485BPOS 1 d481513d485bpos.htm 485BPOS 485BPOS
Table of Contents

As filed with the Securities and Exchange Commission on April 30, 2018

Registration No. 333- 187912

811- 06032

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM N-4

REGISTRATION STATEMENT

UNDER

  THE SECURITIES ACT OF 1933   ☐
  Pre-Effective Amendment No.   ☐
  Post-Effective Amendment No. 6   ☒

and

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

    Amendment No. 280   ☒

 

 

SEPARATE ACCOUNT VA B

(Exact Name of Registrant)

 

 

TRANSAMERICA LIFE INSURANCE COMPANY

(Name of Depositor)

 

 

4333 Edgewood Road N.E.

Cedar Rapids, IA 52499

(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number: (319) 355-8511

Alison Ryan, Esquire

Brian Stallworth, Esquire

Transamerica Life Insurance Company

c/o Office of the General Counsel

4333 Edgewood Road, N.E.

Cedar Rapids, IA 52499

(Name and Address of Agent for Service)

 

 

 

Title of Securities Being Registered:         Flexible Premium Variable Annuity Policies

It is proposed that this filing become effective:

 

☐ immediately upon filing pursuant to paragraph (b) of Rule 485

 

☒ on May 1, 2018 pursuant to paragraph (b) of Rule 485

 

☐ 60 days after filing pursuant to paragraph (a)(1) of Rule 485

 

☐ on                      pursuant to paragraph (a)(1) of Rule 485

If appropriate, check the following box:

 

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment

 

 

 

Table of Contents

TRANSAMERICA PRINCIPIUMSM II VARIABLE ANNUITY

Issued by

TRANSAMERICA LIFE INSURANCE COMPANY

Separate Account VA B

Supplement Dated May 1, 2018

to the

Prospectus dated May 1, 2018

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

Transamerica PrincipiumSM II Variable Annuity dated May 1, 2018

Table of Contents
Transamerica Variable Annuity Series    MEMBERS® Variable Annuity Series
Partners Variable Annuity Series    Transamerica Advisor EliteSM II
Transamerica AxiomSM II    Transamerica Income EliteSM II
Transamerica PrincipiumSM III    Transamerica Advisor EliteSM Variable Annuity
Transamerica LandmarkSM Variable  Annuity    MEMBERS® LandmarkSM Variable Annuity
Transamerica FreedomSM Variable Annuity    MEMBERS® FreedomSM Variable Annuity
Transamerica ExtraSM Variable Annuity    MEMBERS® ExtraSM Variable Annuity
Transamerica LibertySM Variable Annuity    MEMBERS® LibertySM Variable Annuity
Transamerica AxiomSM Variable Annuity    Transamerica PrincipiumSM II Variable Annuity
Income EliteSM Variable Annuity    Transamerica InspireSM Variable Annuity
Transamerica Variable Annuity I-Share     

Issued by

TRANSAMERICA LIFE INSURANCE COMPANY

SEPARATE ACCOUNT VA B

Rate Sheet Supplement dated April 30, 2018

(for Applications signed on or after May 1, 2018)

to the

Prospectus dated May 1, 2018

This Rate Sheet Prospectus Supplement (this “supplement”) applies to the above listed Transamerica variable annuities and should be read and retained with the prospectus. If you would like another copy of the current prospectus, please call us at (800) 525-6205.

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

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

The amounts listed below apply for applications signed between May 1, 2018 and June 30, 2018. The rider fee, growth and withdrawal percentages may be different than those listed below for applications signed after June 30, 2018. The rider fee and withdrawal percentages applicable to your policy will not change for the life of your policy (unless subject to an automatic step-up as described in the Automatic Step-Up section of your prospectus. At the time of an automatic step-up the rider fee percentage may increase by no more than 0.75% from the current rider fee percentage listed below). The Rate Sheet Prospectus Supplement applicable to your policy will be included with your prospectus. Please work with your financial professional or visit www.transamerica.com to confirm the current rates.

RIDER FEE

1.35%

GROWTH PERCENTAGE

7.20%

WITHDRAWAL PERCENTAGE

 

Age at time of

first withdrawal

  

Withdrawal Percentage -

Single Life Option*

 

Withdrawal Percentage -

Joint Life Option*

0-58   0.00%   0.00%
59-64   4.00%   3.50%
65-79   5.00%   4.50%
³ 80   6.00%   5.50%

 

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

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

 

Transamerica Life Insurance Company  

Product Name

    SEC File
Number		    Product Name     
 SEC File
Number		  
 

Transamerica Variable Annuity Series

    333-185573    MEMBERS® Variable Annuity Series      333-185573    

Partners Variable Annuity Series

    333-185573    Transamerica Advisor EliteSM II      333-186031  

Transamerica AxiomSM II

    333-186029    Transamerica Income EliteSM II      333-186032  

Transamerica PrincipiumSM III

    333-186030      Transamerica Advisor EliteSM Variable Annuity      333-187915  

Transamerica LandmarkSM Variable Annuity

    33-33085    MEMBERS® LandmarkSM Variable Annuity      33-33085  

Transamerica FreedomSM Variable Annuity

    33-56908    MEMBERS® FreedomSM Variable Annuity      33-56908  

Transamerica ExtraSM Variable Annuity

    333-187910    MEMBERS® ExtraSM Variable Annuity      333-187910  

Transamerica LibertySM Variable Annuity

    333-187911    MEMBERS® LibertySM Variable Annuity      333-187911  

Transamerica AxiomSM Variable Annuity

    333-187913    Transamerica PrincipiumSM II Variable Annuity      333-187912  

Income EliteSM Variable Annuity

    333-187914    Transamerica InspireSM Variable Annuity      333-215598  

Transamerica Variable Annuity I-Share

    333-186031              

 

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Transamerica Variable Annuity Series   MEMBERS® Variable Annuity Series
Partners Variable Annuity Series   Transamerica Advisor EliteSM II
Transamerica AxiomSM II   Transamerica AxiomSM Variable Annuity
Transamerica PrincipiumSM III   Transamerica Advisor EliteSM Variable Annuity
Transamerica LandmarkSM Variable Annuity   MEMBERS® LandmarkSM Variable Annuity
Transamerica FreedomSM Variable Annuity   MEMBERS® FreedomSM Variable Annuity
Transamerica ExtraSM Variable Annuity   MEMBERS® ExtraSM Variable Annuity
Transamerica LibertySM Variable Annuity   MEMBERS® LibertySM Variable Annuity
Transamerica PrincipiumSM II Variable Annuity   Transamerica InspireSM Variable Annuity
Transamerica Variable Annuity I-Share  

Issued by

TRANSAMERICA LIFE INSURANCE COMPANY

SEPARATE ACCOUNT VA B

Rate Sheet Supplement dated April 30, 2018

(for Applications signed on or after May 1, 2018)

to the

Prospectus dated May 1, 2018

This Rate Sheet Prospectus Supplement (this “supplement”) applies to the above listed Transamerica variable annuities and should be read and retained with the prospectus. If you would like another copy of the current prospectus, please call us at (800) 525-6205.

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

We are issuing this supplement to provide the rider fee, growth and withdrawal percentages that we are currently offering for the Retirement Income Choice® 1.6 rider as described in the Retirement Income Choice® 1.6 Fees, Retirement Income Choice® 1.6 – Base Benefit – Withdrawal Percentage and the Retirement Income Choice® 1.6 – Base Benefit –Growth sections of the prospectus. This supplement replaces and supersedes any previously issued Rate Sheet Prospectus Supplement(s), and must be used in conjunction with the above effective prospectuses, as amended.

The amounts listed below apply for applications signed between May 1, 2018 and June 30, 2018. The rider fee, growth and withdrawal percentages may be different than those listed below for applications signed after June 30, 2018. The rider fee and withdrawal percentages applicable to your policy will not change for the life of your policy (unless subject to an automatic step-up as described in the Automatic Step-Up section of your prospectus. At the time of an automatic step-up the rider fee percentage may increase by no more than 0.75% from the current rider fee percentage listed below). The growth percentage can change upon manual reset, which is a manual process under which your current rider is terminated and a new rider is issued. You can only elect to reset during the 30 day period following each successive fifth rider anniversary and if all other rider issue requirements are met as further described in the Retirement Income Choice® 1.6 – Base Benefit- Manual Resets section of your prospectus. The Rate Sheet Prospectus Supplement applicable to your policy will be included with your prospectus. Please work with your financial professional or visit www.transamerica.com to confirm the current rates.

RIDER FEES

 

Rider Benefit    Single Life Option    Joint Life Option

Base Benefit Designated Allocation Group A  

    1.45%    1.45%

Base Benefit Designated Allocation Group B

    1.10%    1.10%

Base Benefit Designated Allocation Group C

    0.70%    0.70%

Death Benefit

    0.40%    0.35%

Income Enhancement

    0.30%    0.50%

GROWTH PERCENTAGE

5.50%

 

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WITHDRAWAL PERCENTAGE

Age at time of

first withdrawal

   

Withdrawal Percentage -

Single Life Option*

  

Withdrawal Percentage -

Joint Life Option*

0-58    0.00%    0.00%
59-64    4.00%    3.50%
65-79    5.00%    4.50%
³ 80    6.00%    5.50%

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

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

 

Transamerica Life Insurance Company
Product Name    SEC File
Number		    Product Name    SEC File
Number
Transamerica Variable Annuity Series    333-185573    MEMBERS® Variable Annuity Series    333-185573
Partners Variable Annuity Series    333-185573    Transamerica Advisor EliteSM II    333-186031
Transamerica AxiomSM II    333-186029    Transamerica AxiomSM Variable Annuity    333-187913
Transamerica PrincipiumSM III    333-186030      Transamerica Advisor EliteSM Variable Annuity    333-187915  
Transamerica LandmarkSM Variable Annuity    33-33085    MEMBERS® LandmarkSM Variable Annuity    33-33085
Transamerica FreedomSM Variable Annuity    33-56908    MEMBERS® FreedomSM Variable Annuity    33-56908
Transamerica ExtraSM Variable Annuity    333-187910    MEMBERS® ExtraSM Variable Annuity    333-187910
Transamerica LibertySM Variable Annuity    333-187911    MEMBERS® LibertySM Variable Annuity    333-187911
Transamerica PrincipiumSM II Variable Annuity    333-187912    Transamerica InspireSM Variable Annuity    333-215598
Transamerica Variable Annuity I-Share    333-186031          

 

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Table of Contents
TRANSAMERICA PRINCIPIUMSM II VARIABLE ANNUITY
Issued Through
SEPARATE ACCOUNT VA B
By
TRANSAMERICA LIFE INSURANCE COMPANY
The Transamerica PrincipiumSM II Variable Annuity is a flexible premium deferred annuity policy (the “policy”), which is no longer available for purchase by new policy owners. The policy offers many investment choices. You may invest in the separate account, which provides a means of investing in various underlying fund portfolios. You bear the entire investment risk for all amounts you invest in the subaccounts. You may also invest in a fixed account, which offers interest at rates that are guaranteed by Transamerica Life Insurance Company. You may choose any combination of these investment choices.
This prospectus and the underlying fund prospectuses give you important information about the policy 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 Transamerica PrincipiumSM II Variable Annuity, you can obtain a free copy of the Statement of Additional Information (SAI) dated May 1, 2018. Please call us at (800) 525-6205 or write us at: Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499. 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 policy 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 (800)-732-0330. The SEC also maintains a web site (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.
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.
Prospectus Date: May 1, 2018
Statement of Additional Information Date: May 1, 2018

 

The subaccounts available under this policy invest in the following underlying fund portfolios:
SUBACCOUNT UNDERLYING FUND PORTFOLIO
AB Balanced Wealth Strategy Portfolio - Class B AB Balanced Wealth Strategy Portfolio - Class B
State Street Total Return V.I.S. Fund - Class 3 State Street Total Return V.I.S. Fund - Class 3
TA 60/40 Allocation - Service Class Transamerica 60/40 Allocation VP - Service Class
TA AB Dynamic Allocation - Service Class Transamerica AB Dynamic Allocation VP - Service Class
TA Aegon Government Money Market - Service Class Transamerica Aegon Government Money Market VP - Service Class
TA Aegon High Yield Bond - Service Class Transamerica Aegon High Yield Bond VP - Service Class
TA Aegon U.S. Government Securities - Service Class Transamerica Aegon U.S. Government Securities VP - Service Class
TA Barrow Hanley Dividend Focused - Service Class Transamerica Barrow Hanley Dividend Focused VP - Service Class
TA BlackRock Equity Smart Beta 100 - Service Class Transamerica BlackRock Equity Smart Beta 100 VP - Service Class
TA BlackRock Global Allocation - Service Class Transamerica BlackRock Global Allocation VP - Service Class
TA BlackRock Smart Beta 50 - Service Class Transamerica BlackRock Smart Beta 50 VP - Service Class
TA BlackRock Smart Beta 75 - Service Class Transamerica BlackRock Smart Beta 75 VP - Service Class
TA International Equity Index - Service Class Transamerica International Equity Index VP - Service Class
TA Levin Large Cap Value - Service Class Transamerica Levin Large Cap Value VP - Service Class
TA Madison Diversified Income - Service Class Transamerica Madison Diversified Income VP - Service Class
TA Managed Risk - Balanced ETF - Service Class Transamerica Managed Risk - Balanced ETF VP - Service Class
TA Managed Risk - Conservative ETF - Service Class Transamerica Managed Risk - Conservative ETF VP - Service Class
TA Managed Risk - Growth ETF - Service Class Transamerica Managed Risk - Growth ETF VP - Service Class
TA Morgan Stanley Capital Growth - Service Class Transamerica Morgan Stanley Capital Growth VP – Service Class
TA Multi-Managed Balanced - Service Class Transamerica Multi-Managed Balanced VP – Service Class
TA PIMCO Total Return - Service Class Transamerica PIMCO Total Return VP – Service Class
TA PineBridge Inflation Opportunities - Service Class Transamerica PineBridge Inflation Opportunities VP - Service Class
TA T. Rowe Price Small Cap - Service Class Transamerica T. Rowe Price Small Cap VP – Service Class
TA U.S. Equity Index - Service Class Transamerica U.S. Equity Index VP - Service Class
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APPENDIX  
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APPENDIX  
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iii

 

 

GLOSSARY OF TERMS
accumulation unit—An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.
adjusted policy value—The policy value increased or decreased by any excess interest adjustment.
Administrative Office—Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499, (800) 525-6205.
annuitant—The person on whose life any annuity payments involving life contingencies will be based.
annuitize (annuitization)—When you switch from the accumulation period 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.
annuity payment option—A method of receiving a stream of annuity payments selected by the owner.
assumed investment return or AIR— The annual effective rate shown in the contract that is used in the calculation of each variable annuity payment.
cash value—The adjusted policy value less any applicable surrender charge and rider fees (imposed upon surrender).
excess interest adjustment—A positive or negative adjustment to amounts surrendered (both partial or full surrenders) and transfers or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by 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 or partial surrenders 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 options 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 surrender charges or excess interest adjustments.
guaranteed lifetime withdrawal benefit—Any optional benefit under the policy that provides a guaranteed minimum withdrawal benefit, including the Living Benefits Rider, the Retirement Income Max® rider and the Retirement Income Choice® 1.6 rider.
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 plus or minus excess interest adjustments plus the surrender charge on the portion of the requested partial surrender that is subject to the surrender charge plus taxes (on the withdrawal)); plus
• interest credited in the fixed account; plus
• accumulated gains in the separate account; minus
• accumulated losses in the separate account; minus
• service charges, rider fees, premium taxes, transfer fees, and other charges, if any.
policy year—A policy year begins on the policy date and on each anniversary thereafter.
separate account—Separate Account VA B, 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.
subaccount— A subdivision within the separate account, the assets of which are invested in a specified underlying fund portfolio.
1

 

valuation period—The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of those values. Such determination shall be made generally at the close of business on each 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 Office. For some transactions, the Company may accept an electronic notice such as telephone instructions or any other means acceptable to the Company. Such electronic notice must meet the requirements for good order that the Company establishes for such notices.
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SUMMARY
The sections in this summary correspond to sections in this prospectus, which discuss the topics in more detail.
THE ANNUITY POLICY
The flexible premium deferred variable annuity policy offered by Transamerica Life Insurance Company (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 in the “Appendix–Portfolios Associated with the Subaccounts” 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.
PURCHASE
The initial premium payment for nonqualified policies must be at least $5,000 or more, and at least $1,000 for qualified policies, under most circumstances. You must obtain prior Company approval to purchase a policy with an amount less than the stated minimum. However, we do not offer this policy for sale to new policy owners. You can generally add as little as $50 at any time during the accumulation phase.
INVESTMENT CHOICES
You can allocate your premium payments to one of several underlying fund portfolios listed in the “Appendix–Portfolios Associated with the Subaccounts” section in this prospectus and described in the underlying fund portfolio 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. Currently, we do not charge a transfer fee. We reserve the right to impose restrictions and limitations on transfers.
EXPENSES
Note: The following section on expenses and the Annuity Policy Fee Table and expense examples only apply to policies issued on or after the date of this prospectus.
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 of your investment choices.
We may deduct a surrender charge of up to 5% of premium payments surrendered within five years after the premium is paid. We will calculate surrender charges by taking the earnings, if any, out before premium payments.
If you select the Life with Emergency CashSM annuity payment option, then you can surrender your policy after annuity payments have begun. A surrender charge of up to 4% of adjusted 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.
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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 depends on the death benefit option that you select, as follows:
• 0.85% if you do not choose an optional guaranteed minimum death benefit
• 1.00% if you choose the Return of Premium Death Benefit
• 1.20% if you choose the Annual Step-Up Death Benefit
During the accumulation phase, we deduct an annual service charge of no more than $35 from the policy value on each policy anniversary. The charge is waived if either the policy value or the sum of all premium payments, minus all partial surrenders, is at least $50,000.
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.
If you elect the Access Rider, then there is a fee equal to an effective annual rate of 0.35% of the daily net asset value in the subaccounts.
If you elect the Additional Death Distribution (“ADD”), then there is an annual rider fee during the accumulation phase of 0.25% of the policy value.
If you elect the Additional Death Distribution+ Rider (“ADD+”), then there is an annual rider fee during the accumulation phase of 0.55% of the policy value.
If you elect the Living Benefits Rider, then there is an annual rider fee during the accumulation phase of 1.25% of the “principal back” total withdrawal base on each anniversary (“rider anniversary”) of the date the rider was elected.
If you elect the Retirement Income Max® rider, there is an annual rider fee which is disclosed in a Rate Sheet Prospectus Supplement which may be amended by us from time to time.
If you elect the Retirement Income Choice® 1.6 rider, there is a rider fee which is disclosed in a Rate Sheet Prospectus Supplement which may be amended by us from time to time.
The value of the net assets of the subaccounts will reflect the management fee and other expenses incurred by the underlying fund portfolios.
ACCESS TO YOUR MONEY
You can generally take out $500 or more anytime during the accumulation phase (except under certain qualified policies).
You may generally take out up to the free amount free of surrender charges. Amounts surrendered in excess of this free amount may be subject to surrender charges and/or excess interest adjustments. You may have to pay income tax and a tax penalty on any money you take out.
If you have policy value in the fixed account, you may take out any cumulative interest credited free of excess interest adjustments.
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 CashSM annuity payment option.
Partial surrenders will reduce your policy value. Depending on its amount and timing, a partial surrender may considerably reduce or eliminate some of the benefits and guarantees provided by your policy. You should carefully consider whether a partial surrender under a particular circumstance will have a negative impact to your benefits or guarantees. The impact of partial and full surrenders (generally) on your benefits and guarantees is discussed in the corresponding sections of the prospectus describing such benefits and guarantees.
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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 variable annuity payment.
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:
• 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 paid only to the beneficiary if there is no surviving owner.
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 59½ when you take money out, you may incur a 10% federal penalty tax on the taxable earnings.
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”). 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 one of two optional riders that might pay an additional amount on top of the policy death benefit, in certain circumstances. These features are called the “Additional Death Distribution” (“ADD”) and “Additional Death Distribution+ Rider” (“ADD+”). There is an extra charge for these riders.
• Under certain medically related circumstances, you may surrender all or a portion of the policy value without any surrender charge or 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 surrender charges or excess interest adjustments. This feature is called the “Unemployment Waiver.”
• You may generally make transfers and/or change the allocation of additional premium payments by telephone or other electronic means acceptable to the Company. We may restrict or eliminate this feature.
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• 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.”
• You may elect to purchase an optional rider which eliminates all surrender charges during the accumulation phase. You can only elect this rider at the time you purchase your policy. This feature is called the “Access Rider”. There is an extra charge for this rider.
• You may elect to purchase an optional rider which provides you with a guaranteed minimum accumulation benefit and a guaranteed lifetime withdrawal benefit. This feature is called the “Living Benefits Rider.” If you elect this rider, we will monitor your policy value and, as we deem necessary to support the guarantees under the rider, may transfer amounts back and forth between investment choices that we designate and the variable investment choices that you have selected. You may lose the benefit of this rider if you take “excess” withdrawals. There is an extra charge for this rider.
• You may elect to purchase an optional rider which provides you with a guaranteed lifetime withdrawal benefit. This feature is called the “Retirement Income Max® rider.” If you elect the Retirement Income Max® rider, you must allocate 100% of your policy value to one or more “designated investment option(s).” (See “Appendix - Designated Investment Options”.) The designated investment options differ from the designated investment options for the other guaranteed lifetime withdrawal benefits. You may lose the benefit of this rider if you take “excess” withdrawals. There is an extra charge for this rider.
• You may elect to purchase an optional rider which provides you with a guaranteed lifetime withdrawal benefit. This feature is called the “Retirement Income Choice® 1.6 rider.” If you elect the Retirement Income Choice® 1.6 rider, you must allocate 100% of your policy value in certain designated investment choices. You may lose the benefit of this rider if you take “excess” withdrawals. There is an extra charge for this rider.
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 transfer and inheritance 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.
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. 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, 2017) are in “Appendix – Condensed Financial Information” to this prospectus and the SAI.
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INQUIRIES
If you need more information or want to make a transaction, please contact us at:
Transamerica Life Insurance Company
Administrative Office
Attention: Customer Care Group
4333 Edgewood Road NE
Cedar Rapids, IA 52499
(800) 525-6205
You may check your policy at www.transamerica.com. Follow the logon procedures. We cannot guarantee that you will be able to access this site.
You should protect your logon information, because on-line (or telephone) options may be available and could be made by anyone who knows your logon information. We may not be able to verify that the person providing instructions using your logon information is you or someone authorized by you.
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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 fee table applies only to the accumulation phase and reflects the maximum charges unless otherwise noted. During the income phase the fees may be different than those described in the Fee Table. See Notes to Fee Table and Expense Examples, No. 5.
The first section describes the fees and expenses that you will pay at the time that you buy the policy, surrender the policy, transfer cash value between investment options, or request special services. State premium taxes may also be deducted. Excess interest adjustments may be made to amounts surrendered (partial and full), transferred or applied to annuity payment options from cash value from the fixed account. (All fees are maximum for purchases made while this prospectus is effective unless otherwise noted.)
Owner Transaction Expenses:  
Sales Load On Purchase Payments 0%
Maximum Surrender Charge (as a % of premium payments surrendered)(1)  
Base Policy 5%
Transfer Fee(2) $0-$10
Special Service Fee(3) $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(4) $0-$35 per policy
Separate Account Annual Expenses (as a percentage, annually, of average separate account value)(5):  
Base Separate Account Expenses:  
Mortality and Expense Risk Fee 0.70%
Administrative Charge 0.15%
Total Base Separate Account Annual Expenses 0.85%
Optional Separate Account Expenses: (You may only elect one of the guaranteed minimum death benefits listed below)  
Double Enhanced Death Benefit - No Longer Available 0.80%
Annual Step-Up Death Benefit 0.35%
Return of Premium Death Benefit 0.15%
Access Rider 0.35%
Total Separate Account Annual Expenses with Highest Optional Separate Account Expenses 1.55%
Optional Death Benefit Riders: (You may only elect one of the optional riders listed below)  
Additional Death Distribution (annual charge based on policy value) 0.25%
Additional Death Distribution+ (annual charge based on policy value) 0.55%
    
  Maximum
Optional Guaranteed Lifetime Withdrawal Benefit Riders: (You may only elect one of the Guaranteed Lifetime Withdrawal Benefit optional riders listed below)(6)  
Retirement Income Max® rider (annual charge - a % of withdrawal base):*
(for riders issued on or after May 1, 2017) 		 
Base Benefit 2.50%
Retirement Income Choice® 1.6 rider (annual charge - a % of withdrawal base):
(for riders issued on or after May 1, 2017) 		 
Base Benefit Designated Allocation Group A* 2.50%
Base Benefit Designated Allocation Group B* 2.50%
Base Benefit Designated Allocation Group C* 2.50%
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  Maximum
Additional Benefits available with the Retirement Income Choice® 1.6 rider:
(for riders issued on or after May 1, 2017) 		 
Death Benefit (Single Life Option)* 0.55%
Death Benefit (Joint Life Option)* 0.50%
Income EnhancementSM Benefit (Single Life Option)* 0.45%
Income EnhancementSM Benefit (Joint Life Option)* 0.65%
*The Current rider fee will be less than or equal to the stated Maximum. Your rider fee may increase (or decrease) at the time of any automatic step-up. See Automatic Step-Up section. Your rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchase the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the EDGAR system at www.sec.gov (File Number 333-187912). Please note that the maximum fee listed above of 2.50% already includes the additional death benefit and/or income enhancement option as applicable.
  Maximum   Current
Optional Guaranteed Lifetime Withdrawal Benefit Riders(6): (You may only elect one of the optional riders listed below)      
Living Benefits Rider (annual charge - a % of Principal Back Total Withdrawal Base) 1.25%   1.25%
Retirement Income Max® rider (annual charge - a % of withdrawal base):
(for riders issued December 12, 2011 to April 30, 2017) 		     
Base Benefit 2.00%   1.25%
Retirement Income Choice® 1.6 rider (annual charge - a % of withdrawal base):
(for riders issued May 1, 2014 to April 30, 2017) 		     
Base Benefit Designated Allocation Group A 2.20%   1.45%
Base Benefit Designated Allocation Group B 1.85%   1.10%
Base Benefit Designated Allocation Group C 1.45%   0.70%
Additional Benefits available with the Retirement Income Choice® 1.6 rider:
(for riders issued May 1, 2014 to April 30, 2017) 		     
Death Benefit (Single Life Option) 0.40%   0.40%
Death Benefit (Joint Life Option) 0.35%   0.35%
Income EnhancementSM Benefit (Single Life Option) 0.30%   0.30%
Income EnhancementSM Benefit (Joint Life Option) 0.50%   0.50%
    
  Maximum   Current
Optional Guaranteed Lifetime Withdrawal Benefit Riders(6): (You may only elect one of the optional riders listed below)      
Living Benefits Rider (annual charge - a % of Principal Back Total Withdrawal Base) 1.25%   1.25%
Retirement Income Max® rider (annual charge - a % of withdrawal base):
(for riders issued prior to December 12, 2011) 		     
Base Benefit 1.75%   1.00%
Retirement Income Choice® 1.6 rider (annual charge - a % of withdrawal base):
(for riders issued prior to May 1, 2014) 		     
Base Benefit Designated Allocation Group A 2.30%   1.55%
Base Benefit Designated Allocation Group B 1.85%   1.10%
Base Benefit Designated Allocation Group C 1.45%   0.70%
Additional Benefits available with the Retirement Income Choice® 1.6 rider:
(for riders issued prior to May 1, 2014) 		     
Death Benefit (Single Life Option) 0.40%   0.40%
Death Benefit (Joint Life Option) 0.35%   0.35%
Income EnhancementSM Benefit (Single Life Option) 0.30%   0.30%
Income EnhancementSM Benefit (Joint Life Option) 0.50%   0.50%
    
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  Maximum   Current
Optional Guaranteed Lifetime Withdrawal Benefit Riders - No Longer Available:      
Retirement Income Choice® rider - Single Life Option: (annual charge - a % of Withdrawal Base)      
Base Benefit 2.10%   1.35%
Additional Benefits available with the Retirement Income Choice® rider:      
Death Benefit 0.25%   0.25%
Income EnhancementSM Benefit 0.15%   0.15%
Total Retirement Income Choice® Rider Fees (Single Life) with Highest Combination of Benefits 2.50%   1.75%
Retirement Income Choice® rider - Joint Life Option (annual charge - a % of Withdrawal Base):      
Base Benefit 2.40%   1.65% (1)
Additional Benefits available with the Retirement Income Choice® rider:      
Death Benefit 0.20%   0.20%
Income EnhancementSM Benefit 0.30%   0.30%
Total Retirement Income Choice® Rider Fees (Joint Life) with Highest Combination of Benefits 2.90%   2.15%
Retirement Income Choice® with Double Withdrawal Base Benefit rider - Single Life Option (annual charge - a % of Withdrawal Base):      
Base Benefit 2.40%   1.65% (1)
Additional Benefits available with the Retirement Income Choice® with Double Withdrawal Base Benefit rider:      
Death Benefit 0.25%   0.25%
Income EnhancementSM Benefit 0.15%   0.15%
Total Retirement Income Choice® with Double Withdrawal Base Benefit Rider Fees (Single Life) with Highest Combination of Benefits 2.80%   2.05%
Retirement Income Choice® with Double Withdrawal Base Benefit rider - Joint Life Option (annual charge - a % of Withdrawal Base):      
Base Benefit 2.40%   1.65% (1)
Additional Benefits available with the Retirement Income Choice® with Double Withdrawal Base Benefit rider:      
Death Benefit 0.20%   0.20%
Income EnhancementSM Benefit 0.30%   0.30%
Total Retirement Income Choice® with Double Withdrawal Base Benefit Rider Fees (Joint Life) with Highest Combination of Benefits 2.90%   2.15%
Retirement Income Choice® 1.4 rider (annual charge - a % of withdrawal base):      
Base Benefit Designated Allocation Group A 2.30%   1.55%
Base Benefit Designated Allocation Group B 1.85%   1.10%
Base Benefit Designated Allocation Group C 1.45%   0.70%
Additional Benefits available with the Retirement Income Choice® 1.4 rider:      
Death Benefit (Single Life Option) 0.40%   0.40%
Death Benefit (Joint Life Option) 0.35%   0.35%
Income EnhancementSM Benefit (Single Life Option) 0.30%   0.30%
Income EnhancementSM Benefit (Joint Life Option) 0.50%   0.50%
Total Retirement Income Choice® 1.4 Rider Fees (Joint Life) with Highest Combination of Benefits 3.15%   2.40%
Retirement Income Choice® 1.2 rider (annual charge - a % of withdrawal base):      
Base Benefit Open Allocation Option 2.30%   1.55%
Base Benefit Designated Allocation Group A 2.30%   1.55%
Base Benefit Designated Allocation Group B 1.85%   1.10%
Base Benefit Designated Allocation Group C 1.45%   0.70%
Additional Benefits available with the Retirement Income Choice® 1.2 rider:      
Death Benefit (Single Life Option) 0.40%   0.40%
Death Benefit (Joint Life Option) 0.35%   0.35%
Income EnhancementSM Benefit (Single Life Option) 0.30%   0.30%
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  Maximum   Current
Income EnhancementSM Benefit (Joint Life Option) 0.50%   0.50%
Total Retirement Income Choice® 1.2 Rider Fees (Joint Life) with Highest Combination of Benefits and Allocation Options 3.15%   2.40%
Income LinkSM rider (annual charge a - % of withdrawal base):      
Base Benefit 2.00%   1.25%
(1) The current fee is 1.55% for policyowners who purchase the base benefit only with no additional benefits elected.
The next section shows the lowest and highest total operating expenses charged by the underlying fund portfolios for the year ended December 31, 2017 (before any fee waiver or expense reimbursements). Expenses may be higher or lower in future years. More detail concerning each portfolio’s fees and expenses is contained in the prospectus for each portfolio.
Total Portfolio Annual Operating Expenses (Expenses that are deducted from portfolio assets, including management fees, distribution and/or service 12b-1 fees, and other expenses)(7):  
Lowest Gross 0.58%
Highest Gross 15.95%
Expense Examples(8):
The following Examples are intended to help you compare the cost of investing in the policy with the cost of investing in other variable annuity policies. These costs include owner transaction expenses, policy fees, separate account annual expenses, and portfolio fees and expenses.
The Example assumes that you invest $10,000 in the policy for the time periods indicated. The Example also assumes that your policy has a 5% return each year, the highest Total Portfolio Annual Operating Expenses of any of the portfolios for the year ended December 31, 2017, and the base policy with the combination of available optional features or riders with the highest fees and expenses, Annual Step-Up Death Benefit, Additional Death Distribution+ rider and Retirement Income Choice® 1.6 rider – Joint Life with additional Death Benefit and Income EnhancementSM options (prior to May 1, 2014). Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
If the policy is surrendered at the end of the applicable time period (without Access Rider):
1 Year $ 2,328
3 Years $ 5,221
5 Years $ 7,387
10 Years $11,008
If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy (without Access Rider):
1 Year $ 1,878
3 Years $ 4,951
5 Years $ 7,297
10 Years $11,008
If the policy is surrendered at the end of the applicable time period (with Access Rider):
1 Year $ 1,907
3 Years $ 5,010
5 Years $ 7,359
10 Years $11,027
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If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy (with Access Rider):
1 Year $ 1,907
3 Years $ 5,010
5 Years $ 7,359
10 Years $11,027
The Example assumes that you invest $10,000 in the policy for the time periods indicated. The Example also assumes that your policy has a 5% return each year, the highest Total Portfolio Annual Operating Expenses of any of the portfolios for the year ended December 31, 2017, and the base policy with the combination of available optional features or riders with the highest fees and expenses, Annual Step-Up Death Benefit, Additional Death Distribution+ rider and Retirement Income Choice® 1.6 rider - Joint Life with additional Death Benefit and Income EnhancementSM options (on or after May 1, 2014). Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
If the policy is surrendered at the end of the applicable time period (without Access Rider):
1 Year $ 2,319
3 Years $ 5,197
5 Years $ 7,351
10 Years $10,955
If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy (without Access Rider):
1 Year $ 1,869
3 Years $ 4,927
5 Years $ 7,261
10 Years $10,955
If the policy is surrendered at the end of the applicable time period (with Access Rider):
1 Year $ 1,898
3 Years $ 4,986
5 Years $ 7,324
10 Years $10,975
If the policy is annuitized at the end of the applicable time period or if you do not surrender your policy (with Access Rider):
1 Year $ 1,898
3 Years $ 4,986
5 Years $ 7,324
10 Years $10,975
Please remember that these Examples are illustrations and do not represent past or future expenses. Your actual expenses may be lower or higher than those reflected in the Examples. Similarly, your rate of return may be more or less than the 5% assumed in the Examples.
For information concerning compensation paid for the sale of the policies, see OTHER INFORMATION - Distributor of the Policies.
Notes to Fee Table and Expense Examples
Owner Transaction Expenses:
1) Maximum Surrender Charge: The surrender charge, if any is imposed, applies to each premium payment, regardless of how policy value is allocated among the investment options. The surrender charge decreases based on the number of years since the premium payment was made.
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If you select the Life with Emergency CashSM annuity payment option, you will be subject to a surrender charge after the annuity commencement date. See EXPENSES.
2) 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. Currently, we do not charge a transfer fee, but reserve the right to do so.
3) Special Service Fees: We may deduct a charge for special services, including overnight delivery; duplicate policies; non-sufficient checks on new business; duplicate Form 1099 and Form 5498 tax forms; duplicate disclosure documents and semi-annual reports; check copies; printing and mailing previously submitted forms; and asset verification requests from mortgage companies. We may charge a fee for each service performed. In addition, we may consider as special services customer initiated changes, modifications and transactions which are submitted in such a manner as to require us to incur additional processing costs.
4) Annual Service Charge:
Annual Service Charge: The annual service charge is assessed per policy 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 $50,000.
5) 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. During the income phase, the mortality and expense risk fee is at an annual rate of 1.25%
Optional Separate Account Expenses: Any optional separate account expense is in addition to the mortality and expense risk and administrative fees. 
Access Rider: The fee is a percentage of the daily net asset value in the separate account.
Total Separate Account Annual Expenses with Highest Optional Separate Account Expenses: This reflects the base separate account expenses, the Annual Step-Up Death Benefit fee, but does not include any annual optional rider fees. The Double Enhanced Death Benefit is not included in the total since it is no longer available. The death benefits are mutually exclusive.
OPTIONAL RIDERS
In some cases, riders to the policy are available that provide optional benefits. There are additional fees (annualized fee charged on a yearly or quarterly basis, depending on the rider) for those riders.
Optional Death Benefit Riders:
Additional Death Distribution Rider and Additional Death Distribution+ Rider: This annual fee is a percentage of the policy value and is only deducted during the accumulation phase.
6) Optional Guaranteed Lifetime Withdrawal Benefit Riders:
Living Benefits Rider: The annual fee is a percentage of the “principal back” Total Withdrawal Base. The “principal back” Total Withdrawal Base on the rider date is the policy value. After the rider date, the “principal back” Total Withdrawal Base is equal to: the “principal back” Total Withdrawal Base on the rider date; plus subsequent premium payments; less subsequent “principal back” adjusted partial withdrawals.
Retirement Income Max® Rider and Retirement Income Choice® 1.6 Rider - Withdrawal Base: We use the withdrawal base to calculate the rider withdrawal amount. The withdrawal base on the rider date is the policy value. For riders issued prior to the date of this prospectus, the withdrawal percentage, growth percentage and fee information can be found in the Statement of Additional Information “Appendix - Prior Withdrawal/Growth Percentages and Rider Fees”.
Optional Guaranteed Lifetime Withdrawal Benefit Riders - No Longer Available
Retirement Income Choice® rider, Retirement Income Choice® with Double Withdrawal Base Benefit rider, Retirement Income Choice® 1.4 rider and Retirement Income Choice® 1.2 rider - base benefit: The fee is a percentage of the Withdrawal Base. The Withdrawal Base on the rider date is the policy value. During any rider year, the Withdrawal Base is equal to the Withdrawal Base on the rider date or most recent rider anniversary; plus subsequent premium payments, less subsequent Withdrawal Base adjustments. 
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Retirement Income Choice® Rider, Retirement Income Choice® with Double Withdrawal Benefit Rider, Retirement Income Choice® 1.4 Rider and Retirement Income Choice® 1.2 Rider - Additional Benefits (Single Life and Joint Life Options): If you elected the Retirement Income Choice® rider, Retirement Income Choice® with Double Withdrawal Benefit rider, Retirement Income Choice® 1.4 rider or Retirement Income Choice® 1.2 rider with one or more of the following options - Death Benefit or Income EnhancementSM Benefit. The charge for each of these options is a percentage of the Withdrawal Base and is in addition to the base benefit fee.
Maximum Total Retirement Income Choice® 1.4 and Retirement Income Choice® 1.2 Rider Fees with Highest Combination of Benefits: After the fifth rider anniversary, the base benefit rider fees can increase when there is an automatic step-up. These fee totals reflect the maximum fee increase resulting from an automatic step-up of the Withdrawal Base while the rider is in effect.
Maximum Total Retirement Income Choice® 1.4 and Retirement Income Choice® 1.2 Rider Fees (Joint Life) with Highest Combination of Benefits: This reflects the Base Benefit Designated Allocation Group A (Maximum), the Death Benefit (Joint Life Option), plus the Income EnhancementSM Benefit (Joint Life Option).
Current Total Retirement Income Choice® 1.4 and Retirement Income Choice® 1.2 Rider Fees (Joint Life) with Highest Combination of Benefits: This reflects the Base Benefit Designated Allocation Group A (Current), the Death Benefit (Joint Life Option), plus the Income EnhancementSM Benefit (Joint Life Option).
Maximum Total Income LinkSM Rider Fees: After the first rider anniversary, the base benefit rider fees can increase when there is an automatic step-up. The Withdrawal Base on the rider date is the policy value. This fee total reflects the maximum fee increase resulting from an automatic step-up of the Withdrawal Base while the rider is in effect.
7) 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 advisers or managers. We have not verified the accuracy of information provided by unaffiliated fund portfolios. Actual future expenses of the portfolios may be greater or less than those shown in the Table. “Gross” expense figures do not reflect any fee waivers or expense reimbursements. Actual expenses may have been lower than those shown in the Table.
8) Expense Examples:
Expense Examples: The Example does not reflect premium tax charges, special service fees, or transfer fees. Different fees and expenses not reflected in the Example may be assessed during the income phase of the policy.
14

 

