate
Selient Inc.	Canada	100% AEGON Canada ULC	Application service provider providing loan origination platforms to Canadian credit unions.
Seventh FGP LLC	Delaware	100% FGH USA LLC	Real estate

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Short Hills Management Company	New Jersey	100% AEGON U.S. Holding Corporation	Dormant
Southwest Equity Life Insurance Company	Arizona	Voting common stock is allocated 75% of total cumulative vote - AEGON USA, LLC. Participating Common stock (100% owned by non-AEGON shareholders) is allocated 25% of total cumulative vote.	Insurance
St. Lucie West Development Company, LLC	Florida	Sole Member - PSL Acquisitions Operating, LLC	Development company
Stonebridge Benefit Services, Inc.	Delaware	100% Commonwealth General Corporation	Health discount plan
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
TAH-MCD IV, LLC	Iowa	Sole Member - Transamerica Affordable housing, Inc.	Serve as the general partner for McDonald Corporate Tax Credit Fund IV Limited Partnership.
TAH Pentagon Funds, LLC	Iowa	Sole Member - Transamerica Affordable housing, Inc.	Serve as a general partner in a lower-tier tax credit entity
TAHP Fund 1, LLC	Delaware	Sole Member - Garnet LIHTC Fund IX, LLC	Real estate investments
TAHP Fund 2, LLC	Delaware	Sole Member - Garnet LIHTC Fund VIII, LLC	Low incoming housing tax credit
TAHP Fund VII, LLC	Delaware	Investor Member: Garnet LIHTC Fund XIX, LLC	Real estate investments
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
The AEGON Trust Advisory Board: Mark W. Mullin, Alexander R. Wynaendts, and Craig D. Vermie	Delaware	100% AEGON International B.V.	Voting Trust
The RCC Group, Inc.	Delaware	100% FGH USA LLC	Real estate

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
THH Acquisitions, LLC	Iowa	Sole Member - Investors Warranty of America, Inc.	Acquirer of Core South Carolina mortgage loans from Investors Warranty of America, Inc. and holder of foreclosed real estate.
TIHI Canada Holding, LLC	Iowa	Sole Member - Transamerica International Holdings, Inc.	Holding company
TLIC Oakbrook Reinsurance, Inc.	Iowa	100% Transamerica Life Insurance Company	Limited purpose subsidiary life insurance company
TLIC Riverwood Reinsurance, Inc.	Iowa	100% Transamerica Life Insurance Company	Limited purpose subsidiary life insurance company
Tradition Development Company, LLC	Florida	Sole Member - PSL Acquisitions Operating, LLC	Development company
Tradition Irrigation Company, LLC	Florida	Sole Member - PSL Acquisitions Operating, LLC	Irrigation company
Tradition Land Company, LLC	Iowa	Sole Member: Investors Warranty of America, Inc.	Acquirer of Core Florida mortgage loans from Investors Warranty and holder of foreclosed real estate.
Transamerica Accounts Holding Corporation	Delaware	100% TCFC Asset Holdings, Inc.	Holding company
Transamerica Advisors Life Insurance Company	Arkansas	100% AEGON USA, LLC	Insurance company
Transamerica Affinity Marketing 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
Transamerica Affinity Services, Inc.	Maryland	100% AEGON Direct Marketing Services, Inc.	Marketing company
Transamerica Affordable housing, Inc.	California	100% Transamerica Realty Services, LLC	General partner LHTC Partnership
Transamerica Agency Network, Inc.	Iowa	100% AUSA Holding Company	Special purpose subsidiary
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
Transamerica Aviation LLC	Delaware	100% TCFC Air Holdings, Inc.	Special purpose corporation
Transamerica (Bermuda) Services Center, Ltd.	Bermuda	100% AEGON International B.V.	Special purpose corporation
Transamerica Capital, Inc.	California	100% AUSA Holding Company	Broker/Dealer
Transamerica Casualty Insurance Company	Ohio	100% AEGON USA, LLC	Insurance company

