Note 10. Related Party Transactions

At June 30, 2016, the Company had the following related party agreements in effect:

The Company is party to a common cost allocation service agreement between Transamerica Corporation 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. During the three and six months ended June 30, 2016, the Company incurred $2,374 and $4,788, respectively, in expenses under this agreement. During the three and six months ended June 30, 2015, the Company incurred $2,635 and $5,505, respectively, in expenses under this agreement. Charges attributable to this agreement are included in insurance expenses and taxes, net of amounts capitalized.

The Company is party to intercompany short-term note receivable arrangements with its parent and affiliates at various times during the year. During the three and six months ended June 30, 2016, the Company accrued and/or received $10 and $27 of interest, respectively. On June 18, 2016 the Company settled the intercompany short-term note receivable of $25,000 with an interest rate of 0.13% that was entered into on June 19, 2015 and the intercompany short-term note receivable of $25,000 with an interest rate of 0.36% that was entered into on February 25, 2016. During the three months ended June 30, 2015, the Company accrued and /or received $1 interest income. Interest related to these arrangements is included in net investment income.

AEGON USA Realty Advisors, LLC acts as the manager and administrator for the Company’s mortgage loans on real estate under an administrative and advisory agreement with the Company. Charges attributable to this agreement are included in net investment income. During the three and six months ended June 30, 2016, the Company incurred $44 and $86, respectively, under this agreement. During the three and six months ended June 30, 2015, the Company incurred charges of $33 and $66, respectively, under this agreement. Mortgage loan origination fees are amortized into net investment income over the life of the mortgage loans.

AEGON USA Investment Management, LLC acts as a discretionary investment manager under an investment management agreement with the Company. During the three and six months ended June 30, 2016, the Company incurred $511 and $1,003, respectively, in expenses under this agreement. During the three and six months ended June 30, 2015, the Company incurred $402 and $841, respectively, in expenses under this agreement. Charges attributable to this agreement are included in net investment income.

Transamerica Capital, Inc. provides underwriting and distribution services for the Company under an underwriting agreement. During the three and six months ended June 30, 2016, the Company incurred $5,984 and $12,136, respectively, in expenses under this agreement. During the three and six months ended June 30, 2015, the Company incurred $7,303 and $14,653, respectively, in expenses under this agreement. Charges attributable to this agreement are included in insurance expenses and taxes, net of amounts capitalized.

Transamerica Asset Management, Inc. acts as the investment advisor for certain related party funds in the Company’s Separate Accounts under multiple service agreements. During the three and six months ended June 30, 2016, the Company incurred $5 and $82, respectively, in expenses under this agreement. During the three and six months ended June 30, 2015, the Company incurred $94 and $186, respectively, in expenses under this agreement.

The Company has a participation agreement with Transamerica Series Trust to offer certain funds in the Company’s Separate Accounts. Transamerica Capital, Inc. acts as the distributor for such related party funds. The Company has entered into a distribution and shareholder services agreement for certain of such funds. During the three and six months ended June 30, 2016, the Company received $509 and $1,000, respectively, in revenue under this agreement. During the three and six months ended June 30, 2015, the Company received $618 and $1,236, respectively, in revenue under this agreement. Revenue attributable to this agreement is included in policy charge revenue.

The Company purchases and sells investments from/to various affiliated companies. The investments are purchased and sold using the fair value on the date of the acquisition or disposition. The purchasing and selling of investments between affiliated companies for the three and six months ended June 30, 2016 and 2015 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Investments purchased from related parties:
Fixed maturities	$	-	$	-	$	-	$	30,356
Mortgages		-		4,000		-		4,000
Limited partnerships		-		-		10,000		-
Investments sold to related parties:
Fixed maturities		-		3,475		62,859		24,878

While management believes that the service agreements referenced above are calculated on a reasonable basis, they may not necessarily be indicative of the costs that would have been incurred with an unrelated third party. Affiliated agreements generally contain reciprocal indemnity provisions pertaining to each party’s representations and contractual obligations thereunder.