THE ANNUITY POLICY
This prospectus describes the Transamerica PrincipiumSM II Variable Annuity 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 premium payments of $50 or more until the annuity commencement date. You are not required to make any additional premium payments.
The policy is a “variable” annuity because the value of your policy can go up or down based on the performance of your subaccounts. If you invest in the separate account, the amount of money you are able to accumulate in your policy during the accumulation phase depends upon the performance of your subaccounts. You could lose the amount you allocate to the separate account. The amount of annuity payments you receive from the separate account also depends upon the investment performance of your subaccounts for the income phase. 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 variable 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.
Do not purchase this policy if you plan to use it, or any of its riders, for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme. Your contract is not intended or designed to be traded on any stock exchange or secondary market. By purchasing this contract, you represent and warrant that you are not using the contract, or any of its riders for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme.
PURCHASE
Policy Issue Requirements
The Company will not issue a policy unless:
• the Company receives in good order (See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order) all information needed to issue the policy;
• the Company receives in good order (at our Administrative 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).
• the owner and annuitant have an immediate familial relationship.
Please note, certain riders described herein may require a younger age. Please carefully read the applicable rider sections regarding any age limitations.
We reserve the right to reject any application or premium payment.
Premium Payments
You should make checks for premium payments payable only to Transamerica Life Insurance Company and send them to the Administrative Office. Your check must be honored in order for us to pay any associated annuity payments and benefits due under the policy.
We do not accept cash. We reserve the right to not accept third party checks. A third party check is a check that is made payable to one person who endorses it and offers it as payment to a second person. Checks should normally be payable to Transamerica Life Insurance Company, however, in some circumstances, at our discretion we may accept third party checks that are from a rollover or transfer from other financial institutions. Any third party checks not accepted by us will be returned.
We reserve the right to reject or accept any form of payment. Any unacceptable forms of payment will be returned.
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Initial Premium Requirements
The initial premium payment for nonqualified policies must be at least $5,000, and at least $1,000 for qualified policies. 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 payment 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 in good order. If we are unable to credit your initial premium payment, we will contact you or your financial intermediary, if applicable, within five business days and explain why. We will also return your initial premium payment at that time unless you instruct us to hold it and credit it within two business days after your information is both complete and in good order.
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 in good order at our Administrative Office. Additional premium payments must be received in good order before the close of a regular business session of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time) to get same-day pricing of the additional premium payment. Additional premium payments received in good order on non-market days or after our close of business on market days will receive next-day pricing. See OTHER INFORMATION – Sending Forms and Transaction Requests in Good Order.
Maximum Total Premium Payments
For issue ages 0-80, we reserve the right to require prior approval of any cumulative premium payments over $1,000,000 (this includes subsequent premium payments) for policies with the same owner or same annuitant issued by us or an affiliate. We may approve premium payments over $1,000,000 but restrict access to certain optional benefits. For issue ages over 80, we reserve the right to require prior approval of any cumulative premium payments over $500,000 (this includes subsequent premium payments) for policies with the same owner or same annuitant issued by us or an affiliate. If you do not obtain prior approval for premium payments in excess of the dollar amounts listed above, the business will be deemed not in good order.
Allocation of Premium Payments
When you purchase a policy, we will allocate your premium payment to the investment choices you select. Your allocation must be in whole percentages and must total 100%. We will allocate additional premium payments the same way, unless you request a different allocation. You could lose the amount you allocate to the subaccounts.
If you allocate premium payments to the Dollar Cost Averaging program, (if it is available), you must give us instructions regarding the subaccount(s) to which transfers are to be made or we cannot accept your premium payment.
You may change allocations for future additional premium payments by sending written instructions to our Administrative Office, or by telephone, or other electronic means acceptable to us, subject to the limitations described in ADDITIONAL FEATURES - Telephone and Electronic Transactions, or any other means acceptable to us. The allocation change will apply to premium payments received on or after the date we receive the change request in good order.
We reserve the right to restrict or refuse any premium payment.
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. Regular trading on the New York Stock Exchange usually closes at 4:00 p.m., Eastern time. Holidays are generally not business days.
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INVESTMENT OPTIONS
The Transamerica PrincipiumSM II Variable Annuity offers you a means of investing in various underlying fund portfolios offered by different investment companies (by investing in the corresponding subaccounts). The companies that provide investment advice and administrative services for the underlying fund portfolios offered through this Policy are listed in the “Appendix - Portfolios Associated with the Subaccounts”.
The general public may not purchase shares of any of these underlying fund portfolios. The names and investment objectives and policies may be similar to other portfolios managed by the same investment adviser or manager that are sold directly to the public. You should not expect the investment results of the underlying fund portfolios to be the same as those of other portfolios.
More detailed information, including an explanation of the portfolios' fees and investment objectives, may be found in the current prospectuses for the underlying fund portfolios, which accompany this prospectus. You should read the prospectuses for the underlying fund portfolios carefully before you invest.
Note: If you received a summary prospectus for any of the underlying fund portfolios listed in “Appendix - Underlying Fund Portfolios Associated with the Subaccounts,” please follow the instructions on the first page of the summary prospectus to obtain a copy of the full underlying fund prospectus or its statement of additional information.
Selection of Underlying Fund Portfolios
The underlying fund portfolios offered through this variable annuity are selected by us, and we may consider various factors, including, but not limited to, asset class coverage, the strength of the adviser's or sub-adviser's reputation and tenure, brand recognition, volatility, hedgeability, 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 premium payments and/or transfers of cash value if we determine that a portfolio no longer satisfies one or more of the selection criteria, and/or if the portfolio has not attracted significant allocations from owners. We have included the Transamerica Series Trust (“TST”) underlying fund portfolios at least in part because they are managed by one of our affiliates, Transamerica Asset Management, Inc. (“TAM”).
We have developed this variable annuity product in cooperation with one or more distributors, and may include certain underlying fund portfolios based on their recommendations. Their selection criteria may differ from our selection criteria.
If you elect a guaranteed lifetime withdrawal benefit rider, as discussed later in this prospectus, we require you to allocate your policy value to designated investment options. This requirement is intended to reduce the Company’s costs and risks associated with offering the rider, and we select which underlying fund portfolios to make available under the riders with these factors in mind. Certain designated investment options invest in fund portfolios with volatility control strategies, which could limit full participation in market gains and the growth of the riders. See the Investment Restrictions section below for information regarding the potential impact of volatility control strategies on the value of the guaranteed lifetime withdrawal benefit riders.
Designated investment options, including those that invest in fund portfolios with volatility control strategies, are also available to contract owners who do not elect a guaranteed lifetime withdrawal benefit rider. Although volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns, such strategies could limit your full participation in market gains and ability to maximize potential growth of your policy value.
You are responsible for choosing the subaccounts which invest in the underlying fund portfolios, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Because investment risk is borne by you, decisions regarding investment allocations should be carefully considered. We do not recommend or endorse any particular underlying fund portfolio and we do not provide investment advice.
In making your investment selections, we encourage you to thoroughly investigate all of the information regarding the underlying fund portfolios that are available to you, including each underlying fund portfolio's prospectus, statement of additional information and annual and semi-annual reports. Other sources such as the underlying fund's website provide more current information, including information about any regulatory actions or investigations relating to a fund or underlying fund portfolio. After you select underlying fund portfolios for your initial premium payment, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate.
You bear the risk of any decline in the cash value of your policy resulting from the performance of the underlying fund portfolios you have chosen.
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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.
We reserve the right to limit the number of subaccounts you are invested in at any one time.
If you elect certain optional riders, you will be subject to investment restrictions. In the future, we may change the investment restrictions.
Not all subaccounts may be available for all policies, in all states, or through all financial intermediary firms.
Addition, Deletion, or Substitution of Investment Options
We cannot and do not guarantee that any of the subaccounts will always be available for premium payments, allocations, or transfers. We retain the right, subject to any applicable law, to make certain changes in the separate account and its investment options. We reserve the right to eliminate the shares of any portfolio held by a subaccount and to substitute shares of another portfolio of the underlying fund portfolios, or of another registered open-end management investment company for the shares of any portfolio. To the extent required by applicable law, substitutions of shares attributable to your interest in a subaccount will not be made without prior notice to you and prior regulatory approval. Nothing contained herein shall prevent the separate account from purchasing other securities for other series or classes of variable annuity policies, or from affecting an exchange between series or classes of variable annuity policies on the basis of your requests.
New subaccounts may be established when, in our sole discretion, marketing, tax, investment or other conditions warrant. Any new subaccounts may be made available to existing owners on a basis to be determined by us. Each additional subaccount will purchase shares in an underlying fund portfolio or other investment vehicle. We may also close one or more subaccounts if, in our sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any subaccount is closed, we will notify you and request a reallocation of the amounts invested in the closed subaccount. If we do not receive additional instructions, any subsequent premium payments or transfers (including dollar cost averaging transactions or asset rebalance programs transactions) into a closed or liquidated subaccount will be re-allocated to the remaining available investment options according to the investment allocation instructions you previously provided. If your previous investment allocation instructions do not include any available investment options, we will require new instructions. If we do not receive new instructions, the requested transaction will be canceled and any premium payment will be returned. Under asset rebalance programs the value remaining in the closed subaccount will be excluded from any future rebalancing. The value of the closed subaccount will continue to fluctuate due to portfolio performance, and may exceed the original rebalance percentages you requested. As you consider your overall investment strategy within your annuity, you should also consider whether or not to re-allocate the value remaining in the closed subaccount to another investment option. If you decide to re-allocate the value of the closed subaccount, you will need to provide us with instructions to achieve your goal. Under certain situations involving annuitizations (e.g., policy reached maximum annuity commencement date) if an investment option is closed to new investment, the amount that would have been allocated thereto will instead be used to purchase annuity units pro-rata in the other investment options you have purchased accumulation units in and which are open to new investment. Moreover, in certain situations involving death benefit adjustments for continued policies, if an investment option is closed to new investment, the amount that would have been allocated thereto will instead be allocated pro-rata to the other current investment options you have value allocated to and which are open to new investment.
In the event of any such substitution or change, we may, by appropriate endorsement, make such changes in the policies as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the policies, the separate account may be (1) operated as a management company under the 1940 Act or any other form permitted by law, (2) deregistered under the 1940 Act in the event such registration is no longer required or (3) combined with one or more other separate accounts. To the extent permitted by applicable law, we also may (1) transfer the assets of the separate account associated with the policies to another account or accounts, (2) restrict or eliminate any voting rights of owners or other persons who have voting rights as to the separate account, (3) create new separate accounts, (4) add new subaccounts to or remove existing subaccounts from the separate account, or combine subaccounts, or (5) add new underlying fund portfolios, or substitute a new underlying fund portfolio for an existing underlying fund portfolio.
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In addition, a subaccount could become no longer available due to the liquidation of its corresponding underlying fund portfolio. To the extent permitted by applicable law, upon advance notice to you and unless you otherwise instruct us, we will:
1)  Re-allocate any policy value in the liquidated fund to the money market subaccount or a subaccount investing in another underlying fund portfolio designated by us; and
2)  Allocate any subsequent Purchase Payments and/or transfers (including Dollar Cost Averaging transactions or asset rebalance programs transactions) to the other subaccounts you have selected.
The Fixed Account
Premium payments allocated and amounts transferred to the fixed account become part of our general account. Interests in the general account have not been registered under the Securities Act of 1933 (the “1933 Act”), nor is the general account registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are generally subject to the provisions of the 1933 or 1940 Acts. Disclosures relating to interests in the general account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy of statements made in a registration statement.
While we do not guarantee that the fixed account will always be available for investment, we do guarantee that the interest credited to the fixed account 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 option by giving us notice within 30 days before the end of the expiring guaranteed period.
Surrenders, withdrawals, transfers, and amount applied to an annuity payment option 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). See ACCESS TO YOUR MONEY - Excess Interest Adjustment for more information about when an excess interest adjustment applies. This adjustment will also be made to amounts that you apply to an annuity payment option. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum. Please see “Appendix – Excess Interest Adjustment Examples” for an example showing the effect of a hypothetical excess interest adjustment calculation.
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 non-forfeiture law at the time the policy is issued.
If you select the fixed account, your money will be placed with our other general assets. The amount of money you are able to accumulate in the fixed account during the accumulation phase depends upon the total interest credited. The amount of each annuity payment you receive during the income phase from the fixed portion of your policy will remain level for the entire income phase. The interest credited as well as principal invested in the fixed account is based on our claims-paying ability.
We reserve the right to refuse any premium payment or transfer to the fixed account.
Transfers
During the accumulation phase, you may make transfers to or from any investment option within certain limitations.
Transfers out of a guaranteed period option of the fixed account are limited to the following:
• Transfers at the end of a guaranteed period. 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, including transfers in connection with the Portfolio Allocation Method discussed later in this prospectus, 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.  (Note: This restriction may prolong the period of time it takes to transfer the full amount in the guaranteed period option of the fixed account.  You should carefully consider whether investment in the fixed account meets your needs and investment criteria.) Please see “Appendix - Excess Interest Adjustment Examples” for an example showing the effect of a hypothetical excess interest adjustment calculation.
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In general, each transfer must be at least $500, or the entire subaccount value if less than $500. Transfers of interest from a guaranteed period option of the fixed account must be at least $50. If less than $500 remains as a result of the transfer, then we reserve the right to include that amount in the transfer. Transfer requests must be received in good order while the New York Stock Exchange is open for regular trading to get same-day pricing of the transaction. Transfer requests received in good order on non-market days or after our close of business on market days will get next-day pricing. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
The number of transfers permitted may be limited and a $10 charge for each transfer in excess of 12 in any policy year may apply. We reserve the right to prohibit transfers to the fixed account.
During the income phase, you may transfer values out of any subaccount; however, you cannot transfer values out of the fixed account. The minimum amount that can be transferred during this phase is the lesser of $10 of monthly income, or the entire monthly income of the annuity units in the subaccount from which the transfer is being made.
Transfers made by telephone, or other electronic means acceptable to us, are subject to the limitations described in ADDITIONAL FEATURES - Telephone and Electronic Transactions.
Market Timing and Disruptive Trading
Statement of Policy. This variable annuity policy was not designed to accommodate market timing or frequent or large transfers among the subaccounts or between the subaccounts and the fixed account. (Both frequent and large transfers may be considered disruptive.)
Market timing and disruptive trading can adversely affect you, other owners, beneficiaries and underlying fund portfolios. The adverse effects may include: (1) dilution of the interests of long-term investors in a subaccount if purchases or transfers into or out of an underlying fund portfolio are made at prices that do not reflect an accurate value for the underlying fund portfolio’s investments (some market timers attempt to do this through methods known as “time-zone arbitrage” and “liquidity arbitrage”); (2) an adverse effect on portfolio management, such as (a) impeding a portfolio manager’s ability to seek or sustain an investment objective; (b) causing the underlying fund portfolio to maintain a higher level of cash than would otherwise be the case; or (c) causing an underlying fund portfolio to liquidate investments prematurely (or otherwise at an inopportune time) in order to pay withdrawals or transfers out of the underlying fund portfolio; and (3) increased brokerage and administrative expenses. These costs are borne by all owners invested in those subaccounts, not just those making the transfers.
We have developed policies and procedures with respect to market timing and disruptive trading (which vary for certain subaccounts at the request of the corresponding underlying fund portfolios) and we do not make special arrangements or grant exceptions to accommodate market timing or potentially disruptive trading. As discussed herein, we cannot detect or deter all market timing or potentially disruptive trading. Do not invest with us if you intend to conduct market timing or potentially disruptive trading.
Detection. We employ various means in an attempt to detect and deter market timing and disruptive trading. However, despite our monitoring we may not be able to detect nor halt all harmful trading. In addition, because other insurance companies (and retirement plans) with different policies and procedures may invest in the underlying fund portfolios, we cannot guarantee that all harmful trading will be detected or that an underlying fund portfolio will not suffer harm from market timing and disruptive trading among subaccounts of variable products issued by these other insurance companies or retirement plans.
Deterrence. If we determine you or anyone acting on your behalf is engaged in market timing or disruptive trading, we may take one or more actions in an attempt to halt such trading. Your ability to make transfers is subject to modification or restriction if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other owners (or others having an interest in the variable insurance products). As described below, restrictions may take various forms, but under our current policies and procedures will include loss of expedited transfer privileges. We consider transfers by telephone, fax, overnight mail, or the Internet to be “expedited” transfers. This means that we would accept only written transfer requests with an original signature transmitted to us only by U.S. mail. We may also restrict the transfer privileges of others acting on your behalf, including your registered representative or an asset allocation or investment advisory service.
We reserve the right to reject any premium payment or transfer request from any person without prior notice, if, in our judgment, (1) the premium payment or transfer, or series of premium payments or transfers, would have a negative impact on an underlying fund portfolio's operations, or (2) if an underlying fund portfolio would reject or has rejected our purchase order or has instructed us not to allow that purchase or transfer, or (3) because of a history of market timing or disruptive trading. We may impose other restrictions on transfers, or even prohibit transfers for any owner who, in our view, has abused, or appears likely to abuse, the transfer privilege on a case-by-case basis. We may, at any time and without prior notice, discontinue transfer privileges, modify our procedures, impose holding period requirements or limit the number, size, frequency, manner, or timing of transfers we permit. Because determining whether to impose any such special restrictions depends on our judgment and discretion, it is possible that some owners could engage
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in disruptive trading that is not permitted for others. We also reserve the right to reverse a potentially harmful transfer if an underlying fund portfolio refuses or reverses our order; in such instances some owners may be treated differently than others in that some transfers may be reversed and others allowed. For all of these purposes, we may aggregate two or more trades or variable insurance products that we believe are connected by owner or persons engaged in trading on behalf of owners.
In addition, transfers for multiple policies invested in the Transamerica Series Trust underlying fund portfolios which are submitted together may be disruptive at certain levels. At the present time, such aggregated transactions likely will not cause disruption if less than one million dollars total is being transferred with respect to any one underlying fund portfolio (a smaller amount may apply to smaller portfolios). Please note that transfers of less than one million dollars may be disruptive in some circumstances and this general amount may change quickly.
For policies with Portfolio Allocation Method or Open Allocation Method, the effect of transfers pursuant thereto may be considered disruptive for certain underlying fund portfolios. As a result, policy owners using Portfolio Allocation Method or Open Allocation Method may have to change their selected underlying fund portfolios. We will contact you in the event this occurs.
Please note: If you engage a third party investment adviser for asset allocation services, then you may be subject to these transfer restrictions because of the actions of your investment adviser in providing these services.
In addition to our internal policies and procedures, we will administer your variable annuity to comply with any applicable state, federal, and other regulatory requirements concerning transfers. We reserve the right to implement, administer, and charge you for any fee or restriction, including redemption fees, imposed by any underlying fund portfolio. To the extent permitted by law, we also reserve the right to defer the transfer privilege at any time that we are unable to purchase or redeem shares of any of the underlying fund portfolios.
Under our current policies and procedures, we do not:
• impose redemption fees on transfers; or
• expressly limit the number or size of transfers in a given period except for certain subaccounts where an underlying fund portfolio has advised us to prohibit certain transfers that exceed a certain size; or
• provide a certain number of allowable transfers in a given period.
Redemption fees, transfer limits, and other procedures or restrictions imposed by the underlying funds or our competitors may be more or less successful than ours in deterring market timing or other disruptive trading and in preventing or limiting harm from such trading.
In the absence of a prophylactic transfer restriction (e.g., expressly limiting the number of trades within a given period or limiting trades by their size), it is likely that some level of market timing and disruptive trading will occur before it is detected and steps taken to deter it (although some level of market timing and disruptive trading can occur with a prophylactic transfer restriction). As noted above, we do not impose a prophylactic transfer restriction and, therefore, it is likely that some level of market timing and disruptive trading will occur before we are able to detect it and take steps in an attempt to deter it.
Please note that the limits and restrictions described herein are subject to our ability to monitor transfer activity. Our ability to detect market timing or disruptive trading may be limited by operational and technological systems, as well as by our ability to predict strategies employed by owners (or those acting on their behalf) to avoid detection. As a result, despite our efforts to prevent harmful trading activity among the variable investment options available under this variable insurance product, there is no assurance that we will be able to detect or deter market timing or disruptive trading by such owners or intermediaries acting on their behalf. Moreover, our ability to discourage and restrict market timing or disruptive trading may be limited by decisions of state regulatory bodies and court orders that we cannot predict.
Furthermore, we may revise our policies and procedures in our sole discretion at any time and without prior notice, as we deem necessary or appropriate (1) to better detect and deter harmful trading that may adversely affect other owners, other persons with material rights under the variable insurance products, or underlying fund shareholders generally, (2) to comply with state or federal regulatory requirements, or (3) to impose additional or alternative restrictions on owners engaging in market timing or disruptive trading among the investment options under the variable insurance product. In addition, we may not honor transfer requests if any variable investment option that would be affected by the transfer is unable to purchase or redeem shares of its corresponding underlying fund portfolio.
Underlying Fund Portfolio Frequent Trading Policies. The underlying fund portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares. Underlying fund portfolios may, for example, assess a redemption fee (which we reserve the right to collect) on shares held for less than a certain period of time. The prospectuses for the underlying fund portfolios describe any such policies and procedures. The frequent trading policies and
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procedures of an underlying fund portfolio may be different, and more or less restrictive, than the frequent trading policies and procedures of other underlying fund portfolios and the policies and procedures we have adopted for our variable insurance products to discourage market timing and disruptive trading. Owners should be aware that we do not monitor transfer requests from owners or persons acting on behalf of owners against, nor do we apply, the frequent trading policies and procedures of the respective underlying fund portfolios that would be affected by the transfers.
Owners should be aware that we are required to provide to an underlying fund portfolio or its payee, promptly upon request, certain information about the trading activity of individual owners, and to restrict or prohibit further purchases or transfers by specific owners or persons acting on their behalf, identified by an underlying fund portfolio as violating the frequent trading policies established for the underlying fund portfolio.
Omnibus Orders. Owners and other persons with material rights under the variable insurance products also should be aware that the purchase and redemption orders received by the underlying fund portfolios generally are “omnibus” orders from intermediaries such as retirement plans and separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and individual owners of variable insurance products. The omnibus nature of these orders may limit the underlying fund portfolios' ability to apply their respective frequent trading policies and procedures.
We cannot guarantee that the underlying fund portfolios will not be harmed by transfer activity relating to the retirement plans or other insurance companies that may invest in the underlying fund portfolios. These other insurance companies are responsible for their own policies and procedures regarding frequent transfer activity. If their policies and procedures fail to successfully discourage harmful transfer activity, it may affect other owners of underlying fund portfolio shares, as well as the owners of all of the variable annuity or life insurance policies, including ours, whose variable investment options correspond to the affected underlying fund portfolios. In addition, if an underlying fund portfolio believes that an omnibus order we submit may reflect one or more transfer requests from owners engaged in market timing and disruptive trading, the underlying fund portfolio may reject the entire omnibus order and thereby delay or prevent us from implementing your request.
Investment Restrictions
If you are eligible to elect certain optional riders, you will be subject to investment restrictions requiring you to invest in certain underlying portfolios, known as designated investment options. In the future, we may change the investment restrictions.
One or more of the underlying fund portfolios that may be designated investment options under each optional rider in part, may include a volatility control strategy. Volatility control strategies, in periods of high market volatility, could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your policy value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns. Volatility control (and similar terms) can encompass a variety of investment strategies of different types and degrees; therefore, you should read the applicable annuity and underlying fund portfolio prospectuses carefully to understand how these investment strategies may affect your policy value and rider benefits. Our requirement to invest in accordance with designated investment options, which may include volatility control, may reduce our costs and risks associated with the applicable riders. You pay an additional fee for the rider benefits which, in part, pay for protecting the rider benefit base from investment losses. Since the rider benefit base does not decrease as a result of investment losses, volatility control strategies might not provide meaningful additional benefit to you. You should carefully evaluate with your financial adviser whether to invest in underlying fund portfolios with volatility control strategies, taking into consideration the potential positive or negative impact that such strategy may have on your investment objectives, your policy value and the benefits under the riders. If you determine that funds with volatility control strategies are not consistent with your investment objectives, there continues to be other designated investment options available under the riders that do not invest in funds that utilize volatility control strategies.
For more information about the underlying fund portfolios and the investment strategies they employ, please refer to the underlying fund portfolios' current prospectuses.
EXPENSES
Note: The following section on expenses and the ANNUITY POLICY FEE TABLE AND EXPENSE EXAMPLES only apply to policies issued on or after the date of this prospectus.
There are charges and expenses associated with your policy that reduce the return on your investment in the policy.
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Surrender Charges
During the accumulation phase, you can surrender part or all of the cash value (restrictions may apply to qualified policies). We may apply a surrender charge to compensate us for expenses relating to sales, including commissions to registered representatives and other promotional expenses.
You can surrender up to the greater of (i) 10% of your premium payments or (ii) any gains in the policy each year free of surrender charges. This amount is referred to as the free amount and is determined at the time of surrender. (The free amount is not cumulative, so not surrendering anything in one year does not increase the surrender charge free amount in subsequent years.) If the surrender is in excess of this free amount, you might have to pay a surrender charge, which is a contingent deferred sales charge, on the excess amount.
The following schedule shows the surrender charges that apply during the five years following payment of each premium payment:
Number of Years
Since Premium Payment Date 		  Surrender Charge
(as a percentage of premium surrendered)
0 – 1   5%
1 – 2   4%
2 – 3   3%
3 – 4   2%
4 – 5   1%
more than 5   0%
For example, assume your premium is $100,000 and your policy value is $106,000 at the beginning of the second policy year and you surrender $30,000. Since that amount is more than your surrender charge free amount ($10,000), you would pay a surrender charge of $800 on the remaining $20,000 [4% of ($30,000 - $10,000)].
Likewise, assume your policy value is $80,000 (premium payments $100,000) at the beginning of the second policy year and you surrender your policy. You would pay a surrender charge of $3,600 [4% of ($100,000 - ($100,000 x 10%))].
You can generally choose to receive the full amount of a requested partial surrender by directing us to deduct any applicable surrender charge (and any applicable excess interest adjustment) from your remaining policy value. You receive your cash value upon full surrender.
For surrender charge purposes, earnings are considered to be surrendered first, then the oldest premium is considered to be surrendered next.
Surrender charges and excess interest adjustments are waived if you surrender money under the Nursing Care and Terminal Condition Withdrawal Option or the Unemployment Waiver.
Keep in mind that surrenders may be taxable and, if made before age 59½, may be subject to a 10% federal penalty tax. For tax purposes, surrenders from nonqualified policies are considered to come from taxable earnings first.
An optional rider is available which eliminates all surrender charges during the accumulation phase. You can only elect this rider at the time you purchase the policy. There is an extra charge for this rider. See “Access Rider”.
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Life with Emergency CashSM Surrender Charge
If you select the Life with Emergency CashSM 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 (no matter which policy or variation thereof you previously purchased). The following schedule shows the current surrender charge:
Number of Years Since
Annuity Commencement Date 		  Surrender Charge
(as a % of premium surrendered)
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 CashSM 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 premium; and
• under this payment option, there is no surrender charge free amount.
Excess Interest Adjustment
Surrenders, withdrawals, transfers, amounts applied when a death benefit is calculated, and amounts applied to an annuity option from the fixed account may be subject to an excess interest adjustment. This adjustment could retroactively reduce the interest credited in the fixed account to the guaranteed minimum or increase the amount credited. This adjustment may also apply to amounts applied to an annuity payment option. (However, please note that a death benefit will not be reduced if the excess interest adjustment results in a decrease in the cash value available to you.) Please see “Appendix - Excess Interest Adjustment Examples” for an example showing the effect of a hypothetical excess interest adjustment calculation. The excess interest adjustment plays a role in calculating the total interest credited to the fixed account.
Mortality and Expense Risk Fees
We charge a fee as compensation for bearing certain mortality and expense risks under the policy. This fee is assessed daily based on the net asset value of each subaccount. Examples of such risks include a guarantee of annuity rates, the death benefit, certain expenses of the policy (including distribution related expenses), and assuming the risk that the current charges will be insufficient in the future to cover costs of selling, distributing and administering the policy.
If this charge does not cover our actual costs, we absorb the loss. Conversely, if the charge more than covers actual costs, the excess is added to our surplus. We expect to profit from this charge. We may use any profit for any proper purpose, including distribution expenses.
Administrative Charges
We deduct a daily administrative charge to cover the costs of supporting and administering the policy (including certain distribution-related expenses). This charge is equal to an annual rate of 0.15% of the daily net asset value of each subaccount during both the accumulation phase and the income phase.
Premium Taxes
A deduction is also made for premium taxes, if any, imposed on us by a state, municipality or other government agency. The tax, currently ranging from 0% to 3.50%, is assessed at the time premium payments are made or when annuity payments begin. We pay the premium tax at the time it is imposed. We will, at our discretion, deduct the total amount of premium taxes, if any, from the policy value when such taxes are due to the applicable taxing authority, you begin receiving annuity payments, you surrender the policy or a death benefit is paid.
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Federal, State and Local Taxes
We may in the future deduct charges from the policy for any taxes we incur because of the policy. However, no deductions are being made at the present time.
Special Service Fees
We may deduct a charge for special services, including overnight delivery; duplicate policies; non-sufficient checks on new business; duplicate Form 1099 and Form 5498 tax forms; duplicate disclosure documents and semi-annual reports; check copies; printing and mailing previously submitted forms; and asset verification requests from mortgage companies. We may charge a fee for each service performed. In addition, we may consider as special services customer initiated changes, modifications and transactions which are submitted in such a manner as to require us to incur additional processing costs.
Transfer Fee
You are generally allowed to make 12 free transfers per policy year before the annuity commencement date. If you make more than 12 transfers per policy year, we reserve the right to charge $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. Currently we are not charging for transfers.
Service Charge
During the accumulation phase, an annual service charge of $35 (but not more than 2% of the policy value) is charged on each policy anniversary. The service charge is waived if your policy value or the sum of your premiums, less all partial surrenders, is at least $50,000.
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.
Access Rider
If you elect the Access Rider, there is a daily rider fee at an annual rate of 0.35% of the daily net asset value in the separate account.
Optional Benefits
If you elect to purchase optional benefits, we will deduct an additional fee. For some optional benefits the fee is assessed against the daily net asset value of each subaccount and for others it is deducted from each investment option in proportion to the amount of policy value in each investment option. Please refer to the FEE TABLE AND EXPENSE EXAMPLES for the list of fees for each optional benefit and ADDITIONAL FEATURES for more information.
Underlying Fund Portfolio Fees and Expenses
The value of the assets in each subaccount will reflect the fees and expenses paid by the underlying fund portfolios. The lowest and highest underlying fund portfolio expenses for the previous calendar year are found in the ANNUITY POLICY FEE TABLE AND EXPENSE EXAMPLES section of this prospectus. See the prospectuses for the underlying fund portfolios for more information.
Reduced Fees and Charges
We may at our discretion, reduce or eliminate certain fees and charges for certain policies (including employer-sponsored savings plans) which may result in decreased costs and expenses.
Revenue We Receive
This prospectus describes generally the payments that we (and/or our affiliates) may directly or indirectly receive from the underlying fund portfolios, their advisers, subadvisers, distributors or affiliates thereof, in connection with certain administrative, marketing and other support services we (and/or our affiliates) provide and expenses we incur in offering and selling our variable insurance products. These arrangements are described further below. While only certain of the types of payments described below may be made in connection with your particular policy, all such payments may nonetheless influence or impact actions we (and/or our affiliates) take, and recommendations we (and our affiliates) make, regarding each of the variable insurance products that we (and our affiliates) offer, including your policy.
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We (and/or our affiliates) may receive some or all of the following types of payments:
• Rule 12b-1 Fees. We and/or our affiliate, Transamerica Capital, Inc. (“TCI”) who is the principal underwriter for the policies, indirectly receive 12b-1 fees from certain underlying fund portfolios available as investment options under our variable insurance products. Any 12b-1 fees received by TCI that are attributable to our variable insurance products are then credited to us. These fees range from 0.00% to 0.35% of the average daily assets of the certain underlying fund portfolios attributable to the policies and to certain other variable insurance products that we and our affiliates issue. These fees are paid from the underlying fund portfolios’ assets. Policy owners, through their indirect investment in the underlying fund portfolios, bear the costs of 12b-1 fees (see the prospectuses for the underlying funds for more information).
• Administrative, Marketing and Support Service Fees (“Support Fees”). As noted above, an investment adviser, subadviser, administrator and/or distributor (or affiliates thereof) of the underlying fund portfolios may make payments to us and/or our affiliates, including TCI. These payments may be derived, in whole or in part, from the profits the investment adviser or subadviser realized on the advisory fee deducted from underlying fund portfolio assets. Policy owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees (see the prospectuses for the underlying funds for more information). However, amounts paid from an investment adviser’s or sub-adviser’s (or other service provider’s) revenues are not paid from the underlying portfolios’ assets. The amount of the payments we (or our affiliates) receive is generally based on a percentage of the assets of the particular underlying fund portfolios attributable to the policy and to certain other variable insurance products that our affiliates and we issue. These percentages differ and the amounts may be significant. Some advisers or sub-advisers (or other affiliates) pay us more than others.
The following chart provides the maximum combined percentages of Support Fees and underlying fund portfolio fees (i.e. sub-transfer agent, Rule 12b-1, and Shareholder Services) that we anticipate will be paid to us on an annual basis. Please Note: Some of the underlying funds listed in the chart below may not currently be available under your policy:
Incoming Payments to the Company and/or TCI
Fund   Maximum Fee % of assets
TRANSAMERICA SERIES TRUST (“TST”)   0.25%
AB VARIABLE PRODUCTS SERIES FUND, INC.   0.45%
STATE STREET VARIABLE INSURANCE SERIES FUNDS, INC.   0.45%
NOTES TO INCOMING PAYMENTS TABLE:
Maximum Fee % of Assets: Payments are based on a percentage of the average assets of each underlying fund portfolio owned by the subaccounts available under this policy and under certain other variable insurance products offered by our affiliates and us. We and/or TCI may continue to receive 12b-1 fees and administrative fees on funds invested in subaccounts that are closed to new premium payments, depending on the terms of the agreements supporting those payments and on the services provided.
TST: Because TST is managed by TAM, an affiliate of ours, there are additional benefits to us and our affiliates for amounts you allocate to the TST underlying fund portfolios, in terms of our and our affiliates’ overall profitability. These additional benefits may be significant. Payments or other benefits may be received from TAM. Such payments or benefits may be entered into for a variety of purposes, such as to allocate resources to us and to provide administrative services to the policyholders who invest in subaccounts that invest in the TST underlying fund portfolios. These payments or benefits may take the form of internal credits, recognition, or cash payments. A variety of financial and accounting methods may be used to allocate resources and profits to us. Additionally, if a TST portfolio is 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 2017 we received approximately $243.3 million in benefits from TAM pursuant to these arrangements. This includes the 0.25% amount in the above chart. We anticipate receiving comparable amounts in the future.
Other Payments. TCI also serves as the wholesale distributor for the policies, and in that capacity directly or indirectly receives additional amounts or different percentages of assets under management from certain advisers and subadvisers to the underlying fund portfolios (or their affiliates) with regard to variable insurance products and/or mutual funds that are issued by us and our affiliates. These amounts may be derived, in whole or in part, from the profits the investment adviser or subadviser receives from the advisory fee deducted from underlying fund portfolio assets. Owners, through their indirect investment in the underlying fund portfolios, bear the costs of these advisory fees. Certain advisers and subadvisers of the underlying fund portfolios (or their affiliates):
• may each directly or indirectly pay TCI conference sponsorship or marketing allowance payments that provides such advisers and subadvisers with access to TCI's wholesalers at TCI's national and regional sales conferences as well as internal and external meetings and events that are attended by TCI's wholesalers and/or other TCI employees.
• may provide our affiliates and/or selling firms with wholesaling services to assist us in the distribution of the policies.
• may provide us and/or certain affiliates and/or selling firms with occasional gifts, meals, tickets or other compensation as an
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  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, 2017, TCI and its affiliates received payments that totaled approximately $2,900,000. The firms that paid to participate in TCI sponsored events included but were not limited to the following: Aegon USA Investment Management • Alliance Bernstein• American Century Investment Management, Inc. • American Funds • Barrow, Hanley, Mewhinney & Strauss • Belle Haven Investments • BlackRock Investment Management, LLC • Columbia Threadneedle Investments • Fidelity Management & Research Company • Franklin Templeton Services, LLC • Goldman Sachs • Invesco • Janus Capital Management LLC • Jennison Associates LLC • John Hancock• JP Morgan Investment Management Inc. • Kayne Anderson Capital Advisors, LP • Lord Abbett & Co.• Manning & Napier Advisors • MFS Investment Management • Milliman Financial Risk Management LLC • Morgan Stanley Investment Management Inc. • Morningstar Advisers • Natixis Global Asset Management • Neuberger Berman • New York Life/Mainstay Investments • Oppenheimer Funds, Inc. • Pacific Investment Management Company • PineBridge Investments LLC • Pioneer Investment Management, Inc. • Prudential Investments• QS Legg Mason Global Asset Allocation, LLC • Ridgeworth Investments • Rockefeller & Co. • Schroder Investment Management • Systematic Financial Management • TIAA • Thompson Siegel & Walmsley • Rowe Price Associates, Inc. • The Vanguard Group, Inc. • Torray, LLC •  and Wellington Management Company.
Please note some of the aforementioned managers and/or subadvisers may not be associated with underlying fund portfolios currently available in this product.
Proceeds from certain of these payments by the underlying fund portfolios, the advisers, the subadvisers and/or their affiliates may be used for any corporate purpose, including payment of expenses (1) that we and our affiliates incur in promoting, marketing, and administering the policy, and (2) that we incur, in our role as intermediary, in promoting, marketing, and administering the underlying fund portfolios. We and our affiliates may profit from these payments.
For further details about the compensation payments we make in connection with the sale of the policies, see OTHER INFORMATION - Distribution of the Policies in this prospectus.
ACCESS TO YOUR MONEY
During the accumulation phase, you can have access to the money in your policy in the following ways:
• by making a surrender (either a full or partial surrender); or
• by taking systematic payouts (See ADDITIONAL FEATURES - Systematic Payout Option for more details).
Surrenders
During the accumulation phase, if you take a full surrender, you will receive your cash value.
If you want to take a partial surrender, in most cases it must be for at least $500. Unless you tell us otherwise, we will take the surrender from each of the investment options in proportion to the policy value. Surrenders may be referred to as withdrawals on your policy statement and other documents.
You may elect to take up to the free amount once each policy year without incurring a surrender charge. Remember that any surrender you take will reduce the policy value, and the amount of the death benefit. See DEATH BENEFIT, for more details. A partial surrender also may have a negative impact on certain other benefits and guarantees of your policy.
Surrenders may be subject to a surrender charge. Surrenders from the fixed account may be subject to an excess interest adjustment. Income taxes, federal tax penalties and certain restrictions may apply to any surrenders you make.
Surrenders from qualified policies may be restricted or prohibited.
During the income phase, you will receive annuity payments under the annuity payment option you select; however, you generally may not take any other surrenders, either full or partial, unless you elect a Life with Emergency CashSM payment option.
If your policy was issued pursuant to a 403(b) plan, 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 record keeper, and other product providers.
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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.
Note: The optional Access Rider eliminates all surrender charges during the accumulation phase. You can elect this rider only at the time you purchase the policy. There is an extra charge for this rider.
Delay of Payment and Transfer
Payment of any amount due from the separate account for a surrender, a death benefit, or the death of the owner of a nonqualified policy, will generally occur within seven days from the date we receive in good order all required information at our Administrative Office. We may defer such payment from the separate account if:
• the New York Stock Exchange is closed other than for usual weekends or holidays or trading on the Exchange is otherwise restricted;
• an emergency exists as defined by the SEC or the SEC requires that trading be restricted; or
• the SEC permits a delay for the protection of owners.
Transfers of amounts from the subaccounts also may be deferred under these circumstances. In addition, if, pursuant to SEC rules, the Transamerica Aegon Government Money Market VP portfolio (or any money market portfolio offered under this policy) suspends payment of redemption proceeds in connection with a liquidation of the portfolio, then we may delay payment of any transfer, surrender (either full or partial), loan, or death benefit from the TA Aegon Government Money Market subaccount until the portfolio is liquidated.
Any payment or transfer request which is not in good order will cause a delay. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
Federal laws designed to counter terrorism and prevent money laundering by criminals might in certain circumstances require us to reject a premium payment and/or “freeze” an owner's account. If these laws apply in a particular situation, we would not be allowed to pay any request for surrenders (either full or partial), or death benefits, make transfers, or continue making annuity payments absent instructions from the appropriate federal regulator. We may also be required to provide information about you and your policy to government agencies or departments.
Pursuant to the requirements of certain state laws, we reserve the right to defer payment of the cash value from the fixed account for up to six months. We may defer payment of any amount until your premium payment check has cleared your bank.
Excess Interest Adjustment
Surrenders, withdrawals, transfers, and amounts applied to an annuity option from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. If at the time of such transactions the guaranteed interest rate set by us for the applicable period has risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value (but not below the excess interest adjustment floor described in “Appendix - Excess Interest Adjustment Examples”). However, if the guaranteed interest rate for the applicable period has fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value upon surrender or transfer. Please see “Appendix - Excess Interest Adjustment Examples” to see how the excess interest adjustment is calculated and illustrative examples using hypothetical values.
Any amount surrendered in excess of the cumulative interest credited for that guaranteed period option is generally subject to an excess interest adjustment. An excess interest adjustment may also be made on amounts applied to an annuity payment option.
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The formula that will be used to determine the excess interest adjustment is:
S* (G-C)* (M/12)
S = Is the amount (before surrender charges, premium taxes and the application of any Guaranteed Minimum Death Benefits, if any) being surrendered, withdrawn, transferred, paid upon death, or applied to an income option that is subject to the excess interest adjustment;
G = Is the guaranteed interest rate for the guaranteed period applicable to “S”;
C = Is the current guaranteed interest rate then being offered on new premium payments for the next longer option period than “M”. If this policy form or such an option period is no longer offered, “C” will be the U.S. Treasury rate for the next longer maturity (in whole years) than “M” on the 25th day of the previous calendar month, plus up to 2%,
M = Number of months remaining in the current option period for “S”, rounded up to the next higher whole number of months; and
* = multiplication
Please see “Appendix - Excess Interest Adjustment Examples” for more detailed information concerning the excess interest adjustment calculation.
There will be no excess interest adjustment on any of the following:
• surrenders of cumulative interest credited;
• Nursing Care and Terminal Condition Withdrawal Option surrenders;
• Unemployment Waiver surrenders;
• transfers from a Dollar Cost Averaging fixed source;
• 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 a signature guarantee (i.e., Medallion Signature Guarantee as required by us) for the following transaction requests:
• Any surrender over $250,000 unless it is a custodial owned annuity;
• Any non-electronic disbursement request made on or within 15 days of a change to the address of record for a policy owner’s account;
• Any electronic fund transfer instruction changes on or within 15 days of an address change;
• Any surrender when we have been directed to send proceeds to a different personal address from the address of record for that contract owner's account. PLEASE NOTE: This requirement will not apply to requests made in connection with exchanges of one annuity for another with the same owner in a “tax-free exchange”;
• Any surrender when we do not have an originating or guaranteed signature on file unless it is a custodial owned annuity;
• Any other transaction we require.
We may change the specific requirements listed above, or add signature guarantees in other circumstances, at our discretion if we deem it necessary or appropriate to help protect against fraud. For current requirements, please refer to the requirements listed on the appropriate form or call us at (800)525-6205.
You can obtain a Medallion signature guarantee from more than 7,000 financial institutions across the United States and Canada that participate in a Medallion signature guarantee program. The best source of a Medallion signature guarantee is a bank, savings and loan association, brokerage firm, or credit union with which you do business. A notary public cannot provide a Medallion signature guarantee. Notarization will not substitute for a Medallion signature guarantee.
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ANNUITY PAYMENTS (THE INCOME PHASE)
Upon the annuity commencement date, which is the date your policy is annuitized and annuity payments begin, your annuity switches from the accumulation phase to the income phase. You can generally change the annuity commencement date by giving us 30 days notice with the new date or age. The earliest annuity commencement date is at least 30 days after you purchase your policy. Unless required by state law, the latest annuity commencement date cannot be after the date specified in your policy unless a later date is agreed to by us.
Before the annuity commencement date, if the annuitant is alive, you may choose an annuity payment option or change your election. If the annuitant dies before the annuity commencement date, the death benefit is payable in a lump sum or under one of the annuity payment options (unless the surviving spouse is eligible to and elects to continue the policy). If the annuitant dies after the annuity commencement date, no death benefit is payable and the amount payable will depend on the annuity income option.
Your policy may not be “partially” annuitized, i.e., you may not apply a portion of your policy value to an annuity option while keeping the remainder of your policy in force.
After the annuitant's death, the beneficiary you designate at annuitization will receive any remaining guaranteed payments.
Annuity Payment Options
The policy provides several annuity payment options (also known as income options) that are described below. You may choose any combination of annuity payment options. We will use your adjusted policy value to provide these annuity payments. If the adjusted policy value on the annuity commencement date is less than $2,000, we reserve the right to pay it in one lump sum in lieu of applying it under an annuity payment option. You can receive annuity payments monthly, quarterly, semi-annually, or annually. (We reserve the right to change the frequency if payments would be less than $50.)
In deciding on which annuity payment option to elect, you must decide if fixed or variable payments are better for you. If you choose to receive fixed 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 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.
You must also decide if you want your annuity payments to be guaranteed for the annuitant's lifetime, a period certain, or a combination thereof. Generally, payments will be lower if you combine a period certain, guaranteed amount, or liquidity with a lifetime guarantee (e.g., Life Income with 10 years Certain and Life with Guaranteed Return of Policy proceeds). Likewise, annuity payments will also generally be lower the longer the period certain (because you are guaranteed payments for a longer time).
A charge for premium taxes and an excess interest adjustment may be made when annuity payments begin.
The annuity payment options currently available are explained below. Some options are fixed only.
Income for a Specified Period (fixed only). We will make level annuity payments only for a fixed period. No funds will remain at the end of the period. If your policy is a qualified policy, this annuity payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.
Income of a Specified Amount (fixed only). Payments are made for any specified amount until the amount applied to this option, with interest, is exhausted. This will be a series of level annuity payments followed by a smaller final annuity payment.
If your policy is a qualified policy, this annuity payment option may not satisfy minimum required distribution rules. Consult a tax advisor before electing this option.
Life Income. You may choose between:
• No Period Certain (fixed or variable) - Payments will be made only during the annuitant's lifetime. The last annuity payment will be the payment immediately before the annuitant's death.
• 10 Years Certain (fixed or variable) - Payments will be made for the longer of the annuitant's lifetime or ten years.
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• Guaranteed Return of Policy Proceeds (fixed only) - Payments will be made for the longer of the annuitant's lifetime or until the total dollar amount of annuity payments we made to you equals the annuitized amount (i.e., the adjusted policy value).
• Life with Emergency CashSM (fixed or variable)-Payments will be made during the annuitant's lifetime. With the Life with Emergency CashSM feature, you are able to surrender all or a portion of the Life with Emergency CashSM benefit (unlike all other life annuitization options which are not surrenderable). The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency CashSM 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 premium surrendered (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 CashSM benefit will continue through age 100 of the annuitant.
  The Life with Emergency CashSM benefit is also a death benefit that is paid upon the death of the annuitant and is generally equal to the surrender value (i.e., the amount that would be available for surrender according to the Life with Emergency CashSM benefit schedule) 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:
• No Period Certain (fixed or variable) - Payments are made during the joint lifetime of the annuitant and a joint annuitant of your selection. Annuity payments will be made as long as either person is living.
• 10 Year Certain (fixed only) - Payments will be made for the longer of the lifetime of the annuitant and joint annuitant or ten years.
• Life with Emergency CashSM (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 CashSM feature, you are able to surrender all or a portion of the Life with Emergency CashSM benefit. The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency CashSM 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 premium surrendered (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 CashSM benefit will continue through age 100 of the surviving joint annuitant.
  The Life with Emergency CashSM 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, all ages or we may limit certain annuity payment options to ensure they comply with the applicable tax law provisions.
NOTE CAREFULLY
IF:
• you choose Life Income with No Period Certain or a Joint and Survivor Annuity with No Period Certain; and
• the annuitant dies (or both joint annuitants die) before the due date of the second (third, fourth, etc.) annuity payment;
THEN:
• we may make only one (two, three, etc.) annuity payments.
IF:
• you choose Income for a Specified Period, Life Income with 10 Years Certain, Life Income with Guaranteed Return of Policy Proceeds, or Income of a Specified Amount; and
• the person receiving annuity payments dies prior to the end of the guaranteed period;
THEN:
• the remaining guaranteed annuity payments will be continued to a new payee, or their present value may be paid in a single sum.
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However, IF:
• you choose Life with Emergency CashSM; and
• the annuitant dies (if both joint annuitants die) before age 101;
THEN:
• a Life with Emergency CashSM 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 annuity payments is responsible for keeping us informed of his/her current address.
You must annuitize your policy no later than the maximum annuity commencement date specified in your policy (earlier for certain distribution channels) or a later date if agreed to by us. If you do not elect an annuity payment option, the default option will be variable payments under Life with 10 Years Certain. If any portion of the default annuitization is a variable payout option, then annuity units will be purchased proportionally based off your available current investment allocations. Please note, all benefits (including guaranteed minimum death benefits and living benefits) terminate upon annuitization. The only benefits that remain include the guarantees provided under the terms of the annuity option.
DEATH BENEFIT
We will pay a death benefit to your beneficiary, under certain circumstances, if the annuitant dies during the accumulation phase. If there is a surviving owner(s) when the annuitant dies, the surviving owner(s) will receive the death benefit instead of the listed beneficiary. The person receiving the death benefit may choose an annuity payment option (if you pick a variable annuity payment option fees and expenses will apply), or may choose to receive the death benefit as a lump sum withdrawal. The guarantees of these death benefits are based on our claims-paying ability. No death benefit will be payable upon or after the annuity commencement date. Please note that there is a mandatory annuity commencement date.
We will determine the amount of and process the death benefit proceeds, if any are payable on a policy, upon receipt at our Administrative Office of satisfactory proof of the annuitant's death, directions regarding how to process the death benefit, and any other documents, forms and information that we need (collectively referred to as “due proof of death”). For policies with multiple beneficiaries, we will process the death benefit when the first beneficiary provides us with due proof of their share of the death proceeds. We will not pay any remaining beneficiary their share until we receive due proof of death from that beneficiary. Such beneficiaries continue to bear the investment risk until they submit due proof of death. Please note, we may be required to remit the death benefit proceeds to a state prior to receiving “due proof of death.” See OTHER INFORMATION - Abandoned or Unclaimed Property.
Please Note: Such due proof of death must be received in good order to avoid a delay in processing the death benefit claim. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order.
The death benefit proceeds remain invested in the separate account in accordance with the allocations made by the policy owner until the beneficiary has provided us with due proof of death. Once we receive due proof of death, investments in the separate account may be reallocated in accordance with the beneficiary's instructions.
We may permit the beneficiary to give a “one-time” written instruction to reallocate the policy value in the separate account to the money market fund after the death of the annuitant. If there is more than one beneficiary, all beneficiaries must agree to the reallocation instructions. This one-time reallocation will be permitted if the beneficiary provides satisfactory evidence of the annuitant's death.
When We Pay A Death Benefit
We will pay a death benefit IF:
• you are both the annuitant and sole owner of the policy; and
• you die before the annuity commencement date.
We will pay a death benefit to you (owner) IF:
• you are not the annuitant; and
• the annuitant dies before the annuity commencement date.
If the sole beneficiary receiving the death benefit is the surviving spouse of the owner, then he or she may elect, if eligible, to continue the policy as the new annuitant and owner, instead of receiving the death benefit. See DEATH BENEFIT - Spousal Continuation. All surrender charges will be waived.
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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. Generally, upon the owner's death (who is not the annuitant) the entire interest must be distributed within five years. See TAX INFORMATION for a more detailed discussion of the distribution requirements under the Code.
Deaths After the Annuity Commencement Date
The amount payable, if any, on or after the annuity commencement date depends on the annuity income option.
IF:
• you are not the annuitant; and
• you die on or after the annuity commencement date; and
• the guaranteed amount in the policy has not been paid;
THEN:
• the remaining portion of the guaranteed amount in the policy will continue to be distributed at least as rapidly as under the method of distribution being used as of the date of your death.
IF:
• you are the owner and annuitant; and
• you die after the annuity commencement date; and
• the annuity payment option you selected did not have or no longer has a guaranteed period;
THEN:
• no additional payments will be made.
NOTE: If you elect the Life with Emergency CashSM and the annuitant dies before age 101, then a Life with Emergency CashSM death benefit equaling the amount available for surrender will be paid.
IF:
• annuity payments are being made under the Life with Emergency CashSM; and
• the annuitant dies before age 101 (or earlier, if a qualified policy);
THEN:
• a Life with Emergency CashSM death benefit will be paid.
Succession of Ownership
If an owner (who is not the annuitant) dies during the accumulation phase, the person or entity first listed below who is alive or in existence on the date of that death will become the new owner:
• any surviving owner;
• primary beneficiary;
• contingent beneficiary; or
• owner's estate.
Spousal Continuation
If the sole primary beneficiary is the spouse, upon the owner's or the annuitant's death, the beneficiary may elect to continue the policy in his or her own name. Upon the annuitant's death if such election is made, the policy value will be adjusted upward (but not downward) to an amount equal to the death benefit amount determined upon such election and receipt of due proof of death of the annuitant. Any excess of the death benefit amount over the policy value will be allocated to each applicable investment option in the ratio that the policy value in the investment option bears to the total policy value. The terms and conditions of the policy that applied prior to the annuitant's death will continue to apply, with certain exceptions described in the policy. For purposes of the death benefit
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on the continued policy, the death benefit is calculated in the same manner as it was prior to continuation on the date the spouse continues the policy. See TAX INFORMATION - Same Sex Relationships for more information concerning spousal continuation involving same sex spouses.
For these purposes, if the sole primary beneficiary of the policy is a revocable grantor trust and the spouse of the owner/annuitant is the sole grantor, trustee, and beneficiary of the trust and the trust is using the spouse of the owner/annuitant's social security number at the time of claim, she or he shall be treated as the owner/annuitant's spouse. In those circumstances, the owner/annuitant's spouse will be treated as the beneficiary of the policy for purposes of applying the spousal continuation provisions of the policy.
For these purposes, if the owner is an individual retirement account within the meaning of IRC sections 408 or 408A and if the annuitant's spouse is the sole primary beneficiary of the annuitant's interest in such account, the annuitant's spouse will be treated as the beneficiary of the policy for purposes of applying the spousal continuation provisions of the policy.
Amount of Death Benefit
The death benefit may be paid as a lump sum, as annuity payments or as otherwise permitted by the Company in accordance with applicable law. The amount of the death benefit 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 greatest of:
• the policy value on the date we receive the required information in good order at our Administrative Office;
• the cash value on the date we receive in good order the required information at our Administrative Office (this will be more than the policy value if there is a positive excess interest adjustment that exceeds the surrender charge);
• minimum required cash value on the date we receive the required information in good order at our Administrative Office; and
• the guaranteed minimum death benefit, if any, (discussed below), plus premium payments, less gross withdrawals, from the date of death to the date the death benefit is paid. Please see “Appendix - Death Benefit” for illustrative examples regarding death benefit calculations.
Please note: The death benefit terminates upon annuitization.
Guaranteed Minimum Death Benefit
The following generally applies, depending on the state of issue.
The guaranteed minimum death benefit terminates upon annuitization and there is a mandatory annuity commencement date. On the policy application, you may generally choose a guaranteed minimum death benefit listed below (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.
Annual Step-Up Death Benefit
Under this option, on each policy anniversary prior to your 81st 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 81st birthday; plus
• any premium payments since the date of any policy anniversary with the largest policy value; minus
• any adjusted partial withdrawals (please see “Appendix - Death Benefit”) since the date of the policy anniversary with the largest policy value.
  The Annual Step-Up Death Benefit is not available if you or the annuitant is 76 or older on the policy date. There is an extra charge for this death benefit of 0.35% annually.
Return of Premium Death Benefit
The Return of Premium Death Benefit is equal to:
• total premium payments; less
• any adjusted partial withdrawals (please see “Appendix - Death Benefit”) as of the date of death.
This benefit is not available if you or the annuitant is 86 or older on the policy date. There is an extra charge for this death benefit of 0.15% annually.
Please note: You will not receive an optional guaranteed minimum death benefit if you do not choose one when you purchase your policy.
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Double Enhanced Death Benefit - No Longer Available
The death benefit under this option is the greater of 1 or 2 below:
1.  The 6% Annually Compounding through age 80 Death Benefit, which is equal to:
• the total premium payments; less
• any adjusted partial withdrawals;
• accumulated at an effective annual rate of 6% 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 Monthly Step-Up through age 80 Death Benefit, which is equal to:
• the largest policy value on the policy date or on any monthly anniversary before the earlier of the annuitant's date of death or the annuitant's 81st birthday; plus
• any premium payments since the date of any monthly anniversary with the largest policy value; minus
• any adjusted partial withdrawals since the date of the monthly 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 and requires you to invest only in certain “designated investment choices”. There is an extra charge for this death benefit of 0.80% annually.
Designated Investment Options. If you elected the Double Enhanced Death Benefit, you must allocate 100% of your policy value to one or more of the designated investment options approved for the Double Enhanced Death Benefit. See “Appendix - Designated Investment Options” for a complete listing of available subaccounts. Requiring that you designate 100% of your policy value to the designated investment options, some of which employ strategies that are intended to reduce the risk of loss and/or manage volatility, may reduce investment returns and may reduce the likelihood that we will be required to use our own assets to pay amounts due under this benefit.
Please note:
• All policy value must be allocated to one or more designated investment options or your death benefit will terminate.
• You may transfer amounts among the designated investment options; however, you cannot transfer any amount to any other subaccount if you elect this death benefit.
The Double Enhanced Death Benefit was not available if a guaranteed lifetime withdrawal benefit was chosen.
The Guaranteed Minimum Death Benefit may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering a guaranteed minimum death benefit at any time for new sales.
Adjusted Partial Withdrawal
When you request a partial withdrawal, your guaranteed minimum death benefit will be reduced by an amount called the adjusted partial withdrawal. Under certain circumstances, the adjusted partial withdrawal may be more than the dollar amount of your withdrawal request. This will generally be the case if the guaranteed minimum death benefit exceeds the policy value at the time of withdrawal. It is also possible that if a death benefit is paid after you have made a partial withdrawal, then the total amount paid could be less than the total premium payments.
The formula used to calculate the adjusted partial withdrawal amount is: adjusted partial withdrawal = (amount of the gross partial withdrawal * value of the current death proceeds immediately prior to the gross partial withdrawal) / policy value immediately prior to the gross withdrawal.
We have included a detailed explanation of this adjustment with examples in the “Appendix - Death Benefit.” This is referred to as “adjusted partial withdrawal” in your policy. If you have a qualified policy, minimum required distributions rules may require you to request a partial withdrawal.
TAX INFORMATION
NOTE: We have prepared the following information on federal taxes as a general discussion of the subject. It is not intended as tax advice to any taxpayer. The federal tax consequences discussed herein reflects our understanding of current law, and the law may change. No representation is made regarding the likelihood of continuation of the present federal tax law or of the current interpretations by the Internal Revenue Service. The discussion briefly references federal estate, gift and generation-skipping transfer taxes, but principally discusses federal income taxes. No attempt is made to consider any applicable state or other income tax laws, any state and local estate or inheritance tax, or other tax consequences of ownership or receipt of distributions under the policy. You should consult your own tax adviser about your own circumstances.
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Introduction
Deferred annuity policies are a way of setting aside money for future needs like retirement. Congress recognized how important saving for retirement is and provided special rules in the Internal Revenue Code (the “Code”) for annuities. Simply stated, these rules generally provide that individuals will not be taxed on the earnings, if any, on the money held in an annuity policy until withdrawn. This is referred to as tax deferral. When a non-natural person (e.g., corporation or certain trusts) owns a nonqualified policy, the policy will generally not be treated as an annuity for tax purposes. Thus, the owner must generally include in income any increase in the policy value over the investment in the policy during each taxable year.
There are different rules as to how you will be taxed depending on how you take the money out and the type of policy-qualified or nonqualified.
If you purchase the policy as an individual retirement annuity or as a part of a 403(b) plan, 457 plan, a pension plan, a profit sharing plan (including a 401(k) plan), or certain other employer sponsored retirement programs, your policy is referred to as a qualified policy. There is no additional tax deferral benefit derived from placing qualified funds into a variable annuity. Features other than tax deferral should be considered in the purchase of a qualified policy. There are limits on the amount of contributions you can make to a qualified policy. Other restrictions may apply including terms of the plan in which you participate. To the extent there is a conflict between a plan's provisions and a policy's provisions, the plan's provisions will control.
If you purchase the policy other than as part of any arrangement described in the preceding paragraph, the policy is referred to as a nonqualified policy.
You will generally not be taxed on increases in the value of your policy, whether qualified or nonqualified, until a distribution occurs (e.g., as a surrender, withdrawal, or as annuity payments). However, you may be subject to current taxation if you assign or pledge or enter into an agreement to assign or pledge any portion of the policy. You may also be subject to current taxation if you make a gift of a nonqualified policy without valuable consideration. All amounts received from the policy that are includible in income are taxed at ordinary income rates; no amounts received from the policy are taxable at the lower rates applicable to capital gains.
The Internal Revenue Service (“IRS”) has not reviewed the policy for qualification as an IRA annuity, and has not addressed in a ruling of general applicability whether the death benefit options and riders available, with the policy, if any, comport with IRA qualification requirements.
The value of living and death benefit options and riders elected may need to be taken into account in calculating minimum required distributions from a qualified plan/or policy.
We may occasionally enter into settlements with owners and beneficiaries to resolve issues relating to the policy. Such settlements will be reported on the applicable tax form (e.g., Form 1099) provided to the taxpayer and the taxing authorities.
Taxation of Us
We are at present taxed as a life insurance company under part I of Subchapter L of the Code. The separate account is treated as a part of us and, accordingly, will not be taxed separately as a “regulated investment company” under Subchapter M of the Code. We do not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the separate account retained as part of the reserves under the policy. Based on this expectation, it is anticipated that no charges will be made against the separate account for federal income taxes. If in future years, any federal income taxes are incurred by us with respect to the separate account, we may make a charge to that account. We may benefit from any dividends received or foreign tax credits attributable to taxes paid by certain underlying fund portfolios to foreign jurisdictions to the extent permitted under federal tax law.
Tax Status of a Nonqualified Policy
Diversification Requirements. In order for a nonqualified variable policy which is based on a segregated asset account to qualify as an annuity policy under Section 817(h) of the Code, the investments made by such account must be “adequately diversified” in accordance with Treasury Regulations. The Regulations apply a diversification requirement to each of the subaccounts. Each separate account, through its underlying fund portfolios and their portfolios, intends to comply with the diversification requirements of the Regulations. We have entered into agreements with each underlying fund portfolio company that require the portfolios to be operated in compliance with the Regulations but we do not have control over the underlying fund portfolio companies. The owners bear the risk that the entire contract could be disqualified as an annuity policy under the Code due to the failure of a subaccount to be deemed to be “adequately diversified.”
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Owner Control. In some circumstances, owners of variable policies who retain excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets and may be subject to tax on income produced by those assets. In Revenue Ruling 2003-91, the IRS stated that whether the owner of a variable policy is to be treated as the owner of the assets held by the insurance company under the policy will depend on all of the facts and circumstances.
Revenue Ruling 2003-91 also gave an example of circumstances under which the owner of a variable policy would not possess sufficient control over the assets underlying the policy to be treated as the owner of those assets for federal income tax purposes. To the extent the circumstances relating to the issuance and ownership of a policy vary from those described in Revenue Ruling 2003-91, owners bear the risk that they will be treated as the owner of Separate Account assets and taxed accordingly.
We believe that the owner of a policy should not be treated as the owner of the underlying assets. We reserve the right to modify the policies to bring them into conformity with applicable standards should such modification be necessary to prevent owners of the policies from being treated as the owners of the underlying separate account assets. Concerned owners should consult their own tax advisers regarding the tax matter discussed above.
Distribution Requirements . The Code requires that nonqualified policies contain specific provisions for distribution of policy proceeds upon the death of any owner. In order to be treated as an annuity policy for federal income tax purposes, the Code requires that such policies provide that if any owner dies on or after the annuity starting date and before the entire interest in the policy has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such owner's death. If any owner dies before the annuity starting date, the entire interest in the policy must generally be distributed (1) within 5 years after such owner's date of death or (2) be used to provide payments to a designated beneficiary for the life of the beneficiary or for a period not extending beyond the life expectancy of the beneficiary. The designated beneficiary must be an individual and payments must begin within one year of such owner’s death. However, if upon such owner's death the owner's surviving spouse is the sole beneficiary of the policy, then the policy may be continued with the surviving spouse as the new owner. If any owner is a non-natural person (except in the case of certain grantor trusts), then for purposes of these distribution requirements, the primary annuitant shall be treated as an owner and any death or change of such primary annuitant shall be treated as the death of an owner.
In certain instances a designated beneficiary may be permitted to elect a “stretch” payment option as a means of disbursing death proceeds from a nonqualified annuity. The only method we use for making distribution payments from a nonqualified “stretch” payment option is the required minimum distribution method as set forth in Revenue Ruling 2002-62. The applicable payments are calculated using the Single Life Expectancy Table set forth in Treasury Regulation § 1.401(a)(9)-9, A-1.
The nonqualified policies contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the policies satisfy all such Code requirements. The provisions contained in the policies will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise.
Taxation of a Nonqualified Policy
The following discussion assumes the policy qualifies as an annuity policy for federal income tax purposes.
In General. Code Section 72 governs taxation of annuities in general. We believe that an owner who is an individual will not be taxed on increases in the value of a policy until such amounts are surrendered or distributed. For this purpose, the assignment, pledge, or agreement to assign or pledge any portion of the policy value as collateral for a loan generally will be treated as a distribution of such portion. You may also be subject to current taxation if you make a gift of a nonqualified policy without valuable consideration. The taxable portion of a distribution is taxable as ordinary income.
Non-Natural Persons. Pursuant to Section 72(u) of the Code, a nonqualified policy held by a taxpayer other than a natural person generally will not be treated as an annuity policy under the Code; accordingly, an owner who is not a natural person will recognize as ordinary income for a taxable year the excess, if any, of the policy value over the “investment in the contract”. There are some exceptions to this rule and a prospective purchaser of the policy that is not a natural person should discuss these rules with a competent tax adviser. A policy owned by a trust using the grantor's social security number as its taxpayer identification number will be treated as owned by the grantor (natural person) for the purposes of our application of Section 72 of the Code. Consult a tax adviser for more information on how this may impact your policy.
Different Individual Owner and Annuitant
If the owner and annuitant on the policy are different individuals, there may be negative tax consequences to the owner and/or beneficiaries under the policy if the annuitant predeceases the owner including, but not limited, to the assessment of penalty tax and the loss of certain death benefit distribution options. You may wish to consult your legal counsel or tax adviser if you are considering designating a different individual as the annuitant on your policy to determine the potential tax ramifications of such a designation.
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Annuity Starting Date
This section makes reference to the annuity starting date as defined in Section 72 of the Code and the applicable regulations. Generally, the definition of annuity starting date will correspond with the definition of annuity commencement date used in your policy and the dates will be the same. However, in certain circumstances, your annuity starting date and annuity commencement date will not be the same date. If there is a conflict between the definitions, we will interpret and apply the definitions in order to ensure your policy maintains its status as an annuity policy for federal income tax purposes. You may wish to consult a tax adviser for more information on when this issue may arise.
It is possible that at certain advanced ages a policy might no longer be treated as an annuity contract if the policy has not been annuitized before that age or have other tax consequences. You should consult with a tax adviser about the tax consequences in such circumstances.
Taxation of Annuity Payments
Although the tax consequences may vary depending on the annuity payment option you select, in general, for nonqualified and certain qualified policies, only a portion of the annuity payments you receive will be includable in your gross income.
In general, the excludable portion of each annuity payment you receive will be determined as follows:
• Fixed payments-by dividing the “investment in the policy” on the annuity starting date by the total expected return under the policy (determined under Treasury regulations) for the term of the payments. This is the percentage of each annuity payment that is excludable.
• Variable payments-by dividing the “investment in the policy” on the annuity starting date by the total number of expected periodic payments. This is the amount of each annuity payment that is excludable.
The remainder of each annuity payment is includable in gross income. Once the “investment in the policy” has been fully recovered, the full amount of any additional annuity payments is includable in gross income and taxed as ordinary income. The “investment in the policy” is generally equal to the premiums you pay for the policy, reduced by any amounts you have previously received from the policy that are excludible from gross income.
If you select more than one annuity payment option, special rules govern the allocation of the policy's entire “investment in the policy” to each such option, for purposes of determining the excludable amount of each payment received under that option. We advise you to consult a competent tax adviser as to the potential tax effects of allocating amounts to any particular annuity payment option.
If, after the annuity starting date, annuity payments stop because an annuitant died, the excess (if any) of the “investment in the policy” as of the annuity starting date over the aggregate amount of annuity payments received that was excluded from gross income may possibly be allowable as a deduction on your tax return.
Taxation of Surrenders and Partial Withdrawals - Nonqualified Policies
When you surrender your policy, you are generally taxed on the amount that your surrender proceeds exceeds the “investment in the policy”. The “investment in the policy” is generally equal to the premiums you pay for the policy, reduced by any amounts you have previously received from the policy that are excludible from gross income. Partial withdrawals are generally treated first as taxable income to the extent of the excess in the policy value over the “investment in the policy.” Distributions made under the systematic payout option are treated for tax purposes as partial withdrawals, not annuity payments. In general, loans, pledges, and collateral assignments as security for a loan are taxed in the same manner as partial withdrawals and surrenders. You may also be subject to current taxation if you make a gift of a nonqualified policy without valuable consideration. All taxable amounts received under a policy are subject to tax at ordinary rather than capital gain tax rates.
If your policy contains an excess interest adjustment feature (also known as a market value adjustment), then your policy value immediately before a policy withdrawal (or transaction taxed like a withdrawal) may have to be increased by any positive excess interest adjustments that result from the transaction. There is, however, no definitive guidance on the proper tax treatment of excess interest adjustments, and you may want to discuss the potential tax consequences of an excess interest adjustment with your tax adviser.
The Code also provides that amounts received from the policy that are includible in gross income (including the taxable portion of some annuity payments) may be subject to a penalty tax. The amount of the penalty tax is equal to 10% of the amount that is includable in income. Some surrender withdrawals and other amounts will be exempt from the penalty tax. Amounts received that are not subject to the penalty tax include, among others, any amounts: (1) paid on or after the taxpayer reaches age 59½; (2) paid after an owner (or where the owner is a non-natural person, an annuitant) dies; (3) paid if the taxpayer becomes disabled (as that term is
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defined in the Code); (4) paid in a series of substantially equal payments made annually (or more frequently) over the life of the taxpayer or the joint life of the taxpayer and the taxpayer's designated beneficiary; (5) paid under an immediate annuity; or (6) which come from premium payments made prior to August 14, 1982. Regarding the disability exception, because we cannot verify that the owner is disabled, we will report such withdrawals to the IRS as early withdrawals with no known exception from the penalty tax.
Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. You may wish to consult a tax adviser for more information regarding the imposition of penalty tax.
Guaranteed Lifetime Withdrawal Benefits
For policies with a guaranteed lifetime withdrawal benefit or a guaranteed minimum accumulation benefit the application of certain tax rules, particularly those rules relating to distributions from your policy, are not entirely clear. It is possible that the withdrawal base (with respect to the guaranteed lifetime withdrawal benefits) and the guaranteed future value (with respect to the guaranteed minimum accumulation benefit) could be taken into account to determine the policy value that is used to calculate required distributions and the amount of the distribution that would be included in income. The proper treatment of the Income Enhancement Option under a guaranteed lifetime withdrawal benefit is unclear. It is possible that the IRS could determine that the benefit provides some form of long term care insurance. In that event, the Internal Revenue Service may determine the Income Enhancement Option is an incidental benefit with adverse consequences for qualification as an Individual Retirement Annuity, you could be treated as in receipt of some amount of income attributable to the value of the benefit even though you have not received a payment from your policy, and the amount of income attributable to guaranteed lifetime withdrawal payments could be affected. In addition, if the Income Enhancement Benefit causes an increase in payments calculated to meet the Required Minimum Distribution requirements it may violate the rules governing such distributions with adverse tax consequences. In view of this uncertainty, you should consult a tax adviser with any questions.
Aggregation
All nonqualified deferred annuity policies that are issued by us (or our affiliates) to the same owner (policyholder) during the same calendar year are treated as one annuity for purposes of determining the amount includable in the owner's income when a taxable distribution (other than annuity payments) occurs. If you are considering purchasing multiple policies from us (or our affiliates) during the same calendar year, you may wish to consult with your tax adviser regarding how aggregation will apply to your policies.
Tax-Free Exchanges of Nonqualified Policies
We may issue the nonqualified policy in exchange for all or part of another annuity contract that you own. Such an exchange will be tax free if certain requirements are satisfied. If the exchange is tax free, your investment in the policy immediately after the exchange will generally be the same as that of the annuity contract exchanged, increased by any additional premium payment made as part of the exchange. Your policy value immediately after the exchange may exceed your investment in the policy. That excess may be includable in income should amounts subsequently be withdrawn or distributed from the policy (e.g., as a partial withdrawal, surrender, annuity income payment or death benefit).
If you exchange part of an existing contract for the policy, and within 180 days of the exchange you received a payment other than certain annuity payments (e.g., you make a partial withdrawal) from either contract, the exchange may not be treated as a tax free exchange. Rather, some or all of the amount exchanged into the policy could be includible in your income and subject to a 10% penalty tax.
You should consult your tax adviser in connection with an exchange of all or part of an annuity contract for the policy, especially if you may make a withdrawal from either contract within 180 days after the exchange.
Medicare Tax
Distributions from nonqualified annuity policies are considered “investment income” for purposes of the Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts. We are required to report distributions made from nonqualified annuity policies as being potentially subject to this tax. While distributions from qualified policies are not subject to the tax, such distributions may be includable in income for purposes of determining whether certain Medicare Tax thresholds have been met. As such, distributions from your qualified policy could cause your other investment income to be subject to the tax. Please consult a tax adviser for more information.
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Same Sex Relationships
Same sex couples have the right to marry in all states. The parties to each marriage that is valid under the law of any state will each be treated as a spouse as defined in this policy. Individuals in other arrangements, such as civil unions, registered domestic partnerships, or other similar arrangements, that are treated as spouses under the applicable state law, will each be treated as a spouse as defined in this policy for state law purposes. However, individuals in other arrangements, such as civil unions, registered domestic partnerships, or other similar arrangements, that are not recognized as marriage under the relevant state law, will not be treated as married or as spouses as defined in this policy for federal tax purposes. Therefore, exercise of the spousal continuation provisions of this policy or any riders by individuals who do not meet the definition of “spouse” may have adverse tax consequences and/or may not be permissible. Please consult a tax adviser for more information on this subject.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the policy because of your death or the death of the annuitant. Generally, such amounts should be includable in the income of the recipient: (1) if distributed in a lump sum, these amounts are taxed in the same manner as a surrender; (2) if distributed via partial withdrawals, these amounts are taxed in the same manner as partial surrenders; or (3) if distributed under an annuity payment option, these amounts are taxed in the same manner as annuity payments.
Transfers, Assignments or Exchanges of Policies
A transfer of ownership or assignment of a policy, the designation of an annuitant or payee or other beneficiary who is not also the owner, the exchange of a policy and certain other transactions, or a change of annuitant other than the owner, may result in certain income or gift tax consequences to the owner that are beyond the scope of this discussion. An owner contemplating any such transaction or designation should contact a competent tax adviser with respect to the potential tax effects.
Charges
It is possible that the IRS may take a position that fees for certain optional benefits (e.g., death benefits other than the Return of Premium death benefit) are deemed to be taxable distributions to you. In particular, the IRS may treat fees associated with certain optional benefits as a taxable partial withdrawal, which might also be subject to a tax penalty if the partial withdrawal occurs prior to age 59½. Although we do not believe that the fees associated with any optional benefit provided under the policy should be treated as taxable partial withdrawals, the tax rules associated with these benefits are unclear, and we advise that you consult your tax adviser prior to selecting any optional benefit under the policy.
Federal Estate, Gift and Generation-Skipping Transfer Taxes
The estate and gift tax unified credit basic exclusion amount is $10,000,000, subject to inflation adjustments (using the C-CPI-U), for taxable years beginning after December 31, 2017, and before January 1, 2026. The maximum rate is 40%.
The uncertainty as to how the current law might be modified in the future underscores the importance of seeking guidance from a competent adviser to help ensure that your estate plan adequately addresses your needs and that of your beneficiaries under all possible scenarios.
Federal Estate Taxes. While no attempt is being made to discuss the Federal estate tax implications of the policy in detail, a purchaser should keep in mind that the value of an annuity policy owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent's gross estate. Depending on the terms of the annuity policy, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning adviser for more information.
Generation-Skipping Transfer Tax. Under certain circumstances, the Code may impose a “generation skipping transfer tax” when all or part of an annuity policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the owner. Regulations issued under the Code may require us to deduct the tax from your policy, or from any applicable payment, and pay it directly to the IRS.
Qualified Policies
The qualified policy is designed for use with several types of tax-qualified retirement plans which are briefly described below. The tax rules applicable to participants and beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits, distributions prior to age 59½ (subject to certain exceptions), distributions that do not conform to specified commencement and minimum distribution rules, and in other specified
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circumstances. The distribution rules under Section 72(s) of the Code do not apply to annuities provided under a plan described in Sections 401(a), 403(a), 403(b), 408 or 408A of the Code, but other similar rules may. Some retirement plans are subject to distribution and other requirements that are not incorporated into the policies or our policy administration procedures. Owners, employers, participants, and beneficiaries are responsible for determining that contributions, distributions, and other transactions with respect to the policies comply with applicable law.
Traditional Individual Retirement Annuities. In order to qualify as a traditional individual retirement annuity under Section 408(b) of the Code, a policy must satisfy certain conditions: (i) the owner must be the annuitant; (ii) the policy generally is not transferable by the owner, e.g., the owner may not designate a new owner, designate a contingent owner or assign the policy as collateral security; (iii) subject to special rules, the total premium payments for any calendar year may not exceed the amount specified in the Code for the year, except in the case of a rollover amount or contribution under Section 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) or 457(e)(16) of the Code; (iv) annuity payments or partial surrenders according to the requirements in the IRS regulations (minimum required distributions) must begin no later than April 1 of the calendar year following the calendar year in which the annuitant attains age 70½; (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the annuitant and the beneficiary may not be selected; (vi) certain payments of death benefits must be made in the event the annuitant dies prior to the distribution of the policy value; (vii) the entire interest of the owner is non-forfeitable; and (viii) the premiums must not be fixed. Policies intended to qualify as traditional individual retirement annuities under Section 408(b) of the Code contain such provisions. Amounts in the individual retirement annuity (other than nondeductible contributions) generally are taxed only when distributed from the annuity. Distributions prior to age 59½ (unless certain exceptions apply) are subject to a 10% penalty tax.
SIMPLE and SEP IRAs are types of IRAs that allow employers to contribute to IRAs on behalf of their employees. SIMPLE IRAs permit certain small employers to establish SIMPLE plans as provided by section 408(p) of the Code, under which employees may elect to defer to a SIMPLE IRA a specified percentage of compensation. The sponsoring employer is required to make matching or non-elective contributions on behalf of employees. Distributions from SIMPLE IRAs are subject to the same restrictions that apply to IRA distributions. Subject to certain exceptions, distributions prior to age 59½ are subject to a 10 percent penalty tax, which is increased to 25 percent if the distribution occurs within the first two years after the commencement of the employee's participation in the plan. SEP IRAs permit employers to make contributions to IRAs on behalf of their employees, up to a specified dollar amount for the year and subject to certain eligibility requirements as provided by Section 408(k) of the Code. Distributions from SEP IRAs are subject to the same rules that apply to IRA distributions and are taxed as ordinary income.
The IRS has not reviewed this policy for qualification as a traditional IRA, SIMPLE IRA or SEP IRA, and has not addressed in a ruling of general applicability whether any death benefits available under the policy comport with qualification requirements.
Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA, a traditional IRA or other allowed qualified plan. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax. The ability to make cash contributions to Roth IRAs is available to individuals with earned income and whose modified adjusted gross income is under a specified dollar amount for the year. Subject to special rules, the amount per individual that may be contributed to all IRAs (Roth and traditional) is an amount specified in the Code for the year. Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made 5 tax years after the first contribution to any Roth IRA of the individual and made after one of the following: attaining age 59½, to pay for qualified first time home buyer expenses (lifetime maximum of $10,000), or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a penalty tax unless an exception applies. Please note that specific tax ordering rules apply to Roth IRA distributions. Unlike the traditional IRA, there are no minimum required distributions during the owner's lifetime; however, minimum required distributions at death are generally the same as for traditional IRAs.
The IRS has not reviewed this policy for qualification as a ROTH IRA, and has not addressed in a ruling of general applicability whether any death benefits available under the policy comport with qualification requirements.
Section 403(b) Plans. Under Section 403(b) of the Code, payments made by public school systems and certain tax exempt organizations to purchase policies for their employees are generally excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to Federal Insurance Contributions Act (FICA or Social Security) taxes. The policy includes a death benefit that in some cases may exceed the greater of the premium payments or the policy value. Additionally, in accordance with the requirements of the Code, Section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, and (ii) earnings on those contributions, and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989, unless certain events have occurred. Specifically distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59½, severance from employment, disability, or financial hardship, except that income attributable to elective
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contributions may not be distributed in the case of hardship. These rules may prevent the payment of guaranteed withdrawals under a guaranteed lifetime withdrawal benefit prior to age 59½. For policies issued after 2008, amounts attributable to non-elective contributions may be subject to distribution restrictions specified in the employer's section 403(b) plan. Employers using the policy in connection with Section 403(b) plans may wish to consult with their tax adviser.
Pursuant to tax regulations, we generally are required to confirm, with your 403(b) plan sponsor or otherwise, that surrenders, loans or transfers you request from a 403(b) policy comply with applicable tax requirements before we process your request. We will defer such payments you request until all information required under the tax law has been received. By requesting a surrender or transfer, you consent to the sharing of confidential information about you, the policy, and transactions under the policy and any other 403(b) policies or accounts you have under the 403(b) plan among us, your employer or plan sponsor, any plan administrator or record keeper, and other product providers.
Pension and Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the policies to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the policy is assigned or transferred to any individual as a means to provide benefit payments. Contributions to and distributions from such plans are limited by the Code and may be subject to penalties.
Deferred Compensation Plans. Section 457(b) of the Code, while not actually providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans established and maintained by state and local governments (and their agencies and instrumentalities) and tax exempt organizations. Under such plans a participant may be able to specify the form of investment in which his or her participation will be made. For non-governmental Section 457(b) plans, all such investments, however, are typically owned by, and are subject to, the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-government employer may be entitled to draw on deferred amounts for purposes unrelated to its Section 457(b) plan obligations. In general, all amounts received under a non-governmental Section 457 plan are taxable in the year paid (or in the year paid or made available in the case of a non-governmental 457(b) plan). Distributions from non-governmental 457(b) plans are subject to federal income tax withholding as wages, distributions from governmental 457(b) plans are subject to withholding as “eligible rollover distributions” as described in the section entitled “Withholding.” below. Contributions to and distributions from such plans are limited by the Code and may be subject to penalties. Deferred compensation plans of governments and tax-exempt entities that do not meet the requirements of Section 457(b) are taxed under Section 457(f), which means compensation deferred under the plan is included in gross income in the first year in which the compensation is not subject to substantial risk of forfeiture.
Ineligible Owners-Qualified
We currently will not issue new policies to/or for the following plans: 403(a), 403(b), 412(i)/412(e)(3), 419, 457 (we will in certain limited circumstances accept 457(f) plans), employee stock ownership plans, Keogh/H.R.-10 plans and any other types of plans at our sole discretion.
Taxation of Surrenders and Partial Withdrawals - Qualified Policies
In the case of a withdrawal under a qualified policy (other than from a deferred compensation plan under Section 457 of the Code), a pro rata portion of the amount you receive is taxable, generally based on the ratio of your “investment in the policy” to your total account balance or accrued benefit under the retirement plan. Your “investment in the policy” generally equals the amount of any non-deductible premium payments made by you or on your behalf. If you do not have any non-deductible premium payments, your investment in the contract will be treated as zero.
In addition, a penalty tax may be assessed on amounts surrendered from the policy prior to the date you reach age 59½, unless you meet one of the exceptions to this rule which are similar to the penalty exceptions for distributions from nonqualified policies discussed above. However, the exceptions applicable for qualified policies differ from those provided to nonqualified policies. You may wish to consult a tax adviser for more information regarding the application of these exceptions to your circumstances. You may also be required to begin taking minimum distributions from the policy by a certain date. The terms of the plan may limit the rights otherwise available to you under the policy.
Qualified Plan Required Distributions
For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the owner (or plan participant) (i) reaches age 70½ or (ii) retires, and must be made in a specified form or manner. If a participant is a “5 percent owner” (as defined in the Code), or in the case of an IRA (other than a Roth IRA which is not subject to the lifetime required minimum distribution rules), distributions generally must begin no later than April 1 of the year following the calendar year in which the owner (or plan
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participant) reaches age 70½. The actuarial present value of death and/or living benefit options and riders elected may need to be taken into account in calculating minimum required distributions. Consult a competent tax adviser before purchasing an optional living or death benefit.
Each owner is responsible for requesting distributions under the policy that satisfy applicable tax rules. We do not attempt to provide more than general information about the use of the policy with the various types of retirement plans. Purchasers of policies for use with any retirement plan should consult their legal counsel and tax adviser regarding the suitability of the policy.
The Code generally requires that interest in a qualified policy be non-forfeitable.
You should consult your legal counsel or tax adviser if you are considering purchasing an enhanced death benefit or other optional rider, or if you are considering purchasing a policy for use with any qualified retirement plan or arrangement.
Optional Living Benefits
For policies with a guaranteed lifetime withdrawal benefit or a guaranteed maximum accumulation benefit the application of certain tax rules, particularly those rules relating to distributions from your policy, are not entirely clear. The tax rules for qualified policies may impact the value of these optional benefits. Additionally, the actions of the qualified plan as contract holder may cause the qualified plan participant to lose the benefit of the guaranteed lifetime withdrawal benefit. In view of this uncertainty, you should consult a tax adviser before purchasing this policy as a qualified policy.
Withholding
The portion of any distribution under a policy that is includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld. Election forms will be provided at the time distributions are requested or made. The amount of withholding varies according to the type of distribution. The withholding rates applicable to the taxable portion of periodic payments (other than eligible rollover distributions) are the same as the withholding rates generally applicable to payments of wages. A 10% withholding rate applies to the taxable portion of non-periodic payments. Regardless of whether you elect not to have federal income tax withheld, you are still liable for payment of federal income tax on the taxable portion of the payment. For qualified policies taxable, “eligible rollover distributions” from Section 401(a) plans, Section 403(a) annuities, Section 403(b) tax-sheltered annuities, and governmental 457 plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is any distribution from such a plan, other than specified distributions such as distributions required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, to nontaxable distributions or if (i) the employee (or employee's spouse or former spouse as beneficiary or alternate payee) chooses a “direct rollover” from the plan to a tax-qualified plan, IRA, Roth IRA or 403(b) tax-sheltered annuity or to a governmental 457 plan that agrees to separately account for rollover contributions; or (ii) a non-spouse beneficiary chooses a “direct rollover” from the plan to an IRA established by the direct rollover.
Annuity Purchases by Residents of Puerto Rico
The IRS has announced that income received by residents of Puerto Rico under life insurance or annuity policies issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.
Annuity Policies Purchased by Non-resident Aliens and Foreign Corporations
The discussion above provided general information (but not tax advice) regarding U.S. federal income tax consequences to annuity owners that are U.S. persons. Taxable distributions made to owners who are not U.S. persons will generally be subject to U.S. federal income tax withholding at a 30% rate, unless a lower treaty rate applies. In addition, distributions may be subject to state and/or municipal taxes and taxes that may be imposed by the owner's country of citizenship or residence. Prospective foreign owners are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation for any annuity policy purchase.
Foreign Account Tax Compliance Act (“FATCA”)
If the payee of a distribution from the policy is a foreign financial institution (“FFI”) or a non-financial foreign entity (“NFFE”) within the meaning of the Code as amended by the Foreign Account tax Compliance Act (“FATCA”), the distribution could be subject to U.S. federal withholding tax on the taxable amount of the distribution at a 30% rate irrespective of the status of any beneficial owner of the policy or the distribution. The rules relating to FATCA are complex, and a tax adviser should be consulted if an FFI or NFFE is or may be designated as a payee with respect to the policy.
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Possible Tax Law Changes
Although the likelihood of legislative or regulatory changes is uncertain, there is always the possibility that the tax treatment of the policy could change by legislation, regulation, or otherwise. You should consult a tax adviser with respect to legal or regulatory developments and their effect on the policy.
We have the right to modify the policy to meet the requirements of any applicable laws or regulations, including legislative changes that could otherwise diminish the favorable tax treatment that annuity owners currently receive.
ADDITIONAL FEATURES
Systematic Payout Option
You can select at any time (during the accumulation phase) to receive regular surrenders (i.e., partial surrenders) 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 surrenders made per year, where: (1) up to 10% of your premium payments (reduced by prior surrenders 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. The amount of your payment is established when you select the option. The amount available is recalculated on each policy anniversary thereafter while the Systematic Payout Option is in effect.
This amount may be taken free of surrender charges.
Any systematic withdrawal in excess of the remaining rider withdrawal amount could affect your rider values (if elected). Systematic surrenders can be made monthly, quarterly, semi-annually, or annually. Each surrender must be at least $40. Monthly and quarterly surrenders must generally be made by electronic funds transfer directly to your checking or savings account.
Any systematic withdrawal in excess of your remaining surrender charge free amount may be subject to a surrender charge. If the request does not exceed the surrender charge free amount, future systematic payments will be recalculated based on the remaining free amounts.
Keep in mind that surrenders under the systematic payout option may be taxable, and if made before age 59½, may be subject to a 10% federal penalty tax. There is no charge for this benefit.
Initial Payment Guarantee
You may only elect to purchase the Initial Payment Guarantee which provides annually stabilized payments that are guaranteed to never be less than a percentage of the initial variable annuity payment 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.
Under the Initial Payment Guarantee, you receive annuity payments that are stabilized—that is, held level throughout each policy year—and 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.
The payment amount is adjusted once each year (on the anniversary of your annuity commencement date) 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 (i.e., your payment is “net” the initial payment guarantee fee, mortality and expense risk fee, and administrative charges).
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.
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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 and may not be available for all policies, in all states or at all times.
Access Rider
You may elect to purchase the optional “Access Rider” which eliminates all surrender charges during the accumulation phase. You can only elect this rider at the time you purchase your policy.
Please note that the Access Rider does not eliminate any excess interest adjustment, nor does it modify other provisions including the systematic payout option. The Access Rider also does not eliminate the surrender charge under the Life with Emergency Cash® annuity payment options.
Rider Fee. A rider fee equal to an effective annual rate of 0.35% of the daily net asset value in the separate account is deducted in calculating the accumulation unit values. Please note we may credit interest in the fixed account at a lower rate if you select this rider.
Termination. The rider is irrevocable.
Please note: The rider fee is deducted in all years during the accumulation phase, even if you have not made any premium payments in the immediately preceding five years.
The Access Rider may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a benefit, please contact your financial intermediary or our Administrative Office.
Additional Death Distribution
The optional Additional Death Distribution rider pays an additional amount (based on rider earnings, if any, since the rider was issued) when a death benefit is payable during the accumulation phase under your policy, in certain circumstances. The Additional Death Distribution is only available for issue ages through age 80. Please Note: This rider may not be issued or added to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. The Additional Death Distribution benefit is based on our claims-paying ability.
The Additional Death Distribution may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time for new sales, which includes new sales to existing policyowners. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a benefit, please contact your financial intermediary or our Administrative Office.
Additional Death Distribution Benefit Amount. The Additional Death Distribution is payable only if you elected the rider prior to the death triggering the payment of the policy death benefit and a death benefit is payable under the policy. The Additional Death Distribution is equal to:
• the Additional Death Distribution factor (see below); multiplied by
• the rider earnings, if any, on the date the death benefit is calculated.
Rider earnings are policy gains accrued and not previously withdrawn since the rider date. This amount is equal to the current policy value minus the policy value on the rider date minus premiums paid after the rider date plus amounts withdrawn after the rider date that exceed rider earnings on the date of the withdrawal. No benefit is payable under the Additional Death Distribution rider if there are no rider earnings on the date the death benefit is calculated.
If you purchase your policy as part of a 1035 exchange or add the Additional Death Distribution rider after you purchase the policy, rider earnings do not include any gains before the 1035 exchange or the date the Additional Death Distribution is added to your policy.
The Additional Death Distribution factor is 40% for issue ages under 71 and 25% for issue ages 71-80, based on the annuitant’s age.
No benefit is paid under the rider unless (a) the rider is in force, (b) a death benefit is payable on the policy, and (c) there are rider earnings when the death benefit is calculated.
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For purposes of computing taxable gains, both the death benefit payable under the policy and the Additional Death Distribution will be considered.
Please see “Appendix - Additional Death Distribution Rider” for an example which illustrates the Additional Death Distribution payable as well as the effect of a partial surrender on the Additional Death Distribution benefit amount.
Spousal Continuation. If a spouse is eligible to and elects to continue the policy as the new owner instead of receiving a death benefit and Additional Death Distribution, the spouse will generally receive a one-time policy value increase equal to the Additional Death Distribution. At this time the rider will terminate. The spouse will have the option of immediately re-electing the rider through age 80 if the Additional Death Distribution benefit is still being offered. Certain owners may have the option to continue the rider without receiving the one-time policy value increase. See TAX INFORMATION - Tax Status of a Nonqualified Policy - Distribution Requirements. (The payment of a death benefit under the policy is triggered by the death of the annuitant.)
Rider Fee. A rider fee, 0.25% 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. The rider fee is deducted pro rata from each investment option. The fee is deducted even during periods when the Additional Death Distribution would not pay any benefit (because there are no rider earnings).
Termination. The rider will remain in effect until:
• you cancel it by notifying our Administrative Office in writing,
• the policy is annuitized or surrendered,
• the policy value becomes zero, or
• the Additional Death Distribution is paid or added to the policy value under a spousal continuation.
Once terminated, the Additional Death Distribution may be re-elected if still being offered; however, a new rider will be issued and the additional death benefit will be re-determined. Please note that if the rider is terminated and then re-elected, it will only cover gains, if any, since it was re-elected and the terms of the new rider may be different than the terminated rider.
Please note: This feature terminates upon annuitization.
Additional Death Distribution+ Rider
The optional Additional Death Distribution+ Rider rider pays an additional amount (based on the benefit base) when a death benefit is payable during the accumulation phase under your policy, in certain circumstances. The Additional Death Distribution+ Rider is only available for issue ages through age 75. Please Note: This rider may not be issued or added to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. The Additional Death Distribution+ benefit is based on our claims-paying ability.
The Additional Death Distribution+ Rider may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time for new sales, which includes new sales to existing policyowners. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a benefit, please contact your financial intermediary or our Administrative Office.
Additional Death Distribution+ Rider 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 Additional Death Distribution+ 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 premium payments added after the rider date.
The rider benefit percentage equals 30% for issue ages 0 - 70 and 20% for issue ages 71 - 75, based on the annuitant’s age.
No benefit is payable under the Additional Death Distribution+ Rider 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 - Additional Death Distribution+ Rider” for an example that illustrates the additional death benefit payable as well as the effect of a partial surrender on the Additional Death Distribution+ Rider benefit amount.
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Spousal Continuation. If a spouse is eligible to and elects to continue the policy as the new owner instead of receiving the death benefit and Additional Death Distribution+ Rider, then the spouse will generally receive a one-time policy value increase equal to the Additional Death Distribution+ Rider. At this time the rider will terminate. The spouse will have the option of immediately re-electing the rider through age 75 if the Additional Death Distribution+ benefit is still being offered. Certain owners may have the option to continue the rider without receiving the one-time policy value increase. See TAX INFORMATION - Tax Status of a Nonqualified Policy - Distribution Requirements. (The payment of a death benefit under the policy is triggered by the death of the annuitant.)
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 option. 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 Office in writing in good order,
• the policy is annuitized or surrendered,
• the policy value becomes zero, or
• the additional death benefit is paid or added to the policy value under a spousal continuation.
If terminated no more than 90 days after policy issue, you may re-elect the Additional Death Distribution+ Rider within 90 days of policy issuance if it is still being offered. However, if it is terminated more than 90 days after the policy issue date, the Additional Death Distribution+ may not be re-elected, if it is still being offered, for one year. Please note that if the rider is terminated and then re-elected, the new rider will have its own fees, benefits and features as well as a new rider date which may affect the rider benefit.
Please note: This feature terminates upon annuitization.
Nursing Care and Terminal Condition Withdrawal Option
No surrender charges or excess interest adjustments will apply if you make a surrender ($1,000 minimum), under certain circumstances, because you or your spouse has been:
• confined in a hospital or nursing facility for 30 days in a row after the policy issue date; or
• diagnosed with a terminal condition after the policy issue date (usually a life expectancy of 12 months or less).
You may exercise this benefit at any time during the accumulation phase. This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. There is no restriction on the maximum amount you may surrender under this benefit. There is no charge for this benefit.
The Nursing Care and Terminal Condition Withdrawal Option may vary for certain policies and may not be available for all policies, in all states or at all times.
Unemployment Waiver
No surrender charges or excess interest adjustments will apply to surrenders after you or your spouse become unemployed due to:
• involuntary termination of employment
• involuntary lay off;
In order to qualify, you (or your spouse, whichever is applicable) must have been:
• employed full time for at least two years prior to becoming unemployed;
• employed full time on the policy date;
• unemployed for at least 60 days in a row at the time of surrender;
• must have a minimum cash value at the time of surrender of $5,000; and
• you (or your spouse) must be receiving unemployment benefits.
You must provide written proof from your State's Department of Labor, which verifies that you qualify for and are receiving unemployment benefits at the time of surrender.
You may select this benefit at any time during the accumulation phase. This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. There is no restriction on the maximum amount you may surrender under this benefit. There is no charge for this benefit.
The Unemployment Waiver may vary for certain policies and may not be available for all policies, in all states or at all times.
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Telephone and Electronic Transactions
Currently, certain transactions may be made by telephone or other electronic means acceptable to us upon our receipt of the appropriate authorization. We may discontinue this option at any time. To access information and perform transactions electronically, we require you to create an account with a username and password, and to maintain a valid e-mail address.
We will not be liable for following instructions communicated by telephone or electronically we reasonably believe to be genuine. We will employ reasonable procedures to confirm that instructions we receive are genuine. Our procedures require you to provide information to verify your identity when you call us and we will record conversations with you. We may also require written confirmation of the request. When someone contacts our Administrative Office and follows our procedures, we will assume you are authorizing us to act upon those instructions. For electronic transactions through the internet, you will need to provide your username and password. You are responsible for keeping your password confidential and must notify us of any loss, theft or unauthorized use of your password.
Telephone and other electronic transactions must be received in good order while the New York Stock Exchange is open for regular trading to get same-day pricing of the transaction. Transactions received in good order on non-market days or after our close of business on market days will get next-day pricing. See OTHER INFORMATION – Sending Forms and Transaction Requests in Good Order. Please note that the telephone and/or electronic device transactions may not always be available. Any telephone, fax machine or other electronic device, whether it is yours, your service provider's, or your financial representative's can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request if the volume of transactions is unusually high, we might not have anyone available, or lines available, to take your transaction. Although we have taken precautions to limit these problems, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Administrative Office.
We reserve the right to revoke your telephone and other electronic transaction privileges at any time without revoking all owners' privileges. We may deny telephone and electronic transaction privileges to market timers or disruptive traders.
Dollar Cost Averaging Program
During the accumulation phase, you may instruct us to automatically make transfers into one or more subaccounts in accordance with your allocation instructions. This is known as Dollar Cost Averaging. While Dollar Cost Averaging buys more accumulation units when prices are low and fewer accumulation units when prices are high, it does not guarantee profits or assure that you will not experience a loss.
Dollar Cost Averaging programs that may be available under your policy:
• Traditional—You may specify the dollar amount to be transferred or the number of transfers. Transfers will begin as soon as the program is started. A minimum of $500 per transfer is required. The minimum number of transfers is 6 monthly or 4 quarterly, and the maximum is 24 monthly or 8 quarterly. You can elect to transfer from the fixed account, money market or other specified subaccount.
• Special —You may only elect either a six or twelve month program. Transfers will begin as soon as the program is started. You cannot transfer from another investment option into a Special Dollar Cost Averaging program. This program is only available for new premium payments, requires transfers from a fixed source, and may credit a higher or lower interest rate than a traditional program. A minimum of $500 per transfer is required ($3,000 or $6,000 to start a 6-month or 12-month program, respectively).
A Dollar Cost Averaging program will begin the next business day after we have received in good order all necessary information and the minimum required amount. See OTHER INFORMATION - Sending Forms and Transaction Requests in Good Order. Please note: Dollar Cost Averaging programs will not begin on the 29th, 30th, or 31st. If a program would have started on one of those dates, it will start on the 1st 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:
New Dollar Cost Averaging instructions are required to start a new Dollar Cost Averaging program once the previous Dollar Cost Averaging program has completed. Additional premium payments, absent new allocation instructions, received after a Dollar Cost Averaging program has completed, will be allocated according to the current premium payment allocations at that time but will not reactivate a completed Dollar Cost Averaging program.
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IF:
• we do not receive all necessary information to begin or restart a Dollar Cost Averaging program;
THEN:
• any amount allocated to a fixed source will be invested in that fixed source but will be transferred to the money market investment option within 30 days of allocation to fixed source if new Dollar Cost Averaging instructions are not received;
• any amount in a variable source will be invested in that variable source and will remain in that variable investment option; and
• new Dollar Cost Averaging instructions will be required to begin a Dollar Cost Averaging program.
You should consider your ability to continue a Dollar Cost Averaging program during all economic conditions. Transfers from a Dollar Cost Averaging fixed source are not subject to an excess interest adjustment. A Dollar Cost Averaging program can be used in conjunction with Asset Rebalancing and a guaranteed lifetime withdrawal benefit (subject to any investment restrictions involving the source). There is no charge for this benefit.
The Dollar Cost Averaging Program may vary for certain policies and may not be available for all policies, in all states or at all times. See your policy for availability of the fixed account options. We reserve the right to terminate the availability of any Dollar Cost Averaging program at any time.
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. Asset rebalancing can be used in conjunction with a guaranteed lifetime withdrawal benefit. Please note, any amounts rebalanced may be immediately transferred to the Portfolio Allocation Method (PAM) investment options or Open Allocation subaccounts as applicable under the Portfolio Allocation Method or Open Allocation Method (OAM). There is no charge for this benefit. We reserve the right to terminate the availability of any asset rebalancing program at any time.
Guaranteed Lifetime Withdrawal Benefits
You may elect one of the following optional riders under the policy that offers guaranteed lifetime withdrawal benefits - the Living Benefits Rider, the Retirement Income Max® rider and the Retirement Income Choice® 1.6 rider. Important aspects of each of these riders are summarized in the Guaranteed Lifetime Withdrawal Benefit Comparison Table below and are described in more detail. You should consult with tax and financial professionals to determine which of these riders, if any, is appropriate for you.
The following benefits are no longer available, but if you have previously elected one of these riders you can still upgrade:
• Retirement Income Choice® rider
• Retirement Income Choice® with Double Withdrawal Base Benefit rider
• Retirement Income Choice® 1.4 rider
• Retirement Income Choice® 1.2 rider
• Income LinkSM rider
See “Appendix - Rider Grid Variations” for additional information on each of the riders above.
Guaranteed Lifetime Withdrawal Benefit Comparison Table
Living Benefits Rider Retirement Income Max® Rider Retirement Income Choice® 1.6 Rider
Election: At Issue
Post Issue 		Election: At Issue
Post Issue 		Election: At Issue
Post Issue
Cannot be elected if you have Retirement Income Max® or Retirement Income Choice® 1.6 riders. Cannot be elected if you have Living Benefits or Retirement Income Choice® 1.6 riders. Cannot be elected if you have Retirement Income Max® or Living Benefits riders.
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Living Benefits Rider Retirement Income Max® Rider Retirement Income Choice® 1.6 Rider
Benefit:
Provides:
(1) Guaranteed Minimum Accumulation Benefit (“GMAB”)—Ten years after you elect the rider (“guaranteed future value date”), your policy value will equal your guaranteed future value (calculated as described below). After that date, the guaranteed future value equals zero.
(2) Guaranteed Minimum Withdrawal Benefit (“GMWB”)—a maximum annual withdrawal amount (calculated as described below) regardless of your policy value; we account for withdrawals you take under the rider by applying two different withdrawal guarantees, “principal back,” for withdrawals of up to 7% of your total withdrawal base, or “for life,” for withdrawals up to 5% of your total withdrawal base. 		Benefit:
Provides:
(1) Guaranteed Lifetime Withdrawal Benefit (“GLWB”)—i.e.,a series of level cash withdrawals (and payments from us, if necessary) regardless of the performance of the designated investment choices that you select.
(2) Growth—On each of the first 10 rider anniversaries, we add a growth credit to your withdrawal base if no withdrawal occurred during the preceding rider year. The growth credit is equal to the growth percentage multiplied by the withdrawal base immediately before the rider anniversary.
The Growth Percentage is disclosed in the Rate Sheet Prospectus Supplement.
(3) Automatic Step-Up—We will automatically step-up the withdrawal base on each rider anniversary. You can opt out of the automatic step-up if the automatic step-up would result in an increase in the rider fee percentage. 		Benefit:
Provides:
(1) Guaranteed Lifetime Withdrawal Benefit (“GLWB”)—i.e.,a series of level cash withdrawals (and payments from us, if necessary) regardless of the performance of the designated investment choices that you select.
(2) Growth—On each of the first 10 rider anniversaries, we add a growth credit to your withdrawal base if no withdrawal occurred during the preceding rider year. The growth credit is equal to the growth percentage multiplied by the withdrawal base immediately before the rider anniversary.
The Growth Percentage is disclosed in the Rate Sheet Prospectus Supplement.
(3) Automatic Step-Up—We will automatically step-up the withdrawal base on each rider anniversary. You can opt out of the automatic step-up if the automatic step-up would result in an increase in the rider fee percentage.
Investor Need Rider Addresses:
• Market Participation
• Protection of Assets
• Retirement income for life 		Investor Need Rider Addresses:
• Retirement income for life
• Conservative range of investment choices 		Investor Need Rider Addresses:
• Retirement income for life
• Moderate range of investment options
• Income for long term care
Upgrades:
(1) Before the annuitant's 86th birthday, you can upgrade the total withdrawal base (for GMWB) and the guaranteed future value (for GMAB) by sending us written notice.
(2) If you upgrade, the current rider terminates and a new rider is issued (which may have a higher rider fee). 		  Upgrades:
You may request by sending us written notice. If you elect to manually reset, the current rider terminates and a new rider is issued (which may have a higher rider fee percentage and lower growth rate percentage.) If you have elected the joint life option under the rider, you cannot elect a manual reset if the annuitant or the annuitant's spouse is 86 or older (unless state law requires a lower maximum age).
  Additional Options:
Joint Life Option—You may elect to postpone termination of the rider until the later of the death of the annuitant or the death of the annuitant's spouse. The annuitant's spouse must be either a joint owner (along with the annuitant) or the sole primary beneficiary (without a joint owner). 		Additional Options:
(1) Death Benefit Option—You may add an amount to the death benefit payable under the base policy.
(2) Joint Life Option—You may elect to postpone termination of the rider until the later of the death of the annuitant or the death of the annuitant's spouse. The annuitant's spouse must be either a joint owner (along with the annuitant) or the sole primary beneficiary (without a joint owner).
(3) Income EnhancementSM Option—If the rider has been in effect for at least 12 months, then you may elect to have your withdrawal percentage increase to 150% of the non-income enhanced withdrawal percentage if either the annuitant or the annuitant's spouse, if the joint life option is elected, is confined in a hospital or nursing facility because of a medical necessity, and has been so confined for an “elimination period” (i.e., 180 days within the last 365 days). You cannot elect this option if the qualifying person(s) is/are already confined in a hospital or nursing facility when the rider is elected. In addition, the increase to the withdrawal percentage stops when the qualifying person(s) is/are no longer confined.
Availability:
0 - 80 (unless state law requires a lower maximum issue age 		Availability:
Younger than age 86 (unless state law requires a lower maximum issue age) 		Availability:
Younger than age 86 (unless state law requires a lower maximum issue age)
Current Charge:
1.25% of total withdrawal base on each rider anniversary under the “principal back” withdrawal guarantee under the rider. 		Current Charge:
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
 		Current Charge:
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
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Living Benefits Rider Retirement Income Max® Rider Retirement Income Choice® 1.6 Rider
Investment Restrictions:
Portfolio Allocation Method (“PAM”)—We monitor your policy value and, as we deem necessary to support the guarantees under the rider, may transfer amounts between investment options that we designate and the variable investment choices that you select. 		Investment Restrictions:
You must allocate 100% of your policy value to one or more investment options that we designate. 		Investment Restrictions:
You must allocate 100% of your policy value to one or more investment options that we designate.
Withdrawal Option:
5% For Life - Policyholder can withdraw up to 5% of the 5% For Life total withdrawal base each year starting with the rider anniversary following the annuitant's 59th birthday until at least the later of the death of the annuitant or the time when the 5% For Life Minimum Remaining Withdrawal Amount has reached zero. 		Withdrawal Percentages (Single Life):
The Withdrawal Percentage is disclosed in the Rate Sheet Prospectus Supplement.
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
For riders issued prior to the date of this prospectus, please reference the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information. 		Withdrawal Percentages (Single Life):
The Withdrawal Percentage is disclosed in the Rate Sheet Prospectus Supplement.
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
For riders issued prior to the date of this prospectus, please reference the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information.
Withdrawal Option:
7% Principal Back - Policyholder can withdraw up to 7% of the 7% Principal Back total withdrawal base per year until at least the time at which the 7% Principal Back minimum remaining withdrawal amount has reached zero. 		Withdrawal Percentages (Joint Life):
The Withdrawal Percentage is disclosed in the Rate Sheet Prospectus Supplement.
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
For riders issued prior to the date of this prospectus, please reference the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information. 		Withdrawal Percentages (Joint Life):
The Withdrawal Percentage is disclosed in the Rate Sheet Prospectus Supplement.
You may contact us at www.transamerica.com for the current Rate Sheet Prospectus Supplement applicable for this rider.
For riders issued prior to the date of this prospectus, please reference the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information.
Living Benefits Rider
You may elect to purchase the optional Living Benefits Rider (also known as Guaranteed Principal SolutionSM rider) which provides you with a guaranteed minimum accumulation benefit and a guaranteed minimum withdrawal benefit. The Living Benefits Rider is only available during the accumulation phase. The Living Benefits Rider is only available for annuitant issue ages through age 0-80. The maximum issue age may be lower if required by state law. Please Note: This rider may not be issued or added to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. If you elect the Living Benefits Rider you cannot elect the Retirement Income Max® or the Retirement Income Choice® 1.6 riders. The guaranteed lifetime withdrawal benefit is based on our claims-paying ability.
The Living Benefits Rider may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time for new sales, which includes new sales to existing policyowners. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a benefit, please contact your financial intermediary or our Administrative Office.
You should view the Living Benefits Rider as a way to permit you to invest in variable investment options while still having your policy value and liquidity protected to the extent provided by the Living Benefits Rider.
Please note:
• Certain protections under the rider are available only if you hold the rider for ten years.
• The longer you wait to start making withdrawals under the benefit, the less time you have to benefit from the guarantees due to the decreasing life expectancy as you age. This risk may be heightened if amounts are transferred based on the Portfolio Allocation Method. See Portfolio Allocation Method below.
• If you elect the rider, we will monitor your policy value and we may transfer amounts back and forth between specified investment options under the policy (including guaranteed period options in the fixed account) and the variable investment options you choose, according to a mathematical model that we will use to assist us in managing portfolio risk and supporting the guarantees under the rider. See Portfolio Allocation Method below.
• Any such transfers out of a guaranteed period option may be subject to an excess interest adjustment. (See Portfolio Allocation Method, below.)
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• You will begin paying the rider charge as of the date the rider takes effect, even if you do not begin taking withdrawals for many years, or ever. We will not refund the charges you have paid under the rider if you never choose to take withdrawals and/or if you never receive any payments under the rider.
• We have designed this rider for you to take withdrawals each rider year that are less than or equal to the maximum annual withdrawal amount. You should not purchase this rider if you plan to take withdrawals in excess of the maximum annual withdrawal amount, because such excess withdrawals may significantly reduce or eliminate the value of the guarantees provided by the rider.
• The maximum annual withdrawal amount is either “principal back, which is defined as up to 7% of your total withdrawal base each rider year until your minimum remaining withdrawal amount reaches zero, or “for life”, which is defined as up to 5% of your total withdrawal base each rider year starting with the rider anniversary immediately following the annuitant’s 59th birthday until the annuitant’s death, unless your “for life” minimum remaining withdrawal amount reaches zero due to excess withdrawals.
• Because the guaranteed minimum withdrawal benefit under this rider is accessed through regular withdrawals that do not exceed the maximum annual withdrawal amount, the rider may not be appropriate for you if you do not foresee a need for liquidity and your primary objective is to take the maximum advantage of the tax deferral aspect of the policy.
• The tax rules for qualified policies may limit the value of this rider. Please consult a qualified tax advisor before electing the Living Benefits Rider for a qualified policy.
Guaranteed Minimum Accumulation Benefit of Living Benefit Rider
If you elect the Living Benefits Rider, we will provide a guaranteed future value. This benefit is intended to provide a level of protection regardless of the performance of the variable investment options you select. The level of protection under the Guaranteed Minimum Accumulation Benefit is not 100% of your premium payments and is only in effect for the first ten rider years.
Guaranteed Future Value. We guarantee that, on the guaranteed future value date (ten years after you elect the rider), your policy value will at least equal your guaranteed future value. The guaranteed future value on the rider date (i.e., the date the rider is added to the policy) is the policy value. After the rider date and before the guaranteed future value date, the guaranteed future value is equal to:
• the guaranteed future value on the rider date; plus
• a percentage of subsequent premium payments (as described below); less
• subsequent adjusted partial withdrawals (as described below).
After the guaranteed future value date, the guaranteed future value equals zero.
Subsequent Premium Payments. The percentage of subsequent premium payments that will be added to the guaranteed future value is as follows:
Rider Year   Percent of subsequent premium payments
added to guaranteed future value
1   100%
2   90%
3   80%
4   70%
5   60%
6   50%
7   50%
8   50%
9   50%
10   0%
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Guaranteed Future Value Adjusted Partial Withdrawals. If you take a partial withdrawal, even withdrawals under the guaranteed minimum withdrawal benefits, it will reduce your guaranteed future value. The amount of the reduction is referred to as the adjusted partial withdrawal amount, which will be equal to the greater of:
• the guaranteed future value immediately prior to the withdrawal multiplied by the percentage reduction in the policy value resulting from the gross partial withdrawal; or
• the gross partial withdrawal amount.
(The gross partial withdrawal amount is the amount you request, plus any surrender charges or excess interest adjustment that may be applicable.)
In other words, if your policy value is greater than the guaranteed future value at the time you make a partial withdrawal, then your guaranteed future value is reduced by the same amount we reduce your policy value. However, if your policy value is less than the guaranteed future value at the time you make a partial withdrawal, then your guaranteed future value will be reduced by more than the amount by which we reduce your policy value.
See the “Appendix - Living Benefits Rider Adjusted Partial Withdrawals” to this prospectus for examples showing the effect of hypothetical withdrawals in more detail, including withdrawals that reduce the guaranteed future value by more than the amount of the gross partial withdrawal.
Guaranteed Minimum Accumulation Benefit. On the guaranteed future value date (ten years after you elect the rider), if the policy value is less than the guaranteed future value, we will calculate an amount equal to the difference between your policy value (the policy value will then be subject to investment risk) and the guaranteed future value, and this amount will be added on the next valuation date following the guaranteed future value date. This addition will not increase your “principal back” or “for life” total withdrawal bases. After the guaranteed future value date, the guaranteed minimum accumulation benefit will terminate.
Example. Assume you make a single premium payment of $100,000 and you do not make any withdrawals or additional premium payments. If, on the guaranteed future value date, your policy value has declined to $90,000 because of negative investment performance, then we will add $10,000 ($100,000–$90,000) to your policy value.
Please note: You do not have any protection under the guaranteed minimum accumulation benefit unless you hold the policy with the rider for ten years. If you think that you may terminate the policy or elect to start receiving annuity payments (or if you must begin taking required minimum distributions) before the guaranteed future value date, electing the rider may not be in your best interests.
Guaranteed Minimum Withdrawal Benefit of Living Benefit Rider
If you elect the Living Benefits Rider, we will provide a maximum annual withdrawal amount (first as withdrawals from your policy value or, if necessary, as payments from us) regardless of your policy value. This benefit is intended to provide a level of benefits regardless of the performance of the variable investment options you select.
Withdrawal Guarantees. We account for the withdrawals you take under the rider by applying two different withdrawal guarantees:
• “principal back,” for withdrawals of up to 7% of your total withdrawal base.
• “for life,” for withdrawals of up to 5% of your total withdrawal base.
You may elect to make a withdrawal under either “principal Back” or “for life”. However, it is not a requirement that you specify a withdrawal as being under either withdrawal guarantee. Any withdrawals that you take while the rider is in effect could have different impacts under each of the withdrawal guarantees - on your maximum annual withdrawal amount, on your total withdrawal base, and on your minimum remaining withdrawal amount. For example, withdrawals that are compliant with the “principal back” maximum withdrawal amount could result in excess withdrawals under the “for life” withdrawal guarantee and, consequently, would reduce the maximum annual withdrawal amount, the total withdrawal base, and the minimum remaining withdrawal amount under the “for life” withdrawal guarantee. (See Adjusted Partial Withdrawals below.)
Example: Assume you make a single premium payment of $100,000 and you have not made any withdrawals or additional premium payments. If you withdraw $6,000, that would be an excess withdrawal of $1,000 ($6,000 - $5,000) under the for life guarantee but not under the principal back guarantee.
Your ability to change the frequency or amount of your withdrawals ceases if your policy value reaches zero.
Of course, you can always withdraw an amount up to your cash value pursuant to your rights under the policy at your discretion. See “Appendix - Living Benefits Rider Adjusted Partial Withdrawals,” for examples showing the effect of hypothetical withdrawals in more detail, including an excess withdrawal that reduces the total withdrawal base by a pro rata amount.
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Please note:
• Any amount withdrawn in a rider year (including any surrender charge or excess interest adjustment) in excess of the maximum withdrawal amount is an excess withdrawal.
• The amount of your excess withdrawal will impact the maximum annual withdrawal amount, total withdrawal base, and minimum remaining withdrawal amount under each guarantee on a greater than dollar-for-dollar basis. (See Maximum Annual Withdrawal Benefit, Total Withdrawal Base, and Minimum Remaining Withdrawal Amount, below.)
• We will not refund rider charges that have been paid up to the point of terminating the policy or receiving annuity payments.
Withdrawals under the guaranteed minimum withdrawal benefit also:
• reduce your policy value;
• reduce the guaranteed future value;
• reduce your death benefit and other benefits;
• may be subject to surrender charges or excess interest adjustments if the withdrawal is greater than the surrender charge free amount;
• may be subject to income taxes and federal tax penalties (See TAX INFORMATION).
Maximum Annual Withdrawal Amount. Under this benefit:
• Principal Back: You can withdraw up to 7% of your “principal back” total withdrawal base each rider year until your “principal back” minimum remaining withdrawal amount reaches zero.
Example. Assume you make a single premium payment of $100,000 and that you do not make any withdrawals or additional premium payments. Assume that after five years, your policy value has declined to $70,000 solely because of negative investment performance. You could still receive up to $7,000 (7% of $100,000) each rider year for the next fourteen years and $2,000 in the year immediately thereafter so you would get back your full $100,000 (assuming that you do not withdraw more than $7,000 in any one rider year).
OR
• For Life: You can withdraw up to 5% of what we call your “for life” total withdrawal base each rider year starting with the rider anniversary immediately following the annuitant's 59th birthday and lasting until the annuitant's death, unless your “for life” minimum remaining withdrawal amount reaches zero because of “excess withdrawals” (see Adjusted Partial Withdrawals, below). A penalty tax may be assessed on amounts surrendered from the policy before the taxpayer reaches age 59½.
Example. Assume you are the owner and annuitant and you make a single premium payment of $100,000 when you are 55 years old. Assume you do not make any withdrawals or additional premium payments. Assume that after five years, your policy value has declined to $70,000 solely because of negative investment performance. You could still receive up to $5,000 (5% of $100,000) each rider year for the rest of your life (assuming that you do not withdraw more than $5,000 in any one rider year).
You can receive up to the maximum annual withdrawal amount each rider year (first as withdrawals from your policy value and, if necessary, as payments from us) under this rider regardless of your policy value; however, once your policy value reaches zero you cannot make premium payments, and all other policy features, benefits, and guarantees (except those provided by this rider) are terminated. In order to continue withdrawals under this rider after your policy value reaches zero, you must select an amount (which cannot exceed the maximum annual withdrawal amount at that time) and frequency (annually, semi-annually, quarterly or monthly) of future withdrawals. Once selected, the amount and frequency of future withdrawals cannot be changed.
Please note:
• Withdrawals under the 5% “for life” guarantee cannot begin until after the rider anniversary following the annuitant's 59th birthday.
• Any withdrawal before the rider anniversary following the annuitant's 59th birthday will reduce the benefits under the 5% “for life” guarantee.
• The maximum annual withdrawal amounts described above (the 7% “principal back” and 5% “for life”) are based on rider years, not calendar or policy years (if different from rider years).
• You cannot carry over any portion of your maximum annual withdrawal amount that is not withdrawn during a rider year for withdrawal in a future rider year. This means that if you do not take the maximum annual withdrawal amount during a rider year, you cannot take more than the maximum annual withdrawal amount in the next rider year and maintain the rider's guarantees.
• Excess withdrawals may cause you to lose the benefit of the rider.
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• If you have a qualified policy, minimum required distribution rules may force you to take excess withdrawals to avoid the imposition of a 50% penalty. Further, some qualified policies have withdrawal restrictions that may (with limited exceptions) prevent you from taking withdrawals before age 59½. You should consult a tax advisor before purchasing this rider with a qualified policy.
Total Withdrawal Base. We use the total withdrawal base to calculate the maximum annual withdrawal amount. The total withdrawal base on the rider date is the policy value. After the rider date, the total withdrawal base is equal to:
• the total withdrawal base on the rider date; plus
• subsequent premium payments; less
• subsequent adjusted partial withdrawals (as described below).
We will calculate separate total withdrawal bases for the “principal back” and “for life” guarantees.
Please note: We determine the total withdrawal base solely to calculate the maximum annual withdrawal amount. Your total withdrawal base is not a cash value, a surrender value, or a death benefit. It is not available for withdrawal, it is not a minimum return for any subaccount, and it is not a guarantee of policy value.
Minimum Remaining Withdrawal Amount. The minimum remaining withdrawal amount represents the total amount of guaranteed withdrawals still available under the rider. The minimum remaining withdrawal amount on the rider date is the policy value. After the rider date, the minimum remaining withdrawal amount is equal to:
• the minimum remaining withdrawal amount on the rider date; plus
• subsequent premium payments; less
• subsequent adjusted partial withdrawals (as described below).
We will calculate separate minimum remaining withdrawal amounts for the “principal back” and “for life” guarantees. It is important to calculate separate minimum remaining withdrawal amounts because they can provide different payment amounts not only upon reaching exhaustion but also in certain situations involving continuation after the annuitant's death.
Adjusted Partial Withdrawals. Each rider year, for each withdrawal guarantee (i.e., “principal back” and “for life”), gross partial withdrawals (the amount that you request be withdrawn, plus any surrender charge or excess interest adjustment that may be applicable) up to the maximum annual withdrawal amount for that withdrawal guarantee, will reduce the minimum remaining withdrawal amount for that withdrawal guarantee on a dollar-for-dollar basis, but will not reduce the total withdrawal base for that withdrawal guarantee. For each withdrawal guarantee, gross partial withdrawals in excess of the maximum annual withdrawal amount for that withdrawal guarantee will reduce the total withdrawal base and minimum remaining withdrawal amount for that withdrawal guarantee by the greater of the dollar amount of the excess withdrawal or a pro rata amount (possibly to zero). See “Appendix - Living Benefits Rider Adjusted Partial Withdrawals,” which provides examples showing the effect of a withdrawal. Excess withdrawals may cause you to lose the withdrawal guarantees under this rider.
Please note: Gross partial withdrawals that are compliant with the “principal back” withdrawal guarantee (i.e., withdrawals of the “principal back” maximum annual withdrawal amount) and any partial withdrawal before the rider anniversary following the annuitant’s 59th birthday, will result in an excess partial withdrawal under the “for life” guarantee, and will reduce the “for life” maximum annual withdrawal amount, the “for life” total withdrawal base, and the “for life” minimum remaining withdrawal amount. Such reduction may be on a greater than dollar-for-dollar basis if the policy value is less than the applicable base.
Rider Fee. A rider fee, 1.25% of the “principal back” total withdrawal base on each rider anniversary, is charged annually before annuitization. We will also deduct the rider fee upon full surrender of the policy or other termination of the rider. The rider fee is deducted from each investment option in proportion to the amount of policy value in each investment option. Generally, the rider fee is deducted regardless of your values (i.e., even if your policy value exceeds your total withdrawal base).
We will continue to calculate the rider fee using the “principal back” total withdrawal base even after the “principal back” minimum remaining withdrawal amount reaches zero. The “principal back” total withdrawal base is always greater than or equal to the “for life” total withdrawal base.
Please note: Because the rider fee is a percentage of your “principal back” total withdrawal base on each rider anniversary, the fee can be substantially more than 1.25% of your policy value if that total withdrawal base is higher than your policy value.
Portfolio Allocation Method
If you elect the Living Benefits Rider, the Portfolio Allocation Method (“PAM”) will automatically be in effect. PAM is designed to help manage portfolio risk and support the guarantees under the Living Benefits Rider. Using PAM, we will monitor your policy value and amounts will be transferred back and forth between the PAM TA Aegon U.S. Government Securities - Service Class subaccount (which invests in the Transamerica Aegon U.S. Government Securities VP - Service Class portfolio of the Transamerica
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Series Trust) or certain guaranteed period options of the fixed account (each a “PAM investment option” and collectively, the “PAM investment options”) and the variable investment options you choose to the extent the disclosed formula mandates. You should read the underlying fund prospectus for the variable PAM investment option(s) carefully before you elect the Living Benefits Rider. We will transfer amounts from your variable investment options to the PAM investment options to the extent the disclosed formula mandates to support the guarantees under the rider. We will transfer amounts to the PAM investment options proportionally from all your variable investment options. Currently, PAM transfers are being made to the PAM TA Aegon U.S. Government Securities - Service Class subaccount. We will not transfer amounts to the PAM investment options if your policy value is greater than guarantees under the rider.
PAM is designed to help reduce portfolio risk associated with negative performance. Using PAM, we will transfer amounts from your variable investment options to the PAM investment options to the extent the disclosed formula mandates to help manage portfolio risk and support the guarantees under the Living Benefits Rider. You should not view the Living Benefits Rider nor PAM as a “market timing” or other type of investment program designed to enhance your policy value. If you choose this rider, it may result in a lower policy value in certain situations. If policy value is transferred from your chosen variable investment options to the PAM investment options, less of your policy value may be available to participate in any future positive investment performance of your variable investment options. This may potentially provide a lower policy value than if you did not select the Living Benefits Rider.
Under PAM, the mathematical model compares a number of interrelated factors including your policy value and the guarantees under the rider to be provided in the future. The mathematical model also uses assumptions for interest rates, the duration of the policy and stock market volatility. The following table sets forth the most influential of these factors and indicates how each one (assuming all other factors remain constant) could trigger a transfer into or out of the PAM subaccounts.
Factor Direction of Transfer
Policy Value Increases Transfer to the investment options
Policy Value Decreases Transfer to the PAM subaccounts
Interest Rates Increase Transfer to the investment options
Volatility Increases Transfer to the PAM subaccounts
The amount of the transfer will vary depending on the magnitude and direction of the change in these factors. We may transfer some or all of your policy value to or from the PAM investment options.
Transactions you make also affect the number of PAM transfers including:
• additional premium payments; and
• excess withdrawals.
These transactions will change the policy value relative to the guarantees under the rider and may result in additional PAM transfers.
You may not allocate premium payments to, nor transfer policy value into or out of, the PAM investment options. PAM transfers are not subject to any transfer fee and do not count against the number of any free transfers we allow. Transfers out of a fixed account PAM investment option is at our discretion and may be subject to an excess interest adjustment if the transfer occurs before the end of a guarantee period. Any transfer we make out of PAM investment options to your variable investment options will be allocated into your variable investment options in proportion to the amount of policy value in each variable investment option. Please note that if your policy value is 100% allocated to the fixed account, we will be unable to transfer any of your policy value out of PAM investment options. If a merger of an underlying investment option occurs, the policy value allocated to the existing subaccount will be merged into the surviving underlying investment option.
Generally, transfers to the PAM investment options first occur when the policy value drops by a cumulative amount of 3% to 5% over any period of time, although we may make transfers to the PAM investment options when the policy value drops by a cumulative amount of less than 3% in relation to the guarantees. If the policy value continues to fall, more transfers to the PAM investment options will occur. When a transfer occurs, the transferred policy value is allocated to the PAM investment option(s) we deem appropriate. The policy value allocated to the PAM investment options will remain there unless the performance of your chosen investment options recovers sufficiently to enable us to transfer amounts back to your investment options while maintaining the guarantees under the Living Benefits Rider. This generally occurs when the policy value increases by 5% to 10% in relation to the guarantees, although we may require a larger increase before transferring amounts back to your investment options.
We reserve the right to change investment choices in the future for new purchasers of the Living Benefits Rider, including changing the PAM investment option, as we deem necessary to support the guarantees thereunder. We will not change the PAM investment option for any existing policyholders of a Living Benefits Rider.
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The Daily Rebalancing Formula Under the Mathematical Model: As noted above, to limit our exposure under the rider, we transfer policy value from your investment options to the PAM subaccounts, to the extent called for by a mathematical model that will not change once you purchase the policy. We do this in order to minimize the need to provide payments (for example, when your policy value goes to zero by other than an excess withdrawal), or to extend the time before any payment is required. When payments become more likely (because your policy value is approaching zero), the mathematical model will tend to allocate more policy value to the PAM subaccounts. If, on the other hand, the policy value is much higher than the guarantees under the rider, then payments may not be necessary, and therefore, the mathematical model will tend to allocate more policy value to the investment options.
Each business day the mathematical model computes a “target allocation,” which is the portion of the policy value that is to be allocated to the investment options.
The target allocation depends on several factors, including the policy value as compared to the guarantees under the rider, the time until payments are likely required, and interest rates. However, as time passes, these factors change. Therefore, the target allocation changes from one business day to the next.
See “Appendix - PAM Method Transfers” for more detail regarding the workings of the mathematical model.
Upgrades
Prior to the annuitant's 86th birthday and after the third rider anniversary, you can upgrade the rider by providing us the required notice. If you upgrade your rider, the current rider will terminate and a new rider will be issued. The new rider’s total withdrawal base, guaranteed future value and minimum remaining withdrawal amount will equal the policy value on the date of the upgrade. At that time, the maximum annual withdrawal amount will be recalculated using the new total withdrawal base.
If an upgrade is elected, your current rider will terminate and a new rider will be issued with a new rider date, guaranteed future value date, and its own rider fee percentage (which may be higher than your current rider fee percentage). The “principal back” and “for life” withdrawal percentages will not change. The new rider date will be the date the Company receives all necessary information.
Annuitization
If you have reached your maximum annuity commencement date, we will allow you to annuitize your policy and elect to receive lifetime annuity payments equal to your 5% “for life” maximum annual withdrawal amount.
Termination
The Living Benefits Rider will terminate upon the earliest of the following:
• the date we receive written notice from you in good order requesting termination of the Living Benefits Rider (you may not terminate the rider before the third rider anniversary);
• annuitization (however, if you have reached your maximum annuity commencement date you may choose an annuitization option which guarantees you lifetime payments in an amount equal to your 5% “for life” maximum annual withdrawal amount);
• the date the policy to which this rider is attached is assigned or the owner is changed without our approval;
• the date an excess withdrawal reduces your policy value to zero; or
• termination of your policy.
Please note: This feature terminates upon annuitization and there is a maximum annuity commencement date.
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Retirement Income Max® Rider
If you elect the Retirement Income Max® rider identified below, which provides certain guaranteed benefits, The Company requires your policy value to be allocated into designated investment options. One or more of the designated investment options may include a volatility control strategy. Volatility control strategies, in periods of high market volatility, could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your policy value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns. Volatility control (and similar terms) can encompass a variety of investment strategies of different types and degrees; therefore, you should read the applicable annuity and underlying fund portfolio prospectuses carefully to understand how these investment strategies may affect your policy value and rider benefits. The Company’s requirement to invest in accordance with designated investment options, which may include volatility control, may reduce our costs and risks associated with this rider. You pay an additional fee for the rider benefits which, in part, pay for protecting the rider benefit base from investment losses. Since the rider benefit base does not decrease as a result of investment losses, volatility control strategies might not provide meaningful additional benefit to you. You should carefully evaluate with your financial advisor whether to invest in funds with volatility control strategies, taking into consideration the potential positive or negative impact that such strategy may have on your investment objectives, your policy value and the benefits under the Retirement Income Max® rider. If you determine that funds with volatility control strategies are not consistent with your investment objectives, there continues to be other designated investment options available under the Retirement Income Max® rider that do not invest in funds that utilize volatility control strategies.
You may elect to purchase the optional Retirement Income Max® rider, which provides you with: (1) a guaranteed lifetime withdrawal benefit; and (2) an opportunity for increases in the rider withdrawal amount. This rider is available during the accumulation phase, and requires that you allocate 100% of your policy value in certain designated investment options which are designed to help manage our risk and support the guarantees under the rider. If you elect the Retirement Income Max® rider you cannot elect the Living Benefits Rider or Retirement Income Choice® 1.6 riders. The tax rules for qualified policies may limit the value of this rider. Please consult a qualified tax adviser before electing the Retirement Income Max® rider for a qualified policy. Please Note: This rider may not be issued or added to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. The guaranteed lifetime withdrawal benefit is based on our claims-paying ability.
The Retirement Income Max® rider and additional options may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time for new sales, which includes new sales to existing policyowners. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options for electing a benefit, please contact your financial intermediary or our Administrative Office.
Retirement Income Max® – Base Benefit
Under this benefit, you can receive up to the rider withdrawal amount each rider year (first as withdrawals from your policy value and, if necessary because your policy value goes to zero by other than an excess withdrawal, as payments from us for life), starting with the rider year immediately following the annuitant’s (or the annuitant's spouse if younger and the joint life option is elected) 59th birthday and lasting until the annuitant’s (or surviving spouse's if the joint life option is elected) death (unless your withdrawal base is reduced to zero because of an “excess withdrawal”; see Withdrawal Base Adjustments, below). A rider year begins on the rider date (the date the rider becomes effective) and thereafter on each anniversary of that date. The withdrawal percentage and growth percentage that are used to determine your rider withdrawal amount will be disclosed in a Rate Sheet Prospectus Supplement which may be amended from time to time by us.
Of course, you can always withdraw an amount up to your cash value pursuant to your rights under the policy at your discretion.
See the “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail.
Please note:
• You will begin paying the rider charge as of the date the rider takes effect, even if you do not begin taking withdrawals for many years, or ever. We will not refund the charges you have paid under the rider if you never choose to take withdrawals and/or if you never receive any payments under the rider.
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• We have designed this rider to allow for withdrawals from your policy value each rider year that are less than or equal to the rider withdrawal amount. You should not purchase this rider if you plan to take withdrawals in excess of the rider withdrawal amount, because such excess withdrawals may significantly reduce or eliminate the value of the guarantee provided by the rider.
• The longer you wait to start making withdrawals under the benefit, the less time you have to benefit from the guarantee because of decreasing life expectancy as you age. On the other hand, the longer you wait to begin making withdrawals, the higher your withdrawal percentage may be, the higher the withdrawal base due to growth may be, and the more opportunities you will have to lock in a higher withdrawal base. You should carefully consider when to begin making withdrawals. There is a risk that you will not begin making withdrawals at the most financially beneficial time for you.
• Because the guaranteed lifetime withdrawal benefit under this rider is accessed through regular withdrawals that do not exceed the rider withdrawal amount, the rider may not be appropriate for you if you do not foresee a need for liquidity and your primary objective is to take maximum advantage of the tax deferral aspect of the policy.
• All policy value must be allocated to a limited number of specified investment options. You should consult with your registered representative to assist you in determining whether these certain investment options are suited for your financial needs and risk tolerance.
• Any amount of withdrawals in any rider year that are in excess of the rider withdrawal amount are excess withdrawals.
• An excess withdrawal may impact the withdrawal base on a greater than dollar-for-dollar basis and may cause you to lose the benefit of this rider.
• Upon the death of the annuitant (or the death of the surviving spouse if the joint option is elected and the surviving spouse was eligible to and elected to continue the policy), the Retirement Income Max® rider terminates and all benefits thereunder cease.
Like all withdrawals, withdrawals while this rider is in effect also:
• reduce your policy value;
• reduce your base policy death benefit and other benefits;
• may be subject to surrender charges or excess interest adjustments if the withdrawal is greater than the surrender charge free amount;
• may be subject to income taxes and federal tax penalties; and
• may be limited or restricted under certain qualified policies.
Rider Withdrawal Amount. You can withdraw up to the rider withdrawal amount in any rider year (after age 59) from your policy value without causing an excess withdrawal. See Withdrawal Base Adjustments below.
The rider withdrawal amount is zero if the annuitant (or the annuitant's spouse if younger and the joint life option is elected) is not 59 years old on the rider date and remains zero until the first day of the rider year after the annuitant’s (or the annuitant's spouse's if younger and the joint life option is elected) 59th birthday. If the annuitant (or the annuitant's spouse if younger and the joint life option is elected) is at least 59 years old on the rider date, then the rider withdrawal amount is equal to the withdrawal base multiplied by the withdrawal percentage (for riders issued prior to the date of this prospectus, see “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information, for your withdrawal percentage depending on when you purchased your rider).
For qualified policies: If the plan participant (generally the annuitant) is at least 70½ years old, the rider withdrawal amount for that rider year (and each subsequent rider year) is equal to the greater of:
• the rider withdrawal amount described above; or
• an amount equal to any minimum required distribution amount (for the tax year on that rider anniversary) calculated using only: (1) the living annuitant’s age, (2) the IRS Uniform Lifetime table or, if applicable, the Joint Life and Survivor Expectancy table, (3) the policy value of the base policy, (prior to the first rider anniversary we use the policy value on the rider date and thereafter we use the policy value on the date prescribed by the IRS) and (4) amounts from the current calendar year (no carry-over from past years).
Only amounts calculated as set forth above can be used as the rider withdrawal amount. If the minimum required distribution amount (determined as set forth above) exceeds the rider withdrawal amount, the excess will not be treated as an excess withdrawal under the rider.
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If your policy value reaches zero:
• by means other than an excess withdrawal, then you cannot make premium payments and all other policy features, benefits, and guarantees (except those provided by this rider) are terminated. If your policy value reaches zero by other than an excess withdrawal, we will, unless instructed otherwise, disburse any remaining minimum required distribution amount for the current rider year and set up monthly payments beginning in the next rider year according to your guarantees.
• due to an excess withdrawal, then this rider terminates (as does the policy).
Please note:
• If the rider is added prior to the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) 59th birthday, the rider withdrawal amount will be zero until the beginning of the rider year after the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) 59th birthday, however, you will still be charged a rider fee prior to this time.
• The rider year begins on the rider date and thereafter on each rider anniversary. Withdrawals requested for the upcoming rider year must be taken the day after each rider anniversary or later within the rider year. Any withdrawal taken on the rider anniversary date will count towards the previous rider year withdrawals.
• You cannot carry over any portion of your rider withdrawal amount that is not withdrawn during a rider year for withdrawal in a future rider year. This means that if you do not take the entire rider withdrawal amount during a rider year, you cannot take more than the rider withdrawal amount in the next rider year and maintain the rider's guarantees.
• Excess withdrawals may cause you to lose the benefit of the rider.
• All policy value must be allocated to a limited number of specified investment options. (See Designated Investment Options below.)
Rate Sheet Prospectus Supplement
The withdrawal, growth and fee percentages are disclosed in a Rate Sheet Prospectus Supplement. We periodically issue new Rate Sheet Prospectus supplement that may reflect different withdrawal, growth and fee percentages than the previous Rate Sheet Prospectus Supplements. All Rate Sheet Prospectus Supplements are also available on the EDGAR system at www.sec.gov (File Number 333-187912).In order to receive the applicable withdrawal, growth and fee percentages: (1) your application must be signed and received within the stated time period set forth in the applicable Rate Sheet Prospectus Supplement and (2) your application must be received and your policy must be funded within the stated time periods set forth in the applicable Rate Sheet Prospectus Supplement. Withdrawal percentages reflected in a Rate Sheet Prospectus Supplement with an effective period that does not include the date you signed your application will not apply to your policy. You should not purchase this rider without first obtaining the applicable Rate Sheet Prospectus Supplement applicable to you. You can contact us at www.transamerica.com to receive a Rate Sheet Prospectus Supplement applicable to you. For riders issued prior to the date of this prospectus, the applicable withdrawal, growth and fee percentages are set forth in the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” located in the Statement of Additional Information.
Withdrawal Percentage. We use the withdrawal percentage to calculate the rider withdrawal amount. The withdrawal percentage is determined by the annuitant’s age (or the annuitant's spouse's age if younger and the joint life option is elected) at the time of the first withdrawal taken on or after the rider anniversary immediately following the annuitant’s (or the annuitant's spouse's if younger and the joint life option is elected) 59th birthday.
Please note, once established, the withdrawal percentage will not change except in certain instances involving automatic step-ups. Withdrawal percentages will change when an automatic step-up occurs and you had crossed into another age band prior to the automatic step-up, see Automatic Step-Up section in the prospectus.
Withdrawal Base. We use the withdrawal base to calculate the rider withdrawal amount. The withdrawal base on the rider date is the policy value . During any rider year, the withdrawal base is equal to the withdrawal base on the rider date or most recent rider anniversary, plus subsequent premium payments, less subsequent withdrawal base adjustments due to excess withdrawals.
Please note:
• We determine the withdrawal base solely to calculate the rider withdrawal amount and rider fee.
• Your withdrawal base is not a cash value, a surrender value, or a death benefit. It is not available for withdrawal, it is not a minimum return for any subaccount, and it is not a guarantee of policy value.
• Because the withdrawal base is generally equal to the policy value on the rider date, the rider withdrawal amount may be lower if you delay electing the rider and the policy value decreases before you elect the rider.
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On each rider anniversary, the withdrawal base will equal the greatest of:
• the current withdrawal base;
• the withdrawal base immediately before the rider anniversary, increased by the growth credit, if any (see Growth below);
• the policy value on any monthiversarySM (the same day of the month as the rider date, or the next business day if our Administrative Office or the New York Stock Exchange are closed) within the current rider year, including the current rider anniversary (see Automatic Step-Up below).
See “Appendix - Hypothetical Example of the Withdrawal Base Calculation - Retirement Income Max® Rider” which illustrates the hypothetical example of the withdrawal base calculation.
Growth. On each of the first ten rider anniversaries, we will add a growth credit to your withdrawal base if no withdrawal occurred during the preceding rider year. The annual growth credit is equal to the growth percentage multiplied by the withdrawal base immediately before the rider anniversary.
Please note: Because a withdrawal will eliminate the potential application of the growth credit for that rider year, you should consider your need or possible need to take withdrawals within the first 10 rider years in deciding whether to purchase the rider.
Automatic Step-Up. On each rider anniversary, we will automatically step-up the withdrawal base to an amount equal to the greater of (1) the highest policy value on any monthiversarySM during the preceding rider year, if no excess withdrawal occurred, or (2) the policy value on the rider anniversary. If neither value is greater than the current withdrawal base, or the withdrawal base is increased by any growth credit, no automatic step-up will occur. The withdrawal percentage (as indicated in the Rate Sheet Prospectus Supplement) will also increase if you have crossed into another age band prior to the automatic step-up. Please note, the increase is part of the automatic step-up, and if no automatic step-up occurs then there will be no withdrawal percentage increase.
On each rider anniversary the rider fee percentage may increase (or decrease) at the time of any automatic step-up. The rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider.
Automatic Step-Up Opt Out. Each time an automatic step-up results in a rider fee percentage increase, you have the option to reject the automatic step-up and reinstate the withdrawal base, withdrawal percentage, and rider fee percentage to their respective amounts immediately before the automatic step-up, provided that you do so within 30 days after the rider anniversary on which the automatic step-up occurred. We must receive your rejection (each time you elect to opt out), in good order, at our Administrative Office within the same 30 day period after the rider anniversary on which the automatic step-up occurred. You are not subject to fee increases for any Automatic Step-Up that you have opted out of. Opting out of one step-up does not operate as an opt-out of any future step-ups.
Withdrawal Base Adjustments. Cumulative gross partial withdrawals up to the rider withdrawal amount in any rider year will not reduce the withdrawal base. Any amount of gross partial withdrawals in excess of the rider withdrawal amount in any rider year (“excess withdrawals”) will reduce the withdrawal base, however, by the greater of the dollar amount of the excess withdrawal (if the policy value is greater than the withdrawal base) or a pro rata amount (in proportion to the reduction in the policy value when the policy value is less than the withdrawal base), possibly to zero. If an excess withdrawal reduces the policy value to zero, this rider will terminate. Withdrawal base adjustments occur immediately following excess withdrawals. See “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail, including an excess withdrawal that reduces the withdrawal base by a pro rata amount. The effect of an excess withdrawal is amplified if the policy value is less than the withdrawal base.
Please Note: You retain all responsibility for monitoring excess withdrawals. If you take regular or scheduled withdrawals please pay particular attention to any excess withdrawal because your otherwise regular or scheduled non-excess withdrawals may thereafter all be excess withdrawals that reduce or eliminate your benefit on an accelerated basis.
Example. Assume you are the owner and annuitant and you make a single premium payment of $100,000 when you are 66 years old. Further assume that you do not make any withdrawals or additional premium payments, no automatic step-ups occurred, but that after five years your policy value has declined to $90,000 solely because of negative investment performance. With an assumed annual growth rate percentage of 5.0%, after 5 years the withdrawal base is equal to $127,628 ($100,000 x 1.055). You could receive up to $6,381 which is the assumed withdrawal percentage of 5.0% for the single life option multiplied by the withdrawal base of $127,628, each rider year for the rest of your life (assuming that you take your first withdrawal when you are age 71, that you do not withdraw more than the rider withdrawal amount in any one year and there are no future automatic step-ups.)
Example continued. Assume the same facts as above, but you withdraw $10,000 when you are 71 years old. That excess withdrawal decreases your future rider withdrawal amount to $6,105.
See the “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail.
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Designated Investment Options. If you elect this rider, you must designate 100% of your policy value into one or more of the designated investment options approved for the Retirement Income Max® rider. See “Appendix - Designated Investment Options” for a complete listing of available subaccounts. Requiring that you designate 100% of your policy value to the designated investment options, some of which employ strategies that are intended to reduce the risk of loss and/or manage volatility, may reduce investment returns and may reduce the likelihood that we will be required to use our own assets to pay amounts due under this benefit.
Transfers between the designated investment options are allowed as permitted under the policy; however, you cannot transfer any amount (or allocate premium payments) to any non-designated investment option. Within 30 days following the fifth rider anniversary (and each successive fifth rider anniversary), you can terminate this rider. Starting the next business day after you terminate your rider, you may transfer (or allocate premium payments) to a non-designated investment option. Terminating the rider will result in losing all your benefits under the rider.
Please note:
• The earliest you can transfer (or allocate premium payments) to a non-designated investment option is the first business day after the fifth rider anniversary. You will be required to terminate the rider first. If you terminate the rider you will lose all of its benefits.
• We can eliminate a designated investment option at any time. If this occurs, then an owner will be required to reallocate values in the affected designated investment options to other designated investment options that meet the allocation requirements.
Retirement Income Max® – Joint Life Option
If you elect this rider, then you can also elect to postpone termination of the rider until the later of the annuitant or annuitant’s spouse’s death (only if the annuitant’s spouse is eligible to and elects to continue the policy, see TAX INFORMATION – Tax Status of a Nonqualified Policy – Distribution Requirements). If you elect the Joint Life option, then the withdrawal percentage (used to calculate the rider withdrawal amount) is lower.
Please note:
• The withdrawal percentage for each “age at the time of the first withdrawal” is lower if you elect this option.
• The annuitant's spouse (or in certain instances a non-natural entity acting for the benefit of the annuitant's spouse) must be either a joint owner along with the annuitant or the sole primary beneficiary (and there is no joint owner), if you elect this option. (Please see Spousal Continuation section for more detail regarding annuitant's spouse).
• A former spouse of the annuitant cannot continue to keep the policy in force if no longer married to the annuitant at the time of the annuitant's death. In that event, the rider will terminate and no additional withdrawals under the rider will be permitted.
• The annuitant’s spouse for purposes of this rider cannot be changed to a new spouse.
• The rider withdrawal percentage is based on the age of the younger of the annuitant and annuitant’s spouse, if you elect this option.
• This option may not be permitted in the case of certain non-natural owners.
• The rider's issue ages may vary if you elect this option.
Retirement Income Max® Rider Fees
Retirement Income Max® Rider Fee. The rider fee is calculated on the rider date and at the beginning of each rider quarter. The rider fee will be adjusted for any premium additions and excess withdrawals. It will be deducted automatically from your policy value at the end of each rider quarter. Your rider fee may increase (or decrease) at the time of any automatic step-up. See Automatic Step-Up section. Your rider fee will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the EDGAR system at www.sec.gov (File Number 333-187912).
In order for the fee disclosed on the applicable Rate Sheet Prospectus Supplement to apply: (1) your application must be signed within the stated time period set forth in the applicable Rate Sheet Prospectus Supplement and (2) your application must be received and your policy must be funded within the stated time periods set forth in the applicable Rate Sheet Prospectus Supplement. Rider fees reflected in a Rate Sheet Prospectus Supplement with an effective period that does not include the date you signed your application will not apply to your policy. You should not purchase this rider without first obtaining the applicable Rate Sheet Prospectus Supplement. You can contact us at www.transamerica.com to receive a Rate Sheet Prospectus Supplement applicable to you.
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On an annual basis, in general terms, the rider fee is the rider fee percentage times the withdrawal base. Specifically, the quarterly fee is calculated by multiplying (A) by (B) multiplied by (C), where:
(A) is the withdrawal base;
(B) is the rider fee percentage; and
(C) is the number of (remaining) days in the rider quarter divided by the total number of days in the applicable rider year.
The following example uses these assumed values: Initial Premium = $100,000; Withdrawal Base = $100,000; Rider Fee percentage = 1.25%; and 91 total days in the rider quarter.
Example 1: Calculation at rider issue for first quarter rider fee. The rider fee is:
= 100,000*0.0125*(91/365)
= 1,250*(91/365)
= $311.64
We will assess a prorated rider fee upon full surrender of the policy or other termination of the rider for the period beginning on the first day of the most recent rider quarter and ending on the date of termination.
On each rider anniversary the rider fee percentage may increase (or decrease) at the time of an automatic step-up. The rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement which may be amended from time to time by us. Please contact your financial intermediary or call our Administrative Office to determine whether the Rate Sheet Prospectus Supplement has been amended. Each time an automatic step-up results in a rider fee percentage increase, you will have the option to reject the automatic step-up and reinstate the withdrawal base and rider fee percentage to their respective amounts immediately before the automatic step-up (adjusted for any subsequent premium payments or withdrawals), provided that you do so within 30 calendar days after the rider anniversary on which the automatic step-up occurred. We must receive your rejection, in good order, at our Administrative Office within the 30 day period after the rider anniversary on which the automatic step-up occurred.
Please note regarding the rider fee:
• Because the rider fee is a percentage of the withdrawal base, it could be a much higher percentage of your policy value, particularly in the event that your policy value decreases significantly.
• Because the rider fee is a percentage of the withdrawal base, the amount of the rider fee we deduct will increase if the withdrawal base increases (although the percentage(s) may remain the same).
Rider Fee Adjustment for Premium Payments and Excess Withdrawals. A rider fee adjustment will be calculated for subsequent premium payments and excess withdrawals because these events will change the withdrawal base. The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be collected.
The following example uses these assumed values: All initial values as in Example 1; Subsequent Premium = $10,000; and 30 remaining days in the rider quarter.
Example 2: Calculation for first quarter rider fee adjustment for a subsequent premium. The fee adjustment is:
= 10,000*0.0125*(30/365)
= 125*(30/365)
= $10.27
Total fee assessed at the end of the first rider quarter (assuming no further rider fee adjustments):
= 311.64 + 10.27
= $321.91
Retirement Income Max® Rider Issue Requirements
We will not issue the Retirement Income Max® rider unless:
• the annuitant is not yet age 86 (lower if required by state law);
• the annuitant is also an owner (except in the case of non-natural owners);
• there are no more than two owners; and
• if the joint life option is elected, the annuitant’s spouse is also not yet 86 (lower if required by state law) and (1) is a joint owner along with the annuitant or (2) is the sole primary beneficiary (and there is no joint owner).
The use of joint life option may not be permitted in the case of certain non-natural owners.
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Termination
The Retirement Income Max® rider will terminate upon the earliest of the following:
• the date we receive written notice from you requesting termination of the rider if such notice is received before midnight of the 30th calendar day after you receive the rider;
• the date we receive written notice from you requesting termination of the rider if such notice is received by us during the 30 days following the fifth rider anniversary or every fifth rider anniversary thereafter;
• the death of the annuitant (or if the joint life option was elected, the death of the annuitant’s spouse if that spouse was eligible to and elected to continue the policy as the surviving spouse);
• annuitization (however, if you have reached your maximum annuity commencement date you may choose an annuitization option which guarantees you lifetime payments in an amount equal to your rider withdrawal amount);
• the date the policy to which this rider is attached is assigned or if the owner is changed without our approval;
• the date an excess withdrawal reduces your policy value to zero; or
• termination of your policy.
Please note: This rider terminates upon annuitization and there is a maximum annuity commencement date at which time your policy will be annuitized according to its terms. However, if you have reached your maximum annuity commencement date, we will allow you to annuitize your policy and elect to receive lifetime annuity payments which are at least equal to your rider withdrawal amount. Please contact us for more information concerning your options.
Retirement Income Choice® 1.6 Rider
If you elect the Retirement Income Choice® 1.6 rider identified below, which provides certain guaranteed benefits, the Company requires your policy value to be allocated into designated investment options. One or more of the designated investment options may include a volatility control strategy. Volatility control strategies, in periods of high market volatility, could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your policy value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Volatility control strategies are intended to help limit overall volatility and reduce the effects of significant market downturns during periods of high market volatility, providing policy owners with the opportunity for smoother performance and better risk adjusted returns. Volatility control (and similar terms) can encompass a variety of investment strategies of different types and degrees; therefore, you should read the applicable annuity and underlying fund portfolio prospectuses carefully to understand how these investment strategies may affect your policy value and rider benefit. The Company’s requirement to invest in accordance with designated investment options, which may include volatility control, may reduce our costs and risks associated with this rider. You pay an additional fee for the rider benefits which, in part, pay for protecting the rider benefit base from investment losses. Since the rider benefit base does not decrease as a result of investment losses, volatility control strategies might not provide meaningful additional benefit to you. You should carefully evaluate with your financial advisor whether to invest in funds with volatility control strategies, taking into consideration the potential positive or negative impact that such strategy may have on your investment objectives, your policy value and the benefits under the Retirement Income Choice® 1.6 rider. If you determine that funds with volatility control strategies are not consistent with your investment objectives, there continues to be other designated investment options available under the Retirement Income Choice® 1.6 rider that do not invest in funds that utilize volatility control strategies.
You may elect to purchase the optional Retirement Income Choice® 1.6 rider, which provides you with: (1) a guaranteed lifetime withdrawal benefit; and (2) an opportunity for increases in the rider withdrawal amount. This rider is available during the accumulation phase, and requires that you allocate 100% of your policy value in certain designated investment options which are designed to help manage our risk and support the guarantees under the rider. If you elect the Retirement Income Choice® 1.6 rider you cannot elect another the Living Benefits Rider or the Retirement Income Max®. The tax rules for qualified policies may limit the value of this rider. Please consult a qualified tax adviser before electing the Retirement Income Choice® 1.6 rider for a qualified
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policy. Please Note: This rider may not be issued or added to Inherited IRAs (sometimes also referred to as beneficiary IRAs) or a nonqualified annuity under which death benefits are being distributed under a stretch withdrawal option. The guaranteed lifetime withdrawal benefit is based on our claims-paying ability.
The Retirement Income Choice® 1.6 rider and additional options may vary for certain policies and may not be available for all policies, in all states, at all times or through all financial intermediaries. We may discontinue offering this benefit at any time for new sales, which includes new sales to existing policyowners. In some cases, a benefit not available through a financial intermediary may be obtained by contacting us directly. For more information on the options for electing a benefit, please contact your financial intermediary or our Administrative Office.
Retirement Income Choice® 1.6 – Base Benefit
Under this benefit, you can receive up to the rider withdrawal amount each rider year (first as withdrawals from your policy value and, if necessary because your policy value goes to zero by other than an excess withdrawal, as payments from us), starting with the rider year immediately following the annuitant’s (or the annuitant's spouse if younger and the joint life option is elected) 59th birthday and lasting until the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) death (unless your withdrawal base is reduced to zero because of an “excess withdrawal”; see Withdrawal Base Adjustments and Rider Death Benefit Adjustments, below). A rider year begins on the rider date (the date the rider becomes effective) and thereafter on each anniversary of that date. The withdrawal percentage and growth percentage that are used to determine your rider withdrawal amount will be disclosed in a Rate Sheet Prospectus Supplement included with your prospectus.
Of course you can always withdraw an amount up to your cash value pursuant to your rights under the policy at your discretion. See “Appendix – Hypothetical Adjusted Partial Withdrawals – Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail.
Please note:
• You will begin paying the rider charge as of the date the rider takes effect, even if you do not begin taking withdrawals for many years, or ever. We will not refund the charges you have paid under the rider if you never choose to take withdrawals and/or if you never receive any payments under the rider.
• We have designed this rider to allow for withdrawals from your policy value each rider year that are less than or equal to the rider withdrawal amount. You should not purchase this rider if you plan to take withdrawals in excess of the rider withdrawal amount, because such excess withdrawals may significantly reduce or eliminate the value of the guarantees provided by the rider.
• The longer you wait to start making withdrawals under the benefit, the less time you have to benefit from the guarantee because of decreasing life expectancy as you age. On the other hand, the longer you wait to begin making withdrawals, the higher your withdrawal percentage may be, the higher the withdrawal base due to growth may be, and the more opportunities you will have to lock in a higher withdrawal base. You should carefully consider when to begin making withdrawals. There is a risk that you will not begin making withdrawals at the most financially beneficial time for you.
• Because the guaranteed lifetime withdrawal benefit under this rider is accessed through regular withdrawals that do not exceed the rider withdrawal amount, the rider may not be appropriate for you if you do not foresee a need for liquidity and your primary objective is to take maximum advantage of the tax deferral aspect of the policy.
• All policy value must be allocated to a limited number of specified investment options. The investment options are categorized within designated investment groups, each of which has a different price point. You should consult with your registered representative to assist you in determining whether these investment options are suited for your financial needs and risk tolerance.
• Any amount of withdrawals in any rider year that are in excess of the rider withdrawal amount are excess withdrawals.
• An excess withdrawal may impact the withdrawal base, and rider death benefit (if applicable) on a greater than dollar-for-dollar basis and may eliminate the benefit.
• Any withdrawal will reduce your rider death benefit (if applicable).
• Upon the death of the annuitant (or the death of the surviving spouse if the joint option is elected and the surviving spouse was eligible to and elected to continue the policy), the Retirement Income Choice® 1.6 rider terminates and all benefits thereunder cease.
Like all withdrawals, withdrawals while this rider is in effect also:
• reduce your policy value;
• reduce your base policy death benefit and other benefits;
• may be subject to surrender charges or excess interest adjustments if the withdrawal is greater than the surrender charge free amount;
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• may be subject to income taxes and federal tax penalties; and
• may be limited or restricted under certain qualified policies.
Rider Withdrawal Amount. You can withdraw up to the rider withdrawal amount in any rider year (after age 59) from your policy value without causing an excess withdrawal. See Withdrawal Base Adjustments and Rider Death Benefit Adjustments below.
The rider withdrawal amount is zero if the annuitant (or the annuitant’s spouse if younger and the joint life option is elected) is not 59 years old on the rider date and remains zero until the first day of the rider year after the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) 59th birthday. If the annuitant (or the annuitant's spouse if younger and the joint life option is elected) is at least 59 years old on the rider date, then the rider withdrawal amount is equal to the withdrawal base multiplied by the withdrawal percentage (for riders issued prior to the date of this prospectus, see “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” in the Statement of Additional Information depending on when you purchased your rider).
For qualified policies: If the plan participant (generally the annuitant) is at least 70½ years old, the rider withdrawal amount for that rider year (and each subsequent rider year) is equal to the greater of:
• the rider withdrawal amount described above; or
• an amount equal to any minimum required distribution amount (for the tax year on that rider anniversary) calculated using only: (1) the living annuitant’s age, (2) the IRS Uniform Lifetime table or, if applicable, the Joint Life and Survivor Expectancy table, (3) the policy value of the base policy, (prior to the first rider anniversary we use the policy value on the rider date and thereafter we use the policy value on the date prescribed by the IRS) and (4) amounts from the current calendar year (no carry-over from past years).
Only amounts calculated as set forth above can be used as the rider withdrawal amount. If the minimum required distribution amount (determined as set forth above) exceeds the rider withdrawal amount, the excess will not be treated as an excess withdrawal under the rider.
If your policy value reaches zero:
• by means other than an excess withdrawal, then you cannot make further premium payments and all policy features, benefits, and guarantees other than the base guaranteed lifetime withdrawal benefits and the rider death benefit (if applicable), provided by this rider terminate. If your policy value reaches zero by other than an excess withdrawal, we will, unless instructed otherwise, disburse any remaining minimum required distribution amount for the current rider year and set up monthly payments beginning in the next rider year according to your guarantees
• due to an excess withdrawal, then the rider terminates (as does the policy).
Please note:
• If the rider is added prior to the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) 59th birthday, the rider withdrawal amount will be zero until the beginning of the rider year after the annuitant’s (or the annuitant’s spouse if younger and the joint life option is elected) 59th birthday, however, you will still be charged a rider fee prior to this time.
• The rider year begins on the rider date and thereafter on each rider anniversary. Withdrawals requested for the upcoming rider year must be taken the day after each rider anniversary or later within the rider year. Any withdrawal taken on the rider anniversary date will count towards the previous rider year withdrawals.
• You cannot carry over any portion of your rider withdrawal amount that is not withdrawn during a rider year for withdrawal in a future rider year. This means that if you do not take the entire rider withdrawal amount during a rider year, you cannot take more than the rider withdrawal amount in the next rider year and maintain the rider's guarantees.
• Excess withdrawals may cause you to lose the benefit of the rider.
• All policy value must be allocated to a limited number of specified funds. (See Designated Investment Options below.)
Rate Sheet Prospectus Supplement
The withdrawal, growth and fee percentages are disclosed in a Rate Sheet Prospectus Supplement. We periodically issue new Rate Sheet Prospectus Supplements that may reflect different withdrawal, growth and fee percentages than the previous Rate Sheet Prospectus Supplements. All Rate Sheet Prospectus Supplements are also available on the EDGAR system at www.sec.gov (File Number 333-187912). In order for you to receive the withdrawal, growth and fee percentages: (1) your application must be signed and received within the stated time period set forth in the applicable Rate Sheet Prospectus Supplement and (2) your application must be received and your policy must be funded within the stated time periods set forth in the applicable Rate Sheet Prospectus
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Supplement. Withdrawal percentages reflected in a Rate Sheet Prospectus Supplement with an effective period that does not include the date you signed your application will not apply to your policy. You should not purchase this rider without first obtaining the applicable Rate Sheet Prospectus Supplement. You can contact us at www.transamerica.com to receive a Rate Sheet Prospectus Supplement applicable to you. For riders issued prior to the date of this prospectus, the applicable withdrawal, growth and fee percentages are set forth in the “Appendix – Prior Withdrawal/Growth Percentages and Rider Fees” located in the Statement of Additional Information.
Retirement Income Choice® 1.6 – Base Benefit – Withdrawal Percentage
Withdrawal Percentage. We use the withdrawal percentage to calculate the rider withdrawal amount. The withdrawal percentage is determined by the annuitant’s age (or the annuitant's spouse's age if younger and the joint life option is elected) at the time of the first withdrawal taken on or after the rider anniversary immediately following the annuitant’s (or the annuitant's spouse's if younger and the joint life option is elected) 59th birthday.
Please note, once established, the withdrawal percentage will not change except in certain instances involving automatic step-ups. Withdrawal percentages will change when an automatic step-up occurs and you had crossed into another age band prior to the automatic step-up, see Automatic Step-Up section in the prospectus.
Withdrawal Base. We use the withdrawal base to calculate the rider withdrawal amount. The withdrawal base on the rider date is the policy value . During any rider year, the withdrawal base is equal to the withdrawal base on the rider date or most recent rider anniversary, plus subsequent premium payments, less subsequent withdrawal base adjustments due to excess withdrawals.
Please note:
• We determine the withdrawal base solely to calculate the rider withdrawal amount and rider fee.
• Your withdrawal base is not a cash value, a surrender value, or a death benefit. It is not available for withdrawal, it is not a minimum return for any subaccount, and it is not a guarantee of policy value.
• Because the withdrawal base is generally equal to the policy value on the rider date, the rider withdrawal amount may be lower if you delay electing the rider and the policy value decreases before you elect the rider.
On each rider anniversary, the withdrawal base will equal the greatest of:
• current withdrawal base;
• the withdrawal base immediately before the rider anniversary, increased by the growth credit, if any (see Growth below);
• the policy value on any monthiversarySM (the same day of the month as of the rider date, or the next business day if our Administrative Office or the New York Stock Exchange are closed) within the current rider year, including the current rider anniversary (see Automatic Step-Up below).
Retirement Income Choice® 1.6 – Base Benefit – Growth Percentage
Growth. On each of the first ten rider anniversaries, we will add a growth credit to your withdrawal base if no withdrawal occurred during the preceding rider year. The growth credit is equal to the growth percentage multiplied by the withdrawal base immediately before the rider anniversary.
Please note: Because a withdrawal will eliminate the potential application of the growth credit for that rider year, you should consider your need or possible need to take withdrawals within the first 10 rider years in deciding whether to purchase the rider.
Automatic Step-Up. On each rider anniversary, we will automatically step-up the withdrawal base to an amount equal to the greater of (1) the highest policy value on any monthiversarySM during the preceding rider year, if no excess withdrawal occurred, or (2) the policy value on the rider anniversary. If neither value is greater than the current withdrawal base or the withdrawal base increased by any growth credit, no automatic step-up will occur. The withdrawal percentage (as indicated in the Rate Sheet Prospectus Supplement) will also increase if you have crossed into another age band prior to the automatic step-up. Please note, the increase is part of the automatic step-up and if no automatic step-up occurs then there will be no withdrawal percentage increase.
Beginning on the fifth rider anniversary, the rider fee percentage may increase (or decrease) at the time of any automatic step-up. The rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider.
Automatic Step-Up Opt Out. Each time an automatic step-up results in a rider fee percentage increase, you have the option to reject the automatic step-up and reinstate the withdrawal base, withdrawal percentage, and rider fee percentage to their respective amounts immediately before the automatic step-up, provided that you do so within 30 days after the rider anniversary on which the automatic step-up occurred. Charges as a result of the automatic step-up feature will be reversed. We must receive your rejection (each time you
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elect to opt out), in good order, at our Administrative Office within the same 30 day period after the rider anniversary on which the automatic step-up occurred. You are not subject to fee increases for any Automatic Step-Up that you have opted out of. Opting out of one step-up does not operate as an opt-out of any future step-ups.
Withdrawal Base Adjustments. Cumulative gross partial withdrawals up to the rider withdrawal amount in any rider year will not reduce the withdrawal base. Any amount of gross partial withdrawals in excess of the rider withdrawal amount in any rider year (“excess withdrawals”) will reduce the withdrawal base, however, by the greater of the dollar amount of the excess withdrawal (if the policy value is greater than the withdrawal base) or a pro rata amount (in proportion to the reduction in the policy value when the policy value is less than the withdrawal base), possibly to zero. If an excess withdrawal reduces the policy value to zero, this rider will terminate. Withdrawal base adjustments occur immediately following excess withdrawals. See “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail, including an excess withdrawal that reduces the withdrawal base by a pro rata amount. The effect of an excess withdrawal is magnified if the policy value is less than the withdrawal base. See the “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical excess withdrawals in more detail.
Please Note: You retain all responsibility for monitoring excess withdrawals. If you take regular or scheduled withdrawals please pay particular attention to any excess withdrawal because your otherwise regular or scheduled non-excess withdrawals may thereafter all be excess withdrawals that reduce or eliminate your benefit on an accelerated basis.
Example. Assume you are the owner and annuitant and you make a single premium payment of $100,000 when you are 66 years old. Further assume that you do not make any withdrawals or subsequent premium payments, no automatic step-ups occurred, but that after five years your policy value has declined to $90,000 solely because of negative investment performance. With an assumed annual growth rate percentage of 5.0%, after 5 years the withdrawal base is equal to $127,628 ($100,000 x 1.055). You could receive up to $6,381 which is the assumed withdrawal percentage of 5.0% for the single life option multiplied by the withdrawal base of $127,628, each rider year for the rest of your life (assuming that you take your first withdrawal when you are age 71, that you do not withdraw more than the rider withdrawal amount in any one year and there are no future automatic step-ups.)
Example continued. Assume the same facts as above, but you withdraw $10,000 when you are 71 years old. That excess withdrawal decreases your future rider withdrawal amount to $6,105.
See the “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail.
Designated Investment Options. If you elect this rider, you must designate 100% of your policy value into one or more of the designated investment options available under the respective designated allocation groups that have been approved for the Retirement Income Choice® 1.6 rider. See “Appendix - Designated Investment Options” for a complete listing of available subaccounts. Requiring that you designate 100% of your policy value to the designated investment options, some of which employ strategies that are intended to reduce the risk of loss and/or manage volatility, may reduce investment returns and may reduce the likelihood that we will be required to use our own assets to pay amounts due under this benefit.
Transfers between the designated investment options are allowed as permitted under the policy; however, you cannot transfer any amount (or allocate premium payments) to any non-designated investment option. Within 30 days following the fifth rider anniversary (and each successive fifth rider anniversary) you can terminate this rider. Starting the next business day, you may transfer (or allocate premium payments) to a non-designated investment option. Terminating the rider will result in losing all your benefits under the rider.
Please note:
• The earliest you can transfer (or allocate premium payments) to a non-designated investment option is the first business day after the fifth rider anniversary. You will be required to terminate the rider first. If you terminate the rider you will lose all of its benefits.
• We can change a designated allocation group or eliminate a designated investment option at any time. If this occurs, then an owner will be required to reallocate values in the affected designated investment options to other designated investment options that meet the allocation requirements.
Manual Resets. You can effectively “reset” the withdrawal base to the policy value using a manual process under which your current rider is terminated and a new rider is issued. You can only elect a reset during the 30 day periods following each successive fifth rider anniversary and if all other rider issue requirements are met. When the new rider is issued, the rider withdrawal amount and, if applicable, the rider death benefit will be recalculated. Your new rider will have a new rider date, new rider fee percentage (which may
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be higher than your current rider fee percentage), and its own terms and benefits (which may not be as advantageous as the current rider). The new rider date will be the date we receive all necessary information in good order. Please note that this “reset” procedure may be referred to as a “manual upgrade” in your policy rider and other materials.
Please note:
• Manual resets, unlike automatic step-ups, occur only if you so elect during the 30 day window following each successive fifth rider anniversary.
• Manual resets result in the purchase of a new rider whose terms may be more or less favorable than the current rider whereas automatic step-ups do not require termination of the existing rider and repurchase of a new rider (although fees may increase at the time of an automatic step-up).
• Owners may decide to terminate an existing rider if it no longer meets their needs and then elect a new available rider that does.
Retirement Income Choice® 1.6 – Additional Options
You may elect the following options with this rider (the options are not mutually exclusive):
• Death Benefit;
• Joint Life; and
• Income EnhancementSM.
There is an additional fee if you elect the Death Benefit and/or the Income EnhancementSM Benefit option(s) under the rider. If you elect the Joint Life option, then the withdrawal percentage (used to calculate the rider withdrawal amount) is lower. Furthermore, if you elect the Joint Life option in combination with the Death Benefit and/or the Income EnhancementSM Benefit option(s), then the fee for each of those additional options will be different than under the Single Life option. See Retirement Income Choice® 1.6 Rider Fees. There may be different issue ages depending upon which options you elect. The rider fee will be disclosed in a Rate Sheet Prospectus Supplement which may be amended from time to time by us.
Death Benefit. If you elect this rider, you can also elect to add an additional amount to the death benefit payable under the base policy, upon the death of the annuitant (or if the joint life option is selected, the death of the annuitant’s spouse if later). The additional amount will be equal to the excess, if any, of the rider death benefit over the greater of any optional guaranteed minimum death benefit or the base policy death benefit. The additional amount can be zero. See DEATH BENEFIT.
Rider Death Benefit. The rider death benefit on the rider date is the policy value. After the rider date, the rider death benefit is equal to:
• the rider death benefit on the rider date; plus
• subsequent premium payments; less
• adjustments for withdrawals (as described under Rider Death Benefit Adjustments, below).
Rider Death Benefit Adjustments. Gross partial withdrawals up to the rider withdrawal amount in a rider year will reduce the rider death benefit on a dollar-for-dollar basis. Gross partial withdrawals in excess of the rider withdrawal amount in a rider year will reduce the rider death benefit by the greater of the dollar amount of the excess withdrawal or a pro rata amount (in proportion to the reduction in policy value), and possibly to zero. See “Appendix - Hypothetical Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” for examples showing the effect of hypothetical withdrawals in more detail, including an excess withdrawal that results in pro rata adjustments. Rider death benefit adjustments occur immediately following all withdrawals.
Please note:
• No additional death benefit is payable if the base policy death benefit (including the guaranteed minimum death benefit) exceeds the rider death benefit. The greater the death benefit payable under the guaranteed minimum death benefit selected, the more likely it is that an additional amount will not be payable under the rider death benefit option.
• Excess withdrawals may eliminate the additional death benefit available with this rider. You will continue to pay the fee for this option, even if the additional death benefit available under the rider is $0.
• Manual resets to the withdrawal base will result in a recalculation of the rider death benefit. However, automatic step-ups will not reset the rider death benefit.
• If an owner who is not the annuitant dies and the surviving spouse is eligible to and elects to continue the policy, then no additional amount is payable. If the policy is not continued, then the surviving owner (who is also the sole beneficiary) may elect to receive lifetime annuity payments equal to the rider withdrawal amount divided by the number of payments each year instead of receiving the policy’s cash value. See TAX INFORMATION – Tax Status of a Nonqualified Policy – Distribution Requirements. (The payment of a death benefit under the policy is triggered by the death of the annuitant.)
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• The additional death benefit adjustment differs from the adjusted partial withdrawal amount for the Guaranteed Minimum Death Benefits described in DEATH BENEFIT - Guaranteed Minimum Death Benefits. Accordingly, withdrawals may effect the additional death benefit differently than the Guaranteed Minimum Death Benefits.
The additional death benefit payment option may be referred to as “rider death benefit” on your policy statement and other documents.
Joint Life Benefit. If you elect this rider, then you can also elect to postpone termination of the rider until the later of the annuitant or annuitant’s spouse’s death (only if the annuitant’s spouse is eligible to and elects to continue the policy, see TAX INFORMATION – Tax Status of a Nonqualified Policy – Distribution Requirements) If you elect the Joint Life option, then the withdrawal percentage (used to calculate the rider withdrawal amount) is lower.
Please note:
• The withdrawal percentage for each “age at the time of first withdrawal” is lower if you elect this option.
• The annuitant's spouse (or in certain instances a non-natural entity acting for the benefit of the annuitant's spouse) must be either a joint owner along with the annuitant or the sole primary beneficiary (and there is no joint owner), if you elect this option. (Please see Spousal Continuation section for more detail regarding annuitant's spouse).
• A former spouse of the annuitant cannot continue to keep the policy in force if no longer married to the annuitant at the time of the annuitant's death. In that event, the rider will terminate and no additional withdrawals under the rider will be permitted.
• The annuitant’s spouse for purposes of this rider cannot be changed to a new spouse.
• The rider withdrawal percentage is based on the age of the younger of the annuitant and annuitant’s spouse, if you elect this option.
• The rider death benefit is not payable until the death of the surviving spouse, if you elect this option.
• You cannot elect a manual reset if the annuitant or annuitant’s spouse is 86 or older (lower if required by state law).
• This option may not be permitted in the case of certain non-natural owners.
Income EnhancementSM Option. If you elect this rider, you can also elect to have your withdrawal percentage increase to 150% of the non-income enhanced withdrawal percentage if either the annuitant (or the annuitant’s spouse if the joint life option is elected) is confined, due to a medical necessity in a hospital or nursing facility due to physical or cognitive ailments. Benefits from this option are not available unless the rider has been in effect for 12 months (the “waiting period”) and confinement must meet the elimination period of 180 days within the last 365 days. The elimination period and waiting period can, but do not need to, run concurrently.
Please note:
• You cannot elect the Income EnhancementSM Option if the qualifying person or persons is/are already admitted to a hospital or already reside in a nursing facility.
• Confinement must be prescribed by a physician based on the individual's inability to sustain themselves outside of a hospital or nursing facility due to physical or cognitive ailments.
• The increase to the withdrawal percentage stops when the qualifying person or persons is/are no longer confined as described above.
• The hospital and/or nursing facility must meet the criteria listed below to qualify for the benefit.
A Qualifying Hospital must meet the following criteria:
• It is operated pursuant to the laws of the jurisdiction in which it is located;
• It is operated primarily for the care and treatment of sick and injured persons on an inpatient basis;
• It provides 24-hour nursing service by or under the supervision of registered graduate professional nurses;
• It is supervised by a staff of one or more licensed physicians; and
• It has medical, surgical and diagnostic facilities or access to such facilities.
A Qualifying Nursing Facility must meet the following criteria:
• It is operated pursuant to the laws and regulations of the state in which it is located as a nursing facility or Alzheimer's disease facility;
• It provides care performed or supervised by a registered graduate nurse;
• It provides room and board accommodations;
• Will provide 24-hour nursing services, 7 days a week by an on-site Registered Nurse and related services on a continuing inpatient basis;
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• It has a planned program of policies and procedures developed with the advice of, and periodically reviewed by, at least one physician; and
• It maintains a clinical record of each patient.
A Qualifying Nursing Facility does not include:
• Assisted living facilities or residential care facilities;
• A place primarily for treatment of mental or nervous disorders, drug addiction or alcoholism;
• A home for the aged, a rest home, community living center or a place that provides domestic, resident, retirement or educational care;
• Personal care homes, personal care boarding homes, residential or domiciliary care homes;
• A rehabilitation hospital or basic care facilities;
• Adult foster care facilities, congregate care facilities, family and group living assisted living facilities; or
• Other facilities similar to those described above.
We will require confirmation of confinement in a qualifying hospital or a qualifying nursing facility while benefit payouts are being received. Confirmation of that confinement will be attained and approved by completing our “Income EnhancementSM Election and Proof of Confinement Questionnaire” form. This form requires additional proof of confinement which may be a physician’s statement, a statement from a hospital or nursing facility administrator, or any other information satisfactory to us which may include information from third party or company interviews and/or visits of the facility. If it is determined that the qualifying individual was not confined in an eligible facility as defined above and has received payments under the Income EnhancementSM Option, those payments could be considered an excess withdrawal and have a negative effect on the rider values. If confinement ceases, you may re-qualify by satisfying another 180-day elimination period requirement.
Retirement Income Choice® 1.6 Fees
Retirement Income Choice® 1.6 Base Rider Fee. The base rider fee is calculated on the rider date and at the beginning of each rider quarter. The base rider fee will be adjusted for any premium additions, excess withdrawals, or transfers between designated investment groups. It will be deducted automatically from your policy value at the end of each rider quarter.
Your rider fee may increase (or decrease) at the time of any automatic step-up. See Automatic Step-Up section. Your current rider fee will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement. All Rate Sheet Prospectus Supplements are also available on the EDGAR system at www.sec.gov (File Number 333-187912).
In order for the fee disclosed on the applicable Rate Sheet Prospectus Supplement to apply: (1) your application must be signed within the stated time period set forth in the applicable Rate Sheet Prospectus Supplement and (2) your application must be received and your policy must be funded within the stated time periods set forth in the applicable Rate Sheet Prospectus Supplement. Rider fees reflected in a Rate Sheet Prospectus Supplement with an effective period that does not include the date you signed your application will not apply to your policy. You should not purchase this rider without first obtaining the applicable Rate Sheet Prospectus Supplement. You can contact us at www.transamerica.com to receive a Rate Sheet Prospectus Supplement applicable to you.
On an annual basis, in general terms, the base rider fee is the applicable rider fee percentage times the withdrawal base.
The base quarterly fee is calculated by multiplying (A) by (B) divided by (C) multiplied by (D), where:
(A) is the withdrawal base;
(B) is the sum of each designated investment group's rider fee percentage multiplied by the applicable designated investment group's value;
(C) is the total policy value; and
(D) is the number of (remaining) days in the rider quarter divided by the total number of days in the applicable rider year.
The following example uses these assumed values: Initial Premium = $100,000; Fund Allocations such that Group A = $50,000, Group B = $30,000, and Group C = $20,000; Withdrawal Base = $100,000; Policy Value = $100,000; Investment Group fee percentages of Group A = 1.45%, Group B = 1.10% and Group C = 0.70%; and 91 total days in the rider quarter.
Example 1: Calculation at rider issue for the first quarter fee. The rider fee is:
= 100,000 * [(50,000*0.0145) + (30,000*0.0110) + (20,000*0.0070)] / 100,000 * (91/365)
= 100,000 * (725 + 330 + 140) / 100,000 * (91/365)
= 100,000 * 1,195/100,000 * (91/365)
= 1,195 * (91/365)
= $297.93
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We will assess a prorated rider fee upon full surrender of the policy or other termination of the rider for the period beginning on the first day of the most recent rider quarter and ending on the date of termination.
Beginning on the fifth rider anniversary, the rider fee percentage may increase (or decrease) at the time of an automatic step-up. The rider fee percentage will not exceed 0.75% from the current rider fee percentage in effect when you purchased the rider. The current rider fee will be disclosed in a Rate Sheet Prospectus Supplement which may be amended from time to time by us. Please contact your financial intermediary or call our Administrative Office to determine whether the Rate Sheet Prospectus Supplement has been amended. Each time an automatic step-up will result in a rider fee percentage increase, you will have the option to reject the automatic step-up and reinstate the withdrawal base and rider fee percentage to their respective amounts immediately before the automatic step-up (adjusted for any subsequent premium payments or withdrawals), provided that you do so within 30 calendar days after the rider anniversary on which the automatic step-up occurred. We must receive your rejection, in good order, at our Administrative Office within the 30 day period after the rider anniversary on which the automatic step-up occurred.
Please note regarding the base rider fee:
• Because the base rider fee is a percentage of the withdrawal base, it could be a much higher percentage of your policy value, particularly in the event that your policy value decreases significantly.
• Because the base rider fee is a percentage of the withdrawal base, the amount of the base rider fee we deduct will increase if the withdrawal base increases (although the percentage(s) may remain the same).
• If you make a transfer from one designated allocation group to another designated allocation group that has a higher rider fee percentage, then the resulting rider fee will be higher.
Base Rider Fee Adjustment for Premium Payments and Excess Withdrawals. A rider fee adjustment will be calculated for subsequent premium payments and excess withdrawals because these events will change the withdrawal base. The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be collected.
The following example uses these assumed values: All initial values as in Example 1; Subsequent Premium = $10,000, allocated such that Group A = $5,000, Group B = $3,000, and Group C = $2,000; and 30 remaining days in the rider quarter.
Example 2: Calculation of the first quarter rider fee adjustment for a subsequent premium. The fee adjustment is:
= 10,000 * [(5,000*0.0145) + (3,000*0.0110) + (2,000*0.0070)] / 10,000 * (30/365)
= 10,000 * (72.50 + 33 + 14) / 10,000 * (30/365)
= 10,000 * 119.50/10,000 * (30/365)
= 119.50 * (30/365)
= $9.82
Total fee assessed at end of first rider quarter (assuming no further fee adjustments):
= 297.93 + 9.82
= $307.75
Base Rider Fee Adjustment for Transfers. For transfers that you make between different designated investment options in different designated allocation groups on other than the first business day of a rider quarter, a rider fee adjustment will be applied. This adjustment is necessary because of differences in the rider fee percentages. The adjustment in the rider fee percentage will ensure that you are charged the correct overall rider fee for that quarter. The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be collected.
The following example uses these assumed values: All initial values as in Example 1, as well as a subsequent premium payment as in Example 2; Withdrawal Base = $110,000; Policy Value = $90,000; Fund Transfer from Group A = $5,000, into Group B = $3,000, and into Group C = $2,000; and 15 remaining days in the rider quarter.
Example 3: Calculation of the first quarter rider fee adjustment for a fund transfer. The fee adjustment is:
= 110,000 * [(-5,000*0.0145) + (3,000*0.0110) + (2,000*0.0070)] / 90,000 * (15/365)
= 110,000 * (-72.50 + 33 + 14) / 90,000 * (15/365)
= 110,000 * -25.50/90,000 * (15/365)
= -31.17 * (15/365)
= $-1.28
Total fee assessed at end of the first rider quarter (assuming no further rider fee adjustments):
= 307.75 - 1.28
= $306.47
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Additional Option Fees. If you elect options with this rider, then you will be charged a fee for each option you elect that is in addition to the rider fee for the base benefit. Each additional fee is charged quarterly before annuitization and is a percentage of the withdrawal base on each rider anniversary.
We will also deduct all rider fees, including additional option fees, pro rata upon surrender of the policy or other termination of the rider.
Retirement Income Choice® 1.6 Rider Issue Requirements
We will not issue the Retirement Income Choice® 1.6 rider if:
• the annuitant is 86 or older (lower if required by state law);
• the annuitant is not an owner (except in the case of non-natural owners);
• there are more than two owners; and
• the joint life option is elected, and the annuitant’s spouse is 86 or older (lower if required by state law) and (1) is not a joint owner along with the annuitant or (2) is not the sole primary beneficiary (and there is no joint owner).
The use of joint life option may not be permitted in the case of certain non-natural owners.
Termination
The Retirement Income Choice® 1.6 rider and any additional options will terminate upon the earliest of the following:
• the date we receive written notice from you requesting termination of the rider if such notice is received before midnight of the 30th calendar day after you receive the rider;
• the date we receive written notice from you requesting termination or manual reset of the rider if such notice is received by us during the 30 days following the fifth rider anniversary or every fifth rider anniversary thereafter;
• the death of the annuitant (or if the joint life option was elected, the death of the annuitant’s spouse if that spouse was eligible to and elected to continue the policy as the surviving spouse);
• annuitization (however, if you have reached your maximum annuity commencement date you may choose an annuitization option which guarantees you lifetime payments in an amount equal to your rider withdrawal amount);
• the date the policy to which this rider is attached is assigned or if the owner is changed without our approval;
• the date an excess withdrawal reduces your policy value to zero; or
• termination of your policy.
Please note: This rider terminates upon annuitization and there is a maximum annuity commencement date at which time your policy will be annuitized according to its terms. However, if you have reached your maximum annuity commencement date, we will allow you to annuitize your policy and elect to receive lifetime annuity payments which are at least equal to your rider withdrawal amount (this option also guarantees that if the annuitant dies before the sum of all annuity payments equals the policy value, and rider benefit if elected, on the maximum annuity commencement date, the annuitant's beneficiary will receive a final payment equal to the difference). Please contact us for more information concerning your options.
OTHER INFORMATION
State Variations
Oregon. The Retirement Income Choice® 1.6 rider will not terminate upon assignment or ownership changes.
Washington. The Retirement Income Choice® 1.6 designated funds excludes fixed account and does not allow funds to be allocated to the Dollar Cost Averaging fixed account. The Living Benefits Rider fee cannot be deducted from the fixed account.
Ownership
You, as owner of the policy, exercise all rights under the policy. You can generally change the owner at any time by notifying us in writing at our Administrative Office. If we do not have an originating signature or guaranteed signature on file or if the Company suspects fraud, we may require a notarized signature. There may be limitations on your ability to change the ownership of a qualified policy. An ownership change may be a taxable event.
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Beneficiary
The beneficiary designation 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 Company will not be liable for any payment made before the written notice is received in our Administrative Office. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If, upon the death of the annuitant, there is a surviving owner(s), then the surviving owner(s) automatically takes the place of any beneficiary designation.
Right to Cancel Period
You may return your policy for a refund, but only if you return it within a prescribed period, which is generally 10 days after you receive the policy (for replacements the right cancel period is generally 30 days), or whatever longer time may be required by state law. The amount of the refund will generally be the premiums paid plus or minus accumulated gains or losses in the separate account. You bear the risk of any decline in policy value during the right to cancel period. However, if state law requires, we will refund your original premium payment(s), or surrender value, if greater. We will pay the refund within seven days after we receive in good order within the applicable period at our Administrative 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 Office and approve it. We reserve the right, except to the extent prohibited by applicable laws, regulations, or actions of the State insurance commissioner, to require that an assignment will be effective only upon acceptance by us, and to refuse assignments or transfers at any time on a non-discriminatory basis. We will not be liable for any payment or other action we take in accordance with the policy before we approve the assignment. There may be limitations on your ability to assign a qualified policy. An assignment may have tax consequences.
Termination for Low Value
If a partial surrender or fee (including an optional rider fee, administrative fee, or owner transaction fee) reduces your cash value below the minimum specified in your policy, we reserve the right to terminate your policy and send you a full distribution of your remaining cash value. All benefits associated with your annuity policy will be terminated. Federal law may impose restrictions on our right to terminate certain qualified policies. We do not currently anticipate exercising this right if you have certain optional benefits, however, we reserve the right to do so. For all other policies, including policies with certain other optional benefits, we intend to exercise this termination provision.
Sending Forms and Transaction Requests in Good Order
We cannot process your requests for transactions relating to the policy until they are received in good order. “Good order” means the actual receipt of the instructions relating to the requested transaction in writing (or, when appropriate, by telephone or electronically), along with all forms, information and supporting legal documentation necessary to effect the transaction. This information and documentation generally includes, to the extent applicable to the transaction: your completed application; the policy number; the transaction amount (in dollars or percentage terms); the names and allocations to and/or from the subaccounts affected by the requested transaction; the signatures of all 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 of sufficient funds to effect the purchase. We may, in our sole discretion, determine whether any particular transaction request is in good order, and we reserve the right to change or waive any good order requirements at any time.
“Received” or receipt in good order generally means that everything necessary must be received by us, at our Administrative Office specified in the Glossary of Terms. We reserve the right to reject electronic transactions that do not meet our requirements.
Regulatory Modifications to Policy
We reserve the right to amend the policy or any riders attached thereto as necessary to comply with specific direction provided by state or federal regulators, through change of law, rule, regulation, bulletin, regulatory directives or agreements.
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Certain Offers
From time to time, we have (and we may again) offered you some form of payment or incentive in return for terminating or modifying certain guaranteed benefits.
When we make an offer, we may vary the offer amount, up or down, among the same group of policy owners based on certain criteria such as account value, the difference between account value and any applicable benefit base, investment allocations and the amount and type of withdrawals taken. For example, for guaranteed benefits that have benefit bases that can be reduced on either a pro rata or dollar-for-dollar basis depending on the amount of withdrawals taken, we may consider whether you have taken any withdrawal that has caused a pro rata reduction in your benefit base, as opposed to a dollar-for-dollar reduction. Also, we may increase or decrease offer amounts from offer to offer. In other words, we may make an offer to a group of policy owners based on an offer amount, and, in the future, make another offer based on a higher or lower offer amount to the remaining policy owners in the same group.
If you accept an offer that requires you to terminate a guaranteed benefit and you retain your policy, we will no longer charge you for the benefit, and you will not be eligible for any future offers related to that type of guaranteed benefit, even if such future offer would have included a greater offer amount or different payment or incentive.
We may also make an offer to you to exchange an existing rider for a different rider.
Mixed and Shared Funding
The underlying fund portfolios may serve as investment vehicles for variable life insurance policies, variable annuity policies and retirement plans (“mixed funding”) and shares of the underlying fund portfolios also may be sold to separate accounts of other insurance companies (“shared funding”). While we currently do not foresee any disadvantages to owners and participants arising from either mixed or shared funding, it is possible that the interests of owners of various policies and/or participants in various plans for which the underlying fund portfolios serve as investments might at some time be in conflict. We and each underlying fund portfolio’s Board of Directors intend to monitor events in order to identify any material conflicts and to determine what action, if any, to take. Such action could include the sale of underlying fund portfolio shares by one or more of the separate accounts, which could have adverse consequences. Such action could also include a decision that separate funds should be established for variable life and variable annuity separate accounts. In such an event, we would bear the attendant expenses, but owners and plan participants would no longer have the economies of scale resulting from a larger combined fund. Please read the prospectuses for the underlying fund portfolios, which discuss the underlying fund portfolios’ risks regarding mixed and shared funding, as applicable. Please see Voting Rights section below for how shares held by the Company would be voted.
Exchanges and/or Reinstatements
You can generally exchange a nonqualified annuity policy for another in a “tax-free exchange” under Section 1035 of the Internal Revenue Code or transfer qualified policies directly to another life insurance company as a “trustee-to-trustee transfer”. Before making an exchange or transfer, you should compare both annuities carefully. Remember that if you exchange or transfer another annuity for the one described in this prospectus, then you may pay a surrender charge on the other annuity, and there may be a new surrender charge period under this annuity and other charges may be higher (or lower) and the benefits under this annuity may be different. You should not exchange or transfer another annuity for this one unless you determine, after knowing all the facts, that the exchange or transfer is in your best interest and not just better for the person trying to sell you this policy (that person will generally earn a commission if you buy this policy through an exchange, transfer or otherwise).
You may ask us to reinstate your policy after such an exchange, transfer or full or partial surrender and in certain limited circumstances we will allow you to do so by returning the same total dollar amount of funds distributed to the applicable investment options. The dollar amount will be used to purchase new accumulation units at the then current price. In the event any subaccount previously invested in is closed and we don’t receive additional instructions, funds will be reallocated to the remaining available investment options according to the investment allocation instructions you previously provided. Because of changes in market value, your new accumulation units may be worth more or less than the units you previously owned. Generally, unless you return the original company check, your annuity policy is nonqualified and a portion of the prior withdrawal was taxable, we are required to report the taxable amount from the distribution to the IRS even though the funds have been reinstated. The cost basis will be adjusted accordingly. The taxable amount will be reported on Form 1099-R which you will receive in January of the year following the distribution. We recommend that you consult a tax professional to explain the possible tax consequences of reinstatements.
Voting Rights
To the extent required by law, 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/or other individuals that have voting interests in the portfolios. We will send you and/or other individuals requests for instructions on how to vote those shares. When we receive those instructions, we will vote
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all of the shares in proportion to those instructions. Accordingly, it is possible for a small number of 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.
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.
The Company was the subject of inquiries and remains under audits and market conduct examinations with a focus on the handling of unreported claims and abandoned property. The audits and related examination activity may result in additional payments to beneficiaries, escheatment of funds deemed abandoned, and administrative penalties. The Company previously implemented changes in the procedures for the identification of unreported claims and handling of escheatable property to comply with the terms of regulatory agreements and newly adopted laws and regulations. The Company does not believe that any regulatory actions or agreements that result from these audits and examinations will have a material adverse impact on our ability to meet our obligations.
Cyber Security
We rely heavily on interconnected computer systems and digital data to conduct our variable product business activities. Because our variable product business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is potentially vulnerable to disruptions from utility outages and other problems, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions) and cyber-attacks. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, interference with or denial of service attacks on websites and other operational disruption and unauthorized release of confidential customer information. Similarly, individual accounts are subject to the risk of unauthorized account access and transactions that target the funds in the accounts stemming from phishing schemes and other actions, or inactions by individual account holders (including the failure to maintain up-to-date security software and anti-virus programs). Such systems failures, cyber-attacks or unauthorized account access affecting us, any third party administrator, the underlying funds, intermediaries and other affiliated or third-party service provider may adversely affect us and your policy value. For instance, cyber-attacks may: interfere with our processing of policy transactions, including the processing of orders from our website or with the underlying funds; cause the release and possible destruction of confidential customer or business information; impede order processing; subject us and/or our service providers and intermediaries to regulatory fines and financial losses; and/or cause reputational damage. Cyber security risks may also affect the issuers of securities in which the underlying funds invest, which may cause the underlying funds to lose value. There can be no assurance that we, the underlying funds or our service providers will avoid losses affecting your policy that result from cyber-attacks, information security breaches or unauthorized account access in the future.
For a complete description regarding Transamerica’s policies for its websites, including the Privacy Policy and Terms of Use for such websites, please visit: www.transamerica.com/individual/privacy-policy and www.transamerica.com/individual/terms-of-use.
Transamerica Life Insurance Company
Transamerica Life Insurance Company was incorporated under the laws of the State of Iowa on April 19, 1961 as NN Investors Life Insurance Company, Inc. 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
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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, the U.S. Virgin Islands, and all states except New York.
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.
Financial Condition of the Company
We pay benefits under your policy from our general account assets and/or from your policy value held in the separate account. It is important that you understand that payments of the benefits are not assured and depend upon certain factors discussed below.
Assets in the Separate Account. You assume all of the investment risk for your policy value that is allocated to the subaccounts of the separate account. Your policy value in those subaccounts constitutes a portion of the assets of the separate account. These assets are segregated and insulated from our general account, and may not be charged with liabilities arising from any other business that we may conduct.
Assets in the General Account. You also may be permitted to make allocations to guaranteed period options of the fixed account, which are supported by the assets in our general account. Any guarantees under a policy that exceed policy value, such as those associated with any lifetime withdrawal benefit riders and any optional death benefits, are paid from our general account (and not the separate account). Therefore, any amounts that we may be obligated to pay under the policy in excess of policy value are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. The assets of the separate account, however, are also available to cover the liabilities of our general account, but only to the extent that the separate account assets exceed the separate account liabilities arising under the policies supported by it.
We issue other types of insurance policies and financial products as well, and we also pay our obligations under these products from our assets in the general account.
As an insurance company, we are required by state insurance regulation to hold a specified amount of reserves in order to meet all the contractual obligations of our general account. In order to meet our claims-paying obligation we monitor our reserves so that we hold sufficient amounts to cover actual or expected policy and claims payments. In addition, we hedge our investments in our general account, and may require purchasers of certain of the variable insurance products that we offer to allocate premium payments and policy value in accordance with specified investment requirements. However, it is important to note that there is no guarantee that we will always be able to meet our claims-paying obligations, and that there are risks to purchasing any insurance product.
State insurance regulators also require insurance companies to maintain a minimum amount of capital, which acts as a cushion in the event that the insurer suffers a financial impairment, based on the inherent risks in the insurer’s operations. These risks include those associated with losses that we may incur as the result of defaults on the payment of interest or principal on our general account assets, which include bonds, mortgages, general real estate investments, and stocks, as well as the loss in market value of these investments. We may also experience liquidity risk if our general account assets cannot be readily converted into cash to meet obligations to our policy owners or to provide the collateral necessary to finance our business operations.
How to Obtain More Information. We encourage both existing and prospective policy owners to read and understand our financial statements. We prepare our financial statements on a statutory basis. Our financial statements, which are presented in conformity with accounting practices prescribed or permitted by the Iowa Department of Insurance as well as the financial statements of the separate account—are located in the Statement of Additional Information (SAI). For a free copy of the SAI, simply call or write us at the phone number or address of our Administrative Office referenced in this prospectus. In addition, the SAI is available on the SEC's website at www.sec.gov. Our financial strength ratings which reflect the opinions of leading independent rating agencies of our ability to meet our obligations to our policy owners are available on our website (www.transamerica.com/individual/what-we-do/about-us/financial-strength/), and the websites of these nationally recognized statistical ratings organizations – A.M. Best Company (www.ambest.com), Moody’s Investors Service (www.moodys.com), Standard & Poor’s Rating Services (www.standardandpoors.com) and Fitch, Inc. (www.fitchratings.com).
The Separate Account
The Company established a separate account, called Separate Account VA B, under the laws of the State of Iowa on January 19, 1990. The separate account receives and invests the premium payments that are allocated to it for investment in shares of the underlying fund portfolios.
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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, 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.
The Underlying Funds
At the time you purchase your policy, you may allocate your premium to subaccounts. These are subdivisions of our separate account, an account that keeps your policy assets separate from our company assets. The subaccounts then purchase shares of mutual funds set up exclusively for variable annuity or variable life insurance products. These are not the same mutual funds that you buy through your investment professional even though they may have similar investment strategies and the same portfolio managers. Each underlying fund portfolio has varying degrees of investment risk. Underlying fund portfolios are also subject to separate fees and expenses such as management fees and operating expenses. “Master-feeder” or “fund of funds” invest substantially all of their assets in other funds and will therefor bear a pro-rata share of fees and expenses incurred by both funds. This will reduce your investment return. Read the underlying fund portfolio prospectuses carefully before investing. We do not guarantee the investment results of any underlying fund portfolio. Certain underlying fund portfolios may not be available in all states and in all share classes. Please see “Appendix - Portfolios Associated with the Subaccounts” for additional information.
Other Transamerica Policies
We offer a variety of fixed and variable annuity policies. They may offer features, including investment options, and have fees and charges, that are different from those in the policy offered by this prospectus. Not every policy we issue is offered through every financial intermediary. Some financial intermediaries may not offer and/or limit the offering of certain features or options, as well as limit the availability of the policies, based on issue age, or other criteria established by the financial intermediary. Upon request, your financial professional can show you information regarding other Transamerica annuity policies that he or she distributes. You can also contact us to find out more about the availability of any of the Transamerica annuity policies.
You should work with your financial professional to decide whether this policy is appropriate for you based on a thorough analysis of your particular insurance needs, financial objectives, investment goals, time horizons and risk tolerance.
Distribution of the Policies
Distribution and Principal Underwriting Agreement. We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (TCI), for the distribution and sale of the policies. We pay commissions to TCI which are passed through to selling firms. (See below). We also pay TCI an “override” that is a percentage of total commissions paid on sales of our policies which is not passed through to the selling firms and we may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies. TCI may market the policies through bank affiliated firms, national brokerage firms, regional and independent broker-dealers and independent financial planners.
We have discontinued new sales of the policies. You may, however, continue to make premium payments to fund your policy pursuant to its terms, and exercise all other rights and options under your policy - such as reallocating your policy value among investment choices, making partial surrenders and full surrenders, and making changes of ownership of your policy.
Compensation to Broker-Dealers Who Sold the Policies. The policies have been offered to the public through broker-dealers (“selling firms”) that are licensed under the federal securities laws; the selling firm and/or its affiliates are also licensed under state insurance laws. The selling firms have entered into written selling agreements with us and with TCI as principal underwriter for the policies. We pay ongoing commissions through TCI to the selling firms for their past sales of the policies.
The selling firms were paid commissions for the promotion and sale of the policies according to one or more schedules. The amount and timing of commissions varies depending on the selling agreement, but the maximum commission is 5.5% of premium payment (additional amounts may be paid as overrides to wholesalers).
To the extent permitted by Financial Industry Regulatory Authority (FINRA) rules, the Company and TCI may pay (or allow other broker-dealers to provide) promotional incentives or payments in the form of cash or non-cash compensation or reimbursement to some, but not all, selling firms and their sales representatives. These arrangements are described further below.
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The sales representative who sold you the policy may receive 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 continue to receive in connection with your policy. Also inquire about any ongoing compensation arrangements that we and our affiliates may have with the selling firm, including the conflicts of interests that such arrangements may create.
You should be aware that a selling firm or its sales representatives may have received different compensation or incentives for selling one product over another. In some cases, these differences may have created an incentive for the selling firm or its sales representatives to have recommended or sold this policy to you.
Special Compensation Paid to Affiliated Firms. We and/or our affiliates may provide paid-in capital to TCI. We and/or our affiliates also provide TCI with a percentage of total commissions paid on sales of our policies and provide TCI with capital payments that are not contingent on sales.
TCI's registered representatives and supervisors may receive non-cash compensation, such as attendance at conferences, seminars and trips (such as travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items, payments, loans, loan forgiveness or loan guarantees.
Additional Compensation That We, TCI and/or Our Affiliates Pay to Selected Selling Firms. TCI, may continue to pay certain selling firms additional cash amounts in order to receive enhanced marketing services and increased access to their sales representatives. These special compensation arrangements are not offered to all selling firms and the terms of such arrangements may differ among selling firms.
In addition, TCI paid selling firms other special fees based on new sales and/or assets under management. During 2017, TCI had paid such fees to at least 50 broker-dealers and other financial intermediaries. Some of the more significant entities were:
BBVA Securities, Inc. • Bruderman Brothers, LLC • Cambridge Investment Research, Inc. •  CCO Investments •  Centarus Financial, Inc. • Cetera Advisor Networks LLC • Cetera Advisors LLC • Cetera Financial Specialists LLC • Cetera Investment Services LLC •  CFD Investments, Inc • Commonwealth Financial Network • Edward D. Jones & Co., L.P.• Equity Services, Inc. • Fifth Third Securities, Inc. • First Allied Holdings, Inc. • FSC Securities Corporation •  Geneos Wealth Management, Inc. • Girard Securities, Inc. • Hantz Financial Services, Inc. • Invest Financial Corporation • Investacorp, Inc. • Investment Centers of America, Inc. • Investors Capital Holding, Inc. • James T. Borello & Co, • Janney Montgomery Scott, LLC • JP Turner & Company • Key Investment Services, Inc. • Legend Equities Corporation • Lincoln Financial Advisors Corporation • Lincoln Financial Securities Corporation • LPL Financial, LLC. • M&T Securities • Merrill Lynch, Pierce, Fenner & Smith Inc. • MML Securities, Inc. • Morgan Stanley Smith Barney, Inc. • Mutual of Omaha Inv. Serv. • National Planning Corporation • NFP Securities Inc. • Park Avenue Securities, LLC • Raymond James & Associates, Inc. • Raymond James Financial Services, Inc. • Royal Alliance Associates, Inc. • SagePoint Financial, Inc. • Santander Securities LLC • Securian Financial Services, Inc. • Signator Investors, Inc. • SII Investments, Inc. • SunTrust Investment Services • The Huntington Investment Company • Transamerica Financial Advisors, Inc. • UBS Financial Services • US Bancorp Investments, Inc. • VOYA Financial Partners, LLC • VSR Financial Services, Inc. • Wells Fargo Advisors Financial Network, LLC • Wells Fargo Advisors, LLC • Wells Fargo Investments LLC • Woodbury Financial
For the calendar year ended December 31, 2017 TCI paid approximately $29,000,000 to various brokers and other financial intermediaries in connection with revenue sharing arrangements.
No specific charge is assessed directly to owners or the separate account to cover commissions, non-cash compensation, and other incentives or payments described above. We do intend to recoup commissions and other sales expenses and incentives we pay, however, through fees and charges deducted under the policy and other corporate revenue.
79