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Transamerica Commercial Finance Corporation, I	Delaware	100% Transamerica Finance Corporation	Holding company
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	100% Transamerica Corporation	Holding company
Transamerica Direct Marketing Asia Pacific Pty Ltd.	Australia	100% AEGON DMS Holding B.V.	Holding company
Transamerica Direct Marketing Consultants Private Limited	India	99.95% AEGON DMS Holding B.V.; non-AEGON affiliate, Keshav Sunderraj owns .05%	Marketing consultant
Transamerica Distribution Finance - Overseas, Inc.	Delaware	100% TCFC Asset Holdings, Inc.	Commercial Finance
Transamerica Finance Corporation	Delaware	100% Transamerica Corporation	Commercial & Consumer Lending & equipment leasing
Transamerica Financial Advisors, Inc.	Delaware	1,000 shares owned by AUSA Holding Company; 209 shares owned by Transamerica International Holdings, Inc.; 729 shares owned by AEGON Asset Management Services, Inc.	Broker/Dealer
Transamerica Financial Life Insurance Company	New York	87.40% AEGON USA, LLC; 12.60% Transamerica Life Insurance Company	Insurance
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 Home Loan	California	100% Transamerica Consumer Finance Holding Company	Consumer mortgages
Transamerica Insurance Marketing Asia Pacific Pty Ltd.	Australia	100% Transamerica Direct Marketing Asia Pacific Pty Ltd.	Insurance intermediary
Transamerica International 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 International Holdings, Inc.	Delaware	100% AEGON USA, LLC	Holding company
Transamerica International RE (Bermuda) Ltd.	Bermuda	100% AEGON USA, LLC	Reinsurance
Transamerica International Re Escritório de Representação no Brasil Ltd	Brazil	95% Transamerica International Re(Bermuda) Ltd.; 5% Transamerica International Holdings, Inc.	Insurance and reinsurance consulting

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Transamerica Investment Management, LLC	Delaware	Sole Member - AEGON USA Asset Management Holding, LLC	Investment advisor
Transamerica Investors Securities Corporation	Delaware	100% Transamerica Retirement Solutions Corporation	Broker/Dealer
Transamerica Leasing Holdings Inc.	Delaware	100% Transamerica Finance Corporation	Holding company
Transamerica Life Canada	Canada	100% AEGON Canada ULC	Life insurance company
Transamerica Life Insurance Company	Iowa	676,190 shares Common Stock owned by Transamerica International Holdings, Inc.; 86,590 shares of Preferred Stock owned by Transamerica Corporation; 30,564 shares of Preferred Stock owned by AEGON USA, LLC	Insurance
Transamerica Life (Bermuda) Ltd.	Bermuda	100% Transamerica Life Insurance Company	Long-term life insurer in Bermuda - will primarily write fixed universal life and term insurance
Transamerica Oakmont Corporation	California	100% Transamerica International Holdings, Inc.	General partner retirement properties
Transamerica Pacific Insurance Company, Ltd.	Hawaii	26,000 shares common stock owned by Commonwealth General Corporation; 1,000 shares of common stock owned by Transamerica International Holdings, Inc.	Life insurance
Transamerica Premier Life Insurance Company	Iowa	100% Commonwealth General Corporation	Insurance Company
Transamerica Pyramid Properties LLC	Iowa	100% Monumental Life Insurance Company	Realty limited liability company
Transamerica Realty Investment Properties LLC	Delaware	100% Monumental Life Insurance Company	Realty limited liability company
Transamerica Realty Services, LLC	Delaware	AUSA Holding Company - sole Member	Real estate investments
Transamerica Resources, Inc.	Maryland	100% Monumental General Administrators, Inc.	Provides education and information regarding retirement and economic issues.
Transamerica Retirement Advisors, Inc.	Delaware	100% Transamerica Retirement Solutions Corporation	Investment advisor
Transamerica Retirement Insurance Agency, Inc.	Delaware	100% Transamerica Retirement Solutions Corporation	Conduct business as an insurance agency.
Transamerica Retirement Solutions Corporation	Delaware	100% AUSA Holding Company	Retirement plan services.