 

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Glossary of Terms
The Policy - General Provisions
Certain Federal Income Tax Consequences
Investment Experience
Performance
Historical Performance Data
Published Ratings
State Regulation of Transamerica Life Insurance Company
Administration
Records and Reports
Distribution of the Policies
Voting Rights
Other Products
Custody of Assets
Independent Registered Public Accounting Firm
Other Information
Financial Statements
Appendix A - Condensed Financial Information
80

 

APPENDIX
UNDERLYING FUND PORTFOLIOS ASSOCIATED WITH THE SUBACCOUNTS
The following is a list of current underlying fund portfolios available under the policy, which are subject to change as discussed in this prospectus. Please Note: The Company reserves the right to change investment choices made by purchasers of the Living Benefits Rider and Retirement Income Choice® 1.2 rider (if the Open Allocation option is elected) as we deem necessary to support the guarantees under these riders.
SUBACCOUNT (1) UNDERLYING FUND PORTFOLIO ADVISOR/SUBADVISOR
AB VARIABLE PRODUCTS SERIES FUND, INC.
AB Balanced Wealth Strategy Portfolio - Class B AB Balanced Wealth Strategy Portfolio - Class B AllianceBernstein L.P.
Investment Objective: To maximize total return consistent with the Adviser’s determination of reasonable risk.
STATE STREET VARIABLE INSURANCE SERIES FUNDS, INC.
State Street Total Return V.I.S. Fund - Class 3 State Street Total Return V.I.S. Fund - Class 3 SSGA Funds Management, Inc.
Investment Objective: The highest total return, composed of current income and capital appreciation, as is consistent with prudent investment risk.
TRANSAMERICA SERIES TRUST*
TA 60/40 Allocation - Service Class Transamerica 60/40 Allocation VP - Service Class Transamerica Asset Management, Inc.
Investment Objective: Seeks long-term capital appreciation and current income.
TA AB Dynamic Allocation - Service Class Transamerica AB Dynamic Allocation VP - Service Class AllianceBernstein L.P.
Investment Objective: Seeks capital appreciation and current income.
TA Aegon Government Money Market - Service Class(2) Transamerica Aegon Government Money Market VP - Service Class(2) Aegon USA Investment Management, LLC
Investment Objective: Seeks as high a level of current income as is consistent with preservation of capital and liquidity.
TA Aegon High Yield Bond - Service Class Transamerica Aegon High Yield Bond VP - Service Class Aegon USA Investment Management, LLC
Investment Objective: Seeks a high level of current income by investing in high-yield debt securities.
TA Aegon U.S. Government Securities - Service Class Transamerica Aegon U.S. Government Securities VP - Service Class Aegon USA Investment Management, LLC
Investment Objective: Seeks to provide as high a level of total return as is consistent with prudent investment strategies.
TA Barrow Hanley Dividend Focused - Service Class Transamerica Barrow Hanley Dividend Focused VP - Service Class Barrow, Hanley, Mewhinney, & Strauss, LLC
Investment Objective: Seeks total return gained from the combination of dividend yield, growth of dividends and capital appreciation.
TA BlackRock Equity Smart Beta 100 - Service Class Transamerica BlackRock Equity Smart Beta 100 VP - Service Class BlackRock Investment Management, LLC
Investment Objective: Seeks long-term capital appreciation.
TA BlackRock Global Allocation - Service Class Transamerica BlackRock Global Allocation VP - Service Class BlackRock Investment Management, LLC
Investment Objective: Seeks high total investment return. Total investment return is the combination of capital appreciation and investment income.
TA BlackRock Smart Beta 50 - Service Class Transamerica BlackRock Smart Beta 50 VP - Service Class BlackRock Investment Management, LLC
Investment Objective: Seeks long-term capital appreciation and capital preservation.
TA BlackRock Smart Beta 75 - Service Class Transamerica BlackRock Smart Beta 75 VP - Service Class BlackRock Investment Management, LLC
Investment Objective: Seeks long-term capital appreciation with capital preservation as a secondary objective.
TA International Equity Index - Service Class Transamerica International Equity Index VP - Service Class SSGA Funds Management, Inc.
Investment Objective: Seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U. S. and Canada.
TA Legg Mason Dynamic Allocation - Balanced - Service Class(3) Transamerica Legg Mason Dynamic Allocation - Balanced VP - Service Class(3) QS Investors, LLC
Investment Objective: Seeks capital appreciation and income.
TA Legg Mason Dynamic Allocation - Growth - Service Class(3) Transamerica Legg Mason Dynamic Allocation - Growth VP - Service Class(3) QS Investors, LLC
Investment Objective: Seeks capital appreciation and income.
TA Levin Large Cap Value - Service Class Transamerica Levin Large Cap Value VP - Service Class Transamerica Asset Management, Inc. & Levin Capital Strategies, L.P.
Investment Objective: Seeks long-term capital appreciation.
81

 

UNDERLYING FUND PORTFOLIOS ASSOCIATED WITH THE SUBACCOUNTS — (Continued)
SUBACCOUNT (1) UNDERLYING FUND PORTFOLIO ADVISOR/SUBADVISOR
TA Madison Diversified Income - Service Class Transamerica Madison Diversified Income VP - Service Class Madison Asset Management. LLC
Investment Objective: Seeks high total return through the combination of income and capital appreciation.
TA Managed Risk - Balanced ETF - Service Class Transamerica Managed Risk - Balanced ETF VP - Service Class Milliman Financial Risk Management LLC
Investment Objective: Seeks to balance capital appreciation and income.
TA Managed Risk - Conservative ETF - Service Class Transamerica Managed Risk - Conservative ETF VP - Service Class Milliman Financial Risk Management LLC
Investment Objective: Seeks current income and preservation of capital.
TA Managed Risk - Growth ETF - Service Class Transamerica Managed Risk - Growth ETF VP - Service Class Milliman Financial Risk Management LLC
Investment Objective: Seeks capital appreciation as a primary objective and income as a secondary objective.
TA Morgan Stanley Capital Growth - Service Class Transamerica Morgan Stanley Capital Growth VP – Service Class Morgan Stanley Investment Management Inc.
Investment Objective: Seeks to maximize long-term growth.
TA Multi-Managed Balanced - Service Class Transamerica Multi-Managed Balanced VP – Service Class J.P. Morgan Investment Management Inc. and Aegon USA Investment Management, LLC
Investment Objective: Seeks to provide high total investment return through investments in a broadly diversified portfolio of stock, bonds and money market instruments.
TA PIMCO Total Return - Service Class Transamerica PIMCO Total Return VP – Service Class Pacific Investment Management Company LLC
Investment Objective: Seeks maximum total return consistent with preservation of capital and prudent investment management.
TA PineBridge Inflation Opportunities - Service Class Transamerica PineBridge Inflation Opportunities VP - Service Class PineBridge Investments LLC
Investment Objective: Seeks maximum real return, consistent with preservation of capital.
TA QS Investors Active Asset Allocation - Conservative - Service Class(3) Transamerica QS Investors Active Asset Allocation - Conservative VP - Service Class(3) QS Investors, LLC
Investment Objective: Seeks current income and preservation of capital.
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class(3) Transamerica QS Investors Active Asset Allocation - Moderate Growth VP - Service Class(3) QS Investors, LLC
Investment Objective: Seeks capital appreciation with current income as secondary objective.
TA QS Investors Active Asset Allocation - Moderate - Service Class(3) Transamerica QS Investors Active Asset Allocation - Moderate VP - Service Class(3) QS Investors, LLC
Investment Objective: Seeks capital appreciation and current income.
TA T. Rowe Price Small Cap - Service Class Transamerica T. Rowe Price Small Cap VP – Service Class T. Rowe Price Associates, Inc.
Investment Objective: Seeks long-term growth of capital by investing primarily in common stocks of small growth companies.
TA U.S. Equity Index - Service Class Transamerica U.S. Equity Index VP - Service Class SSGA Funds Management, Inc.
Investment Objective: Seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index
(1)  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 objective, investment goals, time horizons, and risk tolerance.
(2)  There can be no assurance that the Transamerica Aegon Government Money Market VP - Service Class portfolio will be able to maintain a stable net asset value per share during extended periods of low interest rates, and partly as a result of policy charges, the yield on the TA Aegon Government Money Market - Service Class subaccount may become extremely low and possibly negative.
(3)  This subaccount is only available to owners that held an investment in the subaccount on May 1, 2018. However, if any such owner surrenders all of his or her money from the subaccount after May 1, 2018, that owner may not reinvest in the subaccount.
* All underlying fund portfolios in the Transamerica Series Trust are advised by Transamerica Asset Management. The entities listed are the subadvisers unless otherwise indicated.
Certain subaccounts may not be available in all states, at all times or through all financial intermediaries. We may discontinue offering any subaccount at any time. In some cases, a subaccount not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a subaccount, please contact your financial intermediary or our Administrative Office.
82

 

APPENDIX
Designated Investment Options
The table below identifies the Designated Investment Options available for use with the Guaranteed Minimum Death Benefits and our Guaranteed Lifetime Withdrawal Benefits.
  Double
Enhanced
Death
Benefit(1) 		Retirement
Income
Max®
Rider 		Retirement
Income
Max®
Rider 		Retirement
Income
Max®
Rider 		Retirement
Income
Max®
Rider 		Retirement
Income
Choice®
1.6 Rider
Subaccounts   Before
12/12/11 		12/12/11 to
11/9/14 		11/10/14 to
1/31/18 		After
2/1/18 		Group
A, B or C
AB Balanced Wealth Strategy Portfolio - Class B √         A
State Street Total Return V.I.S. Fund - Class 3 √         A
TA 60/40 Allocation - Service Class           A
TA AB Dynamic Allocation - Service Class √ √ √   √ C
TA Aegon Government Money Market - Service Class √ √ √ √ √ C
TA Aegon High Yield Bond - Service Class            
TA Aegon U.S. Government Securities - Service Class √ √ √ √ √ C
TA Barrow Hanley Dividend Focused - Service Class            
TA BlackRock Equity Smart Beta 100 - Service Class √          
TA BlackRock Global Allocation - Service Class           A
TA BlackRock Smart Beta 50 - Service Class √ √ √   √ B
TA BlackRock Smart Beta 75 - Service Class √         A
TA International Equity Index - Service Class √          
TA Legg Mason Dynamic Allocation - Balanced - Service Class(2)(3)   √ √ √ √ B
TA Legg Mason Dynamic Allocation - Growth - Service Class(2)(3)           A
TA Madison Diversified Income - Service Class       √ √ B
TA Managed Risk - Balanced ETF - Service Class(2) √ √ √ √ √ B
TA Managed Risk - Conservative ETF - Service Class(2) √ √ √ √ √ C
TA Managed Risk - Growth ETF - Service Class(2) √         A
TA Morgan Stanley Capital Growth - Service Class            
TA Multi-Managed Balanced - Service Class           A
TA PIMCO Total Return - Service Class √ √ √ √ √ C
TA PineBridge Inflation Opportunities - Service Class           C
TA QS Investors Active Asset Allocation - Conservative - Service Class(2)(3)   √ √ √ √ C
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class(2)(3)           A
TA QS Investors Active Asset Allocation - Moderate - Service Class(2)(3)   √ √ √ √ B
TA T. Rowe Price Small Cap - Service Class            
TA U.S. Equity Index - Service Class √          
Fixed Account √ √ √ √ √ C
(1)  The Double Enhanced Death Benefit is no longer available on new policies.
(2)  This subaccount invests in an underlying fund that utilized a volatility management strategy as part of its investment objective and/or principal
83

 

Designated Investment Options — (Continued)
investment strategy. See “Investment Restrictions” earlier in the prospectus for information on how volatility management strategies may impact your policy value in certain optional riders.
(3)  This subaccount is only available to owners that allocated policy value to the subaccount as of May 1, 2018. However, if any such owner surrenders or transfers all of his or her policy value from any such subaccount after May 1, 2018, that owner may not reinvest in the subaccount.
Certain designated investment options may not be available in all states, at all times or through all financial intermediaries. We may discontinue offering any designated investment option at any time. In some cases, a designated investment option not available through a financial intermediary may be obtained by contacting us directly. For more information on the options available for electing a designated investment option, please contact your financial intermediary or our Administrative Office.
84

 

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, 2017. Should the total separate account expense applicable to your policy fall between the highest and lowest charges, AND you wish to see a copy of the Condensed Financial Information applicable to your policy, such information is contained in the SAI. You can obtain a copy of the SAI FREE OF CHARGE by contacting us at:
Calling: (800) 525-6205
Writing: Transamerica Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, IA 52499
    
    Separate Account Expense 2.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.852877
$0.869845
$0.887199
$0.904897
$0.922950
$0.941465
$0.960194
$0.979350
$0.998815
$1.000000 		$0.836237
$0.852877
$0.869845
$0.887199
$0.904897
$0.922950
$0.941465
$0.960194
$0.979350
$0.998815 		0.000
1,486.975
1,491.978
1,497.066
1,502.066
3,618.336
3,630.698
10,629.094
27,426.340
142,388.676
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124
$1.000000 		$1.106917
$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124
$1.000000 		$1.106917
$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.426903
$9.998377 		$12.597600
$10.426903 		0.000
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.111778
$9.998377 		$11.187741
$10.111778 		0.000
0.000
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.180726
$9.998377 		$11.774836
$10.180726 		0.000
0.000
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998252 $10.992002 362.327
85

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 2.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.248809
$1.227645
$1.274759
$1.243684
$1.138414
$1.071340
$1.076920
$0.992347
$0.868604
$1.000000 		$1.388926
$1.248809
$1.227645
$1.274759
$1.243684
$1.138414
$1.071340
$1.076920
$0.992347
$0.868604 		14,253.680
14,299.448
24,898.616
24,977.299
25,053.023
205,254.681
400,105.185
410,580.002
431,855.751
0.000
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.222145
$1.197707
$1.230120
$1.192236
$1.131562
$1.082666
$1.070290
$0.997673
$0.999946 		$1.330433
$1.222145
$1.197707
$1.230120
$1.192236
$1.131562
$1.082666
$1.070290
$0.997673 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.285458
$1.252610
$1.324207
$1.299110
$1.115566
$1.020119
$1.052413
$0.949921
$0.786588
$1.000000 		$1.493132
$1.285458
$1.252610
$1.324207
$1.299110
$1.115566
$1.020119
$1.052413
$0.949921
$0.786588 		275,671.756
275,706.710
275,745.356
307,489.212
309,878.340
784,683.600
909,550.025
848,690.284
888,839.815
0.000
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.214105
$1.208418
$1.226244
$1.198762
$1.257509
$1.195264
$1.150660
$1.097545
$0.967159
$1.000000 		$1.245662
$1.214105
$1.208418
$1.226244
$1.198762
$1.257509
$1.195264
$1.150660
$1.097545
$0.967159 		3,958.275
3,970.646
3,983.621
3,997.030
4,009.968
113,042.196
146,366.276
138,794.744
141,107.461
0.000
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998252 $11.159631 0.000
    
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $2.010151 $2.130271 4,722.130
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.507295 $1.603309 0.000
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.937695
$0.945669
$0.953688
$0.961720
$0.969804
$0.977994
$0.986311
$0.994679
$1.003016
$1.000000 		$0.929840
$0.937695
$0.945669
$0.953688
$0.961720
$0.969804
$0.977994
$0.986311
$0.994679
$1.003016 		2,897,224.743
3,290,612.331
3,385,743.933
2,556,337.101
3,625,408.798
2,906,115.443
3,538,887.537
2,078,681.387
1,565,832.498
142,382.709
86

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481
$1.000000 		$1.230921
$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481 		1,088,100.429
1,441,234.890
3,901,857.702
1,779,590.085
4,084,242.550
4,045,598.256
7,760,356.675
2,679,840.571
1,726,307.936
338,635.161
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481
$1.000000 		$1.230921
$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481 		0.000
0.000
0.000
0.000
0.000
3,881.260
32,552.052
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.519978
$9.999306 		$12.854488
$10.519978 		289,559.106
320,351.652
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.202070
$9.999306 		$11.415970
$10.202070 		54,537.573
1,048.084
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.271622
$9.999306 		$12.014989
$10.271622 		60,227.142
3,133.709
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999182 $11.075822 44,511.815
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.130499
$1.147774
$1.182076
$1.098903
$1.013254
$1.000000 		$1.238335
$1.130499
$1.147774
$1.182076
$1.098903
$1.013254 		4,246,514.055
5,682,913.383
6,420,883.825
5,080,738.060
4,076,628.291
1,653,647.607
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.171405
$1.193128
$1.239831
$1.155843
$1.008284
$1.000000 		$1.314972
$1.171405
$1.193128
$1.239831
$1.155843
$1.008284 		3,600,535.912
4,047,968.509
4,900,238.741
3,007,425.991
1,946,527.308
422,292.992
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.281997 $1.345294 382,674.822
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.373109
$1.334667
$1.370256
$1.321765
$1.196245
$1.113005
$1.106221
$1.007876
$0.872256
$1.000000 		$1.544537
$1.373109
$1.334667
$1.370256
$1.321765
$1.196245
$1.113005
$1.106221
$1.007876
$0.872256 		60,598,930.292
69,148,058.435
72,954,801.741
79,420,885.636
79,796,749.459
70,531,021.154
54,287,152.158
24,245,285.615
13,314,321.928
1,871,105.999
87

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.324875
$1.283789
$1.303656
$1.249264
$1.172318
$1.108949
$1.083942
$0.999007
$0.999977 		$1.458674
$1.324875
$1.283789
$1.303656
$1.249264
$1.172318
$1.108949
$1.083942
$0.999007 		16,723,939.809
18,886,163.616
20,230,972.750
22,055,467.513
23,306,574.638
19,755,002.415
16,679,820.217
5,177,118.531
20,689.598
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.413436
$1.361834
$1.423437
$1.380713
$1.172282
$1.059832
$1.081076
$0.964804
$0.789908
$1.000000 		$1.660444
$1.413436
$1.361834
$1.423437
$1.380713
$1.172282
$1.059832
$1.081076
$0.964804
$0.789908 		65,096,733.919
72,395,401.450
86,899,685.495
98,411,610.311
94,720,474.151
82,831,349.672
67,691,751.249
56,320,200.031
41,724,255.963
10,502,904.586
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.334971
$1.313791
$1.318137
$1.274052
$1.321428
$1.241773
$1.181992
$1.114726
$0.971217
$1.000000 		$1.385233
$1.334971
$1.313791
$1.318137
$1.274052
$1.321428
$1.241773
$1.181992
$1.114726
$0.971217 		7,655,221.705
8,473,453.220
9,708,248.072
11,845,111.122
14,130,089.740
14,535,530.529
12,594,077.711
6,587,087.169
3,747,234.205
324,007.630
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.063693
$0.084095
$0.091489
$0.123976
$0.227789
$0.325554
$0.410146
$0.564776
$1.000000 		$0.042744
$0.063693
$0.084095
$0.091489
$0.123976
$0.227789
$0.325554
$0.410146
$0.564776 		564,965.833
1,289,675.537
919,356.917
53,112.527
259,119.781
2,016,550.262
2,829,740.036
19,715.541
0.000
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.120283
$1.100642
$1.136836
$1.106599
$1.042303
$0.984452
$1.000000 		$1.240804
$1.120283
$1.100642
$1.136836
$1.106599
$1.042303
$0.984452 		4,140,053.405
4,810,733.730
5,533,389.044
5,991,902.026
6,535,223.986
4,521,404.709
1,873,196.632
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.126078
$1.113726
$1.201731
$1.174087
$1.016311
$0.923802
$1.000000 		$1.343343
$1.126078
$1.113726
$1.201731
$1.174087
$1.016311
$0.923802 		6,247,299.663
6,892,378.658
7,921,872.228
8,132,740.978
8,311,082.374
5,790,317.924
1,332,861.647
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.127602
$1.112865
$1.172468
$1.141160
$1.035744
$0.964568
$1.000000 		$1.290818
$1.127602
$1.112865
$1.172468
$1.141160
$1.035744
$0.964568 		11,557,204.644
13,485,656.377
14,452,031.715
15,319,315.215
15,288,919.081
9,544,041.576
1,069,012.852
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999182 $11.244705 1,924.952
88

 

CONDENSED FINANCIAL INFORMATION — (Continued)
The TA 60/40 Allocation and TA Levin Large Cap Value had not commenced operation as of December 31, 2017, therefore, comparable data is not available.
89

 

APPENDIX
Excess Interest Adjustment Examples
Surrenders (full and partial), transfers, death benefits and amounts applied to an annuity option, from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment (“EIA”). At the time you request a surrender, if the guaranteed interest rate set by the Company has risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value. However, if the guaranteed interest rate set by us has fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value.
Excess interest adjustments will not reduce the adjusted policy value for a guaranteed period option below the premium payments and transfers to that guaranteed period option, less any prior partial surrenders and transfers from the guaranteed period option, plus interest at the policy's minimum guaranteed effective annual interest rate. This is referred to as the excess interest adjustment floor.
The formula that will be used to determine the excess interest adjustment is:
S* (G-C)* (M/12)
S = Gross amount being surrendered that is subject to the excess interest adjustment
G = Guaranteed interest rate in effect for the policy
M = Number of months remaining in the current option period, rounded up to the next higher whole number of months.
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% (the amount of the “adjustment” will be based on an actuarial risk based analysis considering a number of financial criteria including the prevailing interest rate environment).
* = multiplication
The following examples are for illustrative purposes only and are calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal. In the following examples ^ denotes exponentiation. Please note the exponentiation represents the compounding of the interest rate.
90

 

Excess Interest Adjustment Examples — (Continued)
Example 1 (Full Surrender, rates increase by 3%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Guaranteed minimum interest rate = 1.50%
Surrender in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Amount subject to excess interest adjustment = 54,181.21 – 4,181.21 = 50,000.00
Excess interest adjustment floor = 50,000.00 * (1.015) ^ 1.5 = 51,129.21
Excess interest adjustment S*(G-C)*(M/12) where: G = .055
C = .085
M = 42
= 50,000.00 * (0.055*0.085) * (42/12)
  = -5,250.00, but excess interest adjustment cannot cause the adjusted policy value to fall below the excess interest adjustment floor, so the adjustment is limited to
51,129.21 - 54,181.21 = -3,052.00
Adjusted policy value = policy value + excess interest adjustment = 54,181.21 + (-3,052.00) = 51,129.21
Upon full surrender of the policy, the net surrender value (adjusted policy value less any surrender charge) will never be less than that required by the non-forfeiture laws of your state.
Example 2 (Full Surrender, rates decrease by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Guaranteed minimum interest rate = 1.50%
Surrender in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Amount subject to excess interest adjustment = 54,181.21 – 4,181.21 = 50,000.00
Excess interest adjustment floor = 50,000.00 * (1.015) ^ 1.5 = 51,129.21
Excess interest adjustment S* (G-C)* (M/12) where: G = .055
C = .045
M = 42
= 50,000.00 * (.055-.045) * (42/12) = 1,750.00
Adjusted policy value = 54,181.21 + 1,750.00 = 55,931.21
Upon full surrender of the policy, the net surrender value will never by less than that required by the non-forfeiture laws of your state. For the purpose of these illustrations no surrender charges are assumed.
91

 

Excess Interest Adjustment Examples — (Continued)
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 + SC
R = the requested partial surrender;
E = the excess interest adjustment; and
SC = the surrender charges on (EPW - E): where
EPW = the excess partial withdrawal amount.
Example 3 (Partial Surrender, rates increase by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Partial Surrender of $20,000 in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Excess interest adjustment S*(G-C)*(M/12) where: S = 20,000 – 4,181.21 = 15,818.79
G = .055
C = .065
M = 42
= 15,818.79 * (.055 - .065) * (42/12) = -553.66
Remaining policy value at middle of policy year 2 = 54,181.21 - (R - E + surrender charge)
= 54,181.21 - (20,000.00 - (-553.66) + 0.00) = 33,627.55
Example 4 (Partial Surrender, rates decrease by 1%):
Assumptions:
Single premium payment = $50,000
Guarantee period = 5 Years
Guarantee rate = 5.5% per annum
Partial Surrender of $20,000 in the middle of policy year 2
Summary:  
Policy value at middle of policy year 2 = 50,000.00 * (1.055) ^ 1.5 = 54,181.21
Cumulative earnings = 54,181.21 – 50,000.00 = 4,181.21
Amount free of excess interest adjustment = 4,181.21
Excess interest adjustment S*(G-C)*(M/12) where: S = 20,000 – 4,181.21 = 15,818.79
G = .055
C = .045
M = 42
= 15,818.79 * (.055 - .045)* (42/12) = 553.66
Remaining policy value at middle of policy year 2 = 54,181.21 - (R - E + surrender charge)
= 54,181.21 - (20,000.00 – 553.66 + 0.00) = 34,734.87
92

 

APPENDIX
Death Benefit
Adjusted Withdrawals. If you make a partial surrender (withdrawal), then your guaranteed minimum death benefit is reduced by an amount called the adjusted withdrawal. The amount of the reduction depends on the relationship between your death proceeds and policy value. The adjusted withdrawal is equal to the gross withdrawal multiplied by the death proceeds immediately prior to the withdrawal divided by the policy value immediately prior to the withdrawal. The formula is AW = GW x (DP/PV) where:
AW = adjusted withdrawal
GW= gross withdrawal
DP = death proceeds prior to the withdrawal = greatest of (PV, CV, or GMDB)
PV = policy value prior to the withdrawal
GMDB = guaranteed minimum death benefit prior to the withdrawal
CV = cash value prior to the withdrawal
The following examples describe the effect of a surrender on the guaranteed minimum death benefit and policy value.
Example 1: Death Proceeds Greater than Policy Value
Assumptions:
GMDB = $75,000
PV = $50,000
DP = $75,000
GW = $15,494
AW = $15,494 x ($75,000/$50,000) = $23,241
Summary:  
Reduction in guaranteed minimum death benefit =$23,241
Reduction in policy value =$15,494
New guaranteed minimum death benefit amount =$51,759
New policy value (after withdrawal) =$34,506
The guaranteed minimum death benefit is reduced more than the policy value because the guaranteed minimum death benefit was greater than the policy value immediately prior to the withdrawal.
Example 2: Death Proceeds Equal to Policy Value
Assumptions:
GMDB = $50,000
PV = $75,000
DP = $75,000
GW = $15,494
AW = $15,494 x ($75,000/$75,000) = $15,494
Summary:  
Reduction in guaranteed minimum death benefit =$15,494
Reduction in policy value =$15,494
New guaranteed minimum death benefit amount =$34,506
New policy value (after withdrawal) =$59,506
The guaranteed minimum death benefit and policy value are reduced by the same amount because the policy value was greater than the guaranteed minimum death benefit immediately prior to the withdrawal.
These examples are for illustrative purposes only. The purpose of these illustrations is to demonstrate how this feature is calculated using hypothetical values. Your experience will vary based on circumstances at the time of withdrawal.
93

 

Death Benefit — (Continued)
Hypothetical Example
In this example, certain death benefit values at various points in time are depicted based on hypothetical assumed rates of performance. This example is for illustrative purposes only and assumes a single $100,000 premium payment by a sole owner and annuitant who is age 50. It further assumes no subsequent premium payments or withdrawals. The difference between the two “Policy Value” columns is the fee for the guaranteed minimum death benefit.
End of Year   Net Rate of
Return for Fund* 		  Policy Value
(No GMDB
Elected) 		  Policy Value
(Return of
Premium GMDB
Elected) 		  Return of
Premium
GMDB 		  Policy Value
(Annual Step-up
GMDB Elected) 		  Annual
Step-Up
GMDB
Issue   N/A   $100,000   $100,000   $100,000   $100,000   $100,000
1   -4%   $ 94,850   $ 94,700   $100,000   $ 94,500   $100,000
2   18%   $110,832   $110,515   $100,000   $110,093   $110,093
3   15%   $126,182   $125,655   $100,000   $124,955   $124,955
4   -7%   $115,899   $115,226   $100,000   $114,334   $124,955
5   2%   $116,884   $116,033   $100,000   $114,905   $124,955
6   10%   $127,228   $126,127   $100,000   $124,672   $124,955
7   14%   $143,577   $142,146   $100,000   $140,257   $140,257
8   -3%   $137,618   $136,033   $100,000   $133,945   $140,257
9   17%   $159,431   $157,391   $100,000   $154,706   $154,706
10   6%   $167,163   $164,788   $100,000   $161,668   $161,668
* The assumed rate does reflect the deduction of a hypothetical fund fee but does not reflect the deduction of any other fees, charges or taxes. The death benefit values do reflect the deduction of hypothetical base policy fees and hypothetical death benefit fees. For purposes of this example we assumed a Mortality and Expense Risk Fee and Administrative Charge of 1.15% for Policy Value, 1.30% for Return of Premium and 1.50% for Annual Step-Up. Different hypothetical returns and fees would produce different results.
94

 

APPENDIX
ADDITIONAL DEATH DISTRIBUTION RIDER
The following example illustrates the Additional Death Distribution additional death benefit payable by this rider as well as the effect of a partial surrender on the Additional Death Distribution benefit amount. The annuitant is less than age 71 on the Rider Date.
Example 1
Assumptions:
Policy value on the rider date = $100,000
Premiums paid after the rider date before surrender = $25,000
Gross partial surrenders after the rider date = $30,000
Policy value on date of surrender = $150,000
Summary:  
Rider earnings on date of surrender (policy value on date of surrender – policy value on rider date – premiums paid after rider date + surrenders since rider date that exceeded rider earnings = $150,000 - $100,000 - $25,000 + 0): $ 25,000
Amount of surrender that exceeds rider earnings ($30,000 - $25,000): $ 5,000
Base policy death benefit (assumed) on the date of death benefit calculation: $200,000
Policy value on the date of death benefit calculations: $175,000
Rider earnings (= policy value on date of death benefit calculations – policy value on rider date – premiums since rider date + surrenders since rider date that exceeded rider earnings = $175,000 - $100,000 - $25,000 + $5,000): $ 55,000
Additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $55,000): $ 22,000
Total death benefit paid (= base policy death benefit plus additional death benefit amount): $222,000
Example 2
Assumptions:
Policy value on the rider date = $100,000
Premiums paid after the rider date before surrender = $0
Gross partial surrenders after the rider date = $0
Base policy death benefit (assumed) on the date of death benefit calculation = $100,000
Policy value on the date of death benefit calculations = $75,000
Summary:  
Rider earnings (= policy value on date of death benefit calculations – policy value on rider date – premiums since rider date + surrenders since rider date that exceeded rider earnings = $75,000 - $100,000 - $0 + $0): $ 0
Additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $0): $ 0
Total death benefit paid (= base policy death benefit plus additional death benefit amount): $100,000
95

 

APPENDIX
ADDITIONAL DEATH DISTRIBUTION+ RIDER
Assume the Additional Death Distribution+ Rider rider is added to a new policy opened with $100,000 initial premium payment. 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 a $25,000 premium payment 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
Assumptions:
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
Summary:  
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) $115,000.00
Rider benefit base in 3rd rider year after premium addition (= $140,000 - $25,000) $115,000.00
Rider benefit base in 4th rider year prior to withdrawal (= account value less premiums added since rider date = $145,000 - $25,000) $120,000.00
Rider benefit base in 4th rider year after withdrawal = (account value less premiums added since rider date =$110,000 - $25,000) $ 85,000.00
Rider benefit base in 5th rider year (= $130,000 - $25,000) $105,000.00
Additional death benefit = rider benefit percentage * rider benefit base = 30% * $105,000 $ 31,500.00
Total death proceeds in 5th rider year (= base policy death proceeds + additional death benefit amount = $145,000 + $31,500) $176,500.00
96

 

APPENDIX
LIVING BENEFITS RIDER ADJUSTED PARTIAL WITHDRAWALS
The following examples show the effect of withdrawals on the benefits under the Living Benefits Rider.
GUARANTEED MINIMUM ACCUMULATION BENEFIT
Gross partial withdrawals will reduce the guaranteed future value by an amount equal to the greater of:
1)  the gross partial withdrawal amount; and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the amount of gross partial withdrawal;
B  is the policy value immediately prior to the gross partial withdrawal; and
C  is the guaranteed future value immediately prior to the gross partial withdrawal.
The following demonstrates, on a purely hypothetical basis, the effects of partial withdrawals under the guaranteed minimum accumulation benefit.
Example 1:
Assumptions:
Policy value prior to withdrawal (“PV”) = $90,000
Guaranteed future value prior to withdrawal (“GFV”) = $100,000
Gross withdrawal amount (“WD”) = $10,000
Step One.  What is the pro rata value of the amount withdrawn?
1.  Formula is (WD / PV) * GFV = pro rata amount
2.  ($10,000 / $90,000) * $100,000 = $11,111.11
Step Two.  Which is larger, the $10,000 withdrawal or the $11,111.11 pro rata amount?
$11,111.11 pro rata amount
Step Three.  After the withdrawal is taken, what will be new guaranteed future value?
$100,000 - $11,111.11 = $88,888.89
Result.   If no more withdrawals are taken, the guaranteed future value on the 10th rider anniversary is $88,888.89.
Example 2:
Assumptions:
PV = $120,000
GFV= $100,000
WD= $10,000
Step One.  What is the pro rata value of the amount withdrawn?
1.  Formula is (WD / PV) * GFV = pro rata amount
2.  ($10,000 / $120,000) * $100,000 = $8,333.33
Step Two.  Which is larger, the $10,000 withdrawal or the $8,333.33 pro rata amount?
$10,000 withdrawal
Step Three.  After the withdrawal is taken, what will be new guaranteed future value?
$100,000 - $10,000 = $90,000
Result.   If no more withdrawals are taken, the guaranteed future value on the 10th Rider Anniversary is $90,000.
GUARANTEED LIFETIME WITHDRAWAL BENEFIT
Total Withdrawal Base.  Gross partial withdrawals up to the maximum annual withdrawal amount will not reduce the total withdrawal base. Gross partial withdrawals in excess of the maximum annual withdrawal amount will reduce the total withdrawal base by an amount equal to the greater of:
1)  the excess gross partial withdrawal amount; and
97

 

LIVING BENEFITS RIDER ADJUSTED PARTIAL WITHDRAWALS — (Continued)
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the excess gross partial withdrawal (the amount in excess of the guaranteed annual withdrawal amount remaining prior to the withdrawal);
B  is the policy value after the maximum annual withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount; and
C  is the total withdrawal base prior to the withdrawal of the excess amount.
Minimum Remaining Withdrawal Amount.  Gross partial withdrawals up to the maximum annual withdrawal amount will reduce the minimum remaining withdrawal amount by the same amount (dollar-for-dollar). Gross partial withdrawals in excess of the maximum annual withdrawal amount will reduce the minimum remaining withdrawal amount by an amount equal to the greater of:
1)  the excess gross partial withdrawal amount; and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the excess gross partial withdrawal (the amount in excess of the guaranteed annual withdrawal amount remaining prior to the withdrawal);
B  is the policy value after the maximum annual withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount; and
C  is the minimum remaining withdrawal amount after the maximum annual withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount.
The following demonstrates, on a purely hypothetical basis, the effects of partial withdrawals under the guaranteed lifetime withdrawal benefit.
When a withdrawal is taken, three parts of the guaranteed lifetime withdrawal benefit can be affected:
1.  Minimum remaining withdrawal amount (“MRWA”)
2.  Total withdrawal base (“TWB”)
3.  Maximum annual withdrawal amount (“MAWA”)
Example 1 (7% “principal back”):
Assumptions:
TWB = $100,000
MRWA = $100,000
7% WD would be $7,000 (7% of the current $100,000 total withdrawal base)
WD = $7,000
Excess withdrawal (“EWD”) = None
PV = $100,000
You = Owner and Annuitant (Age 60)
Step One.  Is any portion of the withdrawal greater than the “principal back” maximum annual withdrawal amount?
No.  There is no excess withdrawal under the “principal back” guarantee if no more than $7,000 is withdrawn.
Step Two.  What is the minimum remaining withdrawal amount after the withdrawal has been taken?
1.  Total to deduct from the minimum remaining withdrawal amount is $7,000 (there is no excess to deduct)
2.  $100,000 - $7,000 = $93,000.
Result.  In this example, because no portion of the withdrawal was in excess of $7,000, the “principal back” total withdrawal base does not change and the “principal back” minimum remaining withdrawal amount is $93,000.00.
Example 2 (7% “principal back”):
Assumptions:
TWB = $100,000
MRWA = $100,000
7% WD would be $7,000 (7% of the current $100,000 total withdrawal base)
WD = $8,000
EWD = $1,000 ($8,000 - $7,000)
PV = $90,000
You = Owner and Annuitant (Age 60)
98

 

LIVING BENEFITS RIDER ADJUSTED PARTIAL WITHDRAWALS — (Continued)
Step One.  Is any portion of the total withdrawal greater than the maximum annual withdrawal amount?
Yes.  $8,000 - $7,000 = $1,000 (the excess withdrawal amount)
Step Two.  Calculate how much of the “principal back” minimum remaining withdrawal amount is affected by the excess withdrawal.
1.  Formula for pro rata amount is: (EWD / (PV - 7% WD)) * (MRWA - 7% WD)
2.  ($1,000 / ($90,000 - $7,000)) * ($100,000 - $7,000) = $1,120.48
Step Three.  Which is larger, the actual $1,000 excess withdrawal amount or the $1,120.48 pro rata amount?
$1,120.48 pro rata amount
Step Four.  What is the “principal back” minimum remaining withdrawal amount after the withdrawal has been taken?
1.  Total to deduct from the minimum remaining withdrawal amount is $7,000 + $1,120.48 (pro rata excess) = $8,120.48
2.  $100,000 - $8,120.48 = $91,879.52
Result.  The “principal back” minimum remaining withdrawal amount is $91,879.52.
NOTE.  For the guaranteed lifetime withdrawal benefit, because there was an excess withdrawal amount, the total withdrawal base needs to be adjusted as well as a new lower maximum annual withdrawal amount. Had the withdrawal for this example not been more than $7,000, the “principal back” total withdrawal base would remain at $100,000 and the “principal back” maximum annual withdrawal amount would be $7,000. However, because an excess withdrawal has been taken, the total withdrawal base is also changed (this is the amount the 7% is based on).
New “principal back” total withdrawal base:
Step One.  The total withdrawal base is only reduced by the excess withdrawal amount or the pro rata amount if greater.
Step Two.  Calculate how much the total withdrawal base is affected by the excess withdrawal.
1.  The formula is (EWD / (PV - 7% WD)) * TWB before any adjustments
2.  ($1,000 / ($90,000 - $7,000)) * $100,000 = $1,204.82
Step Three.  Which is larger, the actual $1,000 excess withdrawal amount or the $1,204.82 pro rata amount?
$1,204.82 pro rata amount.
Step Four.  What is the new total withdrawal base upon which the maximum annual withdrawal amount is based?
$100,000 - $1,204.82 = $98,795.18
Result.   The new “principal back” total withdrawal base is $98,795.18
New “principal back” maximum annual withdrawal amount:
Because the “principal back” total withdrawal base was adjusted (due to the excess withdrawal) we have to calculate a new maximum annual withdrawal amount for the 7% “principal back” guarantee that will be available starting on the next rider anniversary. This calculation assumes no more activity prior to the next rider anniversary.
Step One.  What is the new “principal back” maximum annual withdrawal amount?
$98,795.18 (the adjusted total withdrawal base) * 7% = $6,915.66
Result.  Going forward, the maximum you can take out in a rider year is $6,915.66 without causing an excess withdrawal for the “principal back” guarantee and further reduction of the “principal back” total withdrawal base.
Example 3 (5% “for life”):
Assumptions:
TWB = $100,000
MRWA = $100,000
5% WD would be $5,000 (5% of the current $100,000 total withdrawal base)
WD = $5,000
Excess withdrawal (“EWD”) = None
PV = $100,000
You = Owner and Annuitant (Age 60)
Step One.  Is any portion of the withdrawal greater than the “for life” maximum annual withdrawal amount?
No.  There is no excess withdrawal under the “for life” guarantee if no more than $5,000 is withdrawn.
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LIVING BENEFITS RIDER ADJUSTED PARTIAL WITHDRAWALS — (Continued)
Step Two.  What is the minimum remaining withdrawal amount after the withdrawal has been taken?
1.  Total to deduct from the minimum remaining withdrawal amount is $5,000 (there is no excess to deduct).
2.  $100,000 - $5,000 = $95,000.
Result.  In this example, because no portion of the withdrawal was in excess of $5,000, the “for life” total withdrawal base does not change and the “for life” minimum remaining withdrawal amount is $95,000.00.
Example 4 (5% “for life”):
Assumptions:
TWB = $100,000
MRWA = $100,000
5% WD would be $5,000 (5% of the current $100,000 total withdrawal base)
WD = $7,000
EWD = $2,000 ($7,000 - $5,000)
PV = $90,000
You = Owner and Annuitant (Age 60)
Step One.  Is any portion of the total withdrawal greater than the maximum annual withdrawal amount?
Yes.  $7,000 - $5,000 = $2,000 (the excess withdrawal amount)
Step Two.  Calculate how much of the “for life” minimum remaining withdrawal amount is affected by the excess withdrawal.
1.  Formula for pro rata amount is: (EWD / (PV - 5% WD)) * (MRWA - 5% WD)
2.  ($2,000 / ($90,000 - $5,000)) * ($100,000 - $5,000) = $2,235.29
Step Three.  Which is larger, the actual $2,000 excess withdrawal amount or the $2,235.29 pro rata amount?
$2,235.29 pro rata amount
Step Four.  What is the “for life” minimum remaining withdrawal amount after the withdrawal has been taken?
1.  Total to deduct from the minimum remaining withdrawal amount is $5,000 + $2,235.29 (pro rata excess) = $7,235.29
2.  $100,000 - $7,235.29 = $92,764.71
Result.   The “for life” minimum remaining withdrawal amount is $92,764.71.
NOTE.  For the guaranteed lifetime withdrawal benefit, because there was an excess withdrawal amount, the total withdrawal base needs to be adjusted as well as a new lower maximum annual withdrawal amount. Had the withdrawal for this example not been more than $5,000, the “for life” total withdrawal base would remain at $100,000 and the “for life” maximum annual withdrawal amount would be $5,000. However, because an excess withdrawal has been taken, the total withdrawal base is also changed (this is the amount the 5% is based on).
New “for life” total withdrawal base:
Step One.  The total withdrawal base is only reduced by the excess withdrawal amount or the pro rata amount if greater.
Step Two.  Calculate how much the total withdrawal base is affected by the excess withdrawal.
1.  The formula is (EWD / (PV - 5% WD)) * TWB before any adjustments
2.  ($2,000 / ($90,000 - $5,000)) * $100,000 = $2,352.94
Step Three.  Which is larger, the actual $2,000 excess withdrawal amount or the $2,352.94 pro rata amount?
$2,352.94 pro rata amount.
Step Four.  What is the new total withdrawal base upon which the maximum annual withdrawal amount is based?
$100,000 - $2,352.94 = $97,647.06
Result.   The new “for life” total withdrawal base is $97,647.06
100

 

LIVING BENEFITS RIDER ADJUSTED PARTIAL WITHDRAWALS — (Continued)
New “for life” maximum annual withdrawal amount:
Because the “for life” total withdrawal base was adjusted (due to the excess withdrawal) we have to calculate a new maximum annual withdrawal amount for the 5% “for life” guarantee that will be available starting on the next rider anniversary. This calculation assumes no more activity prior to the next rider anniversary.
Step One.  What is the new “for life” maximum annual withdrawal amount?
$97,647.06 (the adjusted total withdrawal base) * 5% = $4,882.35
Result.  Going forward, the maximum you can take out in a rider year is $4,882.35 without causing an excess withdrawal for the “for life” guarantee and further reduction of the “for life” total withdrawal base.
101

 

APPENDIX
PAM METHOD TRANSFERS
To make the Living Benefits Rider available, we monitor your policy value and guarantees under the rider daily and periodically transfer amounts between your selected investment options and the PAM Subaccount. We determine the amount and timing of PAM Method transfers between the investment options and the PAM Subaccount according to a mathematical model. For further clarification on how PAM works, see Portfolio Allocation Method in the body of the prospectus.
The mathematical model is designed to calculate how much of your policy value should be allocated to the PAM Subaccount. Based on this calculation and threshold amounts, transfers into or out of the PAM Subaccount may occur. The formula is:
Percent of Policy Value required in PAM Subaccount (or X) = e-Dividend*Time *(1- NormDist(d1))
Where:
e = Base of the Natural Logarithm
NormDist = Cumulative Standard Normal Distribution
d1 = [ln(G)+(R – F +.5*V ^ 2)* T]/[V * T^.5]
In order to calculate the percent of policy value required in the PAM Subaccount, we must first calculate d1:
d1 = [ln(G)+(R – F +.5*V ^ 2)* T]/[V * T^.5]
Where:
ln = Natural Logarithm Function
G = Guarantee Ratio
R = Rate
F = Fees
V = Volatility
T = Time
After calculating d1, the percent of policy value required in the PAM Subaccount can be calculated. Once calculated, appropriate transfers into or out of the PAM Subaccount may occur based on the transfer threshold amounts.
Following is a brief discussion of the values used in the formula.
♦ The POLICY VALUE includes the value in both the investment options and in the PAM Subaccount.
♦ The GUARANTEE RATIO is the policy value divided by 7% “Principal Back” Minimum Remaining Withdrawal Amount.
♦ The RATE is the interest rate used for the PAM Method. It is based on a long-term expectation based on historical interest rates and may vary over time.
♦ The FEES is an approximation of average policy fees and charges associated with policies that have elected the Living Benefits Rider. This value may change over time.
♦ The VOLATILITY represents the volatility of the returns of policy value for all in force policies and is based on the long-term expectation of the degree to which the policy values tend to fluctuate. This value may vary over time.
♦ The TIME is an approximation based on actuarial calculations of historical average number of years (including any fraction) which we anticipate remain until any potential payments are made under the benefit. This value may vary over time.
♦ The PERCENT OF POLICY VALUE TO BE ALLOCATED TO THE PAM SUBACCOUNT is computed for each policy. Ultimately the allocation for a policy takes into account the guarantees under the rider and the limit on allocations to the PAM Subaccount.
♦ The CUMULATIVE STANDARD NORMAL DISTRIBUTION function assumes that random events are distributed according to the classic bell curve. For a given value it computes the percentage of such events which can be expected to be less than that value.
♦ The NATURAL LOGARITHM function for a given value, computes the power to which e must be raised, in order to result in that value. Here, e is the base of the natural logarithms, or approximately 2.718282.
♦ The FIXED ACCOUNT TRANSFER THRESHOLD (FATT) is the percentage that the Guarantee Ratio must be below before any of the policy value can be transferred to the PAM Subaccount. This threshold is set to a fixed percentage at rider issue and is then recalculated after each PAM Subaccount transfer.
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PAM METHOD TRANSFERS — (Continued)
♦ The SEPARATE ACCOUNT TRANSFER THRESHOLD (SATT) is the percentage that the Guarantee Ratio must exceed before any of the policy value can be transferred from the PAM Subaccount. This threshold is set to a fixed percentage at rider issue and is then recalculated after each PAM Subaccount transfer.
Example:
Day 1: Policy Value Declines by 10%
For purposes of this example we will assume that the policy value declines by 10% to $90,000 the day after the rider issue date from the initial premium amount of $100,000 producing a guarantee ratio of 90% ($90,000/$100,000). We will also assume:
Guarantee Ratio = 90%
Rate = 4.5%
Volatility = 10%
Fees = 3%
Time = 20
FATT = 95
SATT = 105%
First we calculate d1.
d1=[ln(G)+(R – F +.5*V ^ 2)* T]/[V * T^.5]
d1=[ln(.90)+(.06 – .0305 +.5*.15 ^ 2)* 10]/[.15 * 10^.5]
d1=.658832
Using the value we just calculated for d1 we can now calculate the percent of policy value required in the PAM Subaccount.
Percent of Policy Value in PAM Subaccount (or X) = e-Dividend*Time *(1-NormDist(d1))
X= (2.718282 ^ -.0305 * 10) * (1 – NormDist(.004509))
X = 36.7235%
Therefore, 36.7235% of the policy value is transferred to the PAM Subaccount since the guarantee ratio (90%) is less than the FATT (95%), resulting in a total transfer of $33,051.15.
Day 2: Policy Value Recovers to 99% of Initial Value after the 10% Decline
For purposes of this example we will assume that after the policy value declined to $90,000 it recovered the next day to $99,000 producing a guarantee ratio of 99% ($99,000/$100,000). We will also assume:
Rate = 2%
Volatility = 15%
Fees = 3.05%
Time = 10
FATT = 85.5% (G last transfer *.95) = (.9*.95)
SATT = 94.5% (G last transfer *1.05) = (.9*1.05)
PAM Subaccount Value = $33,051.15
Value in other investment options = $65,948.85 ($99,000 - $33,051.15)
PAM Subaccount Value as percent of Policy Value = $33,051.15 / $99,000 = 33.3850%
First we calculate d1.
d1=[ln(G)+(R – F +.5*V ^ 2)* T]/[V * T^.5]
d1=[ln(.99)+(.02 – .0305 +.5*.15 ^ 2)* 10]/[.15 * 10^.5]
d1= -.005376
Using the value we just calculated for d1 we can now calculate the percent of policy value required in the PAM Subaccount.
Percent of Policy Value in PAM Subaccount (or X) = e-Dividend*Time *(1 - NormDist(d1))
X= (2.718282 ^ -.0305 * 10) * (1 – NormDist(-0.005376))
X = 37.0143%
Although the GR is greater than the SATT, since the percentage required in the PAM Subaccount (37.0143%) is greater than the amount allocated to the PAM Subaccount (33.3850%), none of the policy value will be transferred to the PAM Subaccount. Consequently, the amount in the PAM Subaccount will remain $33,051.15 and the FATT And SATT will not recalculate.
Day 3: Policy Value Recovers to 105% of Initial Value after the increase to 99% of Initial Value
103

 

PAM METHOD TRANSFERS — (Continued)
For purposes of this example we will assume that after the policy value recovered further the next to $105,000 producing a guarantee ratio of 105% ($105,000/$100,000). We will also assume:
Rate = 3%
Volatility = 15%
Fees = 3.05%
Time = 10
FATT = 85.5%
SATT = 94.5%
PAM Subaccount Value = $33,051.15
Value in other investment options = $71,948.85 ($105,000 - $33,051.15)
PAM Subaccount Value as percent of Policy Value = $33,051.15 / $105,000 = 31.4773%
First we calculate d1.
d1=[ln(G)+(R – F +.5*V ^ 2)* T]/[V * T^.5]
d1=[ln(1.05)+(.03 – .0305 +.5*.15 ^ 2)* 10]/[.15 * 10^.5]
d1= .329488
Using the value we just calculated for d1 we can now calculate the percent of policy value required in the PAM Subaccount.
Percent of Policy Value in PAM Subaccount (or X) = e-Dividend*Time *(1 - NormDist(d1))
X= (2.718282 ^ -.0305 * 10) * (1 – NormDist(.329488))
X = 27.3394%
While the mathematical model would suggest we transfer only a portion of the policy value in the PAM Subaccount into your investment options (leaving 27.3394% in the PAM Subaccount), all of the policy value in the PAM Subaccount will be transferred into your investment options. If the Guarantee Ratio equals or exceeds 100%. Because the policy value is greater than or equal to the value of the guarantee, and there is no current need for any policy value to be allocated to the PAM Subaccount.
104

 

APPENDIX
Hypothetical Adjusted Partial withdrawals -Guaranteed Lifetime Withdrawal Benefit Riders
When a withdrawal is taken, three parts of the guaranteed lifetime withdrawal benefit can be affected:
1.  Withdrawal Base (“WB”) (also referred to as Total Withdrawal Base (“TWB”) for some riders);
2.  Rider Withdrawal Amount (“RWA”) (also referred to as Maximum Annual Withdrawal Amount (“MAWA”) for some riders); and
3.  Rider Death Benefit (“RDB”) (also referred to as Minimum Remaining Withdrawal Amount (“MRWA”) for some riders (if applicable)).
Withdrawal Base.  Gross partial withdrawals in a rider year up to the rider withdrawal amount will not reduce the withdrawal base. Gross partial withdrawals in a rider year in excess of the rider withdrawal amount will reduce the withdrawal base by an amount equal to the greater of:
1)  the excess gross partial withdrawal amount; and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the excess gross partial withdrawal (the amount in excess of the rider withdrawal amount remaining prior to the withdrawal);
B  is the policy value after the rider withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount; and
C  is the withdrawal base prior to the withdrawal of the excess amount.
Rider Death Benefit.  Gross partial withdrawals in a rider year up to the rider withdrawal amount will reduce the rider death benefit by the amount withdrawn (dollar-for-dollar). Gross partial withdrawals in a rider year in excess of the rider withdrawal amount will reduce the rider death benefit by an amount equal to the greater of:
1)  the excess gross partial withdrawal amount; and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the excess gross partial withdrawal (the amount in excess of the rider withdrawal amount remaining prior to the withdrawal);
B  is the policy value after the rider withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount; and
C  is the rider death benefit after the rider withdrawal amount has been withdrawn, but prior to the withdrawal of the excess amount.
The following demonstrates, on a purely hypothetical basis, the effects of partial withdrawals under a guaranteed lifetime withdrawal benefit. The withdrawal percentages shown may not be available on all riders. Certain features (growth and rider death benefits) may not be available on all riders. For information regarding a specific rider, please refer to that rider section in this prospectus.
Example 1 (Base):
Assumptions:
WB = $100,000
Withdrawal Percentage = 5%
RWA = 5% withdrawal would be $5,000 (5% of the current $100,000 withdrawal base)
Gross partial withdrawal (“GPWD”) = $5,000
Excess withdrawal (“EWD”) = None
Policy Value (“PV”) = $100,000
Question: Is any portion of the withdrawal greater than the rider withdrawal amount?
No. There is no excess withdrawal under the guarantee since no more than $5,000 is withdrawn.
Result. In this example, because no portion of the withdrawal was in excess of $5,000, the withdrawal base does not change.
105

 

Hypothetical Adjusted Partial withdrawals -Guaranteed Lifetime Withdrawal Benefit
Riders — (Continued)
Example 2 (Excess Withdrawal):
Assumptions:
WB = $100,000
Withdrawal Percentage = 5%
RWA = 5% withdrawal would be $5,000 (5% of the current $100,000 withdrawal base)
GPWD = $7,000
EWD = $2,000 ($7,000 - $5,000)
PV = $90,000
NOTE. For the guaranteed lifetime withdrawal benefit, because there was an excess withdrawal amount, the withdrawal base needs to be adjusted and a new lower rider withdrawal amount calculated. Had the withdrawal for this example not been more than $5,000, the withdrawal base would remain at $100,000 and the rider withdrawal amount would be $5,000. However, because an excess withdrawal has been taken, the withdrawal base is also reduced (this is the amount the 5% is based on).
New withdrawal base:
Step One. The withdrawal base is reduced only by the amount of the excess withdrawal or the pro rata amount, if greater.
Step Two. Calculate how much the withdrawal base is affected by the excess withdrawal.
1.  The formula is (EWD / (PV - 5% withdrawal)) * WB before any adjustments
2.  ($2,000 / ($90,000 - $5,000)) * $100,000 = $2,352.94
Step Three. Which is larger, the actual $2,000 excess withdrawal or the $2,352.94 pro rata amount?
$2,352.94 pro rata amount.
Step Four. What is the new withdrawal base upon which the rider withdrawal amount is based?
$100,000 - $2,352.94 = $97,647.06
Result. The new withdrawal base is $97,647.06
New rider withdrawal amount:
Because the withdrawal base was adjusted (due to the excess withdrawal) we have to calculate a new rider withdrawal amount for the 5% guarantee that will be available starting on the next calendar anniversary. This calculation assumes no more activity prior to the next calendar anniversary.
Question: What is the new rider withdrawal amount?
$97,647.06 (the adjusted withdrawal base) * 5% = $4,882.35
Result. Going forward, the maximum you can take out in a year is $4,882.35 without causing an excess withdrawal for the guarantee and further reduction of the withdrawal base (assuming there are no future automatic step-ups).
Example 3 (Base demonstrating growth):
Assumptions:
WB = $100,000
Withdrawal Percentage = 5%
WB in 10 years (assuming an annual growth rate percentage of 5.0%) = $100,000 * (1 + .05) ^ 10 = $162,889
RWA = 5% withdrawal beginning 10 years from the rider date would be $8,144 (5% of the then-current $162,889 withdrawal base)
Please Note: Withdrawals under these riders can begin prior to the 10th rider anniversary, but the WB growth will not occur during the rider years when a withdrawal is taken, and the growth stops on the 10th rider anniversary.
GPWD = $8,144
EWD = None
PV = $90,000 in 10 years
Question:   Is any portion of the withdrawal greater than the rider withdrawal amount?
No.  There is no excess withdrawal under the guarantee if no more than $8,144 is withdrawn.
Result.   In this example, because no portion of the withdrawal was in excess of $8,144, the withdrawal base does not change.
106

 

Hypothetical Adjusted Partial withdrawals -Guaranteed Lifetime Withdrawal Benefit
Riders — (Continued)
Example 4 (Base demonstrating WB growth with Additional Death Payment Option):
Assumptions:
Withdrawal Percentage = 5%
WB at rider issue = $100,000
WB in 10 years (assuming an annual growth rate percentage of 5%) = $100,000 * (1 + .05) ^ 10 = $162,889
RDB (optional additional death benefit for additional cost) = $100,000
RWA = 5% withdrawal beginning 10 years from the rider date would be $8,144 (5% of the then-current $162,889 withdrawal base)
Please Note: Withdrawals under these riders can begin prior to the 10th rider anniversary, but the WB growth will not occur during the rider years when a withdrawal is taken, and the growth stops on the 10th rider anniversary.
GPWD = $8,144
EWD = None
PV = $90,000 in 10 years
Step One.  Is any portion of the withdrawal greater than the rider withdrawal amount?
No.  There is no excess withdrawal under the guarantee if no more than $8,144 is withdrawn.
Step Two.  What is the rider death benefit after the withdrawal has been taken?
1.  Total to deduct from the rider death benefit is $8,144 (there is no excess to deduct)
2.  $100,000 - $8,144 = $91,856.
Result.  In this example, because no portion of the withdrawal was in excess of $8,144, the total withdrawal base does not change and the rider death benefit reduces to $91,856.
Example 5 (Base with WB growth with Additional Death Payment Option illustrating excess withdrawal):
Assumptions:
Withdrawal Percentage = 5%.
WB at rider issue = $100,000
Automatic step-up never occurs and no withdrawals are taken in the first 10 rider years.
WB in 10 years (assuming an annual growth rate percentage of 5%) = $100,000 * (1 + .05) ^ 10 = $162,889.
RDB (optional additional death benefit for additional cost) = $100,000
RWA = 5% withdrawal beginning 10 years from the rider date would be $8,144 (5% of the then-current $162,889 withdrawal base)
Please Note: Withdrawals under these riders can begin prior to the 10th rider anniversary, but the WB growth will not occur during the rider years when a withdrawal is taken and the growth stops on the 10th rider anniversary.
GPWD = $10,000
EWD = $1,856 ($10,000 - $8,144)
PV = $90,000 in 10 years
Step One.  Is any portion of the total withdrawal greater than the rider withdrawal amount?
Yes. $10,000 - $8,144 = $1,856 (the excess withdrawal amount)
Step Two.  Calculate how much of the rider death benefit is affected by the excess withdrawal.
1.  Formula for pro rata amount is: (EWD / (PV - 5% withdrawal)) * (RDB - 5% withdrawal)
2.  ($1,856 / ($90,000 - $8,144)) * ($100,000 - $8,144) = $2,082.74
Step Three. Which is larger, the actual $1,856 excess withdrawal amount or the $2,082.74 pro rata amount?
$2,082.74 pro rata amount.
Step Four. What is the rider death benefit after the withdrawal has been taken?
1.  Total to deduct from the rider death benefit is $8,144 (RWA) + $2,082.74 (pro rata excess) = $10,226.74
2.  $100,000 - $10,226.74 = $89,773.26.
Result. The rider benefit is $89,773.26.
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Hypothetical Adjusted Partial withdrawals -Guaranteed Lifetime Withdrawal Benefit
Riders — (Continued)
Note: Because there was an excess withdrawal amount in this example, the withdrawal base needs to be adjusted and a new lower rider withdrawal amount calculated. Had the withdrawal for this example not been more than $8,144, the withdrawal base would remain at $162,889 and the rider withdrawal amount would be $8,144. However, because an excess withdrawal has been taken, the withdrawal base is also reduced (this is the amount the 5% is based on).
The Retirement Income Choice®, Retirement Income Choice® with Double Withdrawal Base Benefit, Retirement Income Choice® 1.4, Retirement Income Choice® 1.2, Retirement Income Max® and Retirement Income Choice® 1.6 riders and any additional options they offer may vary for certain policies, may not be available for all policies, and may not be available in all states.
This disclosure explains the material features of the Retirement Income Choice®, Retirement Income Choice® with Double Withdrawal Base Benefit, Retirement Income Choice® 1.4, Retirement Income Choice® 1.2, Retirement Income Max® and Retirement Income Choice® 1.6 riders.
108

 

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

 

APPENDIX
RIDER GRID VARIATIONS
The information below is a summary of riders previously available for purchase but are no longer available. This appendix describes the material features of the riders. Please refer to your personal rider pages and any supplemental mailings for your specific coverage and features regarding these riders. Listed below are the abbreviations that will be used in the following grid for your reference.
Abbreviation   Definition
ADB   Additional Death Benefit
ADD   Additional Death Distribution
ADD+   Additional Death Distribution Plus
DB   Death Benefit
DCA   Dollar Cost Averaging
FIP   Family Income Protector
GFV   Guaranteed Future Value
GMAB   Guaranteed Minimum Accumulation Benefit
GMDB   Guaranteed Minimum Death Benefit
GMIB   Guaranteed Minimum Income Benefit
GMLB   Guaranteed Minimum Living Benefit
GMWB   Guaranteed Minimum Withdrawal Benefit
GPO   Guaranteed Period Option
GPS   Guaranteed Principal SolutionSM
IE   Income EnhancementSM
ILSD   Income Link Start Date
ILSW   Income Link Systematic Withdrawal
Abbreviation   Definition
ILWY   Income Link Withdrawal Year
ISFL   Income SelectSM For Life
MAP   Managed Annuity Program
MAV   Minimum Annuitization Value
MAWA   Maximum Annual Withdrawal Amount
MIB   Minimum Income Base
MRWA   Minimum Remaining Withdrawal Amount
N/A   Not Applicable
OAM   Open Allocation Method
PAM   Portfolio Allocation Method
RDB   Rider Death Benefit
RIC   Retirement Income Choice®
RMD   Required Minimum Distribution
RWA   Rider Withdrawal Amount
TWB   Total Withdrawal Base
WB   Withdrawal Base
WD   Withdrawal
Income LinkSM Rider Specific Withdrawal Benefit Terms:
Withdrawal Option Election Date - This is the date the withdrawal option is selected by the policy owner. The RWA is zero prior to the establishment of this date. The date and the corresponding withdrawal option can change any time prior to the ILSD. Once ILSD is set, it cannot be changed.
ILSD - This is the date the policy owner elects to begin receiving payments using one of the 4 ILSW options. This date may be changed prior to the establishment of the withdrawal year.
ILWY - Also known as the withdrawal year, is each 12 month period beginning on the ILSD. This is the time period for withdrawing your RWA which is reset at the beginning of each withdrawal year.
ILSW - This rider offers 4 new systematic payment options specific to this rider only. ANY withdrawal that is not an ILSW (including other systematic payment options) will be treated as a 100% excess.
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Purpose of Rider This is a Living Benefit Rider and should be viewed as a way to permit you to invest in variable investment options while still having your policy value and liquidity protected to the extent provided by this rider.
This rider is a combination of two separate annuity guarantees:
1) A GMWB and
2) A GMAB (a.k.a. principal protection benefit or guarantee future value benefit).
The rider will guarantee that the policy value of the policy will be at least as high as the GFV after a waiting period has expired. 		This is a GLWB rider that guarantees withdrawals for the annuitant's lifetime, regardless of policy value.
• The policyholder can withdraw the RWA each year until the death of the annuitant.
• This benefit is intended to provide a level of payments regardless of the performance of the designated variable investment options you select. 		This is a GLWB rider that guarantees withdrawals for the annuitant's2 lifetime, regardless of policy value.
• The policyholder can withdraw the RWA each year until the death of the annuitant.2
• This benefit is intended to provide a level of payments regardless of the performance of the designated variable investment options you select.
110

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Availability • Issue age 0-80, but not yet 81 years old (unless state law requires a lower maximum issue age)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner.
**Effective 5/1/2005: This rider is only available for states that have not approved the 2005 version of the Living Benefit Rider. 		• Issue age at least age 55, but not yet 86 years old (unless state law requires a lower maximum issue age)
• Single Annuitant ONLY. Annuitant must be an Owner (unless owner is a non-natural person)
• Maximum of 2 living Joint Owners (with one being the Annuitant)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner. 		• Issue age at least age 55, but not yet 86 years old for single life option and at least 71 but not yet 86 for joint life option (unless state law requires a lower maximum issue age).
• Single Annuitant ONLY. Annuitant must be an Owner (unless owner is a non-natural person)
• Maximum of 2 living Joint Owners (with one being the Annuitant)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner.
Base Benefit and Optional Fees at issue Percentage of “Principal Back” TWB - 0.90% (5/1/2009 - 11/3/13)
Percentage of “Principal Back” TWB - 0.60% (prior to 5/1/2009)
Percentage of WB. Additional option fees would be added to the base.

Single Life
(prior to 11/4/13)
Base Fee.....................................0.60%
DB Fee......................................0.25%
IE Benefit Fee............................0.15%
Joint Life
(prior to 11/4/13)
Base Fee.....................................0.90%
DB Fee......................................0.20%
IE Benefit Fee............................0.30%
Percentage of WB. Additional option fees would be added to the base.

Single Life
(1/19/09 - 11/3/13)
Base Fee.....................................0.90%
DB Fee......................................0.25%
IE Benefit Fee............................0.15%
(11/10/08 - 1/18/09)
Base Fee.....................................0.75%
DB Fee......................................0.25%
IE Benefit Fee............................0.15%
Joint Life
(1/16/09 - 11/3/13)
Fee Frequency • Fee is deducted annually during the accumulation phase on each rider anniversary.
• A pro-rated fee is deducted at the time the rider is terminated or upgraded. 		• Fee is deducted annually during the accumulation phase on each rider anniversary.
• A pro-rated fee is deducted at the time the rider is terminated or upgraded. 		• Fee is deducted annually during the accumulation phase on each rider anniversary.
• A pro-rated fee is deducted at the time the rider is terminated or upgraded.
Death Benefit N/A For an additional fee, the optional death benefit may be elected with this rider. Upon the death of an annuitant, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the base policy death benefit and then this rider will terminate.
The RDB does not reset due to the automatic step-up feature. 		For an additional fee, the optional death benefit may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the base policy death benefit and then this rider will terminate.
The RDB does not reset due to the automatic step-up feature.
111

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Designated Funds Available - Policyholders who add these riders may only invest in the investment options listed. Investment options may not be available as a designated fund based on rider issue date.
Requiring that you designate 100% of your policy value to the designated investment options, some of which employ strategies that are intended to reduce the risk of loss and/or manage volatility, may reduce investment returns and may reduce the likelihood that we will be required to use our own assets to pay amounts due under this benefit.
PLEASE NOTE: These investment options may not be available on all products, may vary for certain policies and may not be available for all policies. Please reference “Portfolios Associated With the Subaccount” Appendix in your prospectus for available funds. You cannot transfer any amount to any other non-designated subaccount without losing all your benefits under this rider. 		Must adhere to the Portfolio Allocation Method. See below. AB Balanced Wealth Strategy Portfolio
State Street Total Return V.I.S. Fund
TA 60/40 Allocation
TA AB Dynamic Allocation
TA Aegon Government Money Market
TA Aegon U.S. Government Securities
TA BlackRock Global Allocation
TA BlackRock Smart Beta 50
TA BlackRock Smart Beta 75
TA Legg Mason Dynamic Allocation – Balanced(4)
TA Legg Mason Dynamic Allocation – Growth(4)
TA Madison Diversified Income
TA Managed Risk – Balanced ETF
TA Managed Risk – Conservative ETF
TA Managed Risk – Growth ETF
TA Multi-Managed Balanced
TA PIMCO Total Return
TA PineBridge Inflation Opportunities
TA QS Investors Active Asset Allocation - Conservative(4)
TA QS Investors Active Asset Allocation – Moderate Growth(4)
TA QS Investors Active Asset Allocation - Moderate(4)
Fixed Account GPOs or DCA Accounts 		AB Balanced Wealth Strategy Portfolio
State Street Total Return V.I.S. Fund
TA 60/40 Allocation
TA AB Dynamic Allocation
TA Aegon Government Money Market
TA Aegon U.S. Government Securities
TA BlackRock Global Allocation
TA BlackRock Smart Beta 50
TA BlackRock Smart Beta 75
TA Legg Mason Dynamic Allocation – Balanced(4)
TA Legg Mason Dynamic Allocation – Growth(4)
TA Madison Diversified Income
TA Managed Risk – Balanced ETF
TA Managed Risk – Conservative ETF
TA Managed Risk – Growth ETF
TA Multi-Managed Balanced
TA PIMCO Total Return
TA PineBridge Inflation Opportunities
TA QS Investors Active Asset Allocation - Conservative(4)
TA QS Investors Active Asset Allocation – Moderate Growth(4)
TA QS Investors Active Asset Allocation - Moderate(4)
Fixed Account GPOs or DCA Accounts
Allocation Methods Portfolio Allocation Method (PAM):
• This program will automatically allocate assets from the policyholder's separate accounts to a subaccount of our choosing when the policy value has dropped relative to the guaranteed amount.
• If the policy value increases enough in relation to the guaranteed amounts, the money may be moved back into the separate accounts (pro-rata based on the policyholder's current separate account values).
• The allocation of assets between the accounts is at our sole discretion but will initially use modern financial theory to determine the correct allocation.
• The policyholder may not allocate premium payments to, nor transfer policy value into or out of, the PAM investment options.
Current PAM Safe Fund: TA U.S. Government Securities 		N/A N/A
112

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Withdrawal Benefits - See “Living Benefits Rider Adjusted Partial Withdrawals” and “Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” appendices for examples showing the effect of withdrawals on the WB. The GMWB guarantees a withdrawal amount regardless of the policy value. The policyholder has 2 withdrawal guarantees available. Once the rider is issued, values for both withdrawal guarantees will be calculated indefinitely as follows:
a) 7% Principal Back: The policyholder can withdraw up to 7% of the 7% Principal Back TWB per year until at least the time at which the 7% Principal Back MRWA has reached zero.
b) 5% For Life: The policyholder can withdraw up to 5% of the 5% For Life TWB each year starting with the Rider Anniversary following the annuitant's 59th birthday until at least the later of the death of the annuitant or the time when the 5% For Life MRWA* has reached zero.
* The MRWA represents the total minimum dollar amount of guaranteed withdrawals the policyholder has remaining provided they take no more than the MAWA each year.
• The policyholder does not have to take the entire MAWA in any year.
• If they do not take the full amount available, the remaining portion does not carry over to the next calendar year.
The percentage is determined by the attained age of the annuitant at the time of the first withdrawal.

Age 1st WDFor Life WD%
 0-58....................................0.0% 
 59-69..................................5.0% 
 70-79..................................6.0% 
 80+......................................7.0% 
• Starting the rider anniversary following the annuitant's 59th birthday, the withdrawal percentage increases above 0% which creates a RWA available under the rider for withdrawal.
• On each rider anniversary, the RWA will be reset equal to the greater of:
 1) The WB multiplied by the Withdrawal Percentage based on the attained age of the annuitant at the time of their first withdrawal if applicable, and
 2) The RMD amount for this policy for the current calendar year.
• The policyholder does not have to take the entire RWA in any year.
• If they do not take the full amount available, the remaining portion does not carry over to the next rider year.
The percentage is determined by the attained age of the annuitant2 at the time of the first withdrawal.

Age 1st WDSingle Life WD%
 0-58....................................0.0% 
 59-69..................................5.0% 
 70-79..................................6.0% 
 80+......................................7.0% 
Age 1st WDJoint Life WD%
 71-79..................................5.5% 
 80+......................................6.5% 
• Starting the rider anniversary following the annuitant's2 59th birthday, the withdrawal percentage increases above 0% which creates a RWA available under the rider for withdrawal.
• On each rider anniversary, the RWA will be reset equal to the greater of:
 1) The WB multiplied by the Withdrawal Percentage based on the attained age of the annuitant2 at the time of their first withdrawal if applicable, and
 2) The RMD amount for this policy for the current calendar year.
• The policyholder does not have to take the entire RWA in any year.
• If they do not take the full amount available, the remaining portion does not carry over to the next rider year.
Automatic Step-Up Benefit N/A On each rider anniversary, the WB will be set to the greatest of:
1) The current WB:
2) The policy value on the rider anniversary;
3) The highest policy value on a rider monthiversarySM*; or
4) The current WB immediately prior to anniversary processing increased by the growth rate percentage**
* Item 3) is set to zero if there have been any excess withdrawals in the current rider year.
** Item 4) is set to zero after the first 10 rider years or if there have been any withdrawals in the current rider year.
A step-up will occur if the largest value is either 2) or 3) above. A step-up will allow us to change the rider fee percentage after the 5th rider anniversary.
• If the largest value is 1) or 4) above, this is not considered a step-up.
• Owner will have a 30 day window after the rider anniversary to reject an automatic step-up if we increase the rider fee.—Must be in writing.
• If an owner rejects an automatic step-up, they retain the right to all future automatic step-ups. 		On each rider anniversary, the WB will be set to the greatest of:
1) The current WB:
2) The policy value on the rider anniversary;
3) The highest policy value on a rider monthiversarySM*; or
4) The current WB immediately prior to anniversary processing increased by the growth rate percentage**
* Item 3) is set to zero if there have been any excess withdrawals in the current rider year.
** Item 4) is set to zero after the first 10 rider years or if there have been any withdrawals in the current rider year.
A step-up will occur if the largest value is either 2) or 3) above. A step-up will allow us to change the rider fee percentage after the 5th rider anniversary.
• If the largest value is 1) or 4) above, this is not considered a step-up.
• Owner will have a 30 day window after the rider anniversary to reject an automatic step-up if we increase the rider fee.—Must be in writing.
• If an owner rejects an automatic step-up, they retain the right to all future automatic step-ups.
113

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Exercising Rider “For Life” GMWB:
The policyholder is guaranteed to be able to withdraw up to the “For Life” MAWA until the later of 1) the annuitant's death or 2) the “For Life” MRWA is zero.
“Principal Back” GMWB:
The policyholder is guaranteed to be able to withdraw up to the “Principal Back” MAWA until the “Principal Back” MRWA is zero.
“GMAB”:
At the end of the GMAB waiting period (currently 10 years), should the policy value be less than the GFV, the GMAB feature will add the difference to the policy value on a pro-rata basis based on their current account value.
a) The addition to the policy will not be considered premium and should not affect any other policy calculations, including the GMDB calculations.
b) At the end of the waiting period, the GMAB will not provide any more benefits, unless the policyholder chooses to upgrade the rider. 		Exercising Base Benefit: The policyholder is guaranteed to be able to withdraw up to the RWA each calendar year even if the policy value is zero at the time of withdrawal. The rider benefits cease when the annuitant2 has died.
Exercising Death Option: This optional feature may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the greater of the base policy death benefit or any GMDB.
Exercising the Income Enhancement Option:
If qualifications are met, this optional feature doubles the income benefit percentage until the annuitant2 is no longer confined (either has left the facility or deceased).
Qualifications:
–Confinement must be due to a medical necessity due to physical or cognitive ailment.
–Must be the annuitant2 who is confined.
–Waiting period of 1 year from the rider date before the increase in the income benefit percentage is applicable.
–Elimination period is 180 days within the last 12 months which can be satisfied during the waiting period.
–Proof of confinement is required. This may be a statement from a physician or a hospital or nursing facility administrator.
–Qualification standards can be met again on the annuitant's2 life. 		Exercising Base Benefit: The policyholder is guaranteed to be able to withdraw up to the RWA each calendar year even if the policy value is zero at the time of withdrawal. The rider benefits cease when the annuitant2 has died.
Exercising Death Option: This optional feature may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the greater of the base policy death benefit or any GMDB.
Exercising the Income Enhancement Option:
If qualifications are met, this optional feature doubles the income benefit percentage until the annuitant2 is no longer confined (either has left the facility or deceased).
Qualifications:
–Confinement must be due to a medical necessity due to physical or cognitive ailment.
–Must be the annuitant2 who is confined.
–Waiting period of 1 year from the rider date before the increase in the income benefit percentage is applicable.
–Elimination period is 180 days within the last 12 months which can be satisfied during the waiting period.
–Proof of confinement is required. This may be a statement from a physician or a hospital or nursing facility administrator.
–Qualification standards can be met again on the annuitant's2 life.
Income Benefit or Other Benefit Payout Considerations
The GFV is the policy value we are guaranteeing on the GFV date. After the Rider Issue Date, the GFV is equal to the GFV on the Rider Issue Date, plus a percentage of premiums (not including premium enhancements) received after the Rider Date as shown in the table below, less an adjustment for withdrawals.

Year Rec'd% Added to GFV
 1.........................................100% 
 2...........................................90% 
 3...........................................80% 
 4...........................................70% 
 5...........................................60% 
 6-10.....................................50% 
 10+.........................................0% 
At the end of the GMAB waiting period (currently 10 years), should the policy value be less than the GFV, we will add the difference to the policy value on a pro-rata basis based on their current policy value. 		Growth: Benefit is not elected separately, but is built into the rider. The WB will grow at 5% growth annually. This will only be credited on the rider anniversary for up to 10 rider years. If a withdrawal has occurred in the current rider year the 5% growth will not be applied.
NOTE: There is not an adjustment or credit for partial years of interest. Growth is not accumulated daily. Only calculated at the end of the year if no withdrawals were taken. 		Growth: Benefit is not elected separately, but is built into the rider. The WB will grow at 5% growth annually. This will only be credited on the rider anniversary for up to 10 rider years. If a withdrawal has occurred in the current rider year the 5% growth will not be applied.
Double Withdrawal Base Feature: If no withdrawals have been made within the first 10 rider years or before the anniversary following the annuitant's2 attained age 67 (or age 73 for joint life option), the WB on that rider anniversary will be the greater of;
1) the current WB; or
2) premiums applied within 90 days of the rider date multiplied by 2.
NOTE: There is not an adjustment or credit for partial years of interest. Growth is not accumulated daily. Only calculated at the end of the year if no withdrawals were taken.
114

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Living Benefit Rider 20043 Retirement Income Choice®3 Retirement Income Choice® with Double Withdrawal Base Benefit3
Rider Form Number1 RGMB 4 0504 (2004) RGMB 27 0108 (w/o IE)
RGMB 29 0108 (with IE) 		RGMB 31 0708 (w/o IE)
RGMB 33 0708 (with IE)
Rider Upgrade • May upgrade anytime after the 5th anniversary by terminating the rider and adding the new rider in place at that time, as long as the covered lives meet the age requirements in effect at that time.
• Must be prior to the annuitant's 86th birthday
• An upgrade will reset the MRWA, TWB, MAWA and the GFV values.
• Rider Fee will be the fee that applies to the new rider at the time of upgrade. 		• Upgrades allowed within a 30 day window following each 5th rider anniversary.
• Rider availability and fees may vary at time of upgrade
• Upgrades are subject to issue age restrictions of the rider at the time of upgrade. Currently the maximum upgrade age is 85 years old.
• An upgrade will reset the WB, RDB, RWA and Income Benefit determination.
• Rider Fee percentage will be the fee percentage that applies to the new rider at the time of upgrade.
• Growth percentage will be the percentage available at the time of upgrade. 		• Upgrades allowed within a 30 day window following each successive 5th rider anniversary.
• Rider availability and fees may vary at time of upgrade
• Upgrades are subject to issue age restrictions of the rider at the time of upgrade. Currently the maximum upgrade age is 85 years old.
• An upgrade will reset the WB, RDB, RWA and Income Benefit determination.
• Rider Fee percentage will be the fee percentage that applies to the new rider at the time of upgrade.
• Growth percentage will be the percentage available at the time of upgrade.
Rider Termination • The rider will be terminated upon policy surrender, annuitization or upgrade.
• The policyholder must wait 5 years from the Rider Start Date to terminate.
• After the five-year waiting period, the policyholder may terminate the rider at any time.
• The rider will be terminated the date we receive written notice from you requesting termination 		• The rider can be “free looked” within 30 days of issue. The request must be made in writing.
• The rider will be terminated upon policy surrender, annuitization, annuitant death or upgrade.
• The date the policy to which this rider is attached is assigned or if the owner is changed without our approval.
• Termination allowed within 30 day window following each successive 5th rider anniversary.
• The rider will be terminated the date we receive written notice from you requesting termination.
• After termination, there is no wait period to re-add the rider, assuming the rider is still being offered. 		• The rider can be “free looked” within 30 days of issue. The request must be made in writing.
• The rider will be terminated upon policy surrender, annuitization, annuitant2 death or upgrade.
• The date the policy to which this rider is attached is assigned or if the owner is changed without our approval.
• Termination allowed within 30 day window following each successive 5th rider anniversary.
• The rider will be terminated the date we receive written notice from you requesting termination.
• After termination, there is no wait period to re-add the rider, assuming the rider is still being offered.
    
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Purpose of Rider This is a GLWB rider that guarantees withdrawals for the annuitant's2 lifetime, regardless of policy value.
• The policyholder can withdraw the RWA each year until the annuitant's2 death
• This benefit is intended to provide a level of payments regardless of the performance of the designated variable investment options you select. 		This is a GLWB rider that guarantees withdrawals for the annuitant's2 lifetime, regardless of policy value.
• The policyholder can withdraw the RWA each rider year until the annuitant's2 death.
• This benefit is intended to provide a level of payments regardless of the performance of the designated variable investment options you select. 		This is a GLWB rider that guarantees tiered withdrawals for the annuitant's2 lifetime.
• The policyholder can withdraw (required to use systematic withdrawals) the RWA each rider year until the death of the annuitant2.
• This benefit is intended to provide a level of tiered payments regardless of the performance of the designated variable investment options you select.
115

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Availability • Issue age 0-85, but not yet 86 years old (unless state law requires a lower maximum issue age).
• Single Annuitant ONLY. Annuitant must be an Owner (unless owner is a non-natural person)
• Maximum of 2 living Joint Owners (with one being the Annuitant)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner. 		• Issue age 0-85, but not yet 86 years old (unless state law requires a lower maximum issue age).
• Single Annuitant ONLY. Annuitant must be an Owner (unless owner is a non-natural person)
• Maximum of 2 living Joint Owners (with one being the Annuitant)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner. 		• Issue age 55-80, but not yet 81 years old (unless state law requires a lower maximum issue age).
• Single Annuitant ONLY. Annuitant must be an Owner (unless owner is a non-natural person)
• Maximum of 2 living Joint Owners (with one being the Annuitant)
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added to a policy with other active GMLB or GMIB riders.
• Cannot be added on policies with Growth or Double Enhanced Death Benefits.
• Not available on qualified annuity which has been continued by surviving spouse or beneficiary as a new owner
Base Benefit and Optional Fees at issue
Fee based on designated allocation groups and the optional benefits selected. If you elect a combination of designated allocations from among the various groups below, then your fee will be based on a weighted average of your choices.

Base Benefit Fees
(2/21/11 - 11/3/13)
Group A....................................1.40%
Group B....................................1.00%
Group C....................................0.45%
Additional option fees would be added to the base and are as follows:

DB Single Life...........................0.25%
DB Joint Life.............................0.20%
IE Single Life.............................0.15%
IE Joint Life..............................0.30%
Base Benefit Fees
(9/21/09 - 2/201/11)
Group A....................................1.25%
Group B....................................0.90%
Group C....................................0.40%
Additional option fees would be added to the base and are as follows:

DB Single Life...........................0.25%
DB Joint Life.............................0.20%
IE Single Life.............................0.15%
IE Joint Life..............................0.30%
Fee based on designated allocation groups and the optional benefits selected. If you elect a combination of designated allocations from among the various groups below, then your fee will be based on a weighted average of your choices.

Base Benefit Fees
(12/12/11 - 11/3/13)
OAM Option............................1.25%
Group A....................................1.55%
Group B....................................1.10%
Group C....................................0.70%
Additional option fees would be added to the base and are as follows:

DB Single Life...........................0.25%
DB Joint Life.............................0.20%
IE Single Life.............................0.30%
IE Joint Life..............................0.50%
Base Benefit Fees
(2/21/11 - 12/11/11)
OAM Option............................1.20%
Group A....................................1.40%
Group B....................................1.00%
Group C....................................0.45%
Additional option fees would be added to the base and are as follows:

DB Single Life...........................0.25%
DB Joint Life.............................0.20%
IE Single Life.............................0.15%
IE Joint Life..............................0.30%
Base Benefit Fees
(5/1/09 - 2/20/11)
OAM Option............................1.10%
Group A....................................1.25%
Group B....................................0.90%
Group C....................................0.40%
Additional option fees would be added to the base and are as follows:

DB Single Life...........................0.25%
DB Joint Life.............................0.20%
IE Single Life.............................0.15%
IE Joint Life..............................0.30% 		Percentage of TWB - 1.25% for Single and Joint Life riders (prior to 11/3/2013)
116

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Fee Frequency • The fee is calculated at issue and each subsequent rider quarter for the upcoming quarter based on the fund values and WB at that point in time and stored.
• Deducted at each rider quarter-versary in arrears during the accumulation phase.
• The fee is calculated on a quarterly basis and varies depending on the fund allocation option you have chosen.
• A “rider fee adjustment” will be applied for transfers between allocation groups and for subsequent premium payments and withdrawals that change the withdrawal base.
• The base rider fee adjustment will be calculated using the same formula as the base rider fee and compare the fee for the remainder of the rider quarter to the initially calculated fee for the same period.
• The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be allocated.
• A pro-rated fee is deducted at the time the rider is terminated or upgraded. 		• The fee is calculated at issue and each subsequent rider quarter for the upcoming quarter based on the fund values and WB at that point in time and stored.
• Deducted at each rider quarter-versary in arrears during the accumulation phase.
• The fee is calculated on a quarterly basis and varies depending on the fund allocation option you have chosen.
• A “rider fee adjustment” will be applied for transfers between allocation groups and for subsequent premium payments and withdrawals that change the withdrawal base.
• The base rider fee adjustment will be calculated using the same formula as the base rider fee.
• The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be allocated.
• A pro-rated fee is deducted at the time the rider is terminated or upgraded. 		• The fee is calculated at issue and each subsequent calendar rider quarter for the upcoming quarter based on the fund values and WB at that point in time and stored.
• Deducted at each rider quarter-versary in arrears during the accumulation phase.
• The fee is adjusted for new deposits that increase the WB and decreased for withdrawals that are not ILSW or RMD systematic withdrawals.
• The base rider fee adjustment will be calculated using the same formula as the base rider fee.
• The rider fee adjustment may be positive or negative and will be added to or subtracted from the rider fee to be allocated.
• A pro-rated fee is deducted at the time the rider is terminated and full surrender.
Death Benefit For an additional fee, the optional death benefit may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the base policy death benefit and then this rider will terminate.
The RDB does not reset due to the automatic step-up feature. 		For an additional fee, the optional death benefit may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the base policy death benefit and then this rider will terminate.
The RDB does not reset due to the automatic step-up feature. 		N/A
117

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Designated Funds Available - Policyholders who add these riders may only invest in the investment options listed. Investment options may not be available as a designated fund based on rider issue date.
Requiring that you designate 100% of your policy value to the designated investment options, some of which employ strategies that are intended to reduce the risk of loss and/or manage volatility, may reduce investment returns and may reduce the likelihood that we will be required to use our own assets to pay amounts due under this benefit.
PLEASE NOTE: These investment options may not be available on all products, may vary for certain policies and may not be available for all policies. Please reference “Portfolios Associated With the Subaccount” Appendix in your prospectus for available funds. You cannot transfer any amount to any other non-designated subaccount without losing all your benefits under this rider. 		Designated Allocation Group A
AB Balanced Wealth Strategy Portfolio
State Street Total Return V.I.S. Fund
TA 60/40 Allocation
TA BlackRock Global Allocation
TA BlackRock Smart Beta 75
TA Legg Mason Dynamic Allocation – Growth(4)
TA Managed Risk – Growth ETF
TA QS Investors Active Asset Allocation – Moderate Growth(4)
Designated Allocation Group B
TA BlackRock Smart Beta 50
TA Legg Mason Dynamic Allocation – Balanced(4)
TA Madison Diversified Income
TA Managed Risk – Balanced ETF
TA QS Investors Active Asset Allocation - Moderate(4)
Designated Allocation Group C
TA AB Dynamic Allocation
TA Aegon Government Money Market
TA Aegon U.S. Government Securities
TA Managed Risk – Conservative ETF
TA PIMCO Total Return
TA PineBridge Inflation Opportunities
TA QS Investors Active Asset Allocation - Conservative(4)
Fixed Account 		Designated Allocation Group A
AB Balanced Wealth Strategy Portfolio
State Street Total Return V.I.S. Fund
TA 60/40 Allocation
TA BlackRock Global Allocation
TA BlackRock Smart Beta 75
TA Legg Mason Dynamic Allocation - Growth(4)
TA Managed Risk – Growth ETF
TA QS Investors Active Asset Allocation – Moderate Growth(4)
Designated Allocation Group B
TA BlackRock Smart Beta 50
TA Legg Mason Dynamic Allocation - Balanced(4)
TA Madison Diversified Income
TA Managed Risk – Balanced ETF
TA QS Investors Active Asset Allocation – Moderate(4)
Designated Allocation Group C
TA AB Dynamic Allocation
TA Aegon Government Money Market
TA Aegon U.S. Government Securities
TA Managed Risk – Conservative ETF
TA PIMCO Total Return
TA PineBridge Inflation Opportunities
TA QS Investors Active Asset Allocation - Conservative(4)
Fixed Account 		TA Aegon Government Money Market
TA Aegon U.S. Government Securities
TA Managed Risk – Conservative ETF
TA PIMCO Total Return
TA QS Investors Active Asset Allocation- Conservative(4)
Fixed Account
Allocation Methods N/A Open Allocation Method (OAM):
• This program will automatically allocate assets from the policyholder's separate accounts to a subaccount of our choosing when the policy value has dropped relative to the guaranteed amount.
• If the policy value increases enough in relation to the guaranteed amounts, the money will be moved back into the separate accounts (pro-rata based on the policy holder's current separate account values).
• The allocation of assets between the accounts is at our sole discretion but will initially use modern financial theory to determine the correct allocation.
• The policyholder may not allocate premium payments to, nor transfer policy value into or out of the OAM investment options.
Current OA Subaccount: TA ProFund UltraBear 		N/A
118

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Withdrawal Benefits - See “Adjusted Partial Withdrawals - Guaranteed Lifetime Withdrawal Benefit Riders” and “Adjusted Partial Withdrawals - Income Link” appendices for examples showing the effect of withdrawals on the WB.
The percentage (after 2/1/2010) is determined by the attained age of the annuitant2 at the time of the first withdrawal.

Age 1st WDSingle Life WD%
 0 - 58..................................0.0% 
 59-64..................................4.0% 
 65-74..................................5.0% 
 75 + ....................................6.0% 
Age 1st WDJoint Life WD%
 0 - 58..................................0.0% 
 59-64..................................3.5% 
 65-74..................................4.5% 
 75 + ....................................5.5% 
NOTE: Prior to 2/1/2010 the age bands regarding the withdrawal percentages above were as follows:
 0-58 59-69 70-79 80+
• Starting the rider anniversary following the annuitant's2 59th birthday, the withdrawal percentage increases above 0% which creates a RWA available under the rider for withdrawal.
• On each rider anniversary, the RWA will be reset equal to the greater of:
 1) The WB multiplied by the Withdrawal Percentage based on the attained age of the annuitant2 at the time of their first withdrawal if applicable, and
 2) The RMD amount for this policy for the current calendar year.
• The policyholder does not have to take the entire RWA in any year.
• If they do not take the full amount available, the remaining portion does not carry over to the next rider year.
The percentage (after 12/12/2011) is determined by the attained age of the annuitant2 at the time of the first withdrawal.

Age 1st WDSingle Life WD%
 0 - 58..................................0.0% 
 59-64..................................4.0% 
 65-79..................................5.0% 
 80 + ....................................6.0% 
Age 1st WDJoint Life WD%
 0 - 58..................................0.0% 
 59-64..................................3.5% 
 65-79..................................4.5% 
 80 + ....................................5.5% 
NOTE: Prior to 2/1/2010 the age bands regarding the withdrawal percentages above were as follows:
 0-58 59-69 70-79 80+
After 2/1/2010 and prior to 12/12/2011 the age bands regarding the withdrawal percentages above were as follows:
 0-58 59-64 65-74 75+
• Starting the rider anniversary following the annuitant's2 59th birthday, the withdrawal percentage increases above 0% which creates a RWA available under the rider for withdrawal.
• On each rider anniversary, the RWA will be reset equal to the greater of:
 1) The WB multiplied by the Withdrawal Percentage based on the attained age of the annuitant2 at the time of their first withdrawal if applicable, and
 2) The RMD amount for this policy for the current calendar year.
• The policyholder does not have to take the entire RWA in any year.
• If they do not take the full amount available, the remaining portion does not carry over to the next rider year. 		WITHDRAWAL PERCENTAGES: The Percentage is used to calculate the RWA and is determined by electing a withdrawal option, which is not required to elect at the time of issue. Once selected, the ILSWs are not required to begin immediately. Your withdrawal option is not locked in until the ILSD and the percentage is not recalculated at the time of an automatic step-up. Withdrawal Percentages are listed below:
Single Life:
5% for 7 rider benefit years and 4% thereafter
6% for 6 rider benefit years and 4% thereafter
7% for 5 rider benefit years and 4% thereafter
8% for 4 rider benefit years and 4% thereafter
9% for 3 rider benefit years and 4% thereafter
10% for 2 rider benefit years and 4% thereafter
Joint Life:
4.5% for 7 rider benefit years and 3.5% thereafter
5.5% for 6 rider benefit years and 3.5% thereafter
6.5% for 5 rider benefit years and 3.5% thereafter
7.5% for 4 rider benefit years and 3.5% thereafter
8.5% for 3 rider benefit years and 3.5% thereafter
9.5% for 2 rider benefit years and 3.5% thereafter
Before the ILSD, the RWA will be zero. On each ILSD and the beginning of each ILWY thereafter, the RWA is equal to the withdrawal option percentage multiplied by the withdrawal base.
119

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Automatic Step-Up Benefit On each rider anniversary, the WB will be set to the greatest of:
1) The current WB:
2) The policy value on the rider anniversary;
3) The highest policy value on a rider monthiversarySM*; or
4) The current WB immediately prior to anniversary processing increased by the growth rate percentage**
* Item 3) is set to zero if there have been any excess withdrawals in the current rider year.
** Item 4) is set to zero after the first 10 years or if there have been any withdrawals in the current rider year.
A step-up will occur if the largest value is either 2) or 3) above. A step-up will allow us to change the rider fee percentage after the 5th rider anniversary.
• If the largest value is 1) or 4) above, this is not considered a step-up.
• Owner will have a 30 day window after the rider anniversary to reject an automatic step-up if we increase the rider fee.—Must be in writing.
• If an owner rejects an automatic step-up, they retain the right to all future automatic step-ups.
NOTE: The benefit percentage will also increase if you have crossed into another age band prior to an automatic step-ups after the election date. 		On each rider anniversary, the WB will be set to the greatest of:
1) The current WB:
2) The policy value on the rider anniversary;
3) The highest policy value on a rider monthiversarySM*; or
4) The current WB immediately prior to anniversary processing increased by the growth rate percentage**
* Item 3) is set to zero if there have been any excess withdrawals in the current rider year.
** Item 4) is set to zero after the first 10 years or if there have been any withdrawals in the current rider year.
A step-up will occur if the largest value is either 2) or 3) above. A step-up will allow us to change the rider fee percentage after the 5th rider anniversary.
• If the largest value is 1) or 4) above, this is not considered a step-up.
• Owner will have a 30 day window after the rider anniversary to reject an automatic step-up if we increase the rider fee.—Must be in writing.
• If an owner rejects an automatic step-up, they retain the right to all future automatic step-ups.
NOTE: The benefit percentage will also increase if you have crossed into another age band prior to an automatic step-ups after the election date. 		On each rider anniversary, the WB will be set to the greatest of:
1) The current WB:
2) The policy value on the rider anniversary; or
3) The highest policy value on a rider monthiversarySM* for the current rider year;
* Item 3) is set to zero if there have been any withdrawals that are not ILSW or RMD systematic withdrawals in the current rider year. the highest monthly value is the largest policy value on each rider monthiversarySM during the rider year.
An automatic step-up will occur if the largest value is either 2) or 3) above. A step-up will allow us to change the rider fee percentage.
• Owner will have a 30 day window after the rider anniversary to reject an automatic step-up if we increase the rider fee.—Must be in writing.
• If an owner rejects an automatic step-up, the rider will revert back to the prior fee percentage and WB.
• If an owner rejects an automatic step-up, they retain the right to all future automatic step-ups.
120

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Exercising Rider Exercising Base Benefit: The policyholder is guaranteed to be able to withdraw up to the RWA each rider year even if the policy value is zero at the time of withdrawal. The rider benefits cease when the annuitant2 has died.
Exercising Death Option: This optional feature may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the greater of the base policy death benefit or any GMDB.
Exercising the Income Enhancement Option:
If qualifications are met, this optional feature doubles the income benefit percentage until the annuitant2 is no longer confined (either has left the facility or deceased).
Qualifications:
–Confinement must be due to a medical necessity due to physical or cognitive ailment.
–Must be the annuitant2 who is confined.
–Waiting period of 1 year from the rider date before the increase in the income benefit percentage is applicable.
–Elimination period is 180 days within the last 12 months which can be satisfied during the waiting period.
–Proof of confinement is required. This may be a statement from a physician or a hospital or nursing facility administrator.
–Qualification standards can be met again on the annuitant's2 life. 		Exercising Base Benefit: The policyholder is guaranteed to be able to withdraw up to the RWA each rider year even if the policy value is zero at the time of withdrawal. The rider benefits cease when the annuitant2 has died.
Exercising Death Option: This optional feature may be elected with this rider. Upon the death of an annuitant2, this rider will pay an additional death benefit amount equal to the excess, if any, of the RDB over the greater of the base policy death benefit or any GMDB.
Exercising the Income Enhancement Option:
If qualifications are met, this optional feature doubles the income benefit percentage until the annuitant2 is no longer confined (either has left the facility or deceased).
Qualifications:
–Confinement must be due to a medical necessity due to physical or cognitive ailment.
–Must be the annuitant2 who is confined.
–Waiting period of 1 year from the rider date before the increase in the income benefit percentage is applicable.
–Elimination period is 180 days within the last 12 months which can be satisfied during the waiting period.
–Proof of confinement is required. This may be a statement from a physician or a hospital or nursing facility administrator.
–Qualification standards can be met again on the annuitant's2 life. 		Exercising Base Benefit: The policyholder is guaranteed to be able to withdraw up to the RWA each rider year even if the policy value is zero at the time of withdrawal. The rider benefits cease when the annuitant2 has died.
121

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Income Benefit or Other Benefit Payout Considerations Growth: Benefit is not elected separately, but is built into the rider. The WB will grow at 5% growth annually. This will only be credited on the rider anniversary for up to 10 rider years. If a withdrawal has occurred in the current rider year the 5% growth will not be applied.
NOTE: There is not an adjustment or credit for partial years of interest. Growth is not accumulated daily. Only calculated at the end of the year if no withdrawals were taken. 		Growth: Benefit is not elected separately, but is built into the rider. The WB will grow at 5% growth annually. This will only be credited on the rider anniversary for up to 10 rider years. If a withdrawal has occurred in the current rider year the 5% growth will not be applied.
NOTE: There is not an adjustment or credit for partial years of interest. Growth is not accumulated daily. Only calculated at the end of the year if no withdrawals were taken. 		ILSW Options:
1. 72t/72q SPO - This option allows fixed level payments that will not change for at least 5 years. Payments will not exceed the RWA and only the 5, 6 and 7 year withdrawal options are available.
2. RMD only SPO - This option allows a modal amount equal to the annual RMD requirement for the current calendar year less all withdrawals taken in current calendar year divided by the number of payments remaining in the calendar year. These payments will NOT reduce RWA and is only available prior to ILSD.
3. RWA SPO without RMD kick out - This option allows modal payments of the remaining RWA divided by the number of payments remaining in the current withdrawal year. These payments will be adjusted for any step-ups, premium additions or excess withdrawals and will reduce the RWA with each payment.
4. RWA SPO with RMD kick out - this option allows for payments equal to #3 above with an additional payment to satisfy the RMD paid on December 27th each calendar year. Modal payments are not affected by this RMD payment.
Rider Upgrade • Upgrades allowed within 30 day window following each successive rider anniversary.
• Upgrades are subject to issue age restrictions of the rider at the time of upgrade. Currently the maximum upgrade age is 85 years old.
• An upgrade will reset the WB and RDB.
• Rider Fee Percentage will be the fee percentage that applies to the new rider at the time of upgrade.
• Growth percentage will be the percentage available at the time of upgrade. 		• Upgrades allowed within a 30 day window following each successive 5th rider anniversary.
• Rider availability and fees may vary at time of upgrade
• Upgrades are subject to issue age restrictions of the rider at the time of upgrade. Currently the maximum upgrade age is 85 years old.
• An upgrade will reset the WB and RDB.
• Rider Fee Percentage will be the fee percentage that applies to the new rider at the time of upgrade.
• Growth percentage will be the percentage available at the time of upgrade. 		• No “upgrades” allowed, however owner may terminate existing rider any time after the 5th anniversary and add the new rider in place at that time, as long as the covered lives meet the age requirements in effect at that time.
• New rider addition will be subject to issue age restrictions of the rider at the time of termination and re-addition. Currently the maximum issue age is 80 years old.
• Rider availability and fees will be the fee that applies to the new rider at the time.
122

 

RIDER GRID VARIATIONS — (Continued)
Rider Name Retirement Income Choice® 1.43 Retirement Income Choice® 1.23 Income LinkSM3
Rider Form Number1 RGMB 37 0809 (w/o IE)
RGMB 38 0809 (with IE) 		RGMB 35 0109 (w/o IE)
RGMB 36 0109 (with IE) 		RGMB 39 0110
Rider Termination • The rider can be “free looked” within 30 days of issue. The request must be made in writing.
• The rider will be terminated upon policy surrender, annuitization, annuitant2 death or upgrade.
• The date the policy to which this rider is attached is assigned or if the owner is changed without our approval.
• Termination allowed within 30 day window following each successive 5th rider anniversary.
• The rider will be terminated the date we receive written notice from you requesting termination.
• After termination, there is no wait period to re-add the rider, assuming the rider is still being offered. 		• The rider can be “free looked” within 30 days of issue. The request must be made in writing.
• The rider will be terminated upon policy surrender, annuitization, annuitant2 death or upgrade.
• The date the policy to which this rider is attached is assigned or if the owner is changed without our approval.
• Termination allowed within 30 day window following each successive 5th rider anniversary.
• The rider will be terminated the date we receive written notice from you requesting termination.
• After termination, there is no wait period to re-add the rider, assuming the rider is still being offered. 		• The rider can be “free looked” within 30 days of issue. The request must be made in writing.
• The rider will be terminated upon policy surrender, annuitization, annuitant2 death or upgrade.
• The date the policy to which this rider is attached is assigned or if the owner is changed without our approval.
• Termination allowed at any time after the 5th rider anniversary.
• The rider will be terminated the date we receive written notice from you requesting termination.
• After termination, there is no wait period to re-add the rider, assuming the rider is still being offered.
(1)  Rider form number may be found on the bottom left corner of your rider pages.
(2)  If the rider's Joint Life option has been elected for an additional fee, the benefits and features available could differ from the Single Life Option based on the age of the annuitant's spouse.
(3)  This rider and additional options may vary for certain policies and may not be available for all policies. This disclosure explains the material features of the riders. The application and operation of the riders are governed by the terms and conditions of the rider itself.
(4)  This subaccount is only available to owners that held an investment in the subaccount on May 1, 2018. However, if any such owner surrenders all of his or her money from the subaccount after May 1, 2018, that owner may not reinvest in the subaccount.
123

 

APPENDIX
Guaranteed Lifetime Withdrawal Benefit
Adjusted Partial withdrawals - Income LinkSM Rider (No Longer Available)
When a withdrawal is taken, three parts of the guaranteed lifetime withdrawal benefit can be affected:
1.  Withdrawal Base (“WB”)
2.  Rider Withdrawal Amount (“RWA”)
3.  Income LinkSM rider Systematic Withdrawals (“ILSW”)
Withdrawal Base.  Income LinkSM rider systematic withdrawals (and certain minimum required distributions) will not reduce the withdrawal base. Non-Income LinkSM rider systematic withdrawals (and minimum required distributions calculated other than as provided for in the rider or not taken via a systematic withdrawal program) will reduce the withdrawal base by an amount equal to the greater of:
1)  the amount of the non-Income LinkSM rider systematic withdrawal (or non-qualifying minimum required distribution); and
2)  a pro rata amount, the result of (A / B) * C, where:
A  is the amount in 1 above;
B  is the policy value prior to the withdrawal; and
C  is the withdrawal base prior to the withdrawal.
The following demonstrates, on a purely hypothetical basis, the effects of partial withdrawals under this guaranteed lifetime withdrawal benefit.
Assumptions:
WB = $100,000
RWA = 6% withdrawal would be $6,000 (6% of the current $100,000 withdrawal base)
ILSW = $500 per month
Non-ILSW = $10,000 (taken after the eighteenth monthly Income LinkSM rider systematic withdrawal)
PV = $90,000
Assumes single life withdrawal option of 6% for 6 years and 4% thereafter has been elected. Non-Income LinkSM rider systematic withdrawal occurs during the second Income LinkSM rider withdrawal year (which means the withdrawal percentage is 6%).
Result. For the guaranteed lifetime withdrawal benefit, because there was a non-Income LinkSM rider systematic withdrawal, the withdrawal base needs to be adjusted and a new lower rider withdrawal amount and Income LinkSM rider systematic withdrawal amount calculated.
New withdrawal base:
Step One. The withdrawal base is reduced only by the amount of the non-Income LinkSM rider systematic withdrawal or the pro rata amount, if greater.
Step Two. Calculate how much the withdrawal base is affected by the non-Income LinkSM rider systematic withdrawal.
1.  The formula is (Non-ILSW / (PV before withdrawal)) * WB before any adjustments
2.  ($10,000 / ($90,000)) * $100,000 = $11,111
Step Three. Which is larger, the actual $10,000 non-Income LinkSM rider systematic withdrawal or the $11,111 pro rata amount?
$11,111 pro rata amount.
Step Four. What is the new withdrawal base upon which the rider withdrawal amount is based?
$100,000 - $11,111 = $88,889
Result. The new withdrawal base is $88,889. Please note the percentage reduction in the withdrawal base is used in calculating the revised RWA and ILSW.
New rider withdrawal amount:
Because the withdrawal base was adjusted (due to the non-Income LinkSM rider systematic withdrawal) we have to calculate a new (remaining) rider withdrawal amount. This calculation assumes no more non-Income LinkSM rider systematic withdrawal activity prior to the next Income LinkSM rider withdrawal year.
Question: What is the new (remaining) rider withdrawal amount for the remainder of the Income LinkSM rider withdrawal year?
$3,000 (the remaining rider withdrawal amount) - ($3,000*11.11%) = $2,667
124

 

Guaranteed Lifetime Withdrawal BenefitAdjusted Partial withdrawals - Income LinkSM
Rider (No Longer Available) — (Continued)
Result. Going forward, the maximum you can take out in a benefit year without causing a negative withdrawal base adjustment and further reduction of the withdrawal base (assuming there are no future automatic step-ups) is $5,333.
New Income LinkSM rider systematic withdrawal amount:
Because the withdrawal base was adjusted (due to the non-Income LinkSM rider systematic withdrawal) we have to calculate a new Income LinkSM rider systematic withdrawal amount. This calculation assumes no more non-Income LinkSM rider systematic withdrawal activity prior to the next Income LinkSM rider withdrawal year.
Question: What is the new Income LinkSM rider systematic withdrawal amount?
$500 (the old Income LinkSM rider systematic withdrawal amount) - ($500*11.11%) = $444
Result. Going forward (until the seventh Income LinkSM rider withdrawal year), the Income LinkSM rider systematic withdrawal amount (assuming there are no future automatic step-ups) is $444.
125

Table of Contents
STATEMENT OF ADDITIONAL INFORMATION
TRANSAMERICA PRINCIPIUMSM II VARIABLE ANNUITY
Issued through
SEPARATE ACCOUNT VA B
Offered by
TRANSAMERICA LIFE INSURANCE COMPANY
This Statement of Additional Information expands upon subjects discussed in the current prospectus for the Transamerica PrincipiumSM II Variable Annuity offered by Transamerica Life Insurance Company. You may obtain a copy of the current prospectus, dated May 1, 2018, by calling (800) 525-6205, or write us at: Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499. 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, 2018

 

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APPENDIX  
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APPENDIX  
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APPENDIX  
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GLOSSARY OF TERMS
accumulation unit—An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date.
adjusted policy value—The policy value increased or decreased by any excess interest adjustment.
Administrative Office—Transamerica Life Insurance Company, Attention: Customer Care Group, 4333 Edgewood Road NE, Cedar Rapids, IA 52499, (800) 525-6205.
annuitant—The person on whose life any annuity payments involving life contingencies will be based.
annuity commencement date—The date upon which annuity payments are to commence.
annuity payment option—A method of receiving a stream of annuity payments selected by the owner.
annuity unit—An accounting unit of measure used in the calculation of the amount of the second and each subsequent variable annuity payment.
assumed investment return or AIR—The annual effective rate shown in the contract that is used in the calculation of each variable annuity payment.
beneficiary(ies)—The person(s) 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 applicable surrender charge and rider fees (imposed upon surrender).
Code—The Internal Revenue Code of 1986, as amended.
enrollment form—A written application, order form, or any other information received electronically or otherwise upon which the policy is issued and/or is reflected on the data or specifications page.
excess interest adjustment—A positive or negative adjustment to amounts surrendered (both partial or full surrenders) and transfers or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by us since the date any payment was received by, or an amount was transferred to, the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon full or partial surrenders or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. The excess interest adjustment will not decrease the interest credited to your policy below the guaranteed minimum.
excess partial surrender—The portion of a partial surrender (surrender) that exceeds the free amount.
fixed account—One or more guaranteed period options under the policy that are part of our general assets and are not in the separate account.
free amount—The amount that can be withdrawn each year without incurring any surrender charges or excess interest adjustments.
guaranteed lifetime withdrawal benefit—Any optional benefit under the policy that provides a guaranteed minimum withdrawal benefit, including the Living Benefits Rider, the Retirement Income Max® rider and the Retirement Income Choice® 1.6 rider.
guaranteed period options—The various guaranteed interest rate periods of the fixed account which we may offer and into which premium payments may be paid or amounts transferred.
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 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 plus or minus excess interest adjustments plus the surrender charge on the portion of the requested partial surrender that is subject to the surrender charge plus taxes (on the withdrawal)); plus
• interest credited in the fixed account; plus
• accumulated gains in the separate account; minus
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• 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 thereafter.
premium payment—An amount paid to us by the owner or on the owner's behalf as consideration for the benefits provided by the policy.
qualified policy—A policy issued in connection with retirement plans that qualify for special federal income tax treatment under the Code.
separate account—Separate Account VA B, 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 $35, 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 portfolio.
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.” If the Access Rider is elected, the surrender charge percentage is zero.
valuation period—The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of those values. Such determination shall be made 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 in good order at the Administrative 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.
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In order to supplement the description in the prospectus, the following provides additional information about the Company (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 our consent; (4) receive annuity payments or name a payee to receive the payments; and (5) exercise, receive and enjoy every other right and benefit contained in the policy. The exercise of these rights may be subject to the consent of any assignee or irrevocable beneficiary; and of your spouse in a community or marital property state.
Unless we have been notified of a community or marital property interest in the policy, 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 we have made or action we have taken before recording the change. Changing the owner does not change the designation of the beneficiary or the annuitant.
Entire Contract
The entire contract consists of the policy and any application, endorsements and riders. If any portion of the policy or rider attached thereto shall be found to be invalid, unenforceable or illegal, the remainder shall not in any way be affected or impaired thereby, but shall have the same force and effect as if the invalid, unenforceable or illegal portion had not been inserted.
Misstatement of Age or Sex
During the Accumulation Phase. If the age of any person whose life or age a benefit provided under a guaranteed benefit has been misstated, any such benefit will be that which would have been purchased on the basis of the correct age. If that person would not have been eligible for that guaranteed benefit at the correct age, (i) the benefit will be rescinded; and (ii) any charges that were deducted for the benefit will be refunded and applied to the total account value of the policy.
We reserve the right to terminate the contract at any time if it discovers a misstatement or fraudulent representation of any information provided in connection with the issuance or ongoing administration of the policy.
After the Annuity Commencement Date. We may require proof of the annuitant’s or owner’s age and/or sex before any payments associated with any benefits are made. If the age or sex of the annuitant and/or owner has been misstated, we will change the payment associated with any benefits payable to that which the premium payments would have purchased for the correct age or sex. The dollar amount of any underpayment made by us shall be paid in full with the next payment due such person, beneficiary, or payee. The dollar amount of any overpayment made by us due to any misstatement shall be deducted from payments subsequently accruing to such person or beneficiary. Any underpayment or overpayment will include interest specified in your policy, from the date of the wrong payment to the date of the adjustment. The age of the annuitant or owner may be established at any time by the submission of proof satisfactory to us.
Reallocation of Annuity Units After the Annuity Commencement Date
After the annuity commencement date, you may reallocate the value of a designated number of annuity units of a subaccount then credited to a policy into an equal value of annuity units of one or more other subaccounts or the fixed account. The reallocation shall be based on the relative value of the annuity units of the account(s) or subaccount(s) at the end of the 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
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annuity units remaining in an account or subaccount after a reallocation is less than $10, we reserve the right to include the value of those annuity units as part of the transfer. The request must be in writing to our Administrative Office. There is no charge assessed in connection with such reallocation. A reallocation of annuity units may be made up to four times in any given policy year.
After the annuity commencement date, no transfers may be made from the fixed account to the separate account.
Annuity Payment Options
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 us in good order at least thirty (30) days before the annuity commencement date (elections less than 30 days require prior approval). If no election is made before the annuity commencement date, annuity payments will be made under life income with variable payments for 10 years certain using the existing policy value of the separate account. These default options may be restricted with respect to qualified policies.
The person who elects an annuity payment option can also name one or more successor payees to receive any unpaid amount we have 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 us in writing and we agree.
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 “Annuity 2000” (male, female and unisex if required by law) mortality table projected for improvement using projection scale G. The rates were projected dynamically using an assumed annuity commencement date of 2005. the “Annuity 2000” mortality rates are adjusted based on improvements in mortality to more appropriately reflect increased longevity. The dollar amount of additional variable annuity payments will vary based on the investment performance of the subaccount(s) of the separate account selected by the annuitant or beneficiary. For certain qualified policies the use of unisex mortality tables may be required.
Determination of the First Variable Payment. The amount of the first variable payment depends upon the sex (if consideration of sex is allowed under state and Federal law) and adjusted age of the annuitant. 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 or any other proof satisfactory to us will constitute due proof of death. If the annuitant dies after the annuity commencement date, no death benefit is payable and the amount payable will depend on the annuity income option.
Upon receipt in good order of this proof and an election of a method of settlement, the death benefit generally will be paid within seven days, or as soon thereafter as we have sufficient information about the beneficiary(ies) to make the payment. The death benefit may be paid as a lump sum, as annuity payments or as otherwise permitted by the Company in accordance with applicable law unless a settlement agreement is effective at the death of the owner preventing such election.
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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 adjusted policy value. If the new owner is not the deceased owner's spouse, however, (1) the adjusted 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.
Beneficiary. The beneficiary designation in the enrollment form will remain in effect until changed. The owner may change the designated beneficiary by sending us written notice. The beneficiary's consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the owner may then designate a new beneficiary.) The change will take effect as of the date the owner signs the written notice, whether or not the owner is living when the notice is received by us. We will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If upon the death of the annuitant there is a surviving owner(s), the surviving owner(s) automatically takes the place of any beneficiary designation.
Death of Owner
Federal tax law requires that if any owner (including any joint owner who has become a current owner) dies before the annuity commencement date, then the entire value of the policy must generally be distributed within five years of the date of death of such owner. Certain rules apply where (1) the spouse of the deceased owner is the sole beneficiary, (2) the owner is not a natural person and the primary annuitant dies or is changed, or (3) any owner dies after the annuity commencement date. See the TAX INFORMATION section in the prospectus for more information about these rules. Other rules may apply to qualified policies.
Assignment
During the lifetime of the annuitant you may assign any rights or benefits provided by the policy if your policy is a nonqualified policy. An assignment will not be binding on us until a copy has been filed at its Administrative Office. Your rights and benefits and those of the beneficiary are subject to the rights of the assignee. We assume no responsibility for the validity or effect of any assignment. Any claim made under an assignment shall be subject to proof of interest and the extent of the assignment. An assignment may have tax consequences.
Unless you so direct by filing written notice with us, no beneficiary may assign any payments under the policy before they are due. To the extent permitted by law, no payments will be subject to the claims of any beneficiary's creditors.
Ownership under qualified policies is restricted to comply with the Code.
Evidence of Survival
We reserve the right to require satisfactory evidence that a person is alive if a payment is based on that person being alive. No payment will be made until we receive such evidence.
Non-Participating
The policy will not share in our surplus earnings; no dividends will be paid.
Amendments
No change in the policy is valid unless made in writing by us and approved by one of our officers. No registered representative has authority to change or waive any provision of the policy.
We reserve the right to amend the policies to meet the requirements of the Code, regulations or published rulings. You can refuse such a change by giving written notice, but a refusal may result in adverse tax consequences.
Employee and Agent Purchases
The policy may be acquired by an employee or registered representative of any broker/dealer authorized to sell the policy or their immediate family, or by an officer, director, trustee or bona-fide full-time employee of ours or our affiliated companies or their immediate family. In such a case, we in our discretion, may credit an amount equal to a percentage of each premium payment to the policy due to lower acquisition costs we experience on those purchases. We may offer certain employer sponsored savings plans, reduced fees and charges including, but not limited to, the annual service charge, the surrender charges, the mortality and expense
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risk fee and the administrative charge for certain sales under circumstances which may result in savings of certain costs and expenses. In addition, there may be other circumstances of which we are not presently aware which could result in reduced sales or distribution expenses. Credits to the policy or reductions in these fees and charges will not be unfairly discriminatory against any owner.
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), 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
♦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).
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INVESTMENT EXPERIENCE
A “net investment factor” is used to determine the value of accumulation units and annuity units, and to determine annuity payment rates.
Accumulation Units
Allocations of a premium payment directed to a subaccount are credited in the form of accumulation units. Each subaccount has a distinct accumulation unit value. The number of units credited is determined by dividing the premium payment or amount transferred to the subaccount by the accumulation unit value of the subaccount as of the end of the valuation period during which the allocation is made. For each subaccount, the accumulation unit value for a given 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.
Upon allocation to the selected subaccount, premium payments are converted into accumulation units of the subaccount. The number of accumulation units to be credited is determined by dividing the dollar amount allocated to each subaccount by the value of an accumulation unit for that subaccount as next determined after the premium payment is received at the Administrative Office or, in the case of the initial premium payment, when the enrollment form is completed, whichever is later. The value of an accumulation unit for each subaccount was arbitrarily established at $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 + B - C) by (D) and subtracting (D) from the result, where the net result of:
A  the net asset value per share of the shares held in the subaccount determined at the end of the current valuation period, plus
B  the per share amount of any dividend or capital gain distribution made with respect to the shares held in the subaccount if the ex-dividend date occurs during the current valuation period, plus or minus
C  a per share credit or charge for any taxes determined by us to have resulted during the valuation period from the investment operations of the subaccount;
D  is the net asset value per share of the shares held in the subaccount determined as of the end of the immediately preceding valuation period; and
E  is an amount representing the separate account charge and any optional benefit fees, if applicable.
Illustration of Separate Account Accumulation Unit Value Calculations
Formula and Illustration for Determining the Net Investment Factor
Net Investment Factor = (A + B - C) - E
  D  
    
Where:  
A = The net asset value of an underlying fund portfolio share 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
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, if applicable. Assume E totals 0.85% on an annual basis; On a daily basis, this equals 0.0000232.
    
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Then, the net investment factor = (11.57 + 0 – 0) - 0.0000232 = Z = 1.0148891
  (11.40)  
Formula for Determining Accumulation Unit Value
Accumulation Unit Value = A * B
Where:  
A = The accumulation unit value for the immediately preceding valuation period.
  Assume A = $X
B = The net investment factor for the current valuation period.
  Assume B = Y
Then, the accumulation unit value = $X * Y = $Z
Annuity Unit Value and Annuity Payment Rates
The amount of variable annuity payments will vary with annuity unit values. Annuity unit values rise if the net investment performance of the subaccount exceeds the assumed investment return of 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 assumed investment return adjustment factor for the valuation period.
The assumed investment return adjustment factor for the valuation period is the product of discount factors of .99986634 per day to recognize the 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
(2) the per share amount of any dividend or capital gain distributions made by the fund for shares held in that subaccount if the ex-dividend date occurs during the valuation period; plus or minus
(3) a per share charge or credit for any taxes reserved for, which we determine to have resulted from the investment operations of the subaccount.
(ii)  is the net asset value of a fund share held in that subaccount determined as of the end of the immediately preceding valuation period.
(iii)  is a factor representing the mortality and expense risk fee and administrative charge. This factor is equal, on an annual basis, to 1.25% of the daily net asset value of shares held in that subaccount. (For calculating Initial Payment Guarantee annuity payments, the factor is higher at a rate of 2.50%).
The dollar amount of subsequent variable annuity payments will depend upon changes in applicable annuity unit values.
The annuity payment rates generally vary according to the annuity option elected and the gender and adjusted age of the annuitant at the annuity commencement date. The policy contains a table for determining the adjusted age of the annuitant.
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Calculations for Annuity Unit
Value and Variable Annuity Payments
Formula for Determining Annuity Unit Value
Annuity Unit Value = A * B * C
Where:  
A = Annuity unit value for the immediately preceding valuation period.
  Assume A = $X
B = Net investment factor for the valuation period for which the annuity unit value is being calculated.
  Assume B = Y
C = A factor to neutralize the annual assumed investment return of 5% built into the Annuity Tables used.
  Assume C = Z
Then, the annuity unit value is: $X * Y * Z = $Q
Formula for Determining Amount of
First Monthly Variable Annuity Payment
First monthly variable annuity payment = A * B
  $1,000
    
Where:  
A = The adjusted policy value as of the annuity commencement date.
  Assume A = $X
B = The annuity purchase rate per $1,000 of adjusted policy value based upon the option selected, the sex and adjusted age of the annuitant according to the tables contained in the policy.
  Assume B = $Y
    
Then, the first monthly variable annuity payment = $X * $Y = $Z
  1,000  
Formula for Determining the Number of Annuity Units
Represented by Each Monthly Variable Annuity Payment
Number of annuity units = A
  B
    
Where:  
A = The dollar amount of the first monthly variable annuity payment.
  Assume A = $X
B = The annuity unit value for the valuation date on which the first monthly payment is due.
  Assume B = $Y
    
Then, the number of annuity units = $X = Z
  $Y  
PERFORMANCE
We periodically 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, surrender charges, or fees for any optional riders or endorsements. Any such deduction would reduce the percentage increase or make greater any percentage decrease.
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Second, advertisements may also include total return figures, which reflect the deduction of the mortality and expense risk fees and administrative charges. These figures may also include or exclude surrender charges. These figures may also reflect 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.
Not all types of performance data presented reflect all of the fees and charges that may be deducted (such as fees for optional benefits); performance figures would be lower if these charges were included.
HISTORICAL PERFORMANCE DATA
Money Market Yields
We may from time to time disclose the current annualized yield of the money market subaccount, which invests in the corresponding money market portfolio, for a 7-day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the corresponding money market portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the 7-day period in the value of a hypothetical account having a balance of 1 unit of the money market subaccount at the beginning of the 7-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing this quotient on a 365-day basis. The net change in account value reflects (i) net income from the portfolio attributable to the hypothetical account; and (ii) charges and deductions imposed under a policy that are attributable to the hypothetical account. The charges and deductions include the per unit charges for the hypothetical account for (i) the administrative charges and (ii) the mortality and expense risk fee. Current yield will be calculated according to the following formula.
Current Yield = ((NCS * ES)/UV) * (365/7)
Where:
NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of 1 subaccount unit.
ES = Per unit expenses of the subaccount for the 7-day period.
UV = The unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a policy, the yield for the money market subaccount will be lower than the yield for the corresponding money market portfolio. The yield calculations do not reflect the effect of any premium taxes. The yield calculations also do not reflect surrender charges that may be applicable to a particular policy. Surrender charges range from 5% to 0% of the amount of premium payments surrendered based on the number of years since the premium payment was made. Surrender charges are based on the number of years since the date the premium payment was made, not the policy issue date.
We may also disclose the effective yield of the money market subaccount for the same 7-day period, determined on a compounded basis. The effective yield is calculated by compounding the base period return according to the following formula.
Effective Yield = (1 + ((NCS - ES)/UV))365/7 - 1
Where:
NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of 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.
10

 

The yield on amounts held in the money market subaccount normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The money market subaccount's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the corresponding money market portfolio, the types and quality of portfolio securities held by the corresponding money market portfolio and its operating expenses.
Total Returns
We may from time to time also advertise or disclose total returns for one or more of the subaccounts for various periods of time. One of the periods of time will include the period measured from the date the subaccount commenced operations. When a subaccount has been in operation for 1, 5 and 10 years, respectively, the total return for these periods will be provided. Total returns for other periods of time may from time to time also be disclosed. Total returns represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods. The ending date for each period for which total return quotations are provided will be for the most recent month end practicable, considering the type and media of the communication and will be stated in the communication.
Total returns will be calculated using subaccount unit values which we calculate on each 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. Total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. The total return will then be calculated according to the following formula.
P (1 + T)N = ERV
Where:
T = The average annual total return net of subaccount recurring charges.
ERV = The ending redeemable value of the hypothetical account at the end of the period.
P = A hypothetical initial payment of $1,000.
N = The number of years in the period.
Other Performance Data
We may from time to time also disclose average annual total returns in a non-standard format in conjunction with the standard format described above. The non-standard format will be identical to the standard format except that the surrender charge percentage will be assumed to be 0%.
We may from time to time also disclose cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formula except that the surrender charge percentage will be assumed to be 0%.
CTR = (ERV / P)-1
Where:
CTR = The cumulative total return net of subaccount recurring charges for the period.
ERV = The ending redeemable value of the hypothetical investment at the end of the period.
P = A hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard performance data is also disclosed.
Adjusted Historical Performance Data
From time to time, sales literature or advertisements may quote average annual total returns for periods prior to the date a particular subaccount commenced operations. Such performance information for the subaccounts will be calculated based on the performance of the various portfolios and the assumption that the subaccounts were in existence for the same periods as those indicated for the portfolios, with the level of policy charges that are currently in effect.
PUBLISHED RATINGS
We may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to 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 our financial strength. The
11

 

ratings should not be considered as bearing on the investment performance of assets held in the separate account or of the safety or riskiness of an investment in the separate account. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, these ratings may be referred to in advertisements or sales literature or in reports to owners. These ratings are opinions of an operating insurance company's financial capacity to meet the obligations of its insurance policies in accordance with their terms.
STATE REGULATION OF US
We are subject to the laws of jurisdiction governing insurance companies and to regulation by the jurisdiction Department of Insurance. An annual statement in a prescribed form is filed with the Department of Insurance each year covering our operations for the preceding year and our financial condition as of the end of such year. Regulation by the Department of Insurance includes periodic examination to determine our contract liabilities and reserves so that the Department may determine the items are correct. Our books and accounts are subject to review by the Department of Insurance at all times, and a full examination of our operations are conducted periodically by the National Association of Insurance Commissioners. In addition, we are subject to regulation under the insurance laws of other jurisdictions in which it may operate.
ADMINISTRATION
We perform administrative services for the policies. These services include issuance of the policies, maintenance of records concerning the policies, and certain valuation services.
RECORDS AND REPORTS
All records and accounts relating to the separate account will be maintained by us. As presently required by the 1940 Act, as amended, and regulations promulgated thereunder, we will mail to all owners at their last known address of record, at least annually, reports containing such information as may be required under that Act or by any other applicable law or regulation. Owners will also receive confirmation of each financial transaction and any other reports required by law or regulation. However, for certain routine transactions (for example, regular monthly premiums deducted from your checking account, or regular annuity payments we send to you) you may only receive quarterly confirmations.
DISTRIBUTION OF THE POLICIES
We have entered into a principal underwriting agreement with our affiliate, Transamerica Capital, Inc. (“TCI”), for the distribution and sale of the policies. We may reimburse TCI for certain expenses it incurs in order to pay for the distribution of the policies (e.g., commissions payable to selling firms selling the Policies, as described below).
TCI's home office is located at 1800 California St. Suite 5200 Denver, Colorado 80202. TCI is an indirect, wholly owned subsidiary of AEGON USA. TCI is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and is a member of Financial Industry Regulatory Authority (“FINRA”). TCI is not a member of the Securities Investor Protection Corporation.
The policies were 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 2017, 2016 and 2015, the amounts paid to TCI in connection with all policies sold through the separate account were $3,873,634, $3,166,656 and $3,292,908,, respectively.
We and/or TCI or another affiliate may pay certain selling firms additional cash amounts for: (1) marketing allowances, which may include marketing services and increased access to their sales representatives; (2) sales promotions relating to the policies; (3) costs associated with sales conferences and educational seminars for their sales representatives; and (4) other sales expenses of the selling firms. We and/or TCI may make bonus payments to certain selling firms based on aggregate sales or persistency standards. These additional payments are not offered to all selling firms, and the terms of any particular agreement governing the payments may vary among selling firms. Differences in compensation paid to a selling firm or its sales representatives for selling one product over another may create conflicts of interests for such firms or its sales representatives.
12

 

VOTING RIGHTS
To the extent required by law, we will vote the underlying fund portfolios' shares held by the separate account at regular and special shareholder meetings of the underlying fund portfolios in accordance with instructions received from persons having voting interests in the portfolios, although none of the underlying fund portfolios hold regular annual shareholder meetings. If, however, the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result we will determine that it is permitted to vote the underlying fund portfolios shares in its own right, it may elect to do so.
Before the annuity commencement date, you hold the voting interest in the selected portfolios. The number of votes that you have the right to instruct will be calculated separately for each subaccount. The number of votes that you have the right to instruct for a particular subaccount will be determined by dividing your policy value in the subaccount by the net asset value per share of the corresponding portfolio in which the subaccount invests. Fractional shares will be counted.
After the annuity commencement date, you have the voting interest, and the number of votes decreases as annuity payments are made and as the reserves for the policy decrease. The person's number of votes will be determined by dividing the reserve for the policy allocated to the applicable subaccount by the net asset value per share of the corresponding portfolio. Fractional shares will be counted.
The number of votes that you have the right to instruct will be determined as of the date established by the underlying fund portfolio for determining shareholders eligible to vote at the meeting of the underlying fund portfolio. We will solicit voting instructions by sending you, or other persons entitled to vote, requests for instructions prior to that meeting in accordance with procedures established by the underlying fund portfolio. Portfolio shares as to which no timely instructions are received, and shares held by us in which you, or other persons entitled to vote have no beneficial interest, will be voted in proportion to the voting instructions that are received with respect to all policies participating in the same subaccount.
Each person having a voting interest in a subaccount will receive proxy material, reports, and other materials relating to the appropriate portfolio.
OTHER PRODUCTS
We make other variable annuity policies available that may also be funded through the separate account. These variable annuity policies may have different features, such as different investment choices or charges.
CUSTODY OF ASSETS
We hold assets of each of the subaccounts. The assets of each of the subaccounts are segregated and held separate and apart from the assets of the other subaccounts and from our general account assets. We maintain records of all purchases and redemptions of shares of the underlying fund portfolios held by each of the subaccounts. Additional protection for the assets of the separate account is afforded by our fidelity bond, presently in the amount of $5,000,000, covering the acts of our officers and employees.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of the Separate Account VA B, as of December 31, 2017, and for the years ended December 31, 2017 and 2016, and the statutory-basis financial statements and schedules of Transamerica Life Insurance Company as of December 31, 2017 and 2016, and for each of the three years ended December 31, 2017 included in this Statement of Additional Information have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
PricewaterhouseCoopers LLP
One North Wacker Drive
Chicago, IL 60606
OTHER INFORMATION
A registration statement has been filed with the SEC, under the Securities Act of 1933 as amended, with respect to the policies discussed in this SAI. Not all of the information set forth in the registration statement and the amendments and exhibits thereto has been included in the prospectus or this SAI. Statements contained in the prospectus and this SAI concerning the content of the policies and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC.
13