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
Transamerica Securities Inc.	Canada	100% World Financial Group Holding Company of Canada, Inc.	Mutual fund dealer
Transamerica Small Business Capital, Inc.	Delaware	100% TCFC Asset Holdings, Inc.	Holding company
Transamerica Stable Value Solutions Inc.	Delaware	100% Commonwealth General Corporation	Principle Business: Provides management services to the stable value division of AEGON insurers who issue synthetic GIC contracts.
Transamerica Travel and Conference Services, LLC	Iowa	100% Money Services, Inc.	Travel and conference services
Transamerica Vendor Financial Services Corporation	Delaware	100% TCFC Asset Holdings, Inc.	Provides commercial leasing
Transamerica Ventures, LLC	Delaware	100% AUSA Holding Company	Investments
Transamerica Ventures Fund, LLC	Delaware	100% AUSA Holding Company	Investments
United Financial Services, Inc.	Maryland	100% AEGON USA, LLC	General agency
Universal Benefits, LLC	Iowa	100% AUSA Holding Company	Third party administrator
Western Reserve Life Assurance Co. of Ohio	Ohio	100% AEGON USA, LLC	Insurance
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 Reinsurance Limited	Bermuda	51% owned by World Financial Group, Inc.; remaining 49% is annually offered to independent contractors associated with WFG Reinsurance Ltd.	Reinsurance
World Financial Group Canada Inc.	Canada	100% World Financial Group Holding Company of Canada Inc.	Marketing
World Financial Group Holding Company of Canada Inc.	Canada	100% Transamerica International Holdings, Inc.	Holding company
World Financial Group, Inc.	Delaware	100% AEGON Asset Management Services, Inc.	Marketing
World Financial Group Insurance Agency of Canada Inc.	Ontario	50% World Financial Group Holding Co. of Canada Inc.; 50% World Financial Group Subholding Co. of Canada Inc.	Insurance agency
World Financial Group Insurance Agency of Hawaii, Inc.	Hawaii	100% World Financial Group Insurance Agency, Inc.	Insurance agency
World Financial Group Insurance Agency of Massachusetts, Inc.	Massachusetts	100% World Financial Group Insurance Agency, Inc.	Insurance agency

Company Name	Jurisdiction of Incorporation	Percent of Voting Securities Owned	Business
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
Yarra Rapids, LLC	Delaware	Members are: Real Estate Alternatives Portfolio 4MR, LLC (49%) and non-AEGON affiliate (51%)	Real estate investments
Zahorik Company, Inc.	California	100% AUSA Holding Company	Inactive
Zero Beta Fund, LLC	Delaware	Members are: Transamerica Life Insurance Company (82.35%); Monumental Life Insurance Company (16.16%); Transamerica Financial Life Insurance Company (1.49%) Manager: AEGON USA Investment Management LLC	Aggregating vehicle formed to hold various fund investments.

Item 27.   Number of Contract Owners

As of August 31, 2014, there were 17 Owners of the Contracts.

Item 28.   Indemnification

The Iowa Code (Sections 490.850 et. seq.) provides for permissive indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The Code also specifies 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 B, Separate Account VA Q, Separate Account VA FF, Separate Account VA HH, Separate Account VA-1, Separate Account VA-2L, Separate Account VA-5, Separate Account VA-6, Separate Account VA-7, Separate Account VA-8, Separate Account Fund B, Separate Account Fund C, Transamerica Corporate Separate Account Sixteen, Transamerica Separate Account R3, Separate Account VL, Separate Account VUL-1; Separate Account VUL-2, Separate Account VUL-3, Separate Account VUL-4, Separate Account VUL-5, Separate Account VUL-6, Separate Account VUL-A, and Variable Life Account A. These accounts are separate accounts of Transamerica Life Insurance Company.

Transamerica Capital, Inc. serves as principal underwriter for Separate Account VA BNY, Separate Account VA QNY, TFLIC Separate Account VNY, Separate Account VA-2LNY, TFLIC Separate Account C, Separate Account VA-5NLNY, Separate Account VA-6NY, TFLIC Series Annuity Account, TFLIC Series Life Account. 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 Transamerica Financial Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for Separate Account VA BB, Separate Account VA CC, Separate Account VL E, 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. This account is a separate account of Transamerica Premier Life Insurance Company (formerly known as 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 Transamerica Advisors Life Insurance Company.

Transamerica Capital, Inc. also serves as principal underwriter for Transamerica Series Trust, Transamerica Funds, Transamerica Investors, Inc., Transamerica Partners Funds Group, Transamerica Partners Funds Group II, Transamerica Partners Portfolios, and Transamerica Asset Allocation Variable Funds.