 

FINANCIAL STATEMENTS
Separate Account
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 B, which are available for investment by Transamerica PrincipiumSM II Variable Annuity policy owners, are contained herein. The statutory-basis financial statements and schedules of Transamerica Life Insurance Company, which are included in this SAI, should be considered only as bearing on the ability of us to meet our obligations under the policies. They should not be considered as bearing on the investment performance of the assets held in the separate account.
The Company
Transamerica Life Insurance Company (“TLIC”) did not maintain effective internal controls over the processes and procedures related to the appropriate accounting for intercompany/affiliated reinsurance, which limited their ability to detect and correct presentation errors. This aggregated deficiency resulted in a material weakness, and is not expected to have any material impact on our ability to perform our obligations under the terms of your contract. We are in the process of remediating this material weakness by enhancing the level of the processes and procedures related to intercompany/affiliated reinsurance. We believe that these enhanced processes and procedures will effectively remediate the material weakness, but the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
14

 

APPENDIX
CONDENSED FINANCIAL INFORMATION
The following tables list the accumulation unit values and the number of accumulation units outstanding for the total separate account expenses listed therein for each subaccount available on December 31, 2017.
    Separate Account Expense 2.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.852877
$0.869845
$0.887199
$0.904897
$0.922950
$0.941465
$0.960194
$0.979350
$0.998815
$1.000000 		$0.836237
$0.852877
$0.869845
$0.887199
$0.904897
$0.922950
$0.941465
$0.960194
$0.979350
$0.998815 		0.000
1,486.975
1,491.978
1,497.066
1,502.066
3,618.336
3,630.698
10,629.094
27,426.340
142,388.676
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124
$1.000000 		$1.106917
$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124
$1.000000 		$1.106917
$1.102960
$1.123390
$1.147875
$1.121259
$1.172848
$1.140923
$1.084647
$1.061512
$1.039124 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.426903
$9.998377 		$12.597600
$10.426903 		0.000
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.111778
$9.998377 		$11.187741
$10.111778 		0.000
0.000
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.180726
$9.998377 		$11.774836
$10.180726 		0.000
0.000
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998252 $10.992002 362.327
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.248809
$1.227645
$1.274759
$1.243684
$1.138414
$1.071340
$1.076920
$0.992347
$0.868604
$1.000000 		$1.388926
$1.248809
$1.227645
$1.274759
$1.243684
$1.138414
$1.071340
$1.076920
$0.992347
$0.868604 		14,253.680
14,299.448
24,898.616
24,977.299
25,053.023
205,254.681
400,105.185
410,580.002
431,855.751
0.000
15

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 2.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.222145
$1.197707
$1.230120
$1.192236
$1.131562
$1.082666
$1.070290
$0.997673
$0.999946 		$1.330433
$1.222145
$1.197707
$1.230120
$1.192236
$1.131562
$1.082666
$1.070290
$0.997673 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.285458
$1.252610
$1.324207
$1.299110
$1.115566
$1.020119
$1.052413
$0.949921
$0.786588
$1.000000 		$1.493132
$1.285458
$1.252610
$1.324207
$1.299110
$1.115566
$1.020119
$1.052413
$0.949921
$0.786588 		275,671.756
275,706.710
275,745.356
307,489.212
309,878.340
784,683.600
909,550.025
848,690.284
888,839.815
0.000
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.214105
$1.208418
$1.226244
$1.198762
$1.257509
$1.195264
$1.150660
$1.097545
$0.967159
$1.000000 		$1.245662
$1.214105
$1.208418
$1.226244
$1.198762
$1.257509
$1.195264
$1.150660
$1.097545
$0.967159 		3,958.275
3,970.646
3,983.621
3,997.030
4,009.968
113,042.196
146,366.276
138,794.744
141,107.461
0.000
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998252 $11.159631 0.000
    
    Separate Account Expense 1.65%
Subaccount Year Beginning AUV Ending AUV # Units
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.877815
$0.892210
$0.906853
$0.921795
$0.936961
$0.952432
$0.968071
$0.984007
$1.000087
$1.000000 		$0.863633
$0.877815
$0.892210
$0.906853
$0.921795
$0.936961
$0.952432
$0.968071
$0.984007
$1.000087 		244,590.719
28,202.396
0.000
0.000
21,382.352
19,966.385
0.000
0.000
0.000
317,148.198
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.135150
$1.152213
$1.173282
$1.142141
$1.190596
$1.154197
$1.093516
$1.066519
$1.040444
$1.000000 		$1.143137
$1.135150
$1.152213
$1.173282
$1.142141
$1.190596
$1.154197
$1.093516
$1.066519
$1.040444 		12,317.602
11,478.242
11,618.263
62,538.860
62,494.323
95,044.281
69,302.126
49,046.606
23,235.402
0.000
16

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.65%
Subaccount Year Beginning AUV Ending AUV # Units
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.135150
$1.152213
$1.173282
$1.142141
$1.190596
$1.154197
$1.093516
$1.066519
$1.040444
$1.000000 		$1.143137
$1.135150
$1.152213
$1.173282
$1.142141
$1.190596
$1.154197
$1.093516
$1.066519
$1.040444 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.455031
$9.998659 		$12.674941
$10.455031 		0.000
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.139069
$9.998659 		$11.256444
$10.139069 		0.000
0.000
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.208194
$9.998659 		$11.847127
$10.208194 		0.000
0.000
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998534 $11.017340 0.000
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.285241
$1.259138
$1.302976
$1.266839
$1.155628
$1.083783
$1.085712
$0.997018
$0.869707
$1.000000 		$1.434359
$1.285241
$1.259138
$1.302976
$1.266839
$1.155628
$1.083783
$1.085712
$0.997018
$0.869707 		1,172,874.387
1,225,514.075
1,433,809.188
1,603,206.337
2,247,564.176
2,214,485.475
2,266,029.945
2,324,222.049
1,702,434.936
166,928.699
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.252438
$1.223188
$1.251978
$1.209253
$1.143767
$1.090563
$1.074408
$0.998075
$0.999955 		$1.368093
$1.252438
$1.223188
$1.251978
$1.209253
$1.143767
$1.090563
$1.074408
$0.998075 		0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.322936
$1.284727
$1.353495
$1.323281
$1.132437
$1.031979
$1.060999
$0.954402
$0.787587
$1.000000 		$1.541941
$1.322936
$1.284727
$1.353495
$1.323281
$1.132437
$1.031979
$1.060999
$0.954402
$0.787587 		2,587,226.197
2,732,430.327
2,898,934.907
3,369,004.564
3,059,219.318
3,216,832.976
4,273,497.473
4,471,789.123
4,297,072.155
1,675,892.199
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.249573
$1.239453
$1.253426
$1.221124
$1.276566
$1.209190
$1.160075
$1.102731
$0.968388
$1.000000 		$1.286452
$1.249573
$1.239453
$1.253426
$1.221124
$1.276566
$1.209190
$1.160075
$1.102731
$0.968388 		43,644.840
62,209.757
62,064.772
131,594.793
130,351.370
224,510.030
256,477.745
217,151.577
249,177.513
50,554.070
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998534 $11.185352 0.000
    
17

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    1.55%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $1.886811 $1.991597 0.000
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.425523 $1.510296 0.000
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.885046
$0.898659
$0.912538
$0.926651
$0.940929
$0.955580
$0.970297
$0.985276
$1.000451
$1.000000 		$0.871599
$0.885046
$0.898659
$0.912538
$0.926651
$0.940929
$0.955580
$0.970297
$0.985276
$1.000451 		11,284.777
20,031.562
21,496.379
21,673.598
59,371.228
88,273.446
123,014.275
115,103.138
116,940.431
0.000
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.144539
$1.160606
$1.180665
$1.148192
$1.195731
$1.158025
$1.096078
$1.067958
$1.040818
$1.000000 		$1.153717
$1.144539
$1.160606
$1.180665
$1.148192
$1.195731
$1.158025
$1.096078
$1.067958
$1.040818 		42,283.803
48,742.366
61,223.141
63,627.961
105,990.471
399,649.317
447,151.765
414,729.703
43,725.064
272,613.271
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.144539
$1.160606
$1.180665
$1.148192
$1.195731
$1.158025
$1.096078
$1.067958
$1.040818
$1.000000 		$1.153717
$1.144539
$1.160606
$1.180665
$1.148192
$1.195731
$1.158025
$1.096078
$1.067958
$1.040818 		140,687.981
341,447.164
337,502.892
0.000
0.000
450,667.325
0.000
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.463110
$9.998739 		$12.697176
$10.463110 		0.000
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.146904
$9.998739 		$11.276218
$10.146904 		12,632.545
0.000
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.216069
$9.998739 		$11.867913
$10.216069 		0.000
0.000
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998614 $11.024624 0.000
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.094597
$1.119013
$1.160456
$1.086300
$1.008581
$1.000000 		$1.190765
$1.094597
$1.119013
$1.160456
$1.086300
$1.008581 		74,953.178
76,827.488
81,327.231
87,895.177
73,564.775
79,321.533
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.134195
$1.163222
$1.217153
$1.142576
$1.003629
$1.000000 		$1.264465
$1.134195
$1.163222
$1.217153
$1.142576
$1.003629 		30,823.790
270,630.051
273,322.007
71,837.732
32,570.731
35,199.997
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.266676 $1.323920 0.000
18

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    1.55%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.295856
$1.268289
$1.311161
$1.273554
$1.160611
$1.087387
$1.088247
$0.998366
$0.870025
$1.000000 		$1.447624
$1.295856
$1.268289
$1.311161
$1.273554
$1.160611
$1.087387
$1.088247
$0.998366
$0.870025 		2,056,228.625
2,258,447.800
2,369,612.617
2,498,366.247
2,841,321.277
2,085,253.628
1,687,057.834
1,833,487.122
1,112,327.932
802,739.797
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.261231
$1.230576
$1.258309
$1.214174
$1.147291
$1.092843
$1.075590
$0.998190
$0.999958 		$1.379051
$1.261231
$1.230576
$1.258309
$1.214174
$1.147291
$1.092843
$1.075590
$0.998190 		179,580.028
200,545.508
209,013.823
203,221.719
219,774.624
268,114.544
305,581.855
95,196.246
0.000
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.333899
$1.294100
$1.362040
$1.330325
$1.137337
$1.035415
$1.063492
$0.955701
$0.787876
$1.000000 		$1.556242
$1.333899
$1.294100
$1.362040
$1.330325
$1.137337
$1.035415
$1.063492
$0.955701
$0.787876 		3,995,125.668
4,487,173.177
4,893,397.979
5,672,225.231
6,496,228.284
5,881,240.038
4,895,895.826
4,307,800.653
3,153,262.670
283,924.172
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.259882
$1.248457
$1.261287
$1.227567
$1.282050
$1.213185
$1.162771
$1.104210
$0.968744
$1.000000 		$1.298333
$1.259882
$1.248457
$1.261287
$1.227567
$1.282050
$1.213185
$1.162771
$1.104210
$0.968744 		406,900.837
549,419.086
709,915.934
852,736.955
1,243,158.564
1,725,328.604
1,072,642.648
773,488.062
1,385,515.478
0.000
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.060430
$0.080322
$0.087972
$0.120042
$0.222069
$0.319599
$0.405419
$0.562151
$1.000000 		$0.040259
$0.060430
$0.080322
$0.087972
$0.120042
$0.222069
$0.319599
$0.405419
$0.562151 		0.000
1,925.503
1,471.689
603.956
6,392.406
59,607.351
139,246.919
17,809.608
0.000
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.077238
$1.065673
$1.108356
$1.086369
$1.030348
$0.979952
$1.000000 		$1.184937
$1.077238
$1.065673
$1.108356
$1.086369
$1.030348
$0.979952 		111,942.515
122,579.256
129,265.182
146,967.915
118,723.240
131,309.829
97,300.787
19

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    1.55%
Subaccount Year Beginning AUV Ending AUV # Units
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.082816
$1.078358
$1.171638
$1.152626
$1.004652
$0.919566
$1.000000 		$1.282844
$1.082816
$1.078358
$1.171638
$1.152626
$1.004652
$0.919566 		49,896.475
67,854.788
89,464.290
78,748.846
49,836.444
27,993.659
3,780.457
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.084248
$1.077486
$1.143079
$1.120291
$1.023855
$0.960147
$1.000000 		$1.232660
$1.084248
$1.077486
$1.143079
$1.120291
$1.023855
$0.960147 		225,802.063
318,532.066
337,776.864
665,201.962
599,929.693
367,167.593
0.000
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998614 $11.192726 0.000
    
    Separate Account Expense 1.35%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $1.918890 $2.027765 23,346.368
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.446827 $1.534608 46,050.902
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.899791
$0.911849
$0.924133
$0.936557
$0.949154
$0.961993
$0.974885
$0.988009
$1.001182
$1.000000 		$0.887825
$0.899791
$0.911849
$0.924133
$0.936557
$0.949154
$0.961993
$0.974885
$0.988009
$1.001182 		1,429,206.813
1,652,497.670
649,908.731
2,027,043.685
1,735,932.230
4,856,206.611
3,475,808.722
2,436,816.689
1,765,872.555
166,464.340
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.163568
$1.177586
$1.195583
$1.160415
$1.206074
$1.165733
$1.101195
$1.070836
$1.041579
$1.000000 		$1.175210
$1.163568
$1.177586
$1.195583
$1.160415
$1.206074
$1.165733
$1.101195
$1.070836
$1.041579 		405,860.121
812,930.173
1,017,956.877
1,507,417.344
1,981,613.617
2,523,306.082
2,501,327.518
2,096,224.111
779,077.533
554,881.381
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.163568
$1.177586
$1.195583
$1.160415
$1.206074
$1.165733
$1.101195
$1.070836
$1.041579
$1.000000 		$1.175210
$1.163568
$1.177586
$1.195583
$1.160415
$1.206074
$1.165733
$1.101195
$1.070836
$1.041579 		69,143.734
70,429.940
67,566.985
0.000
935.828
17,782.950
69,044.770
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.479297
$9.998901 		$12.741833
$10.479297 		3,424.682
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.162603
$9.998901 		$11.315872
$10.162603 		11,133.900
5,213.777
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.231880
$9.998901 		$11.909664
$10.231880 		2,088.845
2,088.845
20

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.35%
Subaccount Year Beginning AUV Ending AUV # Units
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998776 $11.039186 0.000
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.104697
$1.127118
$1.166563
$1.089869
$1.009910
$1.000000 		$1.204108
$1.104697
$1.127118
$1.166563
$1.089869
$1.009910 		631,110.617
615,851.359
830,122.097
825,740.417
622,491.236
354,143.183
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.144653
$1.171647
$1.223553
$1.146324
$1.004945
$1.000000 		$1.278632
$1.144653
$1.171647
$1.223553
$1.146324
$1.004945 		587,632.098
640,656.418
459,028.600
432,403.596
299,817.530
186,940.429
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.281980 $1.341446 1,415.278
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.317403
$1.286852
$1.327726
$1.287092
$1.170642
$1.094621
$1.093332
$1.001063
$0.870662
$1.000000 		$1.474595
$1.317403
$1.286852
$1.327726
$1.287092
$1.170642
$1.094621
$1.093332
$1.001063
$0.870662 		9,075,947.320
10,773,574.401
12,357,463.302
14,123,303.186
15,053,357.027
15,128,635.055
11,877,382.628
8,925,545.555
8,908,014.331
676,941.298
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.279058
$1.245521
$1.271079
$1.224074
$1.154373
$1.097415
$1.077970
$0.998420
$0.999963 		$1.401303
$1.279058
$1.245521
$1.271079
$1.224074
$1.154373
$1.097415
$1.077970
$0.998420 		4,080,164.673
4,807,510.010
4,948,554.426
5,278,637.360
5,723,803.574
7,368,081.943
4,889,914.413
1,415,395.565
2,374.839
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.356093
$1.313051
$1.379257
$1.344487
$1.147188
$1.042321
$1.068478
$0.958292
$0.788462
$1.000000 		$1.585249
$1.356093
$1.313051
$1.379257
$1.344487
$1.147188
$1.042321
$1.068478
$0.958292
$0.788462 		7,694,890.802
9,509,194.929
11,565,405.129
14,982,600.790
16,891,944.806
12,985,707.921
15,221,017.220
14,834,226.440
10,586,807.773
2,873,473.540
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.280822
$1.266727
$1.277226
$1.240634
$1.293147
$1.221259
$1.168216
$1.107200
$0.969449
$1.000000 		$1.322505
$1.280822
$1.266727
$1.277226
$1.240634
$1.293147
$1.221259
$1.168216
$1.107200
$0.969449 		1,594,652.193
2,456,772.635
2,995,733.079
3,901,262.241
5,122,493.542
5,767,121.258
5,189,735.893
3,657,822.098
2,111,302.592
264,528.453
21

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.35%
Subaccount Year Beginning AUV Ending AUV # Units
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.061370
$0.081384
$0.088962
$0.121151
$0.223685
$0.321281
$0.406761
$0.562904
$1.000000 		$0.040940
$0.061370
$0.081384
$0.088962
$0.121151
$0.223685
$0.321281
$0.406761
$0.562904 		264,178.863
399,482.375
308,098.646
74,784.499
80,839.528
233,434.583
546,175.670
0.000
0.000
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.089355
$1.075544
$1.116425
$1.092101
$1.033744
$0.981233
$1.000000 		$1.200618
$1.089355
$1.075544
$1.116425
$1.092101
$1.033744
$0.981233 		1,406,231.677
1,674,338.464
2,035,421.359
2,301,333.611
2,543,852.875
2,118,462.555
1,040,501.874
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.094990
$1.088324
$1.180140
$1.158703
$1.007957
$0.920764
$1.000000 		$1.299830
$1.094990
$1.088324
$1.180140
$1.158703
$1.007957
$0.920764 		1,206,189.714
1,395,154.114
1,798,067.482
1,904,378.445
2,243,334.001
1,091,091.421
327,518.031
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.096434
$1.087459
$1.151387
$1.126199
$1.027230
$0.961403
$1.000000 		$1.248963
$1.096434
$1.087459
$1.151387
$1.126199
$1.027230
$0.961403 		1,940,730.696
2,066,379.782
2,600,845.331
2,392,272.272
2,944,645.603
2,038,935.904
870,534.830
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998776 $11.207517 0.000
    
    Separate Account Expense 1.20%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $1.943278 $2.055292 0.000
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.463055 $1.553147 0.000
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.910999
$0.921906
$0.932885
$0.944044
$0.955341
$0.966765
$0.978335
$0.990022
$1.001727
$1.000000 		$0.900284
$0.910999
$0.921906
$0.932885
$0.944044
$0.955341
$0.966765
$0.978335
$0.990022
$1.001727 		763,507.609
1,652,560.655
1,274,187.911
1,411,361.110
1,488,135.544
1,887,217.469
3,863,757.305
2,752,825.199
2,454,818.950
220,640.004
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.178096
$1.190526
$1.206933
$1.169703
$1.213928
$1.171579
$1.105082
$1.073021
$1.042149
$1.000000 		$1.191634
$1.178096
$1.190526
$1.206933
$1.169703
$1.213928
$1.171579
$1.105082
$1.073021
$1.042149 		1,137,736.784
1,332,726.487
2,049,857.697
1,763,195.120
2,084,184.259
5,004,417.324
2,225,164.043
1,950,101.643
2,488,408.304
73,361.081
22

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.20%
Subaccount Year Beginning AUV Ending AUV # Units
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.178096
$1.190526
$1.206933
$1.169703
$1.213928
$1.171579
$1.105082
$1.073021
$1.042149
$1.000000 		$1.191634
$1.178096
$1.190526
$1.206933
$1.169703
$1.213928
$1.171579
$1.105082
$1.073021
$1.042149 		0.000
110,274.238
105,588.596
0.000
0.000
70,572.233
84,933.963
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.491465
$9.999022 		$12.775480
$10.491465 		22,928.054
0.000
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.174412
$9.999022 		$11.345765
$10.174412 		13,607.169
8,286.825
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.243772
$9.999022 		$11.941118
$10.243772 		5,534.570
0.000
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998898 $11.050135 0.000
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.112370
$1.133280
$1.171193
$1.092566
$1.010907
$1.000000 		$1.214266
$1.112370
$1.133280
$1.171193
$1.092566
$1.010907 		1,419,669.706
1,771,602.646
1,896,468.905
1,402,681.185
1,012,213.723
221,723.425
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.152620
$1.178055
$1.228424
$1.149172
$1.005947
$1.000000 		$1.289430
$1.152620
$1.178055
$1.228424
$1.149172
$1.005947 		1,682,078.349
1,764,060.144
2,074,035.846
1,805,116.388
1,545,699.751
182,067.545
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.281985 $1.342596 0.000
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.333874
$1.301016
$1.340352
$1.297419
$1.178285
$1.100119
$1.097198
$1.003107
$0.871144
$1.000000 		$1.495239
$1.333874
$1.301016
$1.340352
$1.297419
$1.178285
$1.100119
$1.097198
$1.003107
$0.871144 		24,191,752.120
25,911,199.797
28,528,177.894
34,539,012.258
37,166,022.250
32,109,172.987
26,473,375.988
19,057,357.358
11,019,217.665
850,572.252
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.292600
$1.256854
$1.280735
$1.231556
$1.159704
$1.100842
$1.079746
$0.998595
$0.999967 		$1.418232
$1.292600
$1.256854
$1.280735
$1.231556
$1.159704
$1.100842
$1.079746
$0.998595 		7,821,994.113
8,780,176.636
9,448,094.049
11,648,222.142
12,164,833.581
13,623,542.902
10,134,829.402
4,702,379.667
501,264.432
23

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.20%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.373061
$1.327515
$1.392378
$1.355274
$1.154676
$1.047565
$1.072265
$0.960250
$0.788892
$1.000000 		$1.607455
$1.373061
$1.327515
$1.392378
$1.355274
$1.154676
$1.047565
$1.072265
$0.960250
$0.788892 		42,709,501.198
47,862,953.022
51,559,181.146
56,613,305.825
61,749,037.638
53,359,527.503
52,418,254.298
45,852,405.252
35,463,892.851
8,731,819.262
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.296828
$1.280655
$1.289356
$1.250570
$1.301568
$1.227383
$1.172329
$1.109458
$0.969983
$1.000000 		$1.341013
$1.296828
$1.280655
$1.289356
$1.250570
$1.301568
$1.227383
$1.172329
$1.109458
$0.969983 		4,151,419.865
4,619,806.372
5,373,122.656
6,196,590.455
7,976,560.277
10,223,832.574
7,428,752.151
4,918,343.675
2,392,746.971
141,884.002
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.062045
$0.082166
$0.089706
$0.121993
$0.224906
$0.322547
$0.407765
$0.563459
$1.000000 		$0.041463
$0.062045
$0.082166
$0.089706
$0.121993
$0.224906
$0.322547
$0.407765
$0.563459 		540,921.618
1,958,916.480
1,118,450.383
31,265.801
48,726.171
1,236,162.773
1,541,615.512
28,113.976
9,391.458
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.098497
$1.082976
$1.122472
$1.096407
$1.036287
$0.982195
$1.000000 		$1.212488
$1.098497
$1.082976
$1.122472
$1.096407
$1.036287
$0.982195 		2,150,122.834
2,252,533.057
2,290,618.792
2,488,022.892
2,928,712.325
2,510,039.147
529,942.250
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.104186
$1.095856
$1.186546
$1.163276
$1.010446
$0.921669
$1.000000 		$1.312680
$1.104186
$1.095856
$1.186546
$1.163276
$1.010446
$0.921669 		2,481,554.918
2,352,972.244
2,444,198.231
2,987,709.502
2,916,551.377
2,111,282.214
486,100.805
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.105698
$1.095018
$1.157672
$1.130673
$1.029777
$0.962357
$1.000000 		$1.261379
$1.105698
$1.095018
$1.157672
$1.130673
$1.029777
$0.962357 		4,793,749.236
5,367,516.357
5,902,074.947
6,242,406.370
7,249,570.507
4,904,068.081
1,103,780.205
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.998898 $11.218649 8,821.748
    
    Separate Account Expense 1.00%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $2.010151 $2.130271 4,722.130
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.484995 $1.578238 16,828.269
24

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.926197
$0.935351
$0.944649
$0.954092
$0.963582
$0.973173
$0.982843
$0.992662
$1.002462
$1.000000 		$0.917096
$0.926197
$0.935351
$0.944649
$0.954092
$0.963582
$0.973173
$0.982843
$0.992662
$1.002462 		1,814,913.856
1,804,847.210
1,950,266.777
2,990,342.347
1,647,003.058
2,840,974.880
4,665,043.902
2,434,757.877
1,134,121.807
1,163,252.003
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.197733
$1.207987
$1.222204
$1.182162
$1.224437
$1.179372
$1.110246
$1.075920
$1.042913
$1.000000 		$1.213897
$1.197733
$1.207987
$1.222204
$1.182162
$1.224437
$1.179372
$1.110246
$1.075920
$1.042913 		2,899,384.942
2,676,380.420
2,743,251.075
3,129,640.350
3,701,049.137
7,312,956.856
5,462,998.024
3,942,777.946
1,936,076.704
300,680.748
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.197733
$1.207987
$1.222204
$1.182162
$1.224437
$1.179372
$1.110246
$1.075920
$1.042913
$1.000000 		$1.213897
$1.197733
$1.207987
$1.222204
$1.182162
$1.224437
$1.179372
$1.110246
$1.075920
$1.042913 		33,010.158
110,512.454
104,044.994
0.000
0.000
20,299.322
384,913.021
0.000
8,105.166
9,281.440
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.507732
$9.999184 		$12.820531
$10.507732 		12,487.435
33,926.914
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.190197
$9.999184 		$11.385802
$10.190197 		56,847.679
28,733.549
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21,2016 		2017
2016 		$10.259651
$9.999184 		$11.983222
$10.259651 		5,073.268
25,121.329
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999060 $11.064788 5,111.407
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.122692
$1.141529
$1.177391
$1.096179
$1.012242
$1.000000 		$1.227952
$1.122692
$1.141529
$1.177391
$1.096179
$1.012242 		6,734,774.724
9,292,231.655
10,027,587.952
8,751,887.721
7,077,579.196
2,046,191.866
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.163287
$1.186627
$1.234908
$1.152971
$1.007283
$1.000000 		$1.303922
$1.163287
$1.186627
$1.234908
$1.152971
$1.007283 		3,416,314.709
4,060,078.013
4,970,968.888
3,194,593.244
2,531,069.551
572,601.207
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.281992 $1.344140 51,297.240
25

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.356153
$1.320135
$1.357351
$1.311282
$1.188527
$1.107479
$1.102363
$1.005834
$0.871781
$1.000000 		$1.523212
$1.356153
$1.320135
$1.357351
$1.311282
$1.188527
$1.107479
$1.102363
$1.005834
$0.871781 		76,363,913.892
86,857,957.520
95,435,655.136
103,330,754.750
108,869,530.092
94,164,871.952
75,092,536.499
41,059,590.657
21,038,153.378
2,352,941.105
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.310946
$1.272175
$1.293782
$1.241630
$1.166881
$1.105463
$1.082146
$0.998832
$0.999973 		$1.441195
$1.310946
$1.272175
$1.293782
$1.241630
$1.166881
$1.105463
$1.082146
$0.998832 		15,398,740.297
17,450,904.875
19,915,767.758
23,443,494.046
23,710,661.917
22,568,794.206
15,456,428.178
6,581,744.365
197,528.717
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.395962
$1.346992
$1.410017
$1.369725
$1.164688
$1.054544
$1.077284
$0.962852
$0.789470
$1.000000 		$1.637487
$1.395962
$1.346992
$1.410017
$1.369725
$1.164688
$1.054544
$1.077284
$0.962852
$0.789470 		74,319,157.724
82,864,054.006
93,784,722.879
104,264,812.993
104,327,144.437
89,612,111.012
76,704,279.680
57,325,654.618
34,995,559.762
3,866,145.276
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.318444
$1.299446
$1.305678
$1.263894
$1.312836
$1.235559
$1.177820
$1.112447
$0.970688
$1.000000 		$1.366072
$1.318444
$1.299446
$1.305678
$1.263894
$1.312836
$1.235559
$1.177820
$1.112447
$0.970688 		11,136,566.500
12,973,371.551
14,386,334.568
17,178,099.920
21,421,070.166
22,654,675.105
16,155,474.112
10,498,448.893
5,649,390.163
598,526.232
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.062991
$0.083279
$0.090717
$0.123126
$0.226545
$0.324256
$0.409121
$0.564212
$1.000000 		$0.042204
$0.062991
$0.083279
$0.090717
$0.123126
$0.226545
$0.324256
$0.409121
$0.564212 		431,401.728
1,387,212.756
884,292.085
3,249.553
14,799.686
2,058,207.680
1,994,220.340
15,256.367
18,952.850
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.110899
$1.093033
$1.130658
$1.102210
$1.039717
$0.983487
$1.000000 		$1.228591
$1.110899
$1.093033
$1.130658
$1.102210
$1.039717
$0.983487 		7,761,011.662
9,232,910.597
11,405,491.009
12,147,560.434
12,639,534.330
8,353,143.270
3,207,271.148
26

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 1.00%
Subaccount Year Beginning AUV Ending AUV # Units
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.116658
$1.106045
$1.195210
$1.169437
$1.013783
$0.922879
$1.000000 		$1.330129
$1.116658
$1.106045
$1.195210
$1.169437
$1.013783
$0.922879 		8,652,288.378
8,703,176.875
10,336,860.281
10,502,041.762
10,538,855.474
5,742,518.394
1,161,878.323
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.118155
$1.105177
$1.166100
$1.136657
$1.033185
$0.963618
$1.000000 		$1.278112
$1.118155
$1.105177
$1.166100
$1.136657
$1.033185
$0.963618 		19,759.800.271
22,763,129.417
27,246,113.136
29,207,203.584
28,732,471.043
18,919,636.405
2,645,092.754
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999060 $11.233512 4,578.716
    
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
AB Balanced Wealth Strategy Portfolio - Class B
Subaccount Inception Date June 1, 2017 		2017 $2.010151 $2.130271 4,722.130
State Street Total Return V.I.S. Fund - Class 3
Subaccount Inception Date June 1, 2017 		2017 $1.507295 $1.603309 0.000
TA Aegon Government Money Market - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$0.937695
$0.945669
$0.953688
$0.961720
$0.969804
$0.977994
$0.986311
$0.994679
$1.003016
$1.000000 		$0.929840
$0.937695
$0.945669
$0.953688
$0.961720
$0.969804
$0.977994
$0.986311
$0.994679
$1.003016 		2,897,224.743
3,290,612.331
3,385,743.933
2,556,337.101
3,625,408.798
2,906,115.443
3,538,887.537
2,078,681.387
1,565,832.498
142,382.709
TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481
$1.000000 		$1.230921
$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481 		1,088,100.429
1,441,234.890
3,901,857.702
1,779,590.085
4,084,242.550
4,045,598.256
7,760,356.675
2,679,840.571
1,726,307.936
338,635.161
PAM TA Aegon U.S. Government Securities - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481
$1.000000 		$1.230921
$1.212738
$1.221315
$1.233861
$1.191659
$1.232441
$1.185307
$1.114186
$1.078119
$1.043481 		0.000
0.000
0.000
0.000
0.000
3,881.260
32,552.052
0.000
0.000
0.000
TA BlackRock Equity Smart Beta 100 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.519978
$9.999306 		$12.854488
$10.519978 		289,559.106
320,351.652
TA BlackRock Smart Beta 50 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.202070
$9.999306 		$11.415970
$10.202070 		54,537.573
1,048.084
TA BlackRock Smart Beta 75 - Service Class
Subaccount Inception Date March 21, 2016 		2017
2016 		$10.271622
$9.999306 		$12.014989
$10.271622 		60,227.142
3,133.709
27

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
TA International Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999182 $11.075822 44,511.815
TA Legg Mason Dynamic Allocation - Balanced - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.130499
$1.147774
$1.182076
$1.098903
$1.013254
$1.000000 		$1.238335
$1.130499
$1.147774
$1.182076
$1.098903
$1.013254 		4,246,514.055
5,682,913.383
6,420,883.825
5,080,738.060
4,076,628.291
1,653,647.607
TA Legg Mason Dynamic Allocation - Growth - Service Class
Subaccount Inception Date May 1, 2012 		2017
2016
2015
2014
2013
2012 		$1.171405
$1.193128
$1.239831
$1.155843
$1.008284
$1.000000 		$1.314972
$1.171405
$1.193128
$1.239831
$1.155843
$1.008284 		3,600,535.912
4,047,968.509
4,900,238.741
3,007,425.991
1,946,527.308
422,292.992
TA Madison Diversified Income - Service Class
Subaccount Inception Date June 1, 2017 		2017 $1.281997 $1.345294 382,674.822
TA Managed Risk - Balanced ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.373109
$1.334667
$1.370256
$1.321765
$1.196245
$1.113005
$1.106221
$1.007876
$0.872256
$1.000000 		$1.544537
$1.373109
$1.334667
$1.370256
$1.321765
$1.196245
$1.113005
$1.106221
$1.007876
$0.872256 		60,598,930.292
69,148,058.435
72,954,801.741
79,420,885.636
79,796,749.459
70,531,021.154
54,287,152.158
24,245,285.615
13,314,321.928
1,871,105.999
TA Managed Risk - Conservative ETF - Service Class
Subaccount Inception Date November 19, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$1.324875
$1.283789
$1.303656
$1.249264
$1.172318
$1.108949
$1.083942
$0.999007
$0.999977 		$1.458674
$1.324875
$1.283789
$1.303656
$1.249264
$1.172318
$1.108949
$1.083942
$0.999007 		16,723,939.809
18,886,163.616
20,230,972.750
22,055,467.513
23,306,574.638
19,755,002.415
16,679,820.217
5,177,118.531
20,689.598
TA Managed Risk - Growth ETF - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.413436
$1.361834
$1.423437
$1.380713
$1.172282
$1.059832
$1.081076
$0.964804
$0.789908
$1.000000 		$1.660444
$1.413436
$1.361834
$1.423437
$1.380713
$1.172282
$1.059832
$1.081076
$0.964804
$0.789908 		65,096,733.919
72,395,401.450
86,899,685.495
98,411,610.311
94,720,474.151
82,831,349.672
67,691,751.249
56,320,200.031
41,724,255.963
10,502,904.586
TA PIMCO Total Return - Service Class
Subaccount Inception Date August 18, 2008 		2017
2016
2015
2014
2013
2012
2011
2010
2009
2008 		$1.334971
$1.313791
$1.318137
$1.274052
$1.321428
$1.241773
$1.181992
$1.114726
$0.971217
$1.000000 		$1.385233
$1.334971
$1.313791
$1.318137
$1.274052
$1.321428
$1.241773
$1.181992
$1.114726
$0.971217 		7,655,221.705
8,473,453.220
9,708,248.072
11,845,111.122
14,130,089.740
14,535,530.529
12,594,077.711
6,587,087.169
3,747,234.205
324,007.630
28

 

CONDENSED FINANCIAL INFORMATION — (Continued)
    Separate Account Expense 0.85%
Subaccount Year Beginning AUV Ending AUV # Units
TA ProFunds UltraBear Fund - Service Class OAM
Subaccount Inception Date May 1, 2009 		2017
2016
2015
2014
2013
2012
2011
2010
2009 		$0.063693
$0.084095
$0.091489
$0.123976
$0.227789
$0.325554
$0.410146
$0.564776
$1.000000 		$0.042744
$0.063693
$0.084095
$0.091489
$0.123976
$0.227789
$0.325554
$0.410146
$0.564776 		564,965.833
1,289,675.537
919,356.917
53,112.527
259,119.781
2,016,550.262
2,829,740.036
19,715.541
0.000
TA QS Investors Active Asset Allocation - Conservative - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.120283
$1.100642
$1.136836
$1.106599
$1.042303
$0.984452
$1.000000 		$1.240804
$1.120283
$1.100642
$1.136836
$1.106599
$1.042303
$0.984452 		4,140,053.405
4,810,733.730
5,533,389.044
5,991,902.026
6,535,223.986
4,521,404.709
1,873,196.632
TA QS Investors Active Asset Allocation - Moderate Growth - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.126078
$1.113726
$1.201731
$1.174087
$1.016311
$0.923802
$1.000000 		$1.343343
$1.126078
$1.113726
$1.201731
$1.174087
$1.016311
$0.923802 		6,247,299.663
6,892,378.658
7,921,872.228
8,132,740.978
8,311,082.374
5,790,317.924
1,332,861.647
TA QS Investors Active Asset Allocation - Moderate - Service Class
Subaccount Inception Date May 2, 2011 		2017
2016
2015
2014
2013
2012
2011 		$1.127602
$1.112865
$1.172468
$1.141160
$1.035744
$0.964568
$1.000000 		$1.290818
$1.127602
$1.112865
$1.172468
$1.141160
$1.035744
$0.964568 		11,557,204.644
13,485,656.377
14,452,031.715
15,319,315.215
15,288,919.081
9,544,041.576
1,069,012.852
TA U.S. Equity Index - Service Class
Subaccount Inception Date May 1, 2017 		2017 $9.999182 $11.244705 1,924.952
The TA 60/40 Allocation and TA Levin Large Cap Value had not commenced operation as of December 31, 2017, therefore, comparable data is not available.
29

 

APPENDIX
Prior Withdrawal/ Growth Percentages and Rider Fees
The table below identifies the prior percentages for the Retirement Income Max® rider.
Rider fee Percentages
Date   Percentage
Prior to February 1, 2018   1.25%
After February 1, 2018   1.35%
Growth Percentages
Date   Percentage
Prior to May 1, 2014   5.00%
May 1, 2014 to January 31, 2018   5.50%
After February 1, 2018   7.20%
Withdrawal Percentages
Date   Age at time of first withdrawal   Singe Life Percentage   Joint Life Percentage
Prior to December 12, 2011   0-58
59-64
65-74
≥75 		  0.00%
4.50%
5.50%
6.50% 		  0.00%
4.10%
5.10%
6.10%
December 12, 2011 to May 1, 2014   0-58
59-64
65-79
≥80 		  0.00%
4.30%
5.30%
6.30% 		  0.00%
3.80%
4.80%
5.80%
May 1, 2014 to February 16, 2015   0-58
59-64
65-79
≥80 		  0.00%
4.30%
5.30%
6.30% 		  0.00%
4.00%
5.00%
6.00%
February 17, 2015 to December 31, 2016   0-58
59-64
65-79
≥80 		  0.00%
4.20%
5.20%
6.20% 		  0.00%
3.80%
4.80%
5.80%
January 1, 2017 to January 31, 2018   0-58
59-64
65-79
≥80 		  0.00%
4.20%
5.20%
6.20% 		  0.00%
3.70%
4.70%
5.70%
After February 1, 2018   0-58
59-64
65-79
≥80 		  0.00%
4.00%
5.00%
6.00% 		  0.00%
3.50%
4.50%
5.50%
30

 

APPENDIX
Prior Withdrawal and Growth Percentages
The table below identifies the prior percentages for the Retirement Income Choice® 1.6 rider.
Growth Percentages
Date   Percentage
May 1, 2016 to March 31, 2017   5.50%
Withdrawal Percentages
Date   Age at time of first withdrawal   Singe Life Percentage   Joint Life Percentage
May 1, 2016 to December 31, 2016   0-58
59-64
65-79
≥80 		  0.00%
4.00%
5.00%
6.00% 		  0.00%
3.75%
4.75%
5.75%
January 1, 2017 to March 31, 2018   0-58
59-64
65-79
≥80 		  0.00%
4.00%
5.00%
6.00% 		  0.00%
3.50%
4.50%
5.50%
31

Table of Contents

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

A N D   S U P P L E M E N T A R Y   I N F O R M A T I O N

Transamerica Life Insurance Company

Years Ended December 31, 2017, 2016 and 2015

Table of Contents

Transamerica Life Insurance Company

Financial Statements – Statutory Basis

and Supplementary Information

Years Ended December 31, 2017, 2016 and 2015

Contents

 

Report of Independent Auditors

     1  

Audited Financial Statements

  

Balance Sheets – Statutory Basis

     3  

Statements of Operations – Statutory Basis

     4  

Statements of Changes in Capital and Surplus – Statutory Basis

     5  

Statements of Cash Flow – Statutory Basis

     7  

Notes to Financial Statements – Statutory Basis

     9  
 1.   Organization and Nature of Business   
 2.   Basis of Presentation and Summary of Significant Accounting Policies      10  
 3.   Accounting Changes and Correction of Errors      24  
 4.   Fair Values of Financial Instruments      31  
 5.   Investments      40  
 6.   Premium and Annuity Considerations Deferred and Uncollected      59  
 7.   Policy and Contract Attributes      60  
 8.   Reinsurance      69  
 9.   Income Taxes      74  
 10.   Capital and Surplus      82  
 11.   Securities Lending      84  
 12.   Retirement and Compensation Plans      85  
 13.   Related Party Transactions      87  
 14.   Commitments and Contingencies      92  
 15.   Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities      98  
 16.   Reconciliation to Statutory Statement      100  
 17.   Subsequent Events      101  

Appendix A –Listing of Affiliated Companies

     102  

Statutory-Basis Financial Statement Schedules

  

Summary of Investments – Other Than Investments in Related Parties

     106  

Supplementary Insurance Information

     107  

Reinsurance

     108  

Table of Contents

LOGO

Report of Independent Auditors

To the Board of Directors of

Transamerica Life Insurance Company

We have audited the accompanying statutory financial statements of Transamerica Life Insurance Company (the “Company”), which comprise the statutory balance sheets as of December 31, 2017 and 2016, and the related statutory statements of operations, of changes in capital and surplus, and of cash flow for the years ended December 31, 2017, 2016, and 2015.

Management’s Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Iowa Insurance Division, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

 

LOGO

 

Table of Contents

LOGO

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the “Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles” paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2017 and 2016 or the results of its operations or its cash flows for the years ended December 31, 2017, 2016, and 2015.

Opinion on Statutory Basis of Accounting

In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and surplus of the Company as of December 31, 2017 and 2016 and the results of its operations and its cash flows for the years ended December 31, 2017, 2016, and 2015, in accordance with the accounting practices prescribed or permitted by the Iowa Insurance Division described in Note 2.

Other Matter

Our audit was conducted for the purpose of forming an opinion on the statutory-basis financial statements taken as a whole. The supplemental Summary of Investments - Other Than Investments in Related Parties of the Company as of December 31, 2017 and the Supplementary Insurance Information and Reinsurance of the Company as of December 31, 2017, 2016, and 2015 and for the years then ended are presented for purposes of additional analysis and are not a required part of the statutory-basis financial statements. The supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory-basis financial statements. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the statutory-basis financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the statutory-basis financial statements or to the statutory-basis financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental schedules are fairly stated, in all material respects, in relation to the statutory-basis financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

April 30, 2018

 

LOGO

 

2

Table of Contents

Transamerica Life Insurance Company

Balance Sheets – Statutory Basis

(Dollars in Thousands, Except per Share Amounts)

 

     December 31  
     2017     2016  

Admitted assets

     

Cash, cash equivalents and short-term investments

    $ 1,788,997     $ 1,555,214  

Bonds

      26,866,118       38,483,482  

Preferred stocks

      102,747       102,709  

Common stocks

      2,954,730       2,547,695  

Mortgage loans on real estate

      4,202,142       5,641,558  

Real estate

      189,044       121,897  

Policy loans

      580,338       607,746  

Securities lending reinvested collateral assets

      2,460,919       2,303,603  

Derivatives

      801,215       866,950  

Other invested assets

      1,609,797       2,207,214  
        

Total cash and invested assets

      41,556,047       54,438,068  

Accrued investment income

      376,787       510,947  

Premiums deferred and uncollected

      108,500       149,211  

Current federal income tax recoverable

      760,764       524,017  

Net deferred income tax asset

      534,723       863,844  

Variable annuity reserve hedge offset deferral

      86,794       575,869  

Other assets

      1,067,423       1,169,129  

Separate account assets

      80,820,068       73,774,288  
        

Total admitted assets

    $ 125,311,106     $ 132,005,373  
        

Liabilities and capital and surplus

     

Aggregate reserves for policies and contracts

    $ 24,911,935     $ 37,363,159  

Policy and contract claim reserves

      396,176       549,053  

Liability for deposit-type contracts

      1,012,374       3,370,720  

Other policyholders’ funds

      17,782       18,126  

Transfers from separate accounts due or accrued

      (1,260,595 )      (1,515,226 ) 

Funds held under reinsurance treaties

      4,089,838       3,603,948  

Asset valuation reserve

      693,506       813,683  

Interest maintenance reserve

      478,089       894,015  

Derivatives

      794,861       1,314,458  

Payable for collateral under securities loaned and other transactions

      2,866,693       3,018,034  

Borrowed money

      4,111,930       2,267,594  

Other liabilities

      959,694       1,432,983  

Separate account liabilities

      80,820,067       73,655,055  
        

Total liabilities

    $ 119,892,350     $ 126,785,602  

Total capital and surplus

      5,418,756       5,219,771  
        

Total liabilities and capital and surplus

    $     125,311,106     $     132,005,373  
        

See accompanying notes.

 

3

Table of Contents

Transamerica Life Insurance Company

Statements of Operations - Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2017     2016     2015  

Revenues

       

Premiums and other considerations

    $ (3,210,091 )    $   14,022,652     $   14,299,073  

Net investment income

      2,391,767       2,405,198       2,428,955  

Commissions and expense allowances on reinsurance ceded

      668,328       451,545       581,823  

Reserve adjustment on reinsurance ceded

      (1,210,892 )      13,653       (191,378 ) 

Consideration received on reinsurance recapture and novations

      462,313       7,326       49,723  

Separate accounts net gain from operations

      139,852       -       -  

Fee revenue and other income

      1,665,971       1,530,836       1,463,049  
        

Total revenue

      907,248       18,431,210       18,631,245  

Benefits and expenses

       

Death benefits

      1,428,999       1,543,390       1,376,035  

Annuity benefits

      971,208       1,157,200       1,201,449  

Accident and health benefits

      141,823       327,969       427,224  

Surrender benefits

      12,476,609       9,770,320       9,453,043  

Other benefits

      130,136       154,153       120,151  

Net increase (decrease) in reserves

      (12,451,224 )      1,546,868       (1,354,476 ) 

Commissions

      901,852       1,046,135       1,324,189  

Net transfers to (from) separate accounts

      (1,482,085 )      1,365,071       5,047,719  

IMR adjustment due to reinsurance

      (2,065,984 )      81,293       (9,477 ) 

General insurance expenses and other

      877,104       899,485       875,339  
        

Total benefits and expenses

      928,438       17,891,884       18,461,196  
        

Gain (loss) from operations before dividends and federal income taxes

      (21,190 )      539,326       170,049  
        

Dividends to policyholders

      8,056       5,969       5,894  
        

Gain (loss) from operations before federal income taxes

      (29,246 )      533,357       164,155  

Federal income tax (benefit) expense

      (1,088,892 )      (108,241 )      (6,378 ) 
        

Net gain (loss) from operations

      1,059,646       641,598       170,533  

Net realized capital gains (losses), after tax and amounts transferred to interest maintenance reserve

      (538,938 )      (308,708 )      (343,731 ) 
        

Net income (loss)

    $ 520,708     $ 332,890     $ (173,198 ) 
        

See accompanying notes.

 

4

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus - Statutory Basis

(Dollars in Thousands)

 

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

Balance at January 1, 2015

   $     6,762     $     1,597     $     (58,000)     $     150,000     $     3,433,747     $ 667     $     2,453,744     $     5,988,517  

Net income (loss)

     -       -       -       -       -       -       (173,198)       (173,198)  

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

     -       -       -       -       -       -       115,262       115,262  

Change in net deferred income tax asset

     -       -       -       -       -       -       294,500       294,500  

Change in nonadmitted assets

     -       -       -       -       -       -       (298,204)       (298,204)  

Change in surplus in separate accounts

     -       -         -       -       -       6,858       6,858  

Change in surplus as a result of reinsurance

     -       -       -       -       -       -       (108,266)       (108,266)  

Dividends to stockholders

     -       -       -       -       -       -       (50,000)       (50,000)  

Return of capital

     -       -       -       -       (300,000)       -       -       (300,000)  

Other changes - net

     -       -       -       -       (37,209)       1,625       14,800       (20,784)  

Balance at December 31, 2015

   $ 6,762     $ 1,597     $ (58,000)     $ 150,000     $ 3,096,538     $ 2,292     $ 2,255,496     $ 5,454,685  

Net income (loss)

     -       -       -       -       -       -       332,890       332,890  

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

     -       -       -       -       -       575,869       (536,397)       39,472  

Change in net deferred income tax asset

     -       -       -       -       -       -       191,511       191,511  

Change in nonadmitted assets

     -       -       -       -       -       -       106,536       106,536  

Change in asset valuation reserve

     -       -       -       -       -       -       60,538       60,538  

Change in surplus in separate accounts

     -       -       -       -       -       -       2,604       2,604  

Cumulative effect of change in accounting principle

     -       -       -       -       -       -       (276,042)       (276,042)  

Dividends to stockholders

     -       -       -       -       -       -       (385,630)       (385,630)  

Return of capital

     -       -       -       -       (314,056)       -       -       (314,056)  

Other changes - net

     -       (315)       -       -       (3,652)       (225)       11,455       7,263  

Balance at December 31, 2016

   $ 6,762     $ 1,282     $ (58,000)     $ 150,000     $ 2,778,830     $ 577,936     $ 1,762,961     $ 5,219,771  
       

 

5

Table of Contents

Transamerica Life Insurance Company

Statements of Changes in Capital and Surplus - Statutory Basis

(Dollars in Thousands)

 

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

Balance at December 31, 2016

   $ 6,762     $ 1,282     $ (58,000 )    $ 150,000     $ 2,778,830     $ 577,936     $ 1,762,961     $ 5,219,771  

Net income (loss)

     -       -       -       -       -       -       520,708       520,708  

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

     -       -       -       -       -       (489,075 )      1,163,759       674,684  

Change in net deferred income tax asset

     -       -       -       -       -       -       (905,304 )      (905,304 ) 

Change in nonadmitted assets

     -       -       -       -       -       -       458,625       458,625  

Change in asset valuation reserve

     -       -       -       -       -       -       120,177       120,177  

Change in surplus in separate accounts

     -       -       -       -       -       -       (117,876 )      (117,876 ) 

Change in surplus as a result of reinsurance

     -       -       -       -       -       -       230,908       230,908  

Return of capital

     -       -       -       -       (297,572 )      -       -       (297,572 ) 

Dividends to stockholders

     -       -       -       -       -       -       (480,523 )      (480,523 ) 

Other changes - net

     -       (298 )      -       -       (626 )      981       (4,899 )      (4,842 ) 
       

Balance at December 31, 2017

   $ 6,762     $ 984     $ (58,000 )    $ 150,000     $ 2,480,632     $ 89,842     $ 2,748,536     $ 5,418,756  
       

See accompanying notes.

 

6

Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  
     2017     2016     2015  

Operating activities

       

Premiums and annuity considerations

    $ 5,334,399     $ 12,158,028     $ 14,361,992  

Net investment income

      2,368,128       2,226,910       2,309,798  

Other income

      6,634,042       2,011,519       1,759,927  

Benefit and loss related payments

      (15,489,520 )      (12,890,472 )      (12,576,579 ) 

Net transfers from separate accounts

      1,757,093       (1,237,126 )      (5,110,244 ) 

Commissions and operating expenses

      (1,868,853 )      (1,897,305 )      (2,202,781 ) 

Dividends paid to policyholders

      (7,348 )      (6,935 )      (7,743 ) 

Federal income taxes (paid) received

      660,336       (203,264 )      (279,806 ) 
        

Net cash provided by (used in) operating activities

      (611,723 )      161,355       (1,745,436 ) 

Investing activities

       

Proceeds from investments sold, matured or repaid

    $ 9,707,267     $ 12,834,302     $ 15,453,602  

Costs of investments acquired

      (7,489,659 )      (14,363,288 )      (14,784,702 ) 

Net increase (decrease) in policy loans

      27,407       41,992       39,965  
        

Net cash provided by (used in) investing activities

    $ 2,245,015     $ (1,486,994 )    $ 708,865  

Financing and miscellaneous activities

       

Capital and paid in surplus received (returned)

    $ (309,179 )    $ (333,074 )    $ (327,213 ) 

Dividends to stockholders

      (480,523 )      (385,630 )      (50,000 ) 

Net deposits (withdrawals) on deposit-type contracts

      (2,130,086 )      (217,744 )      (328,515 ) 

Net change in borrowed money

      1,833,515       1,769,852       30,508  

Net change in funds held under reinsurance treaties

      (220,588 )      (108,899 )      688,121  

Net change in payable for collateral under securities lending and other transactions

      (151,384 )      (800,797 )      (332,116 ) 

Other cash (applied) provided

      58,736       670,439       450,648  
        

Net cash provided by (used in) financing and miscellaneous activities

      (1,399,509 )      594,147       131,433  

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

      233,783       (731,492 )      (905,138 ) 

Cash, cash equivalents and short-term investments:

       

Beginning of year

      1,555,214       2,286,706       3,191,844  
        

End of year

    $ 1,788,997     $ 1,555,214     $ 2,286,706  
        

See accompanying notes.

 

7

Table of Contents

Transamerica Life Insurance Company

Statements of Cash Flow (supplemental) – Statutory Basis

(Dollars in Thousands)

 

     Year Ended December 31  

Supplemental disclosures of cash flow information

      2017        2016        2015  

Significant non-cash activities during the year not included in the Statutory Statements of Cash Flow

         

Transfer of bonds and mortgage loans related to reinsurance agreement with third party

    $     7,196,754      $ -      $ -  

Transfer of bonds, mortgage loans, and derivatives related to affiliated reinsurance amendment

    $ 5,650,741      $     2,648,094     

Transfer of bonds to settle reinsurance obligations

    $ 172,338      $ 113,566      $     345,914  

Asset transfer of ownership between hedge funds

    $ 62,567      $ -      $ -  

 

8

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis

(Dollars in Thousands, Except per Share amounts)

December  31, 2017

1. Organization and Nature of Business

Transamerica Life Insurance Company (the Company) is a stock life insurance company owned by Commonwealth General Corporation (CGC). CGC is an indirect, wholly-owned subsidiary of Aegon N.V., a holding company organized under the laws of The Netherlands.

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

On January 1, 2016, the Company completed a merger with Global Preferred Re Limited (GPRe), a Bermuda-domiciled affiliate. On October 1, 2015, the Company completed a merger with Stonebridge Life Insurance Company (SLIC), a Vermont-domiciled affiliate. The mergers were accounted for in accordance with Statement of Statutory Accounting Principles (SAP) No. 68, Business Combinations and Goodwill, as a statutory merger. As such, financial statements for periods prior to the merger were combined and the recorded assets, liabilities and surplus of GPRe and SLIC were carried forward to the merged company. As a result of the merger, GPRe and SLIC’s common stock was deemed cancelled by operation of law. Each share of the Company’s capital stock issued and outstanding immediately before the merger shall continue to represent one share of the capital stock.

Nature of Business

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

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Iowa Insurance Division (IID), which practices differ from accounting principles generally accepted in the United States of America (GAAP).

The IID recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual (NAIC SAP) has been adopted as a component of prescribed practices by the State of Iowa. Prescribed statutory accounting practices include state laws and regulations. Permitted statutory accounting practices encompass accounting practices that are not prescribed.

The following is a summary of the accounting practices permitted and prescribed by the IID and reflected in the Company’s financial statements:

The Company, with the permission of the Iowa Commissioner of Insurance, is allowed special accounting treatment for certain hedges of interest rate exposures on variable annuity products that would not otherwise conform to current accounting guidance under SSAP No. 86 – Derivatives of the NAIC SAP. The Company recognizes a reserve hedge offset deferral for the difference between the hedge results associated with a highly effective clearly defined hedge strategy related to variable annuity interest rate risks and the corresponding interest-rate related impact to variable annuity results. During 2017 and 2016, the deferral was granted and will be amortized through special surplus funds, change in net unrealized capital gains (losses) financial statement line, on a straight line basis over a period of 10 years beginning in the period of deferral. The Company may request permission from the IID for the deferral annually.

The State of Iowa has adopted a prescribed accounting practice that differs from that found in the NAIC SAP related to the reported value of the assets supporting the Company’s guaranteed separate accounts. As prescribed by Iowa Administrative Code 508A.1.4, the Commissioner found that the Company is entitled to value the assets of the guaranteed separate account at amortized cost, whereas the assets would be required to be reported at fair value under SSAP No. 56, Separate Accounts, of the NAIC SAP. There is no impact to the Company’s income or surplus as a result of utilizing this prescribed practice.

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

 

10

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

    

SSAP#

      
 F/S
Page
 		   

F/S Line

     

2017

      

2016

      

2015

  

Net income (loss), State of Iowa basis

            $ 520,708     $ 332,890     $ (173,198 ) 

State prescribed practices that are an increase(decrease) from NAIC SAP: Separate account asset valuation

      56       NA      NA      -       -       -  

State permitted practices that are an increase(decrease) from NAIC SAP: Hedge reserve offset deferral

      86      

 




 Balance Sheet;

 

Statement of
Changes in
Capital and
Surplus

  

 

 
 
 
 

    Variable annuity
reserve hedge
offset deferral
Special surplus
funds - Change
in net unrealized
capital gains/
losses		      -       -       -  

TLB

      97       Balance Sheet      Common Stock      -       -       -  
          

 

 

  

Net income (loss), NAIC SAP

            $ 520,708     $ 332,890     $ (173,198 ) 
          

 

 

  

Statutory surplus, state of Iowa basis

      XXX       XXX      XXX    $ 5,418,756     $ 5,219,771     $ 5,454,685  

State prescribed practices that are an increase(decrease) from NAIC SAP: Separate account asset valuation

      56       NA      NA      -       -       -  

State permitted practices that are an increase(decrease) from NAIC SAP: Hedge reserve offset deferral

      86      

 




 Balance Sheet;

 

Statement of
Changes in
Capital and
Surplus

  

 

 
 
 
 

    Variable annuity
reserve hedge
offset deferral
Special surplus
funds - Change
in net unrealized
capital gains/
losses		      (86,794 )      (575,869 )      -  

TLB

      97       Balance Sheet      Common Stock      -       -       74,225  
          

 

 

  

Statutory surplus, NAIC SAP

      XXX       XXX      XXX    $ 5,331,962     $ 4,643,902     $ 5,528,910  
          

 

 

  

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Use of Estimates

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 effects of the following variances from GAAP on the accompanying statutory-basis financial statements have not been determined by the Company, but are presumed to be material. Significant accounting policies and variances from GAAP are as follows:

Investments

Investments in bonds, except those to which the Securities Valuation Office (SVO) of the NAIC has ascribed a NAIC designation of 6, are reported at amortized cost using the interest method. Bonds containing call provisions, except make-whole call provisions, are amortized to the call or maturity value/date which produces the lowest asset value, often referred to as yield-to-worst method. Bonds ascribed a NAIC designation of 6 are reported at the lower of amortized cost or fair value with unrealized gains and losses reported in changes in capital and surplus. Prepayment penalty or acceleration fees received in the event a bond is liquidated prior to its scheduled termination date are reported as investment income.

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.

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.

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. These securities are adjusted for the effects of changes in prepayment assumptions on the related accretion of discount or amortization of premium using either the retrospective or prospective methods. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. For statutory reporting, 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.

For GAAP, all securities purchased or retained that represent beneficial interests in securitized assets, other than high credit quality securities, are adjusted using the prospective method when

 

12

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

there is a change in estimated future cash flows. If high credit quality securities are adjusted, the retrospective method is used.

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

For structured securities, cash flow trends and underlying levels of collateral are monitored. An OTTI is considered to have occurred if the fair value of the structured security is less than its amortized cost basis and the entity intends to sell the security or the entity does not have the intent and ability to hold the security for a period of time sufficient to recover the amortized cost basis. An OTTI is also considered to have occurred if the discounted estimated future cash flows are less than the amortized cost basis of the security and the security is in an unrealized loss position. 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. The Company will record a charge to the statement of operations for the amount of the impairments.

For GAAP, if it is determined that a decline in fair value is other-than-temporary and the entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the OTTI is recognized in earnings equal to the entire difference between the amortized cost basis and its fair value at the impairment date. If the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery, the OTTI should be separated into a) the amount representing the credit loss, which is recognized in earnings, and b) the amount related to all other factors, which is recognized in OCI, net of applicable taxes.

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

Common stocks of unaffiliated companies, which include shares of mutual funds, are reported at fair value and the related net unrealized capital gains or losses are reported in changes in capital and surplus.

 

13

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

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. Prepayment penalty or acceleration fees received in the event a loan is liquidated prior to its scheduled termination date are reported as investment income.

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.

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.

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.

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.

 

14

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

For a decline in the fair value of an investment in a joint venture or limited partnership which is determined to be other-than-temporary, the Company writes it down to fair value as the new cost basis and the amount of the write down is accounted for as a realized loss in the statement of operations. The Company considers an impairment to have occurred if it is probable that the Company will be unable to recover the carrying amount of the investment or if there is evidence indicating inability of the investee to sustain earnings which would justify the carrying amount of the investment.

Investments in Low Income Housing Tax Credit (LIHTC) properties are valued at amortized cost. Tax credits are recognized in operations in the tax reporting year in which the tax credit is utilized by the Company. The carrying value is amortized over the life of the investment. Amortization is calculated as a ratio of the current year tax credits and tax benefits compared to the total expected tax credits and tax benefits over the life of the investment.

Cash equivalents are short-term highly liquid investments with original maturities of three months or less (principally stated at amortized cost) or money market mutual funds which are primarily reported at fair value.

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.

Policy loans are reported at unpaid principal balances.

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

Interest income is recognized on an accrual basis. The Company does not accrue income on bonds in default, mortgage loans on real estate in default and/or foreclosure or which are delinquent more than twelve months, or real estate where rent is in arrears for more than three months. Income is also not accrued when collection is uncertain.

Valuation Reserves

Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, primarily bonds and mortgage loans, attributable to changes in the general level of interest rates and amortizes those deferrals into net investment income 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.

 

15

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

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.

 

  (A)

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

 

  (B)

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

 

  (C)

Derivative instruments used in income generation relationships are accounted for on a basis that is consistent with the associated covered asset or underlying interest to which the derivative relates (amortized cost or fair value). Derivative instruments held for other investment/risk management activities are measured at fair value with value adjustments recorded in unassigned surplus.

 

  (D)

Derivative instruments are subject to market risk, which is the possibility that future changes in market prices may make the instruments less valuable. The Company uses derivatives as hedges, consequently, when the value of the hedged asset or liability changes, the value of the hedging derivative is expected to move in the opposite direction. Market risk is a consideration when changes in the value of the derivative and the hedged item do not completely offset (correlation or basis risk) which is mitigated by active measuring and monitoring.

The Company is exposed to credit-related losses in the event of non-performance by counterparties to derivative instruments, but it does not expect any counterparties to fail to meet

 

16

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

their obligations given their high credit rating of ‘A’ or better. The credit exposure of interest rate swaps and currency swaps is represented by the fair value of contracts, aggregated at a counterparty level, with a positive fair value at the reporting date. The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets on the Company’s behalf. The posted amount is equal to the difference between the net positive fair value of the contracts and an agreed upon threshold that is based on the credit rating of the counterparty. Inversely, if the net fair value of all contracts with this counterparty is negative, then the Company is required to post assets instead.

Instruments:

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

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

Cross currency swaps are utilized to mitigate risks when the Company holds foreign denominated assets or liabilities therefore converting the asset or liability to a USD denominated security. These cross currency swap agreements involve the exchange of two principal amounts in two different currencies at the prevailing currency rate at contract inception. During the life of the swap, the counterparties exchange fixed or floating rate interest payments in the swapped currencies. At maturity, the principal amounts are again swapped at a pre-determined rate of exchange. Each asset or liability is hedged individually where the terms of the swap must meet the terms of the hedged instrument. For swaps qualifying for hedge accounting, the premium or discount is amortized into income over the life of the contract and the foreign currency translation adjustment is recorded as unrealized gain/loss in capital and surplus. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in capital and surplus. If a swap is terminated prior to maturity, proceeds are exchanged equal to the fair value

 

17

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

of the contract. These gains and losses may be included in IMR or AVR if the hedged instrument receives that treatment.

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

Variance swaps are used in the asset/liability management process to mitigate the gamma risk created when the Company has issued minimum guarantee insurance contracts linked to an index. These variance swaps are similar to volatility options where the underlying index provides for the market value movements. Variance swaps do not accrue interest. Typically, no cash is exchanged at the outset of initiating the variance swap, and a single receipt or payment occurs at the maturity or termination of the contract. 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 market indices. Futures are marked to market on a daily basis whereby a cash payment is made or received by the Company. These payments are recognized as realized gains or losses in the financial statements.

The Company issues products providing the customer a return based on the various global equity market indices. The Company uses options to hedge the liability option risk associated with these products. Options are marked to fair value in the balance sheet and fair value adjustments are recorded as capital and surplus in the financial statements. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment.

Caps are used in the asset/liability management process to mitigate the interest rate risk created due to a rapidly rising interest rate environment. The caps are similar to options where the underlying interest rate index provides for the market value movements. The caps do not accrue interest until the interest rate environment exceeds the caps strike rate. Cash is exchanged at the onset, and a single receipt or payment occurs at the maturity or termination of the contract. Caps that meet hedge accounting rules are carried in a manner consistent with the hedged item, generally at amortized cost, on the financial statements. If terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Caps that do not meet hedge

 

18

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

accounting rules are carried at fair value with fair value adjustments recorded in unassigned surplus.

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

The Company issues fixed liabilities that have a guaranteed minimum crediting rate. The Company uses receiver swaptions, whereby the swaption is designed to generate cash flows to offset lower yields on assets during a low interest rate environment. The Company pays a single premium at the beginning of the contract and is amortized throughout the life of the swaption. These swaptions are marked to fair value in the balance sheet and the fair value adjustment is recorded in unassigned surplus. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment.

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

A replication transaction is a derivative transaction entered into in conjunction with a cash instrument to reproduce the investment characteristics of an otherwise permissible investment. The Company replicates investment grade corporate bonds or sovereign debt by combining a highly rated security as a cash component with a written credit default swap which, in effect, converts the high quality asset into an investment grade corporate asset or a sovereign debt. The benefits of using the swap market to replicate credit include possible enhanced relative values as well as ease of executing larger transactions in a shortened time frame. Generally, a premium is received by the Company on a periodic basis and recognized in investment income. In the event the representative issuer defaults on its debt obligation referenced in the contract, a payment

 

19

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

equal to the notional amount 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 a hybrid fixed to floating treasury. The purpose of these replications is to aid duration matching between the treasuries and the supported liabilities. Generally these swaps are carried at amortized cost with periodic interest payments beginning at a future date. Any early terminations are recognized as capital gains or losses.

Securities Lending Assets and Liabilities

The Company loans securities to third parties under agent-managed securities lending programs accounted for as secured borrowings. 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. Non-cash 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).

Repurchase Agreements

Repurchase agreement transactions are accounted for as secured borrowings.

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. The securities transferred are not removed from the balance sheet, and the cash received as collateral is invested as needed or used for general corporate purposes of the Company. A liability is established to record the obligation to return the cash collateral and included in Borrowed Money on the Balance Sheets.

Other Assets and Other Liabilities

Other assets consist primarily of receivables from reinsurance, accounts receivable and company owned life insurance. Company owned life insurance is carried at cash surrender value.

Other liabilities consist primarily of amounts withheld by the Company, accrued expenses and 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. These municipal repurchase agreements require a minimum of 95% of the fair value of the securities transferred to be maintained as collateral.    

 

20

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Separate Accounts

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

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

Assets held in trust for purchases of variable universal life and annuity contracts and the Company’s corresponding obligation to the contract owners are shown separately in the balance sheets. The assets in the separate accounts are valued at fair value.

Income and gains and losses with respect to the assets in the separate accounts accrue to the benefit of the contract owners and, accordingly, the operations of the separate accounts are not included in the accompanying financial statements. The investment risks associated with fair value changes of the separate accounts are borne entirely by the policyholders except in cases where minimum guarantees exist.

Surplus funds transferred from the general account to the separate accounts, commonly referred to as seed money, and earnings accumulated on seed money are reported as surplus in the separate accounts until transferred or repatriated to the general account. The transfer of such funds between the separate account and the general account is reported as surplus contributed or withdrawn during the year.

Aggregate Reserves for Policies and Contracts

Life, annuity and accident and health benefit reserves are calculated 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 GAAP, policy reserves are calculated based on estimated expected experience or actual account balances.

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.

 

21

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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. Interest on these policies is reflected in other benefits.

Premiums and Annuity Considerations

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

Policyholder Dividends

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

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.

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.

 

22

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

Under GAAP, for certain reinsurance agreements whereby assets are retained by the ceding insurer (such as funds withheld or modified coinsurance) and a return is paid based on the performance of underlying investments, the assets and liabilities for these reinsurance arrangements must be adjusted to reflect the fair value of the invested assets. The NAIC SAP does not contain a similar requirement.

Deferred Income Taxes

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

Policy Acquisition Costs

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

Value of Business Acquired

Under GAAP, value of business acquired (VOBA) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The estimated fair value of the acquired liabilities is based on projections, by each block of business, of future contracts and contract changes, premiums, mortality and morbidity, separate account performance, surrenders, operation expenses, investment returns, nonperformance risk adjustment and other factors. VOBA is not recognized under NAIC SAP.

 

23

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Subsidiaries and affiliated companies

Investments in subsidiaries, controlled and affiliated companies (SCA) companies are stated in accordance with the Purposes and Procedures Manual of the NAIC SVO, as well as SSAP No. 97.

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. Dividends or distributions received from an investee are recognized in investment income when declared to the extent that they are not in excess of the undistributed accumulated earnings attributable to an investee. Changes in investments in SCA’s are recorded as a change to the carrying value of the investment with a corresponding amount recorded directly to unrealized gain/loss (capital and surplus).

Surplus Notes

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

Nonadmitted Assets

Certain assets designated as “nonadmitted”, primarily net deferred tax assets and other assets not specifically identified as an admitted asset within the NAIC SAP, are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheet to the extent that they are not impaired.

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

3. Accounting Changes and Corrections of Errors

Recent Accounting Pronouncements

Effective January 1, 2017, the NAIC adopted revisions to SSAP No. 35R, Guaranty Fund and Other Assessments, which allows 1) expected renewals of short-term health contracts to be considered in determining the assets recognized from accrued guaranty fund liability assessments and 2) requires reporting entities to discount guaranty fund liabilities, and related assets, resulting from the insolvencies of insurers that wrote long-term care contracts. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2017, the NAIC adopted revisions to SSAP No. 41, Surplus Notes. Surplus notes held by investors that are rated an equivalent NAIC 1 or 2 designation by an approved NAIC credit rating provider will be reported at amortized cost, while non-rated surplus notes or those with an equivalent designation of 3 through 6 will be reported at the lower of amortized

 

24

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

cost or fair value. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2017, the NAIC adopted revisions to SSAP No. 51R, Life Contracts, which includes updates for new principle-based reserving (PBR) requirements, with references to Valuation Manual changes. The Valuation Manual allows companies to continue using current reserve methodologies for a three-year period, beginning with the Valuation Manual operative date. For policies issued after the operative date, formulaic calculations for some policies will be supplemented with more advanced deterministic and stochastic reserve methodologies. The Company adopted the new requirements for certain of its term products. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Effective January 1, 2017, the NAIC adopted revisions to SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which incorporates explicit accounting guidance on short sales and secured borrowing transactions when the insurer is the transferee. The adoption of this guidance did not impact the financial position or results of operations of the Company.

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

Effective December 31, 2017, the NAIC adopted revisions to SSAP No. 26, Bonds, excluding Loan-backed and Structured Securities, which remove SVO-identified instruments (as defined in the SSAP) from the definition of a bond, and provide guidance for these instruments separately from bonds. The SVO-identified instruments will be required to be reported at fair value, using net asset value as a practical expedient, unless the investment qualifies for, and the reporting entity elects, use of a documented systematic value approach. The adoption of this guidance did not have a material impact on the financial position or results of operations of the Company.

Change in Accounting Principles

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

During 2015, the Company had $20,999 of change reserve in valuation basis which was recorded directly as a reduction of surplus.

 

25

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Consistency of Presentation

Differences in tabular totals and references between notes are caused by rounding differences not considered to be significant to the financial statement presentation.

Reclassifications

The Company reclassified certain balances within the statutory financial statement presentation on the Balance Sheets, Statements of Operations and Statements of Cash Flows to better align with industry practice. All prior period amounts were reclassified to conform with the current period presentation. The Company did not change any financial statement totals reported in the prior periods as a result of reclassifications.

Revision to Prior Years

During 2017, the Company identified errors in prior year financial statements for which the Company has determined it appropriate to revise. The Company assessed the materiality of these revisions and concluded these revisions are not material to the December 31, 2016 and 2015 financial statements as a whole. The following tables show the impact of the revision:

 

            As of December 31, 2016        
            Revisions of errors        
     

 

 

    
Balance Sheet    As reported      Financial
statement
presentation		     Distributions
from
subsidiary		      Other
adjustments		     As revised  
  

 

 

  

Cash, cash equivalents, and short–term investments

    $ 1,470,814      $ 84,400     $ –      $ –     $ 1,555,214  

Bonds

      38,632,034        (148,552 )      –        –       38,483,482  

Other invested assets

      2,058,662        148,552       –        –       2,207,214  

Other assets

      1,038,183        130,946       –        –       1,169,129  
  

 

 

  

Total admitted assets

    $ 131,790,027      $ 215,346     $ –      $ –     $ 132,005,373  
  

 

 

  

Aggregate reserves for policies and contracts

      37,375,059        –          (11,900 )      37,363,159  

Other liabilties

      1,190,754        215,346          26,883       1,432,983  
  

 

 

  

Total liabilities

      126,555,273        215,346       –        14,983       126,785,602  

Total capital and surplus

      5,234,754        –          (14,983 )      5,219,771  
  

 

 

  

Total liabilities and capital and surplus

    $ 131,790,027      $ 215,346     $ –      $ –     $ 132,005,373  
  

 

 

  

 

26

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

           Year Ended December 31, 2016        
           Revisions of errors        
    

 

 

    
Statement of Operations    As reported     Financial
statement
presentation		      Distributions
from
subsidiary		     Other
adjustments		     As revised  
  

 

 

  

Revenues

            

Net investment income

    $ 2,533,198     $ –      $ (128,000 )    $ –     $ 2,405,198  
  

 

 

  

Total revenue

      18,559,210       –        (128,000 )      –       18,431,210  

Benefits and expenses

            

Net increase (decrease) in reserves

      1,546,068       –        –       800       1,546,868  

Commissions

      1,029,935       –        –       16,200       1,046,135  
  

 

 

  

Total benefits and expenses

      17,874,884       –        –       17,000       17,891,884  

Gain (loss) from operations before federal income taxes

      678,357       –        (128,000 )      (17,000 )      533,357  

Federal income tax (benefit) expense

      (101,441 )      –        –       (6,800 )      (108,241 ) 
  

 

 

  

Net gain (loss) from operations

      779,798       –        (128,000 )      (10,200 )      641,598  
  

 

 

  

Net income (loss)

    $ 471,090     $ –      $ (128,000 )    $ (10,200 )    $ 332,890  
  

 

 

  
           Year Ended December 31, 2016        
          

Revisions of errors

       
    

 

 

    
Statement of Changes in Capital and Surplus    As reported     Financial
statement
presentation		      Distributions
from
subsidiary		     Other
adjustments		     As revised  
  

 

 

  

Balance at December 31, 2015

    $ 5,449,209     $ –      $ (16,800 )    $ 22,276     $ 5,454,685  

Net income (loss)

      471,090       –        (128,000 )      (10,200 )      332,890  

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

      (113,128 )      –        144,800       7,800       39,472  

Change in net deferred income tax asset

      183,306       –        –       8,205       191,511  

Change in nonadmitted assets

      114,741       –        –       (8,205 )      106,536  

Other changes - net

      42,122       –        –       (34,859 )      7,263  
  

 

 

  

Balance at December 31, 2016

    $ 5,234,754     $ –      $ –     $ (14,983 )    $ 5,219,771  
  

 

 

  

 

27

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

           Year Ended December 31, 2016         
           Revisions of errors         
    

 

 

     
Statement of Cash Flows    As reported     Financial
statement
presentation		     Distributions
from
subsidiary		     Other
adjustments		      As revised  
  

 

 

  

Net investment income

    $ 2,356,181     $ (1,271 )    $ (128,000 )    $ –      $ 2,226,910  

Benefit and loss related payments

      (13,002,709 )      112,237       –       –        (12,890,472 ) 
  

 

 

  

Net cash provided by operating activities

      178,389       110,966       (128,000 )      –        161,355  

Proceeds from investments sold, matured or repaid

      12,937,386       (231,084 )      128,000       –        12,834,302  

Cost of investments acquired

      (14,480,806 )      117,518       –       –        (14,363,288 ) 
  

 

 

  

Net cash provided by (used in) investing activities

      (1,501,428 )      (113,566 )      128,000       –        (1,486,994 ) 

Other cash (applied) provided

      590,039       80,400       –       –        670,439  
  

 

 

  

Net cash provided by (used in) financing and miscellaneous activities

      513,747       80,400       –       –        594,147  

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

      (809,292 )      77,800       –       –        (731,492 ) 

Cash, cash equivalents and short–term investments:

            

Beginning of year

    $ 2,280,106     $ 6,600     $ –     $ –      $ 2,286,706  
  

 

 

  

End of year

    $ 1,470,814     $ 84,400     $ –     $ –      $ 1,555,214  
  

 

 

  
           Year Ended December 31, 2015         
           Revisions of errors         
    

 

 

     
Statement of Operations    As reported     Financial
statement
presentation		     Distributions
from
subsidiary		     Other
adjustments		      As revised  
  

 

 

  

Revenues

            

Premiums and other considerations

    $ 14,805,287     $ (506,214 )    $ –     $ –      $ 14,299,073  

Net investment income

      2,411,194       –       –       17,761        2,428,955  
  

 

 

  

Total revenue

      19,119,698       (506,214 )      –       17,761        18,631,245  

Benefits and expenses:

            

Surrender benefits

      9,855,357       (402,314 )      –       –        9,453,043  

Net increase (decrease) in reserves

      (1,359,176 )      –       –       4,700        (1,354,476 ) 

Net transfers to (from) separate accounts

      5,151,619       (103,900 )      –       –        5,047,719  
  

 

 

  

Total benefits and expenses

      18,962,710       (506,214 )      –       4,700        18,461,196  

Gain (loss) from operations before federal income taxes

      151,094       –       –       13,061        164,155  

Federal income tax (benefit) expense

      (9,618 )      –       –       3,240        (6,378 ) 
  

 

 

  

Net gain (loss) from operations

      160,712       –       –       9,821        170,533  
  

 

 

  

Net income (loss)

    $ (183,019 )    $ –     $ –     $ 9,821      $ (173,198 ) 
  

 

 

  

 

28

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

           Revisions of errors        
    

 

 

    
Statement of Changes in Capital and Surplus    As reported     Financial
statement
presentation		     Distributions
from
subsidiary		     Other
adjustments		     As revised  
  

 

 

  

Balance at December 31, 2014

    $ 5,999,557     $ -     $ -     $ (11,040 )    $ 5,988,517  

Net income (loss)

      (183,019 )      -       -       9,821       (173,198 ) 

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

      95,872       -       (16,800 )      36,190       115,262  

Change in net deferred income tax asset

      300,765       -       -       (6,265 )      294,500  

Change in nonadmitted assets

      (318,398 )      -       -       20,194       (298,204 ) 

Other changes - net

      5,840       -       -       (26,624 )      (20,784 ) 
  

 

 

  

Balance at December 31, 2015

    $ 5,449,209     $ -     $ (16,800 )    $ 22,276     $ 5,454,685  
  

 

 

  
           Revisions of errors        
    

 

 

    
Statement of Cash Flows    As reported     Financial
statement
presentation		     Distributions
from
subsidiary		     Other
adjustments		     As revised  
  

 

 

  

Premiums and annuity considerations

    $ 14,868,206     $ (506,214 )    $ -     $ -     $ 14,361,992  

Net investment income

      2,306,617       3,181       -       -       2,309,798  

Benefit and loss related payments

      (12,846,598 )      270,019       -       -       (12,576,579 ) 

Net transfers from separate accounts

      (5,214,144 )      103,900       -       -       (5,110,244 ) 
  

 

 

  

Net cash provided by (used in) operating activities

      (1,616,322 )      (129,114 )      -       -       (1,745,436 ) 

Cost of investments acquired

      (15,130,616 )      345,914       -       -       (14,784,702 ) 
  

 

 

  

Net cash provided by (used in) investing activities

      362,951       345,914       -       -       708,865  

Other cash (applied) provided

      660,848       (210,200 )      -       -       450,648  
  

 

 

  

Net cash provided by (used in) financing and miscellaneous activities

      341,633       (210,200 )      -       -       131,433  

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

    $ (911,738 )    $ 6,600     $ -     $ -     $ (905,138 ) 

Cash, cash equivalents and short-term investments:

           
  

 

 

  

End of year

    $ 2,280,106     $ 6,600     $ -     $ -     $ 2,286,706  
  

 

 

  

Financial statement presentations:

Management has determined that the amounts primarily relate to misclassifications of balances within the Balance Sheet as of December 31, 2016 and the Statements of Operations and Cash Flows for the years ended December 31, 2016 and 2015:

 

•  

Related party reinsurance receivables and payables should not be classified as balances due to/from affiliates but classified as reinsurance receivables/payables. This change resulted in offsetting understatements of total assets and total liabilities due to the netting of receivable and payable balances in prior years. The amounts are reported in other assets and other liabilities on the Balance Sheets. The classification error also resulted in offsetting misstatements to cash provided by (used in) operating activities and cash provided by (used in) financing and miscellaneous activities.

 

29

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

•  

Certain surplus note assets had been misclassified as bonds instead of other invested assets on the Balance Sheets, however this error had no impact to total invested assets.

 

•  

A misclassification between cash and an intercompany account was identified while reviewing cash account reconciliations. This change resulted in an offsetting misstatement to cash and other liabilities on the Balance Sheet. The error also resulted in a misstatement to cash provided by (used in) financing and miscellaneous activities and the end of year cash balance in the Statements of Cash Flows.

 

•  

A non-cash asset transfers in support of quarterly reinsurance obligations had not been properly eliminated from the Statements of Cash Flows. This resulted in offsetting misstatement to cash provided by (used in) operating activities and net cash provided by (used in) investing activities.

 

•  

An investment of certain separate account sub-accounts were not properly eliminated which resulted in duplication of transactional entries causing offsetting misstatements to premiums and other considerations, surrender benefits, and net transfers to separate accounts in the Statement of Operations for the year ended December 31, 2015. The error also resulted in offsetting misstatements within the cash provided by (used in) operating activities for the year ended December 31, 2015.

Distribution from subsidiary:

Management determined that distributions from an investment subsidiary were characterized as net investment income and should have been a return on investment as the subsidiary did not have sufficient distributable earnings. The classification error resulted in misstatements to net investment income on the Statement of Operations and change in net unrealized capital/gain loss on the Statement of Changes in Capital and surplus. Ending capital and surplus as of December 31, 2016 was not misstated due to the classification error. The error also resulted in offsetting misstatements to cash provided by (used in) operating activities and net cash provided by (used in) investing activities in the Statement of Cash Flows for the year ended December 31, 2016.

Other Adjustments:

Other adjustments primarily relate to actuarial modeling errors and accounting policy errors. The Company considered the impacts of each of these errors to be not material both individually and in the aggregate and concluded that none were significant for individual categorization herein.

 

30

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

Each month, the Company performs an analysis of the information obtained from indices, third-party services, and brokers to ensure that the information is reasonable and produces a reasonable estimate of fair value. The Company considers both qualitative and quantitative factors as part of this analysis, including but not limited to, recent transactional activity for similar securities, review of pricing statistics and trends, and consideration of recent relevant market events. Other controls and procedures over pricing received from indices, third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price changes, stale prices or un-priced securities.

Fair value hierarchy

The Company’s financial assets and liabilities carried at fair value are classified, for disclosure purposes, based on a hierarchy defined by SSAP No. 100, Fair Value Measurements. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

 

31

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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.

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

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

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

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

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

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

 

32

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Real Estate: Real estate held for sale is typically valued utilizing independent external appraisers in conjunction with reviews by qualified internal appraisers. Valuations are primarily based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. If such information is not available, other valuation methods are applied, considering the value that the property’s net earning power will support, the value indicated by recent sales of comparable properties and the current cost of reproducing or replacing the property.

Other Invested Assets: The fair values for other invested assets, which include investments in surplus notes issued by other insurance companies and fixed or variable rate investments with underlying characteristics of bonds were determined primarily by using indices, third-party pricing services and internal models.

Derivative Financial Instruments: The estimated fair values of equity and interest rate options (calls, puts, caps) are based upon the latest quoted market price at the balance sheet date. The estimated fair values of swaps, including equity, interest rate and currency swaps, are based on pricing models or formulas using current assumptions. The estimated fair values of credit default swaps are based upon active market data, including interest rate quotes, credit spreads, and recovery rates, which are then used to calculate probabilities of default for the fair value calculation. The Company accounts for derivatives that receive and pass hedge accounting in the same manner as the underlying hedged instrument. If that instrument is held at amortized cost, then the derivative is also held at amortized cost.

Policy Loans: The fair value of policy loans is considered to approximate the book value of the loan, which is stated at unpaid principal balance.

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

Separate Account Assets and Annuity Liabilities: The fair value of separate account assets are based on quoted market prices when available. When not available, they are primarily valued either using third-party pricing services or are valued in the same manner as the general account assets as further described in this note. However, some separate account assets are valued using non-binding broker quotes, which cannot be corroborated by other market observable data, or internal modeling which utilizes input that are not market observable. The fair value of separate account annuity liabilities is based on the account value for separate accounts business without guarantees. For separate accounts with guarantees, fair value is based on discounted cash flows.

Investment Contract Liabilities: Fair value for the Company’s liabilities under investment contracts, which include deferred annuities and GICs, are estimated using discounted cash flow calculations. For those liabilities that are short in duration, carrying amount approximates fair value. For investment contracts with no defined maturity, fair value is estimated to be the present surrender value.

 

33

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Deposit-Type Contracts: The carrying amounts of deposit-type contracts reported in the accompanying balance sheets approximate their fair values. These are included in the Investment Contract Liabilities.

The Company accounts for its investments in affiliated common stock in accordance with SSAP No. 97, as such, they are not included in the following disclosures.

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

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, 2017 and 2016, respectively:

 

     December 31, 2017  
     Aggregate
Fair Value		     Admitted
Value		      (Level 1)      (Level 2)     (Level 3)  

Admitted assets

             

Cash equivalents and short-term investments,

other than affiliates

    $ 1,543,548     $ 1,543,566      $ 1,035,520      $ 508,028     $ –  

Short-term notes receivable from affiliates

      168,300       168,300        –        168,300       –  

Bonds

      29,199,310       26,866,118        8,409,475        20,167,308       622,527  

Preferred stocks, other than affiliates

      94,354       95,585        –        91,174       3,180  

Common stocks, other than affiliates

      203,091       203,091        5,320        20       197,751  

Mortgage loans on real estate

      4,330,683       4,202,142        –        –       4,330,683  

Other invested assets

      232,122       195,050        –        226,170       5,952  

Options

      170,119       170,119        –        170,119       –  

Interest rate swaps

      574,599       574,448        –        541,454       33,145  

Currency swaps

      8,349       10,269        –        8,349       –  

Credit default swaps

      55,537       36,620        –        55,537       –  

Equity swaps

      9,760       9,760        –        9,760       –  

Policy loans

      580,338       580,338        –        580,338       –  

Securities lending reinvested collateral

      2,460,919       2,460,919        –        2,460,919       –  

Separate account assets

      80,149,650       80,096,666        76,888,437        3,253,417       7,796  

Liabilities

             

Investment contract liabilities

      12,427,585       11,460,334        –        251,404       12,176,181  

Options

      45,443       45,443        –        45,443       –  

Interest rate swaps

      305,657       438,194        –        303,184       2,473  

Currency swaps

      5,041       2,776        –        5,041       –  

Credit default swaps

      (12,107 )      23,526        –        (12,107 )      –  

Equity swaps

      284,921       284,921        –        284,921       –  

Separate account annuity liabilities

      74,664,347       74,665,853        1,550        74,619,387       43,410  

 

34

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31, 2016  
     Aggregate
Fair Value		      Admitted
Value		      (Level 1)      (Level 2)     (Level 3)  

Admitted assets

              

Cash equivalents and short-term investments,

other than affiliates

    $ 1,435,906      $ 1,435,906      $ –      $ 1,435,906     $ –  

Short-term notes receivable from affiliates

      –        –        –        –       –  

Bonds

      41,564,816        38,483,482        8,543,520        32,146,440       874,856  

Preferred stocks, other than affiliates

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

Common stocks, other than affiliates

      194,833        194,833        1,905        –       192,928  

Mortgage loans on real estate

      5,801,102        5,641,558        –        –       5,801,102  

Other invested assets

      353,438        297,571        –        345,757       7,681  

Options

      182,667        182,667        –        182,667       –  

Interest rate swaps

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

Currency swaps

      21,819        21,408        –        21,819       –  

Credit default swaps

      36,173        26,828        –        36,173       –  

Equity swaps

      48,509        48,509        –        48,509       –  

Policy loans

      607,746        607,746        –        607,746       –  

Securities lending reinvested collateral

      2,303,603        2,303,603        –        2,303,603       –  

Separate account assets

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

Liabilities

              

Investment contract liabilities

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

Options

      82,070        82,070        –        82,070       –  

Interest rate swaps

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

Currency swaps

      1,666        76        –        1,666       –  

Credit default swaps

      13,478        44,647        –        13,478       –  

Equity swaps

      381,242        381,242        –        381,242       –  

Separate account annuity liabilities

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

The following tables provide information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2017 and 2016:

 

     2017  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Industrial and miscellaneous

    $ –      $ 21,438      $ 14,618      $ 36,056  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      –        21,438        14,618        36,056  
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stock

            

Industrial and miscellaneous

      –        1,964        3,180        5,144  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total preferred stock

      –        1,964        3,180        5,144  
  

 

 

     

 

 

     

 

 

     

 

 

  

Common stock

            

Mutual funds

      –        5        –        5  

Industrial and miscellaneous

      5,320        15        197,751        203,086  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      5,320        20        197,751        203,091  
  

 

 

     

 

 

     

 

 

     

 

 

  

Cash equivalents and short-term

            

Money market mutual funds

      1,035,520        –        –        1,035,520  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash equivalents and short-term

      1,035,520        –        –        1,035,520  
  

 

 

     

 

 

     

 

 

     

 

 

  

Securities lending reinvested collateral

      –        2,460,919        –        2,460,919  

Derivative assets

      –        721,333        31,703        753,036  

Separate account assets

      76,780,559        2,607,246        51,040        79,438,845  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 77,821,399      $ 5,812,920      $ 298,292      $ 83,932,611  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

    $ –      $ 679,730      $ 2,473      $ 682,203  

Separate account liabilities

      1,550        –        –        1,550  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ 1,550      $ 679,730      $ 2,473      $ 683,753  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

35

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     2016  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Bonds

            

Government

    $ –      $ 1,124      $ –      $ 1,124  

Industrial and miscellaneous

      –        20,216        18,746        38,962  

Hybrid securities

      –        2,573        –        2,573  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      –        23,913        18,746        42,659  
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stock

            

Industrial and miscellaneous

      –        –        3,153        3,153  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total preferred stock

      –        –        3,153        3,153  
  

 

 

     

 

 

     

 

 

     

 

 

  

Common stock

            

Mutual funds

      761        –        –        761  

Industrial and miscellaneous

      1,144        –        192,928        194,072  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stock

      1,905        –        192,928        194,833  
  

 

 

     

 

 

     

 

 

     

 

 

  

Short-term investments

            

Government

      –        598,723        –        598,723  

Industrial and miscellaneous

      –        820,579        –        820,579  

Sweep accounts

      –        16,604        –        16,604  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total short-term investments

      –        1,435,906        –        1,435,906  
  

 

 

     

 

 

     

 

 

     

 

 

  

Securities lending reinvested collateral

      –        2,303,603        –        2,303,603  

Derivative assets

      –        813,180        3,930        817,110  

Separate account assets

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

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

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

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Derivative liabilities

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

Separate account liabilities

      1,996        871        –        2,867  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

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

 

 

     

 

 

     

 

 

     

 

 

  

Bonds classified in Level 2 are valued using inputs from third party pricing services or broker quotes. Bonds classified in Level 3 are primarily those valued using non-binding broker quotes, which cannot be corroborated by other market observable data, or internal modeling which utilize significant inputs that are not market observable.

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

Common stock classified in Level 2 are valued using inputs from third party pricing services or broker quotes. Common stocks classified in Level 3 are comprised primarily of shares in the Federal Home Loan Bank (FHLB) of Des Moines, which are valued at par as a proxy for fair value as a result of restrictions that allow redemptions only by FHLB.

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

Derivatives classified as Level 2 represent over-the-counter (OTC) contracts valued using pricing models based on the net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades, or external pricing services. Derivatives classified as Level 3 represent interest rate swaps calculated by simulation using a series of market-consistent inputs to model the dynamics of the swap. The inputs are taken from market instruments to the extent that they exist.

 

36

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

Transfers from Level 1 to Level 2 for common stock were attributable to securities being valued using third party vendor inputs, subsequently changing to being valued using external money managers during 2017.

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

Transfers from Level 2 to Level 1 for short term securities were attributable to money market mutual funds being valued at amortized cost, subsequently changed to being valued using vendor pricing during Q4 2017.

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

Transfers from Level 1 to Level 2 for separate account common stock were attributable to securities being valued using third party vendor inputs, subsequently changing to being valued using external money manager during 2017.

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

 

37

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables summarize the changes in assets classified in Level 3 for 2017 and 2016:

 

     Beginning
Balance at
  January 1, 2017		      Transfers in
(Level 3)		      Transfers out
(Level 3)		      Total Gains
(Losses) Included
in Net income (a)		     

Total Gains (Losses)  

Included in Surplus
(b)

  
  

 

 

  

Bonds

               

Government

      $ –      $ –      $ –      $ (8)      $ 8    

RMBS

      –        –        –        (30)        30    

Other

      18,746        2,571        2,555        2        1,306    

Preferred stock

      3,153        –        –        –        (518)    

Common stock

      192,928        7        6        (2,246)        1,896    

Derivatives

      (358,974)        457        –        (174,683)        387,747    

Separate account assets

        45,420        3,249        2,719        16        4,887    
  

 

 

  

Total

      $ (98,727)      $ 6,284      $ 5,280      $ (176,949)      $ 395,356    
  

 

 

  
     Purchases      Issuances      Sales      Settlements      Ending Balance at
December 31, 2017  		  
  

 

 

  

Bonds

               

Government

      $ –      $ –      $ –      $ –      $ –    

RMBS

      –        –        –        –        –    

Other

      –        6,082        –        11,533        14,618    

Preferred stock

      546        –        –        –        3,180    

Common stock

      155        12,164        1,000        6,148        197,751    

Derivatives

      –        –        (8,536)        (166,147)        29,230    

Separate account assets

      5,393        –        755        4,452        51,040    
  

 

 

  

Total

      $ 6,094      $ 18,246      $ (6,781)      $ (144,014)      $ 295,819    
  

 

 

  

 

38

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

Total Gains (Losses)

Included in Surplus
(b)

  

Bonds

          

Government

   $ –     $ –     $ –     $ (9 )    $ 9  

RMBS

     1,439       –       1,428       (122 )      116  

Other

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

Preferred stock

     –       –       –       512       (101 ) 

Common stock

     118,338       –       –       –       101  

Derivatives

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

Separate account assets

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

Total

   $ 160,359     $ 6,463     $ 10,754     $ (175,978 )    $ (343,173 ) 
       
    Purchases     Issuances     Sales     Settlements     Ending Balance at
December 31, 2016		  

Bonds

          

Government

   $ –     $ –     $ –     $ –     $ –  

RMBS

     –       –       –       5       –  

Other

     1,663       –       –       7,208       18,746  

Preferred stock

     3,254       –       –       512       3,153  

Common stock

     73,000       1,689       200       –       192,928  

Derivatives

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

Separate account assets

     1,520       –       –       1,082       45,420  
       

Total

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

(a) Recorded as a component of Net Realized Capital Gains (Losses) on Investments in the Statements of Operations

(b) Recorded as a component of Change in Net Unrealized Capital Gains (Losses) in the Statements of Changes in Capital and Surplus

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

Transfers in for bonds were the result of a security being carried at amortized cost, subsequently changing to being carried at fair value during 2017. Transfers in for bonds were the result of a security being carried at amortized cost at December 31, 2015 and subsequently changing to being carried at fair value during 2016.

Transfers out for bonds were the result of a security being carried at fair value, subsequently changing to being carried at amortized cost during 2017. Transfers out for bonds were the result of a security being carried at fair value at December 31, 2015, subsequently changing to being carried at amortized cost during 2016.

Transfers in for common stocks were attributable to securities being valued using third party vendor inputs, subsequently changing to being valued using a stale price during 2017.

Transfers out for common stocks were attributable to securities being valued using broker quotes, subsequently changing to being valued using third party vendor inputs during 2017.

Transfers in for separate account bonds were attributable to a security being valued using a stale price, subsequently changing to being valued using broker quotes during 2017. Transfers in for separate account assets were attributable to securities being valued using third party vendor inputs

 

39

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

at December 31, 2015 and subsequently changing to being valued using broker quotes during 2016.

Transfers out for separate account bonds were attributable to securities being valued using a stale price or broker quotes, subsequently changing to being valued using third party vendor inputs during 2017. Transfers out for separate account assets were attributable to securities being valued using a stale price at December 31, 2015 and subsequently changing to being valued using third party vendor inputs during 2016. In addition, transfers out for separate account assets were attributable to securities being valued using broker quotes at December 31, 2015, subsequently changing to being valued using third party vendor inputs during 2016.

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, 2017, the Company held no property as held-for- sale. The Company had parcels of land that were held for sale as of December 31, 2016. Fair value less cost to sell of these properties was $8,570. Two parcels of land had a carrying amount less than its fair value and therefore is not carried at fair value as of December 31, 2016.

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

5. Investments Bonds and Stocks

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

 

     Book Adjusted
Carrying Value		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated Fair
Value		  

December 31, 2017

            

Bonds:

            

United States Government and agencies

    $ 7,608,636      $ 641,623      $ 83,506      $ 8,166,753  

State, municipal and other government

      605,420        62,573        4,509        663,484  

Hybrid securities

      279,523        42,592        11,135        310,980  

Industrial and miscellaneous

      14,161,753        1,500,166        65,237        15,596,681  

Mortgage and other asset-backed securities

      4,210,786        296,492        45,867        4,461,412  
        

Total bonds

      26,866,118        2,543,446        210,254        29,199,310  

Unaffiliated preferred stocks

      95,585        5,552        6,783        94,354  
        
   $ 26,961,703      $ 2,548,998      $ 217,037      $ 29,293,664  
        
     Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated Fair
Value		  

Unaffiliated common stocks

    $ 187,538      $ 15,572      $ 19      $ 203,091  
        

 

40

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Book Adjusted
Carrying Value		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated Fair
Value		  

December 31, 2016

            

Bonds:

            

United States Government and agencies

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

State, municipal and other government

      846,024        38,500        21,056        863,468  

Hybrid securities

      463,953        21,551        29,150        456,354  

Industrial and miscellaneous

      22,524,122        2,926,363        221,692        25,228,793  

Mortgage and other asset-backed securities

      6,735,275        298,695        137,661        6,896,309  

Affiliated bonds

      4,982        1,657        –        6,639  
        

Total bonds

      38,483,482        3,766,991        685,657        41,564,816  

Unaffiliated preferred stocks

      95,547        3,771        4,992        94,326  
        
   $ 38,579,029      $ 3,770,762      $ 690,649      $ 41,659,142  
        
     Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated Fair
Value		  

Unaffiliated common stocks

    $ 179,505      $ 15,621      $ 293      $ 194,833  
        

The carrying amount and estimated fair value of bonds at December 31, 2017, 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.

 

     2017  
December 31:    Carrying Value      Fair Value  

Due in one year or less

    $ 809,307      $ 824,425  

Due after one year through five years

      4,310,609        4,483,201  

Due after five years through ten years

      4,703,004        5,152,079  

Due after ten years

      12,832,412        14,278,193  
        
     22,655,332        24,737,898  

Mortgage and other asset-backed securities

      4,210,786        4,461,412  
        
   $ 26,866,118      $ 29,199,310  
        

 

41

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2017 and 2016 is as follows:

 

     2017  
  

 

 

  
     Equal to or Greater than 12
Months		      Less than 12 Months  
  

 

 

     

 

 

  
     Estimated
Fair Value		      Gross
  Unrealized  
Losses		      Estimated
Fair Value		      Gross
  Unrealized  
Losses		  
  

 

 

     

 

 

     

 

 

     

 

 

  

United States Government and agencies

    $ 1,132,368      $ 81,324      $ 185,141      $ 2,182  

State, municipal and other government

      82,535        4,141        42,106        368  

Hybrid securities

      72,531        11,135        –        –  

Industrial and miscellaneous

      1,161,032        49,060        975,964        16,177  

Mortgage and other asset-backed securities

      590,847        30,460        666,486        15,407  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      3,039,313        176,120        1,869,697        34,134  
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stocks-unaffiliated

      18,284        6,722        3,846        61  

Common stocks-unaffiliated

      –        –        549        19  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 3,057,597      $ 182,842      $ 1,874,092      $ 34,214  
  

 

 

     

 

 

     

 

 

     

 

 

  
     2016  
  

 

 

  
     Equal to or Greater than 12
Months		      Less than 12 Months  
  

 

 

     

 

 

  
     Estimated
Fair Value		      Gross
  Unrealized  
Losses		      Estimated
Fair Value		      Gross
  Unrealized  
Losses		  
  

 

 

     

 

 

     

 

 

     

 

 

  

United States Government and agencies

    $ –      $ –      $ 3,765,738      $ 276,098  

State, municipal and other government

      49,698        9,136        290,257        11,920  

Hybrid securities

      107,667        26,842        65,108        2,308  

Industrial and miscellaneous

      845,412        81,739        3,754,485        140,208  

Mortgage and other asset-backed securities

      673,363        74,418        2,512,512        63,243  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total bonds

      1,676,140        192,135        10,388,100        493,777  
  

 

 

     

 

 

     

 

 

     

 

 

  

Preferred stocks-unaffiliated

      22,207        4,802        4,736        190  

Common stocks-unaffiliated

      –        –        1,726        293  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,698,347      $ 196,937      $ 10,394,562      $ 494,260  
  

 

 

     

 

 

     

 

 

     

 

 

  

During 2017 and 2015, respectively, there were no loan-backed or structured securities with a recognized OTTI due to intent to sell or lack of intent and ability to hold for a period of time to recover the amortized cost basis. During 2016 there was $27,182 of loan-backed structured securities with a recognized OTTI due to the inability or lack of intent and ability to hold for a period of time to recover the amortized cost basis.

For loan-backed and structured 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, in 2017, 2016 and 2015 the Company recognized OTTI of $7,751, $17,321 and $10,428, respectively.

 

42

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following loan-backed and structured securities were held at December 31, 2017, 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		      Date of
Financial
Statement
Where
Reported		  

05948KV63

    $ 4,957      $ 4,954      $ 3        $ 4,954      $ 4,651        3/31/2017  

05950WAM0

      3,936        1,968        1,968          1,968        2,359        3/31/2017  

65536PAA8

      812        795        17          795        534        3/31/2017  

61751NAM4

      583        –        583          –        317        3/31/2017  

48123HAA1

      574        461        113          461        158        3/31/2017  

059523AS9

      126        5        121          5        19        3/31/2017  

65536PAA8

      758        747        10          748        551        6/30/2017  

70557RAB6

      6,179        6,044        134          6,044        4,852        6/30/2017  

48123HAA1

      440        425        15          425        139        6/30/2017  

52108MDN0

      4,563        3,448        1,115          3,448        2,371        6/30/2017  

52108HYQ1

      710        –        710          –        –        6/30/2017  

52108HYP3

      2,539        –        2,539          –        –        6/30/2017  

65536PAA8

      713        704        9          704        545        9/30/2017  

48123HAA1

      391        299        92          299        105        9/30/2017  

52522QAM4

      43,179        42,924        255          42,924        37,554        12/31/2017  

65536PAA8

      682        664        17          664        512        12/31/2017  

48123HAA1

      288        263        24          263        69        12/31/2017  

126380AA2

      5,203        5,178        26          5,178        5,179        12/31/2017  
        

 

 

           
           $ 7,751             
        

 

 

           

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, 2017 and 2016 is as follows:

 

     2017           2016  
     Losses 12
Months or
More		      Losses Less
Than 12
Months		           Losses 12
Months or
More		      Losses Less
Than 12
Months		  

Year ended December 31:

               

The aggregate amount of unrealized losses

    $ 30,444      $ 28,759         $ 74,418      $ 86,409  

The aggregate related fair value of securities with unrealized losses

      589,801        690,608           673,363        2,548,835  

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

At December 31, 2017 and 2016, 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 435 and 326 securities with a carrying amount of $3,240,439 and $1,905,967, and an unrealized loss of $182,842 and $196,937 with an average price of 94.4 and 89.7 (fair value/amortized cost). Of

 

43

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

this portfolio, 88.9% and 66.2% were investment grade with associated unrealized losses of $132,062 and $105,393, respectively.

At December 31, 2017 and 2016, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 457 and 1,128 securities with a carrying amount of $1,907,737 and $10,886,803 and an unrealized loss of $34,195 and $493,967 with an average price of 98.2 and 95.5 (fair value/amortized cost). Of this portfolio, 86.6% and 96.4% were investment grade with associated unrealized losses of $26,208 and $471,156, respectively.

At December 31, 2017 and 2016, respectively, there were no common stocks that have been in a continuous loss position for greater than or equal to twelve months.

At December 31, 2017 and 2016, respectively, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 5 and 4 securities with a cost of $592 and $2,020 and an unrealized loss of $43 and $294 with an average price of 92.8 and 85.5 (fair value/cost).

The following structured notes were held at December 31, 2017 and 2016:

 

December 31, 2017                            
CUSIP Identification    Actual Cost      Fair Value      Book /Adjusted
Carrying Value		      Mortgage-
Referenced
Security
(YES/NO)		  

44965TAA5

    $ 4,296      $ 4,802      $ 4,301        NO  

44965UAA2

      205        241        205        NO  

912810QV3

      14,974        15,644        16,022        NO  

912810RA8

      772,522        951,760        831,117        NO  

912810RL4

          1,195,281            1,333,989            1,249,924        NO  
           

Total

    $ 1,987,278      $ 2,306,436      $ 2,101,569     
           
December 31, 2016                       
CUSIP Identification    Actual Cost      Fair Value      Book /Adjusted
Carrying Value		      Mortgage-
Referenced
Security
(YES/NO)		  

44965TAA5

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

G52836AB2

      10,050        10,310        10,050        NO  

912810QV3

      14,974        14,392        15,722        NO  

912810RA8

      772,522        873,726        809,956        NO  

912810RL4

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

Total

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

 

44

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

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

December 31, 2017

         

Bond, amortized cost

    4    $ 33,531      $ 35,359    

Loan-backed and structured securities, amortized cost

    1      9        9    
  

 

   

 

 

     

 

 

  

Total

    5    $ 33,540      $ 35,368    

December 31, 2016

         

Bond, amortized cost

    2    $     14,644      $ 1    4,473    

Loan-backed and structured securities, amortized cost

    1      432        430    
  

 

   

 

 

     

 

 

  

Total

    3    $ 15,076      $ 14,903    

During 2017, the Company sold, redeemed or otherwise disposed of 105 securities as a result of a callable feature which generated investment income of $44,617 as a result of a prepayment penalty and/or acceleration fee.

Proceeds from sales and other disposals of bonds and preferred stock and related gross realized capital gains and losses are reflected in the following table. The amounts exclude maturities and include transfers associated with reinsurance agreements.

 

     Year Ended December 31  
     2017      2016      2015  

Proceeds

    $     17,572,041      $     10,218,560      $     12,429,993  
        

Gross realized gains

    $ 2,371,708      $ 155,810      $ 180,050  

Gross realized losses

      (146,551 )       (117,206 )       (158,916 ) 
                          

Net realized capital gains (losses)

    $ 2,225,157      $ 38,604      $ 21,134  
        

The Company had gross realized losses, which relate to losses recognized on other-than-temporary declines in the fair value of bonds and preferred stocks, for the years ended December 31, 2017, 2016 and 2015 of $18,892 , $40,319 and $13,947 , respectively.

At December 31, 2017 and 2016, the Company had no investments in restructured securities.

 

45

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Mortgage Loans

The credit qualities of mortgage loans by type of property for the year ended December 31, 2017 and 2016 were as follows:

 

December 31, 2017                          
    Farm      Commercial      Mezzanine     Total  

AAA - AA

   $ 16,247      $ 2,421,619      $     –     $ 2,437,866  

A

         41,447            1,549,298        –           1,590,745  

BBB

     –        125,975        –       125,975  

BB

     –        16,144        –       16,144  

B

     8,912        49,118        –       58,030  
       
  $ 66,606      $ 4,162,154      $ –     $ 4,228,760  
       
December 31, 2016                          
    Farm      Commercial      Mezzanine     Total  

AAA - AA

   $ –      $ 3,418,276      $ –     $ 3,418,276  

A

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

BBB

     –        255,494        –       255,494  

BB

     –        58,846        –       58,846  

B

     9,024        –        –       9,024  
       
  $ 77,857      $ 5,565,122      $ –     $ 5,642,979  
       

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

During 2017, the Company issued mortgage loans with a maximum interest rate of 7.35% and a minimum interest rate of 3.50% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2017 at the time of origination was 77%. During 2016, the Company issued mortgage loans with a maximum interest rate of 8.71% and a minimum interest rate of 3.00% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2016 at the time of origination was 91%. During 2015, the Company issued mortgage loans with a maximum interest rate of 4.59% and a minimum interest rate of 3.50% for commercial loans. The maximum percentage of any one mortgage loan to the value of the underlying real estate originated or acquired during the year ending December 31, 2015 at the time of origination was 75%.

During 2017 or 2016, the Company did not reduce the interest rate on any outstanding mortgage loans.

 

46

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The age analysis of mortgage loans and identification in which the Company is a participant or co-lender in a mortgage loan agreement is as follows for December 31, 2017 and 2016.

 

     Farm      Residential      Commercial                
      Insured      All Other      Insured      All Other      Mezzanine      Total  

December 31, 2017

                     

Recorded Investment (All)

                     

(a) Current

    $ 66,606      $ –      $ –      $ –      $ 4,153,714      $ –      $ 4,220,320  

(b) 30-59 Days Past Due

      –        –        –        –        3,641        –        3,641  

(c) 60-89 Days Past Due

      –        –        –        –        –        –        –  

(d) 90-179 Days Past Due

      –        –        –        –        –        –        –  

(e) 180+ Days Past Due

      –        –        –        –        4,799        –        4,799  

Participant or Co-lender in

                     

Mortgage Loan Agreement

                     

(a) Recorded Investment

    $ 34,964      $ –      $ –      $ –      $ 1,252,751      $ –      $ 1,287,715  
            Residential      Commercial                
     Farm      Insured      All Other      Insured      All Other      Mezzanine      Total  

December 31, 2016

                     

Recorded Investment (All)

                     

(a) Current

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

(b) 30-59 Days Past Due

      –        –        –        –        –        –        –  

(c) 60-89 Days Past Due

      –        –        –        –        –        –        –  

(d) 90-179 Days Past Due

      –        –        –        –        –        –        –  

(e) 180+ Days Past Due

      –        –        –        –        –        –        –  

Participant or Co-lender in

                     

Mortgage Loan Agreement

                     

(a) Recorded Investment

    $ 36,297      $ –      $ –      $ –      $ 1,023,342      $ –      $ 1,059,639  

At December 31, 2017, multiple mortgage loans with a carrying value of $4,799 were non-income producing for the previous 180 days, and at December 31, 2016, no mortgage loans were non-income producing. There was no accrued interest related to these mortgage loans at December 31, 2017 or 2016. The Company has a mortgage or deed of trust on the property thereby creating a lien which gives it the right to take possession of the property (among other things) if the borrower fails to perform according to the terms of the loan documents. The Company requires all mortgaged properties to carry fire insurance equal to the value of the underlying property. At December 31, 2017 and 2016 there were no taxes, assessments and other amounts advanced and not included in the mortgage loan total.

At December 31, 2017 and 2016, respectively, the Company held $49,118 and $6,077 in impaired loans with related allowance for credit losses of $26,618 and $1,421. There were no impaired mortgage loans held without an allowance for credit losses as of December 31, 2017 and 2016, respectively. There were no mortgage loans submit to participant or co-lender mortgage loan agreement for which the Company is restricted from unilaterally foreclosing on the mortgage loans. The average recorded investment in impaired loans during 2017 and 2016 was $10,793 and $9,820, respectively.

 

47

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Year Ended December 31  
     2017      2016      2015  

Balance at beginning of period

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

Additions, net charged to operations

          26,618        174        7,225  

Recoveries in amounts previously charged off

      (1,421 )       (322 )       (13,349 ) 
        

Balance at end of period

    $ 26,618      $ 1,421      $ 1,569  
        

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

 

     Year Ended December 31  
     2017      2016  

Aggregate amount of mortgage loans derecognized

    $     –      $ 10,522  

Real estate collateral recognized

      –        10,543  

Other collateral recognized

      –        –  

Receivables recognized from a government guarantee of the foreclosed mortgage loan

      –        –  

The Company accrues interest income on impaired loans to the extent deemed collectible (delinquent less than 91 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on nonperforming loans generally is recognized on a cash basis. For the years ended December 31, 2017, 2016 and 2015, respectively, the Company recognized $5,359, $677 and $92 of interest income on impaired loans. Interest income of $2,806, $786 and $289, respectively, was recognized on a cash basis for the years ended December 31, 2017, 2016 and 2015.

At December 31, 2017 and 2016, the Company held a mortgage loan loss reserve in the AVR of $42,871 and $53,388, respectively.

 

48

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

Geographic Distribution        

Property Type Distribution

  
     December 31              December 31  
     2017     2016              2017     2016  

Pacific

      29 %      25 %      Apartment      46 %      38 % 

South Atlantic

      20       21       Retail      23       24  

Middle Atlantic

      18       18       Office      17       21  

W. North Central

      8       9       Industrial      9       11  

W. South Central

      8       8       Other      2       3  

Mountain

      7       7       Agricultural      2       2  

E. North Central

      6       7       Medical      1       1  

E. South Central

      4       4           

New England

      1       1           

At December 31, 2017, 2016 and 2015, the Company had mortgage loans with a total net admitted asset value of $83,445, $81,895 and $86,311, 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, 2017, 2016 and 2015 related to such restructurings. At December 31, 2017 and 2016 there was one commitment for $3,000 to lend additional funds to debtors owing receivables

Real Estate

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 $4,033, $7,500 and $3,356 were taken on real estate in 2017, 2016 and 2015, respectively, to write the book value down to the current fair value and were reflected as realized losses in the statements of operations.

The carrying value of the Company’s real estate assets at December 31, 2017 and 2016 was as follows:

 

     2017      2016  

Home office properties

    $ 84,719      $ 84,670  

Investment properties

      104,325        8,112  

Properties held for sale

      -        29,115  
   $     189,044      $     121,897  

The properties classified as held for sale as of December 31, 2016 were reclassified during 2017 because sale of these properties was unlikely to occur within one year. These properties were either reclassified to held for the production of income or properties occupied by the Company.

Accumulated depreciation on real estate at December 31, 2017 and 2016, was $71,624 and $65,765, respectively.

 

49

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Other Invested Assets

During 2017, the Company recorded impairments of $10,619, $54,902, and $6,269 throughout 2017, 2016, and 2015. These impairments were primarily related to private equity funds, except for 2016, which also included an impairment for a tax credit fund. The impairments were taken because the decline in fair value of the funds were deemed to be other than temporary and a recovery in value from the remaining underlying investments in the funds were not anticipated. These write-downs are included in net realized capital gains (losses) within the statement of operations.

During 2017, the Company reassigned its ownership interest in the Prisma Spectrum Fund for an additional interest in the Zero Beta Fund in the amount of $62,567, which resulted in a realized gain of $16,974.

Tax Credits

At December 31, 2017, the Company had ownership interests in forty-nine LIHTC investments. The remaining years of unexpired tax credits ranged from one to eleven, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to seventeen years. The amount of contingent equity commitments expected to be paid during the years 2018 to 2029 is $38,608. Other LIHTC tax benefits recognized during 2017 was $12,366. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

At December 31, 2016, the Company had ownership interests in fifty-two LIHTC investments. The remaining years of unexpired tax credits ranged from one to twelve, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to seventeen years. The amount of contingent equity commitments expected to be paid during the years 2017 to 2029 is $48,742. LIHTC tax credits recognized during 2016 was $6,423. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.

 

50

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following tables provide the carrying value of transferable state tax credits gross of any related tax liabilities and total unused transferable tax credits by state and in total as of December 31, 2017 and 2016:

 

            December 31, 2017  

Description of State Transferable and Non-

transferable Tax Credits

      State        Carrying Value        Unused Amount * 

Low-Income Housing Tax Credits

      MA      $ 1,332      $ 7,400  

Economic Redevelopment and Growth Tax Credits

      NJ        2,982        14,449  
     

 

 

  

Total

       $ 4,314      $ 21,849  
     

 

 

  
            December 31, 2016  

Description of State Transferable and Non-

transferable Tax Credits

      State        Carrying Value        Unused Amount  

Low-Income Housing Tax Credits

      MA      $ 1,332      $ 9,000  

Economic Redevelopment and Growth Tax Credits

      NJ        4,669        15,497  
     

 

 

  

Total

       $ 6,001      $ 24,497  
     

 

 

  

 

*The

unused amount reflects credits that the Company deems will be realizable in the period from 2018 to 2029.

The Company did not have any non-transferable state tax credits.

The Company estimated the utilization of the remaining state transferable tax credits by projecting a future tax liability based on projected premium, tax rates and tax credits, and comparing the projected future tax liability to the availability of remaining state transferable tax credits. The Company had no impairment losses related to state transferable tax credits.

Derivatives

The Company has entered into collateral agreements with certain counterparties wherein the counterparty is required to post assets (cash or securities) on the Company’s behalf in an amount equal to the difference between the net positive fair value of the contracts and an agreed upon threshold based on the credit rating of the counterparty. If the net fair value of all contracts with this counterparty is negative, then the Company is required to post similar assets (cash or securities). Fair value of derivative contracts, aggregated at a counterparty level at December 31, was as follows:

 

     2017      2016  

Fair value - positive

    $     1,098,479      $     1,803,598  

Fair value - negative

      (909,070 )       (1,497,706 ) 

For those years ended December 31, 2017, 2016 and 2015, the Company has recorded unrealized gains (losses) of ($120,083) and ($591,186) and $272,952, respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. The Company did not recognize any unrealized gains or losses during 2017, 2016 and 2015 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.

 

51

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The maximum term over which the Company is hedging its exposure to the variability of future cash flows is approximately 26 years for forecasted hedge transactions. At December 31, 2017 and 2016, none of the Company’s cash flow hedges have been discontinued as it was probable that the original forecasted transactions would occur by the end of the originally specified time period documented at inception of the hedging relationship. As of December 31, 2017 and 2016, the Company has accumulated deferred gains in the amount of $1,898 and $30,231, respectively, related to the termination of swaps that were hedging forecasted transactions. It is expected that these gains will be used as basis adjustments on future asset purchases expected to transpire throughout 2018.

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

 

     2017      2016      2015  
  

 

 

  

Options:

         

Calls

    $ 2,067      $ 1,524      $ 7,014  

Caps

      (1,203)        –        –  

Puts

      (1,337)        10,700        25,396  

Collars

      –        –        –  
  

 

 

  

Total options

    $ (473)      $ 12,224      $ 32,410  
  

 

 

  

Swaps:

         

Interest rate

    $ 307,519      $ 642,433      $ (187,530)  

Credit

      10,107        3,046        (278)  

Foreign exchange

      —        (2,959)        –  

Total return

      (1,412,666)        (510,883)        (324,480)  
  

 

 

  

Total swaps

    $ (1,095,040)      $ 131,637      $ (512,288)  
  

 

 

  

Foreign currency forwards

      –        –        –  

Futures - net positions

      59,052        (337,977)        20,012  

Argentina warrants

      –        –        4,225  

Lehman settlements

      1,195        1,241        1,590  
  

 

 

  

Total realized gains (losses)

    $     (1,035,266)      $     (192,875)      $     (454,051)  
  

 

 

  

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

 

     2017      2016     2015  

Replicated assets

    $ 3,568,730      $ 4,576,931     $ 4,726,248  

Credit default

      43,239        (32,317 )      (95,069 ) 

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

 

         2017              2016              2015      

Capital gains (losses)

    $ 10,107      $ 3,046      $ (278 ) 

 

52

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

As stated in Note 1, the Company replicates investment grade corporate bonds, sovereign debt, or commercial mortgage backed securities 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, a payment equal to the notional amount of the contract, less any potential recoveries as determined by the underlying agreement, will be made by the Company to the counterparty to the swap.

The following tables present the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at December 31, 2017 and 2016:

 

          2017  
     

 

 

  

Rating Agency Designation of

Referenced Credit Obligations (1)

   NAIC
 Designation 		    Estimated
  Fair Value  
of Credit
Default
Swaps		        Maximum Amount  
of Future
Payments under
Credit Default
Swaps		      Weighted
Average
Years to
  Maturity (2)  
  

 

   

 

   

 

 

     

 

 

     

 

 

  

AAA/AA/A

    1         

Single name credit default swaps (3)

      $ 55,569        $ 2,051,835          3.0    

Credit default swaps referencing indices

         13,655          665,000          4.3    
     

 

 

     

 

 

     

Subtotal

         69,224          2,716,835          3.3    
     

 

 

     

 

 

     

BBB

    2         

Single name credit default swaps (3)

        1,907          75,000        2.2    

Credit default swaps referencing indices

         -          -       
     

 

 

     

 

 

     

Subtotal

         1,907          75,000          2.2    
     

 

 

     

 

 

     

BB

    3         

Single name credit default swaps (3)

        -          -       

Credit default swaps referencing indices

         -          -       
     

 

 

     

 

 

     

Subtotal

         -          -       
     

 

 

     

 

 

     

B

    4         

Single name credit default swaps (3)

        -          -       

Credit default swaps referencing indices

         -          -       
     

 

 

     

 

 

     

Subtotal

         -          -       
     

 

 

     

 

 

     

CCC and lower

    5         

Single name credit default swaps (3)

        -          -       

Credit default swaps referencing indices

         -          -       
     

 

 

     

 

 

     

Subtotal

         -          -       
     

 

 

     

 

 

     

In or near default

    6         

Single name credit default swaps (3)

        -          -       

Credit default swaps referencing indices

         -          -       
     

 

 

     

 

 

     

Subtotal

         -          -       
     

 

 

     

 

 

     

Total

       $ 71,131        $ 2,791,835          3.3  
     

 

 

     

 

 

     

 

53

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

   

 

 

 

 

2016

 

 

 

 

Rating Agency Designation of Referenced Credit Obligations (1)

   
 NAIC
Designation		  
 		    



 Estimated
Fair Value
of Credit
Default
Swaps		  
 
 
 
 		    



 Maximum Amount
of Future
Payments under
Credit Default
Swaps		  
 
 
 
 		    



 Weighted
Average
Years to
Maturity (2)
  
 
 
 
 

AAA/AA/A

     1        

Single name credit default swaps (3)

    $ 33,241       $ 2,772,035         2.6    

Credit default swaps referencing indices

       8,361         657,500         2.5    

Subtotal

       41,602       3,429,535         2.6    

BBB

     2        

Single name credit default swaps (3)

      -         -      

Credit default swaps referencing indices

       -         -      

Subtotal

       -         -      

BB

     3        

Single name credit default swaps (3)

      -         -      

Credit default swaps referencing indices

       -         -      

Subtotal

       -         -      

B

     4        

Single name credit default swaps (3)

      -         -      

Credit default swaps referencing indices

       -         -      

Subtotal

       -         -      

CCC and lower

     5        

Single name credit default swaps (3)

      -         -      

Credit default swaps referencing indices

       -         -      

Subtotal

       -         -      

In or near default

     6        

Single name credit default swaps (3)

      -         -      

Credit default swaps referencing indices

       -         -      

Subtotal

       -         -      

Total

     $ 41,602       $ 3,429,535         2.6  

 

(1) 

The rating agency designations are based on availability and the blending of the applicable ratings among Moody’s Investors Service (“Moody’s”), Standard and Poor’s Rating Services (“S&P”), and Fitch Ratings. If no rating is available from a rating agency, then an internally derived rating is used.

 

(2) 

The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.

 

(3) 

Includes corporate, foreign government and state entities.

The Company may enter into credit default swaps to purchase credit protection on certain of the referenced credit obligations in the table above. At December 31, 2017, the maximum amounts of potential future recoveries available to offset the $2,791,835 from the table above were $10,000. At December 31, 2016, the maximum amounts of potential future recoveries available to offset the $3,429,535 from the table above were $10,000.

 

54

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2017 and 2016, the Company’s outstanding financial instruments with on and off balance sheet risks, shown in notional amounts, are summarized as follows:

 

     Notional Amount  
     2017      2016  

Interest rate and currency swaps:

      

Receive fixed - pay fixed

    $ 99,473      $ 85,262  

Receive fixed - pay floating

      –        77,500  

Receive floating - pay fixed

      –        –  

Receive floating - pay floating

      –        –  

Swaptions:

      

Receive fixed - pay floating

      6,000,000        6,000,000  

Receive floating - pay fixed

      6,000,000        6,000,000  

Interest rate swaps:

      

Receive fixed - pay fixed

      8,464,263        11,825,181  

Receive fixed - pay floating

      11,710,014        15,695,014  

Receive floating - pay fixed

      16,576,000        18,811,000  

Receive floating - pay floating

      6,238,190        11,491,769  

Caps

      2,000,000        2,250,000  

Options Calls / Puts

      4,484,586        250,375  

Restricted Assets

The following tables show the pledged or restricted assets as of December 31, 2017 and 2016, respectively:

 

     Gross Restricted (Admitted & Nonadmitted)
2017		  
Restricted Asset Category    Total General
Account (G/A)		      G/A
Supporting
Separate
Account (S/A)		      Total S/A
Restricted
Assets		      S/A Assets
Supporting
G/A Activity		      Total  

Collateral held under security lending agreements

    $ 2,461,167      $     –      $     –      $     –      $ 2,461,167  

Subject to repurchase agreements

      116,023        –        –        –        116,023  

Subject to dollar repurchase agreements

      278,626        –        –        –        278,626  

Letter stock or securities restricted as to sale -

excluding FHLB capital stock

      –        –        –        –        –  

FHLB capital stock

      175,800        –        –        –        175,800  

On deposit with states

      40,862        –        –        –        40,862  

Pledged as collateral to FHLB (including

assets backing funding agreements)

          4,999,339        –        –        –            4,999,339  

Pledged as collateral not captured in other categories

      600,943        –        –        –        600,943  

Other restricted assets

      423,770        –        –        –        423,770  
        

Total Restricted Assets

    $ 9,096,530      $ –      $ –      $ –      $ 9,096,530  
        

 

55

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

    Gross (Admitted & Nonadmitted) Restricted     Percentage  
Restricted Asset Category   Total From
Prior Year
(2016)		     Increase/
(Decrease)		     Total
Nonadmitted
Restricted		     Total
Admitted
Restricted		     Gross
(Admitted &
Nonadmitted)
Restricted
to Total
Assets		     Admitted
Restricted to
Total
Admitted
Assets		  

Collateral held under security lending

agreements

   $ 2,303,289     $     157,878     $     –     $ 2,461,167       1.96%       1.96%  

Subject to repurchase agreements

     147,444       (31,421 )      –       116,023       0.09%       0.09%  

Subject to dollar repurchase agreements

     453,474       (174,848 )      –       278,626       0.22%       0.22%  

Letter stock or securities restricted as to sale - excluding FHLB capital stock

     6,408       (6,408 )      –       –       0.00%       0.00%  

FHLB capital stock

     176,800       (1,000 )      –       175,800       0.14%       0.14%  

On deposit with states

     47,548       (6,686 )      –       40,862       0.03%       0.03%  

Pledged as collateral to FHLB (including

assets backing funding agreements)

         5,155,703       (156,364 )      –           4,999,339       3.98%       3.99%  

Pledged as collateral not captured in other

categories

     1,039,105       (438,162 )      –       600,943       0.48%       0.48%  

Other restricted assets

     482,544       (58,774 )      –       423,770       0.34%       0.34%  
       

Total Restricted Assets

   $ 9,812,315     $ (715,785 )    $ –     $ 9,096,530       7.24%       7.25%  
       

The following tables show the pledged or restricted assets in other categories as of December 31, 2017 and 2016, respectively:

 

     Gross (Admitted & Nonadmitted)
Restricted 2017		  
Description of Assets    Total General
Account (G/A)		      G/A Supporting
S/A Activity		      Total Separate
Account (S/A)
Restricted
Assets		      S/A Assets
Supporting
G/A Activity		      Total  

Derivatives

    $     577,146      $     –      $     –      $     –      $     577,146  

Secured Funding Agreements

      19,943        –        –        –        19,943  

AMBAC

      3,854        –        –        –        3,854  
        

Total

    $ 600,943      $ –      $ –      $ –      $ 600,943  
        

 

56

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

    

Gross (Admitted &

Nonadmitted) Restricted

      Percentage  
Description of Assets    Total From
Prior Year
(2016)		      Increase/
(Decrease)		     Total Current
Year Admitted
Restricted		      Gross
(Admitted &
Nonadmitted)
Restricted to
Total Assets		     Admitted
Restricted to
Total Admitted
Assets		  

Derivatives

    $ 989,453      $ (412,307 )    $     577,146        0.46 %      0.46 % 

Secured Funding Agreements

      42,588        (22,645 )      19,943        0.02 %      0.02 % 

AMBAC

      7,064        (3,210 )      3,854        0.00 %      0.00 % 
        

Total

    $     1,039,105      $ (438,162 )    $ 600,943        0.48 %      0.48 % 
        

The following tables show the collateral received and reflected as assets within the financial statements as of December 31, 2017 and 2016:

 

      2017  
Collateral Assets    Carrying
Value		      Fair Value      Total Assets
(Admitted
and
Nonadmitted)		      % of CV
to Total
Admitte
d Assets		  

Cash

    $ 673,755      $ 673,756        1.51  %       1.51  % 

Securities lending collateral assets

          2,460,919            2,460,919        5.50         5.53   

Other

      9,974        9,973        0.02         0.02   
        

Total Collateral Assets

    $ 3,144,648      $ 3,144,648        7.03  %       7.06  % 
        
     Amount      % of Liability to
Total Liabilities		                

Recognized Obligation to return collateral asset

    $ 3,145,387        8.05 %       
      2016  
Collateral Assets    Carrying
Value		      Fair Value      Total Assets
(Admitted
and
Nonadmitted)		      % of CV
to Total
Admitte
d Assets		  

Cash

    $ 1,079,335      $ 1,079,335        1.83  %       1.85  % 

Securities lending collateral assets

      2,303,603        2,303,603        3.91         3.96   

Other

      79,536        79,531        0.14         0.14   
        

Total Collateral Assets

    $ 3,462,474      $ 3,462,469        5.88  %       5.95  % 
        
     Amount      % of Liability to
Total Liabilities		                

Recognized Obligation to return collateral asset

    $ 3,463,690        6.52 %       

 

57

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Net Investment Income

Detail of net investment income is presented below:

 

     Year Ended December 31  
     2017      2016      2015  

Income:

         

Bonds

    $ 1,556,429      $ 1,781,209      $ 1,735,557  

Preferred stocks

      5,632        6,141        6,639  

Common stocks

      214,463        13,474        3,836  

Mortgage loans on real estate

      239,980        284,532        314,903  

Real estate

      20,862        22,698        20,264  

Policy loans

      39,825        41,872        44,072  

Cash, cash equivalents and short-term investments

      22,704        15,064        6,597  

Derivatives

      100,763        221,031        256,287  

Other invested assets

      293,788        79,299        90,731  
        

Gross investment income

          2,494,446            2,465,320            2,478,886  

Less: investment expenses

      166,133        139,501        134,003  
        

Net investment income before amortization of IMR

      2,328,313        2,325,819        2,344,883  

Amortization of IMR

      63,454        79,379        84,202  
        

Net investment income, including IMR

    $ 2,391,767      $ 2,405,198      $ 2,429,085  
        

Realized Capital Gains (Losses)

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

 

       Realized
Year Ended December 31		  
       2017        2016      2015  

Bonds

      $     2,205,730        $ (48,084 )     $ (6,233 ) 

Preferred stocks

        535          933        10,119  

Common stocks

        (1,978 )         885        (1,640 ) 

Mortgage loans on real estate

        89,463          145        (16,141 ) 

Real estate

        (4,101 )         (3,377 )       (3,356 ) 

Cash, cash equivalents and short-term investments

        (181 )         133        2  

Derivatives

        (1,036,461 )         (185,514 )       (455,642 ) 

Other invested assets

        115,119          (143,907 )           140,574  
          

Change in realized capital gains (losses), before taxes

        1,368,126          (378,786 )       (332,317 ) 

Federal income tax effect

        (193,551 )         (5,234 )       (51,585 ) 

Transfer from (to) interest maintenance reserve

        (1,713,513 )         75,312        39,581  
          

Net realized capital gains (losses) on investments

      $ (538,938 )       $ (308,708 )     $ (344,321 ) 
          

 

58

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Unrealized Capital Gains (Losses)

The changes in net unrealized capital gains and losses on investments, including the changes in net unrealized foreign capital gains and losses were as follows:

 

     Change in Unrealized  
     Year Ended December 31  
     2017     2016     2015  
  

 

 

  

Bonds

    $ 64,814     $ 87,348     $ (34,438 ) 

Preferred stocks

      (564 )      (102 )      15  

Common stocks

      1,468       95       (1,898 ) 

Affiliated entities

      398,521       420,679       194,397  

Mortgage loans on real estate

      (25,197 )      149       6,123  

Cash equivalents and short-term investments

      (2 )      (131 )      –  

Derivatives

      (73,945 )      (282,801 )      41,311  

Other invested assets

      181,548       44,603       (99,289 ) 
  

 

 

  

Change in unrealized capital gains (losses), before taxes

      546,643       269,840       106,221  

Taxes on unrealized capital gains (losses)

      124,074       (202,078 )      (6,205 ) 
  

 

 

  

Change in unrealized capital gains (losses), net of tax

    $         670,717     $         67,762     $         100,016  
  

 

 

  

6. Premium and Annuity Considerations Deferred and Uncollected

Deferred and uncollected life premium and annuity considerations at December 31, 2017 and 2016 were as follows:

 

     2017     2016  
     Gross      Net of Loading     Gross      Net of Loading  

Life and annuity:

           

Ordinary first-year business

    $ 233      $ (644 )    $ 1,629      $ 293  

Ordinary renewal business

      88,791        78,408       117,461        106,606  

Group life direct business

      17,510        8,438       18,960        9,311  

Credit direct business

      55        55       556        556  
  

 

 

     

 

 

    

 

 

     

 

 

  
   $         106,589      $         86,257     $         138,606      $         116,766  
  

 

 

     

 

 

    

 

 

     

 

 

  

 

59

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

7. Policy and Contract Attributes

Insurance Liabilities

Policy reserves, deposit funds and policy claims at December 31, 2017 and 2016 were as follows:

 

     Year Ended December 31  
     2017      2016  

Life insurance reserves

    $     11,016,283      $     14,606,067  

Annuity reserves and supplementary contracts with life contingencies

      13,180,233        17,643,814  

Accident and health reserves (including long term care)

      715,419        5,113,278  

Total policy reserves

    $ 24,911,935        37,363,159  

Deposit funds

      1,012,374        3,370,720  

Policy claims

      396,176        549,053  

Total policy reserves, deposit funds and claim liabilities

    $ 26,320,485      $ 41,282,932  
        

Life Insurance Reserves

The aggregate policy reserves for life insurance policies are based principally upon the 1941, 1958, 1980 and 2001 Commissioner’s Standard Ordinary Mortality and American Experience Mortality Tables. The reserves are calculated using interest rates ranging from 2.00 to 6.00 percent and are computed principally on the Net Level Premium Valuation and the Commissioner’s Reserve Valuation Method. Reserves for universal life policies are based on account balances adjusted for the Commissioner’s Reserve Valuation Method.

Tabular interest, tabular less actual reserves released and tabular cost have been determined by formula.

The Company waives deduction of deferred fractional premiums upon death of the insured and returns any portion of the final premium for periods beyond the date of death. 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.

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 0.05% of ordinary life insurance in force at December 31, 2017 and 2016.

 

60

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Annuity Reserves and Supplementary Contracts Involving Life Contingencies

Deferred annuity reserves are calculated according to the Commissioner’s Annuity Reserve Valuation Method including excess interest reserves to cover situations where the future interest guarantees plus the decrease in surrender charges are in excess of the maximum valuation rates of interest.

Reserves for immediate annuities and supplementary contracts with and without life contingencies are equal to the present value of future payments assuming interest rates ranging from 2.00 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.

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

For variable annuities with guaranteed living benefits and variable annuities with minimum guaranteed death benefits the Company complies with Valuation Manual section 21 (VM-21), Requirements for Principle-Based Reserves for Variable Annuities, which replaced Actuarial Guideline XLIII (AG 43) effective January 1, 2017. VM-21 specifies statutory reserve requirements for variable annuity contracts with benefit guarantees (VACARVM) and without benefit guarantees and related products. The VM-21 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 VM-21 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 VM-21 for determining the SSA.

Accident and Health Liabilities

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.

The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with SSAP No. 54, Individual and Group Accident and Health Contracts. As of December 31, 2017 and 2016, the Company had insurance in force aggregating $93,922,936 and $108,217,769, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the Iowa Insurance Division. The Company established

 

61

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

policy reserves of $1,816,099 and $1,636,310 to cover these deficiencies as of December 31, 2017 and 2016, respectively.

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

Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business. Unpaid claims include amounts for losses and related adjustment expenses and are estimates of the ultimate net costs of all losses, reported and unreported. These estimates are subject to the impact of future changes in claim severity, frequency and other factors.

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

 

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

Year ended December 31, 2017

            

2017

    $ -      $ 316,002      $ 215,157      $ 100,845  

2016 and prior

      1,425,390        (1,282,531 )       86,503        56,356  
     1,425,390      $ (966,529 )     $ 301,660        157,201  
              

Active life reserve

    $ 3,953,654            $ 657,543  

Total accident and health reserves

    $ 5,379,044            $ 814,744  
                       
     Unpaid Claims
Liability
Beginning of
Year		      Claims
Incurred		      Claims
Paid		      Unpaid Claims
Liability End
of Year		  

Year ended December 31, 2016

            

2016

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

2015 and prior

      1,372,958        (358,737 )       103,318        910,903  
     1,372,958      $ 368,071      $ 315,639        1,425,390  
                       

Active life reserve

    $ 3,720,926            $ 3,953,654  

Total accident and health reserves

    $ 5,093,884            $ 5,379,044  
                       

The Company’s unpaid claims reserve was decreased by ($1,282,351) and ($358,737) for the years ended December 31, 2017 and 2016, respectively, for health claims that were incurred prior

 

62

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

to those balance sheet dates. The change in 2017 resulted primarily from a new intercompany reinsurance agreement on the long term care block.

The balance in the liability for unpaid accident and health claim adjustment expenses as of December 31, 2017 and 2016 was $3,278 and $36,586, respectively. The Company incurred -$17,765 and paid $15,543 of claim adjustment expenses during 2017, of which $1,190 of the paid amount was attributable to insured or covered events of prior years. The Company incurred $19,398 and paid $18,036 of claim adjustment expenses during 2016, of which $2,466 of the paid amount was attributable to insured or covered events of prior years. The Company slightly decreased the claim adjustment expense provision for insured events of prior years during 2017. The Company did not increase or decrease the claim adjustment expense provision for insured events of prior years during 2016.

Deposit-type Contracts

Tabular interest on funds not involving life contingencies has also been determined primarily by formula.

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.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Withdrawal Characteristics of Annuity Reserves and Deposit Funds

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
2017		                  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account Non-
Guaranteed		      Total      Percent  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

    $ 981,060      $ –      $ –      $ 981,060        1  %  

At book value less surrender charge of 5% or more

      309,366        –        –        309,366        1       

At fair value

      104,165        –        74,544,361        74,648,526        80       

Total with adjustment or at fair value

      1,394,591        –        74,544,361        75,938,952        82       

At book value without adjustment (minimal or no charge or adjustment)

      12,266,170        –        –        12,266,170        13       

Not subject to discretionary withdrawal provision

      4,681,115        44,915        75,027        4,801,057        5       

Total annuity reserves and deposit liabilities

      18,341,876        44,915        74,619,388        93,006,179        100  %  
                    

Less reinsurance ceded

      4,149,269        –        –        4,149,269     

Net annuity reserves and deposit liabilities

    $     14,192,607      $     44,915      $     74,619,388      $     88,856,910     
           

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

                     December 31
2016		                  
     General
Account		      Separate
Account
with
Guarantees		      Separate
Account Non-
Guaranteed		      Total      Percent  

Subject to discretionary withdrawal with adjustment:

               

With fair value adjustment

    $ 1,141,878      $ –      $ –      $ 1,141,878        1  %  

At book value less surrender charge of 5% or more

      273,919        –        –        273,919        0       

At fair value

      126,155        –        66,886,612        67,012,767        73       

Total with adjustment or at fair value

      1,541,952        –        66,886,612        68,428,564        74       

At book value without adjustment (minimal or no charge or adjustment)

      13,413,613        17,739        –        13,431,352        14       

Not subject to discretionary withdrawal provision

      10,732,102        41,507        38,256        10,811,865        12       

Total annuity reserves and deposit liabilities

      25,687,667        59,246        66,924,868        92,671,781        100  %  
                    

Less reinsurance ceded

      4,680,333        –        –        4,680,333     

Net annuity reserves and deposit liabilities

    $     21,007,334      $     59,246      $ 66,924,868      $     87,991,448     
           

Separate Accounts

Certain separate and variable accounts held by the Company relate to individual variable life insurance policies. The benefits provided on the policies are determined by the performance and/or fair value of the investments held in the separate account. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. The assets of these separate accounts are carried at fair value. The life insurance policies typically provide a guaranteed minimum death benefit.

Certain separate accounts held by the Company represent funds which are administered for pension plans. The assets consist primarily of fixed maturities and equity securities and are carried at fair value. The Company provides a minimum guaranteed return to policyholders of certain separate accounts. Certain other separate accounts do not have any minimum guarantees and the investment risks associated with fair value changes are borne entirely by the policyholder.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Information regarding the separate accounts of the Company as of and for the years ended December 31, 2017, 2016 and 2015 is as follows:

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2017

    $ –      $ –      $ 10,782      $ 8,705,180      $ 8,715,962  
        

Reserves for separate accounts as of December 31, 2017 with assets at:

               

Fair value

    $ –      $ 25,346      $ 19,569      $ 78,023,636      $ 78,068,551  

Amortized cost

      –        633,003        –        –        633,003  

Total as of December 31, 2017

    $ –      $ 658,349      $ 19,569      $ 78,023,636      $ 78,701,554  
        

Reserves for separate accounts by withdrawal characteristics as of December 31, 2017:

               

Subject to discretionary withdrawal

    $ –      $ –      $ –      $ –      $ –  

With fair value adjustment

      –        –        –        –        –  

At fair value

      –        –        –        77,948,609        77,948,609  

At book value without fair value adjustment and with current surrender charge of less than 5%

      –        633,003        –        –        633,003  

Subtotal

      –        633,003        –        77,948,609        78,581,612  

Not subject to discretionary withdrawal

      –        25,346        19,569        75,027        119,942  

Total separate account reserve liabilities at December 31, 2017

    $     –      $     658,349      $     19,569      $     78,023,636      $     78,701,554  
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2016

    $ –      $ 64      $ 10,970      $ 8,767,639      $ 8,778,673  
        

Reserves for separate accounts as of December 31, 2016 with assets at:

               

Fair value

    $ –      $ 21,505      $ 20,001      $ 70,154,420      $ 70,195,926  

Amortized cost

      –        633,674        –        –        633,674  

Total as of December 31, 2016

    $ –      $ 655,179      $ 20,001      $ 70,154,420      $ 70,829,600  
        

Reserves for separate accounts by withdrawal characteristics as of December 31, 2016:

               

Subject to discretionary withdrawal

    $ –      $ –      $ –      $ –      $ –  

With fair value adjustment

      –        –        –        –        –  

At fair value

      –        –        –        70,116,163        70,116,163  

At book value without fair value adjustment and with current surrender charge of less than 5%

      –        633,674        –        –        633,674  

Subtotal

      –        633,674        –        70,116,163        70,749,837  

Not subject to discretionary withdrawal

      –        21,505        20,001        38,257        79,763  

Total separate account reserve liabilities at December 31, 2016

    $     –      $     655,179      $     20,001      $     70,154,420      $     70,829,600  
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Guaranteed
Indexed		      Nonindexed
Guarantee
Less Than or
Equal to 4%		      Nonindexed
Guarantee
Greater
Than 4%		      Nonguaranteed
Separate
Accounts		      Total  

Premiums, deposits and other considerations for the year ended December 31, 2015

    $ –      $ 31      $ 9,244      $ 12,203,423      $ 12,212,698  
        

Reserves for separate accounts as of December 31, 2015 with assets at:

               

Fair value

    $ –      $ 19,818      $ 23,493      $ 66,606,612      $ 66,649,923  

Amortized cost

      –        633,332        –        –        633,332  

Total as of December 31, 2015

    $ –      $ 653,150      $ 23,493      $ 66,606,612      $ 67,283,255  
        

Reserves for separate accounts by withdrawal characteristics as of December 31, 2015:

               

Subject to discretionary withdrawal

    $ –      $ –      $ –      $ –      $ –  

With fair value adjustment

      –        –        –        –        –  

At fair value

      –        –        –        66,568,326        66,568,326  

At book value without fair value adjustment and with current surrender charge of less than 5%

      –        633,332        –        –        633,332  

Subtotal

      –        633,332        –        66,568,326        67,201,658  

Not subject to discretionary withdrawal

      –        19,818        23,493        38,286        81,597  

Total separate account reserve liabilities at December 31, 2015

    $ –      $ 653,150      $ 23,493      $ 66,606,612      $ 67,283,255  
        

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

 

     Year Ended December 31  
     2017     2016     2015  

Transfer as reported in the summary of operations of the separate accounts statement:

       

Transfers to separate accounts

    $ 8,742,039     $ 8,767,931     $ 12,204,163  

Transfers from separate accounts

      (10,668,223 )      (7,872,107 )      (8,389,740 ) 

Net transfers to separate accounts

      (1,926,184 )      895,824       3,814,423  

Miscellaneous reconciling adjustments

      444,099       469,247       1,337,434  

Net transfers as reported in the statements of operations of the life, accident and health annual statement

    $ (1,482,085 )    $ 1,365,071     $ 5,151,857  
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The legal insulation of separate account assets prevents such assets from being generally available to satisfy claims resulting from the general account. At December 31, 2017 and 2016, the Company’s separate account statement included legally insulated assets of $80,820,068 and $73,597,682, respectively. The assets legally insulated from general account claims at December 31, 2017 and 2016 are attributed to the following products:

 

     2017      2016  

Group annuities

    $ 27,892,661      $ 24,388,135  

Variable annuities

      48,043,845        44,163,304  

Fixed universal life

      665,407        729,291  

Variable universal life

      3,952,973        4,212,641  

Variable life

      222,858        37,918  

Modified separate accounts

      29,090        53,201  

Registered Market Value Annuity Product - SPL

      13,234        13,192  

Total separate account assets

    $     80,820,068      $     73,597,682  
        

Some separate account liabilities are guaranteed by the general account. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account. To compensate the general account for the risk taken, the separate account paid risk charges of $505,695, $483,307, $434,084, $342,823, and $242,109, to the general account in 2017, 2016, 2015, 2014, and 2013, respectively. During the years ended December 31, 2017, 2016, 2015, 2014, and 2013 the general account of the Company had paid $43,334, $77,232, $223,304, $35,985, and $30,830 respectively, toward separate account guarantees.

At December 31, 2017 and 2016, the Company reported guaranteed separate account assets at amortized cost in the amount of $616,456 and $672,491, respectively, based upon the prescribed practice granted by the State of Iowa as described in Note 2. These assets had a fair value of $669,442 and $709,808 at December 31, 2017 and 2016, respectively, which would have resulted in an unrealized gain of $52,984 and $37,317, respectively, had these assets been reported at fair value.

The Company does not participate in securities lending transactions within the separate account.

8. 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.

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Premiums earned reflect the following reinsurance amounts:

 

     Year Ended December 31  
     2017      2016      2015  

Direct premiums

    $ 13,588,838      $ 14,081,227      $ 17,115,755  

Reinsurance assumed - non affiliates

      1,351,628        1,412,887        1,376,827  

Reinsurance assumed - affiliates

      310,030        98,501        110,700  

Reinsurance ceded - non affiliates

      (15,100,457 )       (2,018,612 )       (2,650,533 ) 

Reinsurance ceded - affiliates

      (3,360,130 )       448,649        (1,649,085 ) 

Net premiums earned

    $ (3,210,091 )     $ 14,022,652      $ 14,303,664  
        

Effective December 1, 2017, the Company entered into an agreement with Transamerica Premier Life Insurance Company (TPLIC), an affiliate, to convert the modified coinsurance agreement to coinsurance and funds withheld. As a result, TLIC transferred cash and invested assets to TPLIC. Assets that were not able to be transferred were retained in a FWH portfolio by TLIC until they mature, are sold or can be transferred. The Company transferred cash and invested assets with a market value of $6,487,360 to TPLIC. The reserves of $4,543,045 and claim reserves of $199,940 net of due and advance premium of $5,815 previously held on a modco basis were transferred to TPLIC. As a result of the transaction $18,642 existing IMR and $1,125,506 newly created IMR ($1,731,547 pre-tax gains) was released and transferred to TPLIC. The transaction results in a pre-tax loss of $606,306 which has been included in the Statement of Operations. Realized gains on the sale of assets supporting the business resulted in gains that offset the impact of the pre-tax loss related to the transaction. The Company ceded modified coinsurance reserves of $4,536,010 and $4,236,392 as of December 31, 2016 and 2015, respectively, for certain stand-alone long-term care policies under the indemnity reinsurance agreement with TPLIC. Ceded losses incurred of $361,167 and $346,166 for years ended December 31, 2016 and 2015, respectively, are presented net within the claims development table in Note 7.

Effective October 1, 2017, the Company recaptured credit life business from an affiliate, Southwest Equity Life Insurance Company. Subsequently, the mortgage life and disability insurance business was recaptured from the Company by TPLIC.

Effective October 1, 2017, the Company recaptured term insurance business from an affiliate, Transamerica International Reinsurance (Bermuda) Ltd. The Company received cash of $346,458, recaptured $1,260,767 in policyholder reserves, $35,798 claim reserves, $3,502 commissions payable and $26,595 due premium. The transaction results in a pre-tax loss of $927,013 which has been included in the Statement of Operations. The Company subsequently entered into an agreement with SCOR Global Life Americas to assume business related to this recapture at the same consideration. The gain related to this reinsurance agreement was deferred to surplus. The combination of the transaction results in no impact to the surplus of the Company.