(b)        Directors and Officers of Transamerica Capital, Inc.:

Name	Principal           Business Address	Position and Offices with Underwriter
Michael W. Brandsma	(2)	Director, President and Chief Financial Officer
David W. Hopewell	(1)	Director
David R. Paulsen	(2)	Director, Chief Executive Officer and Chief Sales Officer
Blake S. Bostwick	(2)	Chief Marketing Officer and Chief Operations Officer
Courtney John	(2)	Chief Compliance Officer and Vice President
Amy Angle	(3)	Assistant Vice President
Elizabeth Belanger	(4)	Assistant Vice President
Dennis P. Gallagher	(5)	Assistant Vice President
Brenda L. Smith	(5)	Assistant Vice President
Lisa Wachendorf	(1)	Assistant Vice President
Arthur D. Woods	(5)	Assistant Vice President
Jeffrey T. McGlaun	(3)	Assistant Treasurer
Carrie N. Powicki	(2)	Secretary
C. Michael van Katwijk	(3)	Treasurer

(1)   4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001

(2)   4600 S Syracuse St, Suite 1100, Denver, CO 80237-2719

(3)   100 Light Street, Floor B1, Baltimore, MD 21202

(4)   440 Mamaroneck Avenue, Harrison, NY 10528

(5)   570 Carillon Parkway, St. Petersburg, FL 33716

(c) Compensation to Principal Underwriter:

Name of Principal Underwriter	Net Underwriting Discounts and Commissions(1)	Compensation on Redemption	Brokerage Commissions	Compensation
Transamerica Capital, Inc.	$ 0	0	0	0

⁽¹⁾  Fiscal Year 2013

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 Premier 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 at the address or phone number listed in the Prospectus.

(d) Transamerica Premier Life Insurance Company hereby represents that the fees and charges deducted under the policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Transamerica Premier Life Insurance Company.

SECTION 403(B) REPRESENTATIONS

Transamerica Premier 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 1st day of October, 2014.

SEPARATE ACCOUNT VA AA

TRANSAMERICA PREMIER LIFE INSURANCE COMPANY

Depositor

Brenda K. Clancy*

Director, President and Chairman of the Board

and Chief Executive Officer

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
	Director, President, Chairman of the	,  2014
Brenda K. Clancy*	Board and Chief Executive Officer
	Director and Division President-Life &	,  2014
Scott W. Ham*	Protection
	Director, Chief Financial Officer,	,  2014
C. Michiel van Katwijk*	Treasurer and Senior Vice President
	Director and Vice President	,  2014
Robert J. Kontz*
	Director	,  2014
Mark W. Mullin*
	Director, Chief Tax Officer and	,  2014
Arthur C. Schneider*	Senior Vice President
	Director, Senior Vice President,	,  2014
Jason Orlandi*	Secretary and General Counsel
	Corporate Controller and Senior	,  2014
Eric J. Martin*	Vice President
/s/ Alison Ryan	Vice President	October 1, 2014
Alison Ryan

*By: Alison Ryan – Attorney-in-Fact pursuant to Powers of Attorney filed herewith.

Registration No.

333 -            

811 - 22113

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 AA

EXHIBIT INDEX

Exhibit No.	Description of Exhibit	Page No.*
(l)(b)	Resolution of Board of Directors of Transamerica Premier Life Insurance Company re-domesticating Separate Account VA AA.
(l)(c)	Resolution of Board of Directors of Transamerica Premier Life Insurance Company Approving Plan of Merger with Western Reserve Life Assurance Co. of Ohio.
(1)(d)	Resolution of Board of Directors of Western Reserve Life Assurance Co. of Ohio Approving Plan of Merger with Transamerica Premier Life Insurance Company.
(3)(b)	Amendment to Amended and Restated Principal Underwriting Agreement.
(6)(a)	Restated Articles of Incorporation and Articles of Re-domestication of Transamerica Premier Life Insurance Company.
(6)(b)	Amended and Restated By-Laws Transamerica Premier Life Insurance Company.
(8)(a)(1)	Amendment No. 1 to Participation Agreement (Access One and ProFunds)
(8)(d)(2)	Participation Agreement Addendum (Franklin Templeton)
(8)(d)(4)	Amendment to Participation Agreements (Franklin Templeton)
(8)(e)(2)	Amended Schedule A 07-01-14 to Participation Agreement (TST)
(9)	Opinion of Counsel
(10)	Consent of Independent Registered Public Accounting Firm
(13)	Powers of Attorney

^* Page numbers included only in manually executed original.