Effective October 1, 2017, the Company recaptured term insurance business from an affiliate, LIICA Re I. The Company received cash of $113,953, recaptured $724,596 in policyholder reserves, $19,768 claim reserves and $11,124 in interest maintenance reserve liability. The transaction results in a pre-tax loss of $641,535 which has been included in the Statement of

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Operations. The Company subsequently entered into an agreement with SCOR Global Life Americas to assume business related to this recapture.

Effective October 1, 2017, the Company recaptured certain term insurance business from an affiliate, Transamerica Pacific Insurance Company (TPIC). The company received cash of $1,902 and recaptured $17,310 in policyholder reserves, $2,897 claim reserves and $325 due premium (net of commission). The transaction results in a pre-tax loss of $17,980 which has been included in the Statement of Operations. The Company subsequently entered into an agreement with SCOR Global Life Americas to assume business related to this recapture.    

Effective October 1, 2017, the Company novated the reinsurance agreement between TPIC and Transamerica International Re (Bermuda) Ltd. No cash or invested asset or net reserves were transferred as a result of this novation. The transaction results in no pre-tax gain or loss.

Subsequently effective October 1, 2017, the Company entered into a reinsurance agreement to cede an in force block of term insurance business to SCOR Global Life Americas. The company accrued to a funds withheld payable of $314,000 ceding $737,678 in policyholder reserves, $21,886 claim reserves, $10,958 due premium (net of commissions), offset by a reinsurance recoverable of $6,000 receivable and $11,124 in interest maintenance reserves liability. The transaction results in a pre-tax gain of $451,730 which has been identified separately on the insurer’s statutory financial statement as a surplus item and recognition of the surplus increase as income shall be reflected on a net of tax basis as earnings emerge from the business reinsured. The funds withheld balance was paid to SCOR Global Life Americas on December 29, 2017.    

On June 28, 2017, Transamerica completed a transaction to reinsure its payout annuity business and Bank Owned Life Insurance/Corporate Owned Life Insurance business (BOLI/COLI). Under the terms of the Master Agreement, the Company entered into a 100% coinsurance (general account liabilities)/100% modified coinsurance (separate account liabilities) reinsurance agreement with Wilton Reassurance Company, with an effective date of April 1, 2017. The Company transferred assets in the amount of $8,312,263, which included a negative ceding commission of $112,183, and released policy and deposit-type reserves of $7,186,330 and reinsurance deposit, policy loans and other balances related to the business of $191,144. Modified coinsurance separate account reserves of $3,695,331 were retained by the Company. As a part of the transaction, the Company realized $972,360 in net gains on the assets that were transferred of which $627,872 were deferred to IMR. The IMR liability simultaneously was released along with historical deferrals associated with the blocks of business in the amount of $921,322, resulting in a pretax loss of $51,266, which has been included in the Statement of Operations.

Effective January 1, 2017, three affiliated reinsurance treaties with TLB were amended to include the cession of all business with secondary guarantee universal life (SGUL) issued or novated by the Company. The Company increased cessions from 80 to 100% coinsurance and increased the expense allowance by fifteen basis points of account value on all business ceded based on the end of the period account value. As consideration for the cessions, the Company received cash and invested assets of $206,742, equal to the additional U.S. statutory reserves, resulting in no gain or loss on the transaction.

Effective October 1, 2016, the Company recaptured fixed annuity and funding agreement business previously ceded to TPLIC, an affiliate, on a coinsurance basis. The Company received

 

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Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

cash and invested assets of $3,017,999 and recaptured policy and claim reserves of $3,030,564. A reinsurance receivable from TPLIC was established for the remaining $12,565 of assets to be transferred in support of the transferred policy and claim reserves. In addition, TPLIC transferred $82,218 of transfer date IMR to the Company. The Company paid net consideration to TPLIC resulting in a pre-tax loss of $40,086, which has been included in the Statement of Operations.

Effective October 1, 2016, TPLIC recaptured medium-term note funding agreements previously ceded to the Company on a coinsurance basis. The Company transferred cash and invested assets of $114,175 and released deposit-type reserves of $112,238 and a hedge novation of $2,228. A payable to TPLIC of $292 was established for remaining assets to be transferred in support of the hedge novation. The Company received consideration from TPLIC resulting in a pre-tax gain of $2,936 which has been included in the Statement of Operations.

Effective September 30, 2016, the Company ceded term life business to TWRI, an affiliate, on a coinsurance funds withheld basis. The Company paid an initial reinsurance premium of $41,565, transferred other net assets of $2,042, and released life and claim reserves of $296,656 and $21,926, respectively, resulting in a pre-tax gain of $274,974 ($178,733 net of tax) which has been credited directly to unassigned surplus. Effective January 1, 2017, an amendment was made to the reinsurance agreement with TWRI to allow reinsurance of post December 31, 2016 issue dates up to June 30, 2017 issue dates. The policies with issue dates in 2017 are subject to a $50 million maximum in total annualized premium.

The Company received reinsurance recoveries in the amount of $3,854,126, $3,349,716 and $3,370,420, during 2017, 2016 and 2015, respectively. At December 31, 2017 and 2016, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $913,852 and $753,202. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2017 and 2016 of $42,383,007 and $30,090,704, respectively, of which $21,187,873 and $17,480,278 were ceded to affiliates.

On October 1, 2015, the Company, Union Hamilton Reinsurance, Ltd. (UH), and Commonwealth Annuity and Life Insurance Company (CALIC) entered into a Novation Agreement, pursuant to which UH assigned and delegated to CALIC its rights and obligations under the Original Agreement. Subsequently, the Company and CALIC amended and restated the fixed annuity reinsurance agreement from a modified coinsurance to coinsurance basis. As a result of the amendment, the Company transferred assets with a market value of $735,156, released coinsurance reserve liabilities of $721,190, and released an after-tax IMR liability associated with the block of business in the amount of $9,477 resulting in a net of tax gain on the transaction in the amount of $399 (IMR after-tax gain of $9,477 less gross loss on reinsurance of $13,966 taxed at 35%) which has been included in the Statement of Operations.

Effective July 1, 2015, the Company entered into an assumption reinsurance agreement with TPLIC, an affiliate, under which the Company novated its Medicare Supplement business to TPLIC. The Company transferred policy reserves of $6,987, claims reserves of $20,893, other liabilities of $920 along with assets of $28,801 to TPLIC during the last two quarters of the year. This represents the portion of the Medicare supplement business for which regulatory approval of the assumption agreement was received by July 1. No consideration was paid or received related to the novation. No gain or loss was recognized in the financial statements.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Effective April 14, 2015, the reinsurance agreement dated December 31, 2008 reinsuring variable annuity reinsurance between the Company and Transamerica International Re (Bermuda) Ltd (TIRe) was novated, to Firebird Re Corp. (FReC). General account reserves, and claim reserves ceded on a coinsurance basis at the time of novation were $514,898 and $5,070, respectively. Separate account modified coinsurance reserves and general account modified coinsurance reserves at the time of the novation were $7,052,587 and $140,034 respectively. No consideration was paid or received related to the novation. No gain or loss was recognized.

Subsequent to the novation, the Companies entered into an amended and restated reinsurance agreement related to the business. The modified coinsurance reinsurance reserves were converted to coinsure reserves and a general account funds withheld was established. The general account paid FReC $140,034 for the modified coinsurance reserves and ceded coinsurance reserves of $156,478, resulting in a pre-tax gain of $16,444 which has been credited directly to unassigned surplus. FReC placed assets of $676,446, equal to the ceded general account reserves, in a funds withheld account, and the Company established a corresponding funds withheld liability of $676,446.

The Company provided invested assets to FReC as settlement of reinsurance payables in the amount of $172,338 and $231,084 during 2017 and 2016, respectively. The Company received invested assets from FReC as settlement of reinsurance receivables in the amount of $117,519 and $345,914 during 2016 and 2015, respectively.

During 2017, 2016 and 2015 amortization of deferred gains associated with previously transacted reinsurance agreements was released into income in the amount of $90,556 ($62,716 after tax), $255,425 ($176,996 after tax) and $133,048 ($106,755 after tax), respectively.

The Company reports a reinsurance deposit receivable of $0 and $199,500 as of December 31, 2017 and 2016, respectively. In 1996, the Company entered into a reinsurance agreement with an unaffiliated company where, for a net consideration of $59,716, the Company ceded certain portions of future obligations under single premium annuity contracts originally written by the Company in 1993. Consistent with the requirements of SSAP No. 75, Reinsurance Deposit Accounting, the Company reports the net consideration paid as a deposit. The amount reported is the present value of the future payment streams discounted at the effective yield rate determined at inception.

During 2017, 2016 and 2015, the Company obtained letters of credit of $55,017, $98,006 and $242,957, respectively, for the benefit of affiliated and nonaffiliated companies that have reinsured business to the Company where the ceding company’s state of domicile does not recognize the Company as an authorized reinsurer.

The Company reinsures a closed block of guaranteed minimum income benefit (GMIB), guaranteed minimum death benefit (GMDB), and guaranteed minimum withdrawal benefit (GMWB) risks to Firebird Re Corp. The affiliated reinsurance treaties have been in place for a number of years and do not include any new business since the inception but were initiated to better align hedging and capital requirements. The risk reinsured to the affiliated reinsurer is retained by the Transamerica group. The risks assumed by Firebird Re Corp. are all affiliated variable annuity treaties.    

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Variable annuity reserves established by Firebird Re Corp. are equal to the US GAAP reserve requirements. In addition, the captive establishes an additional variable annuity reserve above the US GAAP reserve to the greater of the mirror of the reserve ceded to the Captive (US statutory) and a total asset requirement (CTE 80) level. The TAR CTE80 is calculated assuming a 50% best estimate model (with hedge credit) and 50% stochastic model.

The Company took reserve credits for variable annuities of $600,668 and $746,339 in 2017 and 2016, respectively. The amount of collateral supporting the reserve credits was $585,540 and $730,545 in 2017 and 2016, respectively. All of the collateral held to support the reserve credit is funds withheld. The collateral is made up of bonds, cash and short-term assets.

9. Income Taxes

The net deferred income tax asset at December 31, 2017 and 2016 and the change from the prior year are comprised of the following components:

 

     December 31, 2017  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ 1,450,636      $ 135,094      $ 1,585,730  

Statutory Valuation Allowance Adjustment

      2,432        –        2,432  

Adjusted Gross Deferred Tax Assets

      1,448,204        135,094        1,583,298  

Deferred Tax Assets Nonadmitted

      65,297        –        65,297  

Subtotal (Net Deferred Tax Assets)

      1,382,907        135,094        1,518,001  

Deferred Tax Liabilities

      773,659        209,619        983,278  

Net Admitted Deferred Tax Assets

    $ 609,248      $ (74,525 )     $ 534,723  
        
     December 31, 2016  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $       2,482,554      $       215,092      $       2,697,646  

Statutory Valuation Allowance Adjustment

      –        –        –  

Adjusted Gross Deferred Tax Assets

      2,482,554        215,092        2,697,646  

Deferred Tax Assets Nonadmitted

      517,406        –        517,406  

Subtotal (Net Deferred Tax Assets)

      1,965,148        215,092        2,180,240  

Deferred Tax Liabilities

      1,152,105        164,291        1,316,396  

Net Admitted Deferred Tax Assets

    $ 813,043      $ 50,801      $ 863,844  
        
     Change  
     Ordinary      Capital      Total  

Gross Deferred Tax Assets

    $ (1,031,918 )     $ (79,998 )     $ (1,111,916 ) 

Statutory Valuation Allowance Adjustment

      2,432        –        2,432  

Adjusted Gross Deferred Tax Assets

      (1,034,350 )       (79,998 )       (1,114,348 ) 

Deferred Tax Assets Nonadmitted

      (452,109 )       –        (452,109 ) 

Subtotal (Net Deferred Tax Assets)

      (582,241 )       (79,998 )       (662,239 ) 

Deferred Tax Liabilities

      (378,446 )       45,328        (333,118 ) 

Net Admitted Deferred Tax Assets

    $ (203,795 )     $ (125,326 )     $ (329,121 ) 
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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

 

     Year Ended December 31         
     2017      2016      Change  

Deferred Tax Assets

         

Ordinary

         

Discounting of unpaid losses

    $ 3,915      $ 5,995      $ (2,080 ) 

Policyholder reserves

      345,518        819,164        (473,646 ) 

Investments

      98,453        556,905        (458,452 ) 

Deferred acquisition costs

      146,018        532,284        (386,266 ) 

Compensation and benefits accrual

      17,918        32,619        (14,701 ) 

Receivables - nonadmitted

      16,017        28,232        (12,215 ) 

Tax credit carry-forward

      522,986        222,313                300,673  

Assumption Reinsurance

      5,025        9,545        (4,520 ) 

CFC FTC Offset

      17,908        15,020        2,888  

Hedge Reserve offset

      85,961        –        85,961  

Subpart F

      79,733        227,680        (147,947 ) 

Policyholder Reserve Transitional

         

Amount

      97,963        –        97,963  

Other (including items <5% of total ordinary tax assets)

      13,221        32,797        (19,576 ) 

Subtotal

          1,450,636            2,482,554        (1,031,918 ) 

Statutory valuation allowance adjustment

      2,432        –        2,432  

Nonadmitted

      65,297        517,406        (452,109 ) 

Admitted ordinary deferred tax assets

      1,382,907        1,965,148        (582,241 ) 

Capital:

         

Investments

      135,094        215,092        (79,998 ) 

Other (including items <5% of total total capital tax assets)

      –        –        –  

Subtotal

      135,094        215,092        (79,998 ) 

Nonadmitted

      –        –        –  

Admitted capital deferred tax assets

      135,094        215,092        (79,998 ) 

Admitted deferred tax assets

    $ 1,518,001      $ 2,180,240      $ (662,239 ) 
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     Year Ended December 31         
     2017      2016      Change  

Deferred Tax Liabilities

         

Ordinary

         

Investments

    $ 421,295      $ 687,898      $ (266,603 ) 

Deferred and Uncollected Premiums

      18,114        40,867        (22,753 ) 

§807(f) adjustment

      41,138        68,493        (27,355 ) 

Separate Acct. - Temp adjustments (exce

      –        34,766        (34,766 ) 

CFC FTC Offset

      15,977        11,579        4,398  

Hedge Reverse Offset

      104,188        201,554        (97,366 ) 

Subpart F

      61,334        106,760        (45,426 ) 

Policyholder Reserve Transitional Amount

      110,804        –        110,804  

Other (including items <5% of total

            –  

ordinary tax liabilities)

      809        188        621  

Subtotal

      773,659        1,152,105        (378,446 ) 

Capital

         

Investments

      209,619        164,291        45,328  

Subtotal

      209,619        164,291        45,328  

Deferred tax liabilities

      983,278        1,316,396        (333,118 ) 

Net deferred tax assets/liabilities

    $ 534,723      $ 863,844      $ (329,121 ) 
        

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) (HR 1, Pub. L. 115-97), was signed into law. As a result, the Company reported a valuation allowance of $2,432 on its minimum tax credit carryover deferred tax assets to reflect the amount expected to be realized as a refund in the future.

The TCJA reduced the federal tax rate to 21%. As a result, the Company reduced its net deferred tax asset balance by $9,524, excluding $42,450 of net deferred tax asset reduction on unrealized gains/(losses).

The effects of the U.S. tax reform were reflected in the 2017 financial statements as determined or as reasonably estimated provisional amounts based on available information subject to interpretation in accordance with the SEC’s Staff Accounting Bulletin No. 118 (SAB 118), as adopted by NAIC SAPWG INT 18-01. SAB 118 provides guidance on accounting for the effects of the U.S. tax reform where the Company’s determinations are incomplete but the Company is able to determine a reasonable estimate. A final determination is required to be made within a measurement period not to extend beyond one year from the enactment date of the U.S. tax reform.

As a result of TCJA, the Company’s tax reserve deductible temporary difference increased by an estimated $61,149. This change results in a net offsetting ($61,149) taxable temporary difference that will be amortized into taxable income evenly over the next eight years. As noted, this transitional change amount was based on a provisional estimate at December 31, 2017. Actual results may differ from the estimates and will be adjusted in future periods when the actuarial models and systems are updated for the policyholder tax reserve changes required by the TCJA.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

As discussed in Note 1, for the years ended December 31, 2017 and 2016 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, 2017  
         Ordinary      Capital      Total  

Admission Calculation Components SSAP No. 101

        
2(a)   Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks    $ –      $ –      $ –  
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)      498,310        36,413        534,723  
 

1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date

      498,310        36,413        534,723  
 

2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

      XXX        XXX        731,553  
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      884,597        98,681        983,278  
2(d)   Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))    $ 1,382,907      $ 135,094      $ 1,518,001  
          
         December 31, 2016  
         Ordinary      Capital      Total  
  Admission Calculation Components SSAP No. 101         

2(a)

   Federal Income Taxes Paid in Prior Years         
  Recoverable Through Loss Carrybacks    $ 226,217      $ 30,862      $ 257,079  

2(b)

   Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)      550,512        56,253        606,765  
 

1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date

      550,512        56,253        606,765  
 

2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

      XXX        XXX        655,637  

2(c)

   Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities      1,188,419        127,977        1,316,396  

2(d)

   Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))    $     1,965,148      $     215,092      $     2,180,240  
          

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

         Ordinary      Change
Capital		      Total  

Admission Calculation Components SSAP No. 101

         

2(a)

   Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks    $     (226,217)      $ (30,862)      $ (257,079)  

2(b)

   Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below)      (52,202)        (19,840)        (72,042)  
 

1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date

      (52,202)        (19,840)        (72,042)  
 

2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold

      XXX        XXX        75,916  

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      (303,822)        (29,296)        (333,118)  

2(d)

   Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c))    $     (582,241)      $ (79,998)      $ (662,239)  
                            

 

    

December 31

         
     2017      2016      Change  

Ratio Percentage Used To Determine Recovery

                           

Period and Threshold Limitation Amount

      901 %       706 %       195 % 
                          

Amount of Adjusted Capital and Surplus Used To

         

Determine Recovery Period and Threshold

                           

Limitation in 2(b)2 above

    $     4,879,886      $ 4,355,927      $ 523,959  
                          

The impact of tax planning strategies at December 31, 2017 and 2016 was as follows:

 

 

     December 31, 2017  
     Ordinary
Percent		      Capital
Percent		      Total Percent  

Impact of Tax Planning Strategies:

         

(% of Total Adjusted Gross DTAs)

      0 %       0 %       0 % 
                          

(% of Total Net Admitted Adjusted Gross DTAs)

      8 %       16 %       8 % 
                          

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

     December 31, 2016  
     Ordinary
Percent		     Capital
Percent		      Total Percent  

Impact of Tax Planning Strategies:

        

(% of Total Adjusted Gross DTAs)

      0 %      0 %       0 % 
        

(% of Total Net Admitted Adjusted Gross DTAs)

      3 %      25 %       6 % 
        

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                          
     2017     2016     Change  

Current Income Tax

       

Federal

    $ (1,088,923 )    $ (108,240 )    $ (980,683 ) 

Foreign

      31       (1 )      32  

  Subtotal

      (1,088,892 )      (108,241 )      (980,651 ) 

Federal income tax on net capital gains

              193,551       5,234               188,317  

Federal and foreign income taxes incurred

    $ (895,341 )    $ (103,007 )    $ (792,334 ) 
        
     Year Ended December 31                          
     2016     2015     Change  

Current Income Tax

       

Federal

    $ (108,240 )     $ (6,352 )     $ (101,888 ) 

Foreign

      (1 )      (26 )      25  

  Subtotal

      (108,241 )      (6,378 )      (101,863 ) 

Federal income tax on net capital gains

      5,234       50,995       (45,761 ) 

Federal and foreign income taxes incurred

    $ (103,007 )     $         44,617     $ (147,624 ) 
        

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income before tax as follows:

 

     Year Ended December 31  
     2017     2016     2015  
  

 

 

  

Current income taxes incurred

    $ (895,341 )    $ (103,007 )    $ 44,617  

Change in deferred income taxes

(without tax on unrealized gains and losses)

      905,304       (191,512 )      (294,499 ) 
  

 

 

  

Total income tax reported

    $ 9,963     $   (294,519 )    $   (249,882 ) 
  

 

 

  

Income before taxes

    $ 1,341,430     $ 154,572     $ (168,253 ) 
     35.00%       35.00%       35.00%  
  

 

 

  

Expected income tax expense (benefit) at 35% statutory rate

    $ 469,501     $ 54,100     $ (58,889 ) 

Increase (decrease) in actual tax reported resulting from:

       

Dividends received deduction

      (74,961 )      (74,012 )      (69,204 ) 

Tax credits

      (53,734 )      (25,037 )      (81,829 ) 

Tax-exempt Income

      (4 )      (11 )      (7 ) 

Tax adjustment for IMR

      (747,002 )      669       (33,936 ) 

Surplus adjustment for in-force ceded

      80,818       608       (40,327 ) 

Nondeductible expenses

      1,202       1,049       976  

Deferred tax benefit on other items in surplus

      131,796       (233,112 )      (3,152 ) 

Provision to return

      549       (2,177 )      (4,546 ) 

Life-owned life insurance

      (2,975 )      (2,966 )      (2,948 ) 

Dividends from certain foreign corporations

      2,639       1,620       2,093  

Statutory valuation allowance

      (2,432 )      –       –  

Pre-tax income of single member limited liability company

      230,025       14,093       46,193  

Tax-free distribution

      129,644       –       –  

Intercompany Dividends

      (150,570 )      (2,966 )      –  

Partnership Permanent Adjustment

      (2,136 )      (1,913 )      (13,177 ) 

Change in tax rates

      9,524       –       –  

Uncertain tax positions

      3,689       3,664       2,179  

Deferred only transfer - IWA

      (16,157 )      –       –  

Audit Adjustment - Permanent

      –       (21,196 )      –  

Other

      547       (6,932 )      6,692  
  

 

 

  

Total income tax reported

      $ 9,963     $ (294,519 )    $ (249,882 )  
  

 

 

  

The Company’s federal income tax return is consolidated with other included affiliated companies. Please see attached listing of companies in the Appendix A. The method of allocation between the companies is subject to a written tax allocation agreement. Under the terms of the tax allocation agreement, allocations are based on separate income tax return calculations. The Company is entitled to recoup federal income taxes paid in the event the future losses and credits reduce the greater of the Company’s separately computed income tax liability or the consolidated group’s income tax liability in the year generated. The Company is also entitled to recoup federal income taxes paid in the event the losses and credits reduce the greater of the Company’s

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

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 been filed for 2017.

As of December 31, 2017 and 2016, respectively, the Company had a $522,986 and $223,313 tax credit carryforward available for tax purposes. Included in the 2017 tax credit carryforward is a foreign tax credit (“FTC”) carryforward of $103,673 and general business credit (“GBC”) carryforward of $370,444.

GBC Carryovers:

 

Carryovers from:

   Expiration            

12-31-2008

   12-31-2028       53,133  

12-31-2009

   12-31-2029       44,135  

12-31-2010

   12-31-2030       51,443  

12-31-2011

   12-31-2031       45,390  

12-31-2012

   12-31-2032       33,424  

12-31-2013

   12-31-2033       37,784  

12-31-2014

   12-31-2034       24,112  

12-31-2015

   12-31-2035       58,113  

12-31-2016

   12-31-2036       8,468  

12-31-2017

   12-31-2037       14,442  

GBC Carryovers

    370,444  

FTC Carryovers:

 

Carryovers from:

   Expiration            

12-31-2013

   12-31-2023       8,176  

12-31-2014

   12-31-2024       15,607  

12-31-2015

   12-31-2025       27,352  

12-31-2016

   12-31-2026       13,245  

12-31-2017

   12-31-2027       39,293  

FTC Carryovers

     103,673  

The company also has a minimum tax credit carryforward of $48,869 ($46,437 net of valuation allowance). The Company will fully recoup the minimum tax credit carryforward by the end of 2021 pursuant to TCJA regardless of future income tax liability. As of December 31, 2017 and 2016, the Company had no operating loss or capital loss carryforwards available for tax purposes.

The Company incurred income taxes of $0, $0, and $0 during 2017, 2016, and 2015, respectively, which will be available for recoupment in the event of future net capital losses.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The total amount of the unrecognized tax benefits that if recognized, would affect the effective income tax rate for years ending in December 31, 2017 and 2016 is $11,091 and $9,763. It is not anticipated that the total amounts of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

 

Unrecognized Tax Benefits    December 31,  
     2017      2016  

Unrecognized tax benefits, opening balance

    $ 9,763      $   4,152  

Additions for - tax positions of prior years

      1,328        5,611  
  

 

 

     

 

 

  

Unrecognized tax benefits, ending balance

    $     11,091      $   9,763  
  

 

 

     

 

 

  

The Company classifies interest and penalties related to income taxes as income tax expense. The Company’s interest (benefit) expense related to income taxes for the years ending in December 31, 2017, 2016, and 2015 is ($14,348), $864, and ($270), respectively. The total interest receivable (payable) balance as of December 31, 2017 and 2016 is $3,577 and ($10,768), respectively. The Company recorded no liability for penalties.

The Company modified its calculation of dividends that are eligible for dividends received deduction in 2016. This resulted in recording a permanent tax benefit of $20,250 in the Company’s 2016 financial statement for years 2011-2015. This was treated as a change in estimate.

The Company’s federal income tax returns have been examined by the Internal Revenue Service and an examination is in progress for the year 2009 through 2013. The Company believes that there are adequate defenses against or sufficient provisions established related to any open or contested tax positions.

10. Capital and Surplus

The Company had authorized 1,000,000 common stock shares at $10 per share par value of which 676,190 shares were issued and outstanding at December 31, 2017 and 2016.

The Company has 42,500 Series A preferred shares authorized, 42,500 shares issued, and 42,500 shares held by the Company as treasury stock, with a par value of $10. On December 26, 2006, the Company repurchased its Series A preferred shares for $58,000. The Company also has 250,000 Series B preferred shares authorized, 117,154 shares issued and 55,930 shares outstanding, with a par value of $10, at December 31, 2017. On December 27, 2017, the Company paid $297 to its parent company, representing the redemption of 29,787 shares of Series B non-voting preferred stock at par value. On December 22, 2016, the Company redeemed 31,437 shares of its Series B non-voting preferred stock at par value, in the amount of $314.

The Company is subject to limitations, imposed by the State of Iowa, on the payment of dividends to its shareholders. Generally, dividends during any twelve-month period may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of the Company’s statutory surplus as of the preceding December 31, or (b) the Company’s statutory gain from operations before net realized capital gains (losses) on investments for the preceding year. Subject to the availability of unassigned surplus at the time of such dividend, the maximum

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

payment which may be made in 2018, without the prior approval of insurance regulatory authorities, is $1,044,694.

On September 12, 2017 and June 28, 2017, the Company paid ordinary common stock dividends of $240,000 and $188,393, respectively, to its parent, CGC.

The Company provided a cash return of capital to its parent company in the amount of $297,572 on June 28, 2017.

The Company received ordinary common stock dividends from Transamerica Financial Life Insurance Company (TFLIC) in the amount of $10,289 on June 28, 2017, $9,075 on December 21, 2017, and $8,473 on June 27, 2016. On December 21, 2017 the Company received preferred stock dividends of $3 from TFLIC.

On June 15, 2017, the Company received a common stock dividend of $188,400 from its subsidiary TLB.

The Company received a return of capital of $27,000 on June 28, 2017 from its subsidiary Investors Warranty of America, LLC (IWA).

On December 28, 2017, the Company received a return of capital of $135,000 and dividends of $221,506 from LIICA Holdings, LLC, a subsidiary.

On December 22, 2016, the Company paid a preferred stock dividend of $35,630 and a cash return of capital of $314,056 to its parent. In addition, the Company paid $314 representing the redemption of 31,437 shares of Series B non-voting preferred stock at par value to its parent also on December 22, 2016.

On June 20, 2016 the Company paid a preferred stock dividend of $104,555 and an ordinary common stock dividend of $245,445 to its parent company.

On September 28, 2016 the Company made a capital contribution in the amount of $2,500 to TWRI in exchange for 25,000 common shares of TWRI. The Company also made an additional capital contribution to TWRI of $122,500 on September 28, 2016.

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, 2017, the Company meets the minimum RBC requirements.

On September 30, 2002, Life Investors Insurance Company of America (LIICA), which merged in to the Company effective October 2, 2008, received $150,000 from TA Corp in exchange for surplus notes. These notes are due 20 years from the date of issuance at an interest rate of 6%, and are subordinate and junior in right of payment to all obligations and liabilities of the Company. In the event of liquidation of the Company, the holders of the issued and outstanding preferred stock shall be entitled to priority only with respect to accumulated but unpaid dividends before the holder of the surplus notes and full payment of the surplus notes shall be made before the holders of common stock become entitled to any distribution of the remaining assets of the

 

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Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

Company. The Company received approval from the IID prior to paying quarterly interest payments.

Additional information related to the outstanding surplus notes at December 31, 2017 and 2016 is as follows:

 

For Year

Ending

    Balance
Outstanding		      Interest Paid
Current Year		      Cumulative
Interest Paid		      Accrued
Interest		  
2017    $     150,000      $     9,000      $     135,000      $     2,250  
2016    $ 150,000      $ 9,000      $ 126,000      $ 2,250  

11. Securities Lending

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

At December 31, 2017 and 2016, respectively, securities with a fair value of $2,385,635 and $2,251,377 were on loan under securities lending agreements. At December 31, 2016, the collateral the Company received from securities lending activities was in the form of cash and on open terms. This cash collateral is reinvested and is not available for general corporate purposes. The reinvested cash collateral has a fair value of $2,460,919 and $2,303,603 at December 31, 2017 and 2016, respectively.

The contractual maturities of the securities lending collateral positions are as follows:

 

     Fair Value  
     2017      2016  

Open

    $     2,461,167      $     2,303,289  

30 days or less

      –        –  

31 to 60 days

      –        –  

61 to 90 days

      –        –  

Greater than 90 days

      –        –  

Total

      2,461,167        2,303,289  

Securities received

      –        –  

Total collateral received

    $ 2,461,167      $ 2,303,289  
        

The Company receives primarily cash collateral in an amount in excess of the fair value of the securities lent. The Company reinvests the cash collateral into higher yielding securities than the

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

securities which the Company has lent to other entities under the arrangement.

The maturity dates of the reinvested securities lending collateral are as follows:

 

    

2017

     2016  
  

 

 

     

 

 

  
     Amortized
Cost		      Fair Value      Amortized
Cost		      Fair Value  
  

 

 

     

 

 

  

Open

    $ 264,039      $ 264,039      $ 349,742      $ 349,742  

30 days or less

      913,484        913,484        1,045,472        1,045,472  

31 to 60 days

      376,158        376,158        320,865        320,865  

61 to 90 days

      489,542        489,542        200,597        200,597  

91 to 120 days

      191,141        191,141        110,054        110,054  

121 to 180 days

      226,555        226,555        276,873        276,873  

181 to 365 days

      –        –        –        –  

1 to 2 years

      –        –        –        –  

2 to 3 years

      –        –        –        –  

Greater than 3 years

      –        –        –        –  
  

 

 

     

 

 

  

Total

      2,460,919        2,460,919        2,303,603        2,303,603  

Securities received

      –        –        –        –  
  

 

 

     

 

 

  

Total collateral reinvested

    $   2,460,919      $   2,460,919      $   2,303,603      $   2,303,603  
  

 

 

     

 

 

  

For securities lending, the Company’s sources of cash that it uses to return the cash collateral are dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $2,463,459 (fair value of $2,460,919) that are currently tradable securities that could be sold and used to pay for the $2,461,167 in collateral calls that could come due under a worst-case scenario.

12. Retirement and Compensation Plans

Defined Contribution Plans

The Company’s employees participate in a contributory defined contribution plan sponsored by Transamerica Corporation (TA Corp) which is qualified under Section 401(k) of the Internal Revenue Code. Generally, employees of the Company who customarily work at least 20 hours per week and meet the other eligibility requirements are participants of the plan. Participants may elect to contribute up to 100% of eligible earnings, subject to government or other plan restrictions for certain key employees. The Company will match an amount up to three percent of the participant’s eligible earnings. Participants may direct all of their contributions and plan balances to be invested in a variety of investment options. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974. Benefits expense of $13,113, $15,745 and $16,439 was allocated to the Company for the years ended December 31, 2017, 2016 and 2015 respectively.

Defined Benefit Plans

The Company’s employees participate in a qualified defined benefit pension plan sponsored by TA Corp. Generally, employees of the Company who customarily work at least 20 hours per

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

week and complete six months of continuous service and meet the other eligibility requirements are participants of the plan. The Company has no legal obligation for the plan. The benefits are based on years of service and the employee’s eligible compensation. The plan provides benefits based on a traditional final average formula or a cash balance formula. The plan is subject to the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974.

TA Corp sponsors supplemental retirement plans to provide the Company’s senior management with benefits in excess of normal pension benefits. The Company has no legal obligation for the plan. The plans are noncontributory and benefits are based on years of service and the employee’s eligible compensation. The plan provides benefits based on a traditional final average formula or cash balance formula. The plans are unfunded and nonqualified under the Internal Revenue Service Code.

The Company recognizes pension expense equal to its allocation from TA Corp. The pension expense related to both the defined pension plan and the supplemental retirement plans 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, which is within the guidelines of SSAP 102, Pensions. Pension expenses were $30,676, $35,812 and $32,799 for the years ended December 31, 2017, 2016 and 2015, respectively.

In addition to pension benefits, TA Corp sponsors unfunded plans that provide health care and life insurance benefits to retired Company employees meeting certain eligibility requirements. The Company has no legal obligation for the plan. Portions of the medical and dental plans are contributory. The expenses of the postretirement plans are allocated among the participating companies based on IAS 19 and based upon actuarial participant benefit calculations which is within the guidelines of SSAP 92, Postretirement Benefits Other Than Pensions. The Company’s allocation of post retirement expenses was $7,332, $6,527 and $6,361 for the years ended December 31, 2017, 2016 and 2015, respectively.

Other Plans

TA Corp has established deferred compensation plans for certain key employees of the Company. The Company’s allocation of expense for these plans for each of the years ended December 31, 2017, 2016 and 2015 was insignificant.

Postemployment Benefits - Restructurings

The Company announced an update of its restructuring plan in December 2016 that includes a significant number of position eliminations. Affected employees were offered a severance package contingent upon completion of the terms of their employment. In accordance with SSAP No. 5R, Liabilities, Contingencies and Impairments of Assets, an expense was accrued in 2016 for the severance benefit of $21,615.

During December 2015, the Company offered select employees the opportunity to participate in the Transamerica Voluntary Separation Incentive Plan (VSIP). Eligible employees were given until January 18, 2016 to make an election. Following SSAP No. 11, Postemployment Benefits and Compensated Absences, and SSAP No. 5R, an expense was accrued in 2015 for the post-

 

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Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

employment benefit in the amount of $34,824. The remaining accrual balance at the year ended December 31, 2016 was $5,876.

13. Related Party Transactions

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

The Company is party to a shared services and cost sharing agreement among and between the Transamerica companies, under which various affiliated companies may perform specified administrative functions in connection with the operation of the Company, in consideration of reimbursement of actual costs of services rendered. The Company is also party to a service agreement with TFLIC, in which the Company provides services, including accounting, data processing and other professional services, in consideration of reimbursement of the actual costs of services rendered. The Company is also a party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors, Inc. whereby the advisor serves as the administrator and advisor for the Company’s mortgage loan operations. AEGON USA

Investment Management, LLC acts as a discretionary investment manager under an Investment Management Agreement with the Company. The amount received by the Company as a result of being a party to these agreements was $908,170, $993,182 and $802,298 during 2017, 2016 and 2015, respectively. The amount paid as a result of being a party to these agreements was $644,589, $610,754 and $445,462 during 2017, 2016 and 2015, respectively. Fees charged between affiliates approximate their cost. The Company has an administration service agreement with Transamerica Asset Management, Inc. to provide administrative services to the AEGON/Transamerica Series Trust. The Company received $148,943, $136,494 and $133,831 for these services during 2017, 2016 and 2015, respectively.

Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred expenses under this agreement of $35,676, $56,076 and $71,184 for the years ended December 31, 2017, 2016 and 2015, respectively.

Receivables from and payables to affiliates bear interest at the thirty-day commercial paper rate. During 2017, 2016 and 2015, the Company received (paid) net interest of ($555) and $63 and $90 from (to) affiliates, respectively. At December 31, 2017 and 2016, respectively, the Company reported net payables from affiliates of $489 and $3,951. Terms of settlement require that these amounts are settled within 60 days.

At December 31, 2017, the Company had short-term intercompany notes receivable of $168,300 as follows. In accordance with SSAP No. 25, Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties, these notes are reported as short-term investments.

 

Receivable from    Amount      Due By      Interest Rate  

TA Corp

    $ 53,600        December 21, 2018        1.18 % 

TA Corp

          114,700        December 29, 2018        1.18 % 

At December 31, 2016, the Company had no short-term intercompany notes receivable.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

During 1998, the Company issued life insurance policies to two affiliated companies, covering the lives of certain employees of those affiliates. Aggregate reserves for policies and contracts related to these policies are $166,473 and $165,912 at December 31, 2017 and 2016, respectively.

In prior years, the Company purchased life insurance policies covering the lives of certain employees of the Company from an affiliate. At December 31, 2017 and 2016, the cash surrender value of these policies was $174,952 and $171,075, respectively.

The Company utilizes the look-through approach in valuing its investment in the following five entities.

 

Real Estate Alternatives Portfolio 2, LLC (REAP 2)

    $ 31,578  

Real Estate Alternatives Portfolio 3, LLC (REAP 3)

    $ 52,499  

Real Estate Alternatives Portfolio 4 HR, LLC (REAP 4 HR)

    $ 96,573  

Aegon Multi-Family Equity Fund, LLC (AMFEF)

    $ 40,602  

Natural Resources Alternatives Portfolio, LLC (NRAP)

    $ 76,249  

These entity’s financial statements are not audited and the Company has limited the value of its investment in these entities to the value contained in the audited financial statements of the underlying LP/LLC investments, including adjustments required by SSAP No. 97, entities and/or non-SCA SSAP No. 48, Joint Ventures, Partnerships and Limited Liability Companies entities owned by these entities. All liabilities, commitments, contingencies, guarantees or obligations of these entities which are required to be recorded as liabilities, commitments, contingencies, guarantees or obligations under applicable accounting guidance, are reflected in the Company’s determination of the carrying value of the investment in these entities.

Effective December 31, 2017, the Company received a liquidating distribution from IWA, a wholly owned limited liability company reported using the equity method outlined in SSAP No. 48, fully redeeming the Company’s membership interest therein. The Company received $176,999 cash, $57,050 directly held real estate, $17,602 real estate LLC membership, $4,328 intercompany receivable, and $2,684 tax refund receivable in redemption of the Company’s equity method basis in IWA. The transaction resulted in a pre-tax realized loss of $39,953 reported on the Statement of Operations which is offset by a pre-tax $40,097 unrealized loss reduction that is reported on the Statement of Changes in Capital and Surplus.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table shows the disclosures for all SCA investments, except 8bi entities, and balance sheet value (admitted and nonadmitted) as of December 31, 2017 and 2016:

 

SCA Entity    Percentage of
SCA
Ownership
     Gross
Amount		      Admitted
Amount 		     Nonadmitted
Amount		  

SSAP No. 97 8a Entities

           

None

      –   %    $ –      $ –      $ –    
  

 

 

  

Total SSAP No. 97 8a Entities

      XXX     $ –      $ –      $ –    
  

 

 

  

SSAP No. 97 8b(ii) Entities

           

None

      –   %    $ –      $ –      $ –    
  

 

 

  

Total SSAP No. 97 8b(ii) Entities

      XXX     $ –      $ –      $ –    
  

 

 

  

SSAP No. 97 8b(iii) Entities

           

REAL ESTATE ALTERN PORT 3A INC

      54   %    $ 16,471      $ 16,471      $ –    

GARNET ASSURANCE CORP

      –       –        –        –    

LIFE INVESTORS ALLIANCE LLC

      –       –        –        –    

ASIA INVESTMENT HOLDING LTD

      100       –        –        –    

AEGON FINANCIAL SERVICES GROUP

      100       –        –        –    

GARNET ASSURANCE CORP III

      100       –        –        –    
  

 

 

  

Total SSAP No. 97 8b(iii) Entities

      XXX     $ 16,471      $ 16,471      $ –    
  

 

 

  

SSAP No. 97 8b(iv) Entities

           

TRANSAMERICA LIFE (BERMUDA) LTD

      94   %    $ 1,101,266      $ 1,101,266      $ –    
  

 

 

  

Total SSAP No. 97 8b(iv) Entities

      XXX     $ 1,101,266      $ 1,101,266      $ –    
  

 

 

  

Total SSAP No. 97 8b Entities (except 8bi entities)

      XXX     $ 1,117,737      $ 1,117,737      $ –    
  

 

 

  

Aggregate Total

      XXX     $     1,117,737      $     1,117,737      $             –    
  

 

 

  
SCA Entity    Percentage
of
SCA
Ownership		     Gross
Amount		      Admitted
Amount		      Nonadmitted
Amount		  

SSAP No. 97 8a Entities

           

None

      –   %    $ –      $ –      $ –    
  

 

 

  

Total SSAP No. 97 8a Entities

      XXX     $ –      $ –      $ –    
  

 

 

  

SSAP No. 97 8b(ii) Entities

           

None

      –   %    $ –      $ –      $ –    
  

 

 

  

Total SSAP No. 97 8b(ii) Entities

      XXX     $ –      $ –      $ –    
  

 

 

  

SSAP No. 97 8b(iii) Entities

           

REAL ESTATE ALTERN PORT 3A INC

      53.60   %    $ 17,252      $ 17,252      $ –    

GARNET ASSURANCE CORP

      100.00       –        –        –    

LIFE INVESTORS ALLIANCE LLC

      100.00       –        –        –    

ASIA INVESTMENT HOLDING LTD

      100.00       –        –        –    

AEGON FINANCIAL SERVICES GROUP

      100.00       –        –        –    

GARNET ASSURANCE CORP II

      100.00       –        –        –    
  

 

 

  

Total SSAP No. 97 8b(iii) Entities

      XXX     $ 17,252      $ 17,252      $ –    
  

 

 

  

SSAP No. 97 8b(iv) Entities

           

TRANSAMERICA LIFE (BERMUDA) LTD

      94.07   %    $ 924,100      $ 924,100      $ –    
  

 

 

  

Total SSAP No. 97 8b(iv) Entities

      XXX     $ 924,100      $ 924,100      $ –    
  

 

 

  

Total SSAP No. 97 8b Entities (except 8bi entities)

      XXX     $ 941,352      $ 941,352      $ –    
  

 

 

  

Aggregate Total

      XXX     $ 941,352      $ 941,352      $ –    
  

 

 

  
          

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The following table shows the NAIC responses for the SCA filings (except 8bi entities):

December 31, 2017

 

SCA Entity    Type of
NAIC
Filing*		    Date of
Filing to
the NAIC		   

NAIC
Valuation
Amount

    NAIC
Response
Received
Y/N		    NAIC
Disallowed
Entities
Valuation
Method,
Submission
Required
Y/N		    Code**

SSAP No. 97 8a Entities

                     

None

          $    –         

Total SSAP No. 97 8a Entities

    –    –    $    –    –    –    –

SSAP No. 97 8b(ii) Entities

                     

None

          $    –         

Total SSAP No. 97 8b(ii) Entities

    –    –    $    –    –    –    –

SSAP No. 97 8b(iii) Entities

                     

REAL ESTATE ALTERN PORT 3A INC

    S2    10/31/2017    $    17,072    Y    N    I

GARNET ASSURANCE CORP

    S1    9/27/2017       –    Y    N    I

LIFE INVESTORS ALLIANCE LLC

    S1    9/27/2017       –    Y    N    I

ASIA INVESTMENT HOLDING LTD

    S1    9/27/2017       –    Y    N    I

AEGON FINANCIAL SERVICES GROUP

    S1    9/21/2017       –    Y    N    I

GARNET ASSURANCE CORP III

    S1    12/28/2017       –    N    N    I

Total SSAP No. 97 8b(iii) Entities

    –    –    $    17,072    –    –    –

SSAP No. 97 8b(iv) Entities

                     

TRANSAMERICA LIFE (BERMUDA) LTD

    S1    12/28/2017    $    924,067    N    N    I

Total SSAP No. 97 8b(iv) Entities

    –    –    $    924,067    –    –    –

Total SSAP No. 97 8b Entities (except 8bi entities)

    –    –    $    941,139    –    –    –

Aggregate Total

    –    –    $    941,139    –    –    –
                      

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

December 31, 2016

 

SCA Entity    Type of
NAIC
Filing*		   

Date of
Filing to
the NAIC

   

NAIC
Valuation
Amount

    NAIC
Response
Received
Y/N		    NAIC
Disallowed
Entities
Valuation
Method,
Submission
Required
Y/N		    Code**

SSAP No. 97 8a Entities

                     

None

          $    –         

Total SSAP No. 97 8a Entities

    –    –    $    –    –    –    –

SSAP No. 97 8b(ii) Entities

                     

None

          $    –         

Total SSAP No. 97 8b(ii) Entities

    –    –    $    –    –    –    –

SSAP No. 97 8b(iii) Entities

                     

REAL ESTATE ALTERN PORT 3A INC

    S2    12/8/2016    $    20,592    Y    N    I

GARNET ASSURANCE CORP

             –    N    N    I

LIFE INVESTORS ALLIANCE LLC

             –    N    N    I

ASIA INVESTMENT HOLDING LTD

             –    N    N    I

AEGON FINANCIAL SERVICES GROUP

             –    N    N    I

GARNET ASSURANCE CORP III

             –    N    N    I

Total SSAP No. 97 8b(iii) Entities

    –    –    $    20,592    –    –    –

SSAP No. 97 8b(iv) Entities

                     

TRANSAMERICA LIFE (BERMUDA) LTD

    NA       $    924,100    N    N    I

Total SSAP No. 97 8b(iv) Entities

    –    –    $    924,100    –    –    –

Total SSAP No. 97 8b Entities (except 8bi entities)

    –    –    $    944,692    –    –    –

Aggregate Total

    –    –    $    944,692    –    –    –
                      

* S1 – Sub1, S2 – Sub2 or RDF – Resubmission of Disallowed Filing

** I – Immaterial or M – Material

(1) NAIC Valuation Amount is as of the Filing Date to the NAIC

The Company reports an investment in the following insurance SCAs for which the reported statutory equity reflects a departure from NAIC SAP. Each of the insurance SCAs listed in the table below reflects an admitted asset, equal to the value of the letter of credit provided by an unaffiliated company, whereas this would not be an admitted asset recognized by SSAP No. 4, Assets and Non Admitted Assets.

 

LIICA Re II, Inc.

   

Letter of credit

Pine Falls Re (PFRe)

   

Letter of credit

Stonebridge Reinsurance Company (SRC)

   

Letter of credit

MLIC Re I, Inc. (MLIC Re)

   

Letter of credit

 

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Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company has three LPS with prescribed practices whereby under Iowa Administrative Code 191-99.11(3), the LPS are entitled to admit the following assets that would not be admissible under the NAIC SAP:

 

TLIC Riverwood Reinsurance, Inc. (TRRI)

  

Parental guarantee

TLIC Oakbrook Reinsurance, Inc. (TORI)

  

Credit linked note

TLIC Watertree Reinsurance, Inc. (TWRI)

  

Excess of loss reinsurance asset

The monetary effect on net income and surplus as a result of using an accounting practice that differed from NAIC SAP, the amount of the investment in the insurance SCA per reported statutory equity, and amount of the investment if the insurance SCA has completed statutory financial statements in accordance with the NAIC SAP. The SCAs are valued in the Company’s financial statements at zero in accordance with SSAP No. 97.

 

    

Monetary Effect on

NAIC SAP

    

Amount of Investment

  

SCA Entity

(Investments in Insurance SCA Entities)

    Net
Income
Increase
(Decrease)		      Surplus
Increase
(Decrease)		     Per
Reported
Statutory
Equity		      If the Insurance
SCA Had
Completed
Financial
Statutory
Statements*		  

LIICA Re II**

    $         –      $ (160,000 )    $ –      $         –  

Pine Falls Re**

      –            (1,200,000 )      –        –  

Stonebridge Reinsurance Company**

      –        (934,804 )      –        –  

MLIC Re**

      –        (910,000 )      –        –  

TLIC Riverwood Reinsurance, Inc.

      –        (2,153,039 )      1,020,350        –  

TLIC Oakbrook Reinsurance, Inc.

      –        (1,229,167 )      139,010        –  

TLIC Watertree Reinsurance, Inc.

      –        (573,139 )      352,749        –  

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

**    The SCA is valued at zero in the Company’s financial statements

The above SCA entities had not been permitted to include a letter of credit as an admitted asset recognized in the financial statements, the risk- based capital would have been below the mandatory control level. If the RBC for each of the insurance SCA entities listed above would have triggered a regulatory event had they not used a prescribed practice.

Information regarding the Company’s affiliated reinsurance transactions is available in Note 8. Reinsurance.

14. Commitments and Contingencies

At December 31, 2017 and 2016, the Company has mortgage loan commitments of $91,038 and $24,877, respectively.

 

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Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company has contingent commitments for $701,790 and $809,291 as of December 31, 2017 and 2016, respectively, to provide additional funding for various joint ventures, partnerships, and limited liability companies, which includes LIHTC commitments of $40,605 and $48,742, respectively.

At December 31, 2017 and 2016, the Company has private placement commitments outstanding of $46,679 and $21,679, respectively.

The Company sold $0 and $5,858 of “to-be-announced” (TBA) securities as of December 31, 2017 and 2016, respectively. Due to different counterparties, the receivable related to these TBAs was not reclassed in 2016.

At December 31, 2017 and 2016, securities in the amount of $45,201 and $198,786, respectively, were posted to the Company as collateral from derivative counterparties. The securities were not included on the Company’s balance sheet as the Company does not have the ability to sell or repledge the collateral.

The Company has provided back-stop guarantees for the performance of non-insurance affiliates or subsidiaries that are involved in the guaranteed sale of investments in low-income housing tax credit partnerships. The nature of the obligation is to provide third-party investors with a minimum guaranteed annual and cumulative return on their contributed capital which is based on tax credits and tax losses generated from the low income housing tax credit partnerships. Guarantee payments arise if low income housing tax credit partnerships experience unexpected significant decreases in tax credits and tax losses or there are compliance issues with the partnerships. A significant portion of the remaining term of the guarantees is between 13-18 years. The Company did not recognize a liability for the low income housing tax credit guarantees at December 31, 2017 or 2016, as the maximum potential amount of future payments the Company could be required to make is immaterial to the Company’s financial results. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as a decrease in net investment income. The maximum potential amount of future payments (undiscounted) that the Company could be required to make under these guarantees was $28 and $59 at December 31, 2017 and 2016, respectively. No payments are required as of December 31, 2017. The current assessment of risk of making payments under these guarantees is remote.

The Company has guaranteed to the Monetary Authority of Singapore (MAS) that it will provide adequate funds to make up for any liquidity shortfall in its wholly-owned foreign life insurance subsidiary, TLB (Singapore Branch), and continues to meet, pay and settle all present and future obligations of TLB. As of December 31, 2017, there is no payment or performance risk because TLB has adequate liquidity as of this date.

The Company has guaranteed to the Hong Kong Insurance Authority that it will provide the financial support to TLB for maintaining TLB’s solvency at all times so as to enable TLB to promptly meet its obligations and liabilities. If at any time the value of TLB’s assets do not exceed its liabilities by the prevailing acceptable level of solvency, the Company will increase the paid up share capital of TLB or provide financial assistance to TLB to maintain the acceptable level of solvency, defined as net assets at one hundred and fifty percent of the required margin of solvency as stipulated under the Insurance Companies (Margin of Solvency) Regulation. As of

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

December 31, 2017, there is no payment or performance risk because TLB is able to meet its obligations and has assets in excess of its liabilities by the prevailing level of solvency as of this date.

The Company has guaranteed that TLB will (1) maintain tangible net worth of at least equal to the greater of 165% of S&P Risk-Based Capital and the minimum required by regulatory authorities in all jurisdictions in which TLB operates, (2) have, at all times, sufficient cash to pay all contractual obligations in a timely manner and (3) have a maximum operating leverage ratio of 20 times. TLIC can terminate this agreement upon thirty days written notice, but not until TLB attains a rating from S&P the same as without the support from this agreement, or the entire book of TLB business is transferred provided that it is transferred to an entity with a rating from S&P that is the same as or better than TLIC’s then current rating or AA, whichever is lower. As of December 31, 2017, there is no payment or performance risk because TLB has adequate tangible net worth, sufficient cash to meet its obligations and an operating leverage ratio not in excess of 20 times as of this date.

The Company is not able to estimate the financial statement impact or the maximum potential amount of future payments it could be required to make under these three guarantees as they are considered to be unlimited under the provisions of SSAP No. 5R.

The Company has provided a guarantee to TLB’s (Singapore Branch) policyholders. If TLB fails to pay a valid claim solely by reason of it becoming insolvent as defined by Bermuda law, then the Company shall pay directly to the policy owner or named beneficiary the amount of the valid claim. At December 31, 2017 and 2016, TLB holds related statutory-basis policy and claim reserves of $1,918,249 and $1,880,923, respectively, which would be the maximum potential amount of future payments the Company could be required to make under this guarantee. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as an increase to incurred claims. As of December 31, 2017, there is no payment or performance risk because TLB is not insolvent as of this date.

The Company has provided a guarantee to TLB’s (Hong Kong Branch) policyholders. If TLB fails to pay a valid claim solely by reason of it becoming insolvent as defined by Bermuda law, then the Company shall pay directly to the policy owner or named beneficiary the amount of the valid claim. At December 31, 2017 and 2016, TLB holds related statutory-basis policy and claim reserves of $3,168,807 and $3,005,979, respectively, which would be the maximum potential amount of future payments the Company could be required to make under this guarantee. In the event the Company is required to make a payment under this guarantee, the payment would be reflected in the Company’s financial statements as an increase to incurred claims. As of December 31, 2017, there is no payment or performance risk because TLB is not insolvent as of this date.

The Company did not recognize a liability for any of the TLB guarantees due to the adoption of SSAP No. 5R at December 31, 2017 or 2016, as a liability is not required for guarantees to or on behalf of a wholly-owned subsidiary. Management monitors TLB’s financial condition, and there are no indications that TLB will become insolvent. As such, management feels the risk of payment under these guarantees on behalf of TLB is remote.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company is a party to a fee agreement with TLB whereby the Company continues to provide the guarantees with respect to TLB described in the paragraphs above. The Company received $545 and $260 under this agreement in 2017 and 2016, respectively.

The Company has provided guarantees for the obligations of noninsurance affiliates who have accepted assignments of structured settlement payment obligations from other insurers and purchased structured settlement insurance policies from subsidiaries of the Company that match those obligations. The guarantees made by the Company are specific to each structured settlement contract and vary in date and duration of the obligation. These are numerous and are backed by the reserves established by the Company to represent the present value of the future payments for those contracts. The statutory reserve established at December 31, 2017 and 2016 for the total payout block is $3,286,580 and $3,363,290, respectively. As this reserve is already recorded on the balance sheet of the Company, there was no additional liability recorded due to the adoption of SSAP No. 5R.

The following table provides an aggregate compilation of guarantee obligations as of December 31, 2017 and 2016:

 

     December 31  
     2017      2016  

Aggregate maximum potential of future payments of all guarantees (undiscounted)

    $ 5,087,084      $ 4,886,961  
                 

Current liability recognized in financial statements:

      

Noncontingent liabilities

      –        –  
                 

Contingent liabilities

      –        –  
                 

Ultimate financial statement impact if action required:

      

Incurred claims

      5,087,056        4,886,902  

Other

      28        59  

Total impact if action required

    $     5,087,084      $     4,886,961  
                 

The Company is a member of the FHLB of Des Moines. Through its membership, the Company has conducted business activity (borrowings) with the FHLB. It is part of the Company’s strategy to utilize these funds for asset and liability management and spread lending purposes. The Company has determined the actual/estimated long-term maximum borrowing capacity as $3,353,330. The Company calculated this amount in accordance with the terms and conditions of agreement with FHLB of Des Moines.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2017 and 2016, the Company purchased/owned the following FHLB stock as part of the agreement:

 

     Year Ended December 31  
     2017      2016  

Membership Stock:

      

Class A

    $ –      $ –  

Class B

      10,000        10,000  

Activity Stock

      165,800        166,800  

Excess Stock

      –        –  

Total

    $     175,800      $     176,800  
                 

At December 31, 2017 and 2016, Membership Stock (Class A and B) Eligible for Redemption and the anticipated timeframe for redemption was as follows:

 

     Less Than
6 Months		      6 Months to
Less Than 1
Year		      1 to Less
Than 3
Years		      3 to 5
Years		  

December 31, 2017

            

Membership Stock

            

Class A

    $ –      $ –      $ –      $ –  

Class B

      –        –        –        10,000  

Total

    $ –      $ –      $ –      $ 10,000  
                                   
     Less Than
6 Months		      6 Months to
Less Than 1
Year		      1 to Less
Than 3
Years		      3 to 5
Years		  

Decemeber 31, 2016

            

Membership Stock

            

Class A

    $         –      $         –      $         –      $ –  

Class B

      –        –        –            10,000  

Total

    $         –      $         –      $         –      $     10,000  
                                   

At December 31, 2017 and 2016, the amount of collateral pledged and the maximum amount pledged to the FHLB was as follows:

 

     Fair Value      Carry Value  

December 31, 2017

      

Total Collateral Pledged

    $       5,262,087      $       4,999,339  

Maximum Collateral Pledged

      5,534,849        5,317,412  
     Fair Value      Carry Value  

Decemeber 31, 2016

      

Total Collateral Pledged

    $ 5,344,860      $ 5,155,703  

Maximum Collateral Pledged

      5,344,860        5,155,703  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

At December 31, 2017 and 2016, the borrowings from the FHLB were as follows:

 

    December 31, 2017     December 31, 2016  
    General
Account		      Funding
Agreements
Reserves
Established		     General
Account		      Funding
Agreements
Reserves
Established		  
 

 

 

    

 

 

  

Debt1

   $ 3,820,000      $ –     $ 1,820,000      $ –  

Funding agreements2

     325,000        326,380       2,350,000        2,350,742  

Other

     –        –       –        –  
 

 

 

    

 

 

  

Total

   $         4,145,000      $         326,380     $         4,170,000      $         2,350,742  
 

 

 

    

 

 

  

1 The maximum amount of borrowing during 2017 was $3,820,000

2 The maximum amount of borrowing during 2017 was $325,000

As of December 31, 2017, the weighted average interest rate on FHLB advances was 1.544% with a weighted average term of 5.2 years. As of December 31, 2016, the weighted average interest rate on FHLB advances was 0.810% with a weighted average term of 21.7 years.

At December 31, 2017 the prepayment penalties information is as follows:

 

 

Does the Company have

prepayment obligations

under the following

arrangements (yes/no)?

Debt   NO
Funding Agreements   NO
Other   N/A

The Company has issued synthetic GIC contracts to benefit plan sponsors totaling $2,762,795 and $2,704,658 as of December 31, 2017 and 2016, respectively. A synthetic GIC is an off-balance sheet fee-based product sold primarily to tax qualified plans. The plan sponsor retains ownership and control of the related plan assets. The Company provides book value benefit responsiveness in the event that qualified plan benefit requests exceed plan cash flows. In certain contracts, the Company agrees to make advances to meet benefit payment needs and earns a market interest rate on these advances. The periodically adjusted contract-crediting rate is the means by which investment and benefit responsive experience is passed through to participants. In return for the book value benefit responsive guarantee, the Company receives a premium that varies based on such elements as benefit responsive exposure and contract size. The Company underwrites the plans for the possibility of having to make benefit payments and also must agree to the investment guidelines to ensure appropriate credit quality and cash flow. Funding requirements to date have been minimal and management does not anticipate any future material funding requirements that would have a material impact on reported financial results. To comply with statutory guidelines no related reserves have been recorded at December 31, 2017.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

The Company has guaranteed the full faith and complete performance of Mid-West National Life Insurance Company of Tennessee (Mid-West), an unaffiliated company, through execution of a Cut-Through Endorsement and Substitution Agreement and a Stop-Loss Reinsurance Agreement, with respect to the obligations of Mid-West on a block of annuity contracts assumed by MidWest from Mutual Security Life Insurance Company in Liquidation (Transferred Contracts). The Company agrees to substitute itself in Mid-West’s place with respect to the Transferred Contracts if Mid-West fails to perform any of the terms, duties, and conditions of the reinsurance agreement between Mid-West and Mutual Security Life Insurance Company. This guarantee is in force until all duties and obligations of the Transferred Contracts and the agreements have been completely satisfied. Wilton Reinsurance Company has agreed to reimburse TLIC for any payments made. As of December 31, 2017, the most recent reserve balance reported to the Company (as of September 30, 2017) is $7,765. As of December 31, 2017, the Company does not anticipate future action under the guarantee will be required.

The Company is a party to legal proceedings involving a variety of issues incidental to its business, including class actions. Lawsuits may be brought in nearly any federal or state court in the United States or in an arbitral forum. In addition, there continues to be significant federal and state regulatory activity relating to financial services companies. The Company’s legal proceedings are subject to many variables, and given its complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, it is management’s opinion that damages arising from such demands will not be material to the Company’s financial position.

The Company is subject to insurance guaranty laws in the states in which it writes business. These laws provide for assessments against insurance companies for the benefit of policyholders and claimants in the event of insolvency of other insurance companies. Assessments are charged to operations when received by the Company, except where right of offset against other taxes paid is allowed by law. Amounts available for future offsets are recorded as an asset on the

Company’s balance sheet. The future obligation for known insolvencies has been accrued based on the most recent information available from the National Organization of Life and Health Insurance Guaranty Associations. Potential future obligations for unknown insolvencies are not determinable by the Company and are not required to be accrued for financial reporting purposes. The Company has established a reserve of $10,075 and $20,034 and an offsetting premium tax benefit of $7,345 and $13,593 at December 31, 2017 and 2016, respectively, for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. The guaranty fund (benefit) expense was $216, $6,142 and $1,112, for the years ended December 31, 2017, 2016 and 2015, respectively.

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

The Company has recorded liabilities of $93,497 and $91,808 for municipal repurchase agreements as of December 31, 2017 and 2016, respectively. The repurchase agreements are primarily collateralized by investment-grade corporate bonds with book values of $116,023 and $147,444, respectively, and fair values of $125,733 and $156,407, respectively, as of December 31, 2017 and 2016. These securities have maturity dates that range from 2018 to 2097.

For repurchase agreements, the Company rigorously manages asset/liability risks via an integrated risk management framework. The Company’s liquidity position is monitored

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

constantly, and factors heavily in the management of the asset portfolio. Projections comparing liquidity needs to available resources in both adverse and routine scenarios are refreshed monthly. The results of these projections on time horizons ranging from 16 months to 24 months are the basis for the near-term liquidity planning. This liquidity model excludes new business (non applicable for the spread business), renewals and other sources of cash and assumes all liabilities are paid off on the earliest dates required. Interest rate risk is carefully managed, in part through rigorously defined and monitored derivatives programs.

The Company enters into dollar repurchase agreements in which securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2017 and 2016, the Company had dollar repurchase agreements outstanding in the amount of $278,626 and $453,474, respectively. The Company had an outstanding liability for borrowed money in the amount $278,694 and $445,656, which included accrued interest of $739 and $1,217, at December 31, 2017 and 2016, respectively due to participation in dollar repurchase agreements.    

The contractual maturities of the dollar repurchase agreement positions are as follows:

 

    Fair Value  
    2017     2016  
 

 

 

  

Open

   $ 277,955     $ 444,439  

30 days or less

     –       –  

31 to 60 days

     –       –  

61 to 90 days

     –       –  

Greater than 90 days

     –       –  
 

 

 

  

Total

     277,955       444,439  

Securities received

     –       –  
 

 

 

  

Total collateral received

   $         277,955     $         444,439  
 

 

 

  

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 2017 and reacquired within 30 days of the sale date are:

 

     Number of
  Transactions		      Book Value of
Securities Sold		      Cost of Securities
Repurchased		      Gains (Losses)    
  

 

 

  

Bonds:

            

NAIC 3

      1      $ 1,692      $ 1,689      $ (5 ) 

Common stocks:

            

Common stocks:

      3      $ 22      $ 25      $ 15  

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

16. Reconciliation to Statutory Statement

The following is a reconciliation of amounts previously reported to the Iowa Department of Financial Regulation in the 2017 Annual Statement, to those reported in the accompanying statutory-basis financial statements:

 

     December 31,
2017		     December 31,
2016		  
  

 

 

  

Balance Sheet

     

Total assets as reported in the Company’s Annual Statement

    $ 125,308,206     $ 131,790,027  

Increase in current federal income tax recoverable

      2,900       –  

Increase in cash, cash equivalents and short-term investments

      –       84,400  

Increase in other assets

      –       130,946  
  

 

 

  

Total assets as reported in the accompanying audited statutory basis balance sheet

    $ 125,311,106     $ 132,005,373  
  

 

 

  

Capital and surplus as reported in the Company’s Annual Statement

    $ 5,411,710     $ 5,234,756  

Increase (decrease) in prior year reported capital and surplus

      (14,984 )      29,298  

Decrease in change in aggregate reserves

      (11,900 )      (800 ) 

Decrease (increase) in commissions

      16,200       (16,200 ) 

Increase in federal income tax benefit

      2,900       6,800  

Increase in net capital gains (losses)

      124,394       –  

Increase in net unrealized capital gains (losses)

      –       7,800  

Increase (decrease) in net investment income

      7,753       (128,000 ) 

Increase (decrease) in change in net unrealized capital gains/losses

      (128,000 )      144,800  

Increase (decrease) in change in net deferred income tax asset

      (1,773 )      8,205  

Increase (decrease) in change in nonadmitted assets

      1,773       (8,205 ) 

Increase (decrease) in paid in surplus

      10,683       (10,683 ) 

Decrease in other changes

      –       (48,000 ) 
  

 

 

  

Total capital and surplus as reported in the accompanying audited statutory basis balance sheet

    $ 5,418,756     $ 5,219,771  
  

 

 

  

Statement of Operations

     

Statutory net income as reported in the Company’s Annual Statement

    $ 381,361     $ 471,090  

Decrease in change in aggregate reserves

      (11,900 )      (800 ) 

Decrease (increase) in commissions

      16,200       (16,200 ) 

Increase in federal income tax benefit

      2,900       6,800  

Increase in net capital gains (losses)

      124,394       –  

Increase (decrease) in net investment income

      7,753       (128,000 ) 
  

 

 

  

Total net income as reported in the accompanying audited statutory basis statement of operations

    $ 520,708     $ 332,890  
  

 

 

  

The reconciling differences to the Annual Statement is driven by Management’s decision to revise prior year amounts. Please refer to Revision to Prior Years in Note 3 for further details.

 

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Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

17. 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). The Company has not identified any Type I subsequent events for the year ended December 31, 2017 through April 30, 2018.

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 identified a Type II subsequent event for the year ended December 31, 2017. In January 2018, in connection with the transformation of the Company’s and its parent’s U.S. business and long term strategy, a Company affiliate entered into a multi-year third party administration arrangement for the administration of certain U.S. based in-force policies.

 

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies

 

Transamerica Corporation

         

EIN: 42-1484983

     

AFFILIATIONS SCHEDULE

     

YEAR ENDED DECEMBER 31, 2017

     
   

Attachment to Note 9

 

     
Entity Name    FEIN  

Transamerica Corporation

      42-1484983  

AEGON Asset Management Services Inc

      39-1884868  

AEGON Assignment Corp (Illinois)

      42-1477359  

AEGON Assignment Corp of Kentucky

      61-1314968  

AEGON Direct Marketing Services Inc

      42-1470697  

AEGON Direct Marketing Services International Inc

      52-1291367  

AEGON Financial Services Group Inc

      41-1479568  

AEGON Institutional Markets Inc

      61-1085329  

AEGON Management Company

      35-1113520  

AEGON Structured Settlements Inc

      61-1068209  

AEGON USA Real Estate Services Inc

      61-1098396  

AEGON USA Realty Advisors of CA FKA Pensaprima Inc

      20-5023693  

AFSG Securities Corporation

      23-2421076  

AUSA Properties Inc

      27-1275705  

Commonwealth General Corporation

      51-0108922  

Creditor Resources Inc

      42-1079584  

CRI Solutions Inc

      52-1363611  

Financial Planning Services Inc

      23-2130174  

Firebird Reinsurance Corporation

      47-3331975  

Garnet Assurance Corporation

      11-3674132  

Garnet Assurance Corporation II

      14-1893533  

Garnet Assurance Corporation III

      01-0947856  

Intersecurities Ins Agency

      42-1517005  

Investors Warranty of America Inc

      42-1154276  

LIICA RE I

      20-5984601  

LIICA RE II

      20-5927773  

Massachusetts Fidelity Trust

      42-0947998  

MLIC RE I Inc

      01-0930908  

 

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

         

EIN: 42-1484983

     

AFFILIATIONS SCHEDULE

     

YEAR ENDED DECEMBER 31, 2017

     
   

Attachment to Note 9

 

     
Entity Name    FEIN  

Money Services Inc

      42-1079580  

Monumental General Administrators Inc

      52-1243288  

Pearl Holdings Inc I

      20-1063558  

Pearl Holdings Inc II

      20-1063571  

Pine Falls Re Inc

      26-1552330  

Real Estate Alternatives Portfolio 3A Inc

      20-1627078  

River Ridge Insurance Company

      20-0877184  

Short Hills Management

      42-1338496  

Stonebridge Benefit Services Inc

      75-2548428  

Stonebridge Reinsurance Company

      61-1497252  

TCF Asset Management Corp

      84-0642550  

TCFC Air Holdings Inc

      32-0092333  

TCFC Asset Holdings Inc

      32-0092334  

TLIC Oakbrook Reinsurance Inc.

      47-1026613  

TLIC Riverwood Reinsurance Inc

      45-3193055  

TLIC Watertree Reinsurance, Inc.

      81-3715574  

Tranasmerica Advisors Life Insurance Company (FKA MLLIC)

      91-1325756  

Transamerica Accounts Holding Corp

      36-4162154  

Transamerica Affinity Services Inc

      42-1523438  

Transamerica Affordable Housing Inc

      94-3252196  

Transamerica Agency Network Inc (FKA: Life Inv Fin Group)

      61-1513662  

Transamerica Annuity Service Corporation

      85-0325648  

Transamerica Asset Management (fka Transamerica Fund Adviso)

      59-3403585  

Transamerica Capital Inc

      95-3141953  

Transamerica Casualty Insurance Company

      31-4423946  

Transamerica Commercial Finance Corp I

      94-3054228  

Transamerica Consumer Finance Holding Company

      95-4631538  

Transamerica Corporation (OREGON)

      98-6021219  

 

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Transamerica Life Insurance Company

Appendix A – Listing of Affiliated Companies (continued)

 

Transamerica Corporation

         

EIN: 42-1484983

     

AFFILIATIONS SCHEDULE

     

YEAR ENDED DECEMBER 31, 2017

     
   

Attachment to Note 9

 

     
Entity Name    FEIN  

Transamerica Distribution Finance Overseas Inc

      36-4254366  

Transamerica Finance Corporation

      95-1077235  

Transamerica Financial Advisors FKA InterSecurities

      59-2476008  

Transamerica Financial Life Insurance Company

      36-6071399  

Transamerica Fund Services Inc

      59-3403587  

Transamerica Home Loan

      95-4390993  

Transamerica International Re (Bermuda) Ltd

      98-0199561  

Transamerica Investors Securities Corp

      13-3696753  

Transamerica Leasing Holdings Inc

      13-3452993  

Transamerica Life Insurance Company

      39-0989781  

Transamerica Pacific Insurance Co Ltd

      94-3304740  

Transamerica Premier Life Insurance Company

      52-0419790  

Transamerica Resources Inc (FKA: Nat Assoc Mgmt)

      52-1525601  

Transamerica Small Business Capital Inc

      36-4251204  

Transamerica Stable Value Solutions Inc

      27-0648897  

Transamerica Vendor Financial Services Corporation

      36-4134790  

United Financial Services Inc

      52-1263786  

WFG China Holdings Inc

      20-2541057  

World Fin Group Ins Agency of Massachusetts Inc

      04-3182849  

World Financial Group Inc

      42-1518386  

World Financial Group Ins Agency of Hawaii Inc

      99-0277127  

World Financial Group Insurance Agency of WY Inc

      42-1519076  

World Financial Group Insurance Agency

      95-3809372  

Zahorik Company Inc

      95-2775959  

Zero Beta Fund LLC

      26-1298094  

 

104

Table of Contents

 

 

Statutory-Basis Financial

Statement Schedules

 

105

Table of Contents

Transamerica Life Insurance Company

Notes to Financial Statements – Statutory Basis (continued)

(Dollars in Thousands, Except per Share amounts)

 

December 31, 2017

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

    $ 7,679,274      $ 8,332,193      $ 7,771,356  

States, municipalities and political subdivisions

      599,265        630,547        599,234  

Foreign governments

      343,299        370,706        343,299  

Hybrid securities

      435,918        473,485        435,918  

All other corporate bonds

      17,730,673        19,392,379        17,716,311  

Preferred stocks

      96,250        94,354        95,585  

Total fixed maturities

      26,884,679        29,293,664        26,961,703  

Equity securities

         

Common stocks:

         

Industrial, miscellaneous and all other

      187,538        203,091        203,091  

Total equity securities

      187,538        203,091        203,091  

Mortgage loans on real estate

      4,190,172           4,190,172  

Real estate

      189,044           189,044  

Policy loans

      580,338           580,338  

Other long-term investments

      882,422           882,422  

Receivable for securities

      17,364           17,364  

Securities lending

      2,460,919           2,460,919  

Cash, cash equivalents and short-term investments

      1,620,697           1,620,697  

Total investments

    $     37,013,173         $     37,105,750  
                    

 

(1)

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

 

(2)

United States government, state, municipal and political, hybrid and corporate bonds of $36,056 are held at fair value rather than amortized cost due to having an NAIC 6 rating. A preferred stock security is held at its fair value of $5,144 due to having an NAIC 6 rating.

 

106

Table of Contents

Transamerica Life Insurance Company

Supplementary Insurance Information

(Dollars in Thousands)

SCHEDULE III

 

     Future Policy
Benefits and
Expenses		      Unearned
Premiums		      Policy and
Contract
Liabilities		      Premium
Revenue		     Net
Investment
Income*		     Benefits, Claims
Losses and
Settlement
Expenses		     Other
Operating
Expenses*		  
  

 

 

  

Year ended December 31, 2017

                  

Individual life

    $ 9,987,824      $ –      $ 250,100      $ (7,812,143 )    $ (1,056,944 )    $ (1,870,315 )    $ 603,366  

Individual health

      100,420        91,784        27,176        (1,489,124 )      1,344,780       (4,084,846 )      (885,516 ) 

Group life and health

      1,528,445        23,229        100,510        508,023       238,217       (36,386 )      186,023  

Annuity

      13,180,233        –        18,390        5,583,153       1,427,062       8,689,098       (1,672,986 ) 

Other

      –        –        –        –       438,652       –       –  
  

 

 

  
   $ 24,796,922      $ 115,013      $ 396,176      $ (3,210,091 )    $ 2,391,767     $ 2,697,551     $ (1,769,113 ) 
  

 

 

  

Year ended December 31, 2016

                  

Individual life

    $ 13,570,924      $ –      $ 241,127      $ 964,932     $ 768,583     $ 1,682,114     $ 850,556  

Individual health

      4,104,887        96,408        177,690        128,097       288,730       350,311       164,250  

Group life and health

      1,920,903        26,223        111,533        646,226       126,113       395,670       313,984  

Annuity

      17,643,814        –        18,703        12,283,397       1,069,143       12,071,805       2,063,194  

Other

      –        –        –        –       152,629       –       –  
  

 

 

  
   $ 37,240,528      $ 122,631      $ 549,053      $ 14,022,652     $ 2,405,198     $ 14,499,900     $ 3,391,984  
  

 

 

  

Year ended December 31, 2015

                  

Individual life

    $ 13,843,756      $ –      $ 294,838        941,368     $ 753,961     $ 2,027,312     $ 796,949  

Individual health

      3,835,520        101,563        171,161        247,524       284,543       475,488       259,508  

Group life and health

      1,893,922        26,260        109,739        664,396       97,824       277,444       307,198  

Annuity

      16,115,270        –        25,920        12,445,785       1,171,288       8,443,182       5,874,115  

Other

      –        –        –        –       121,339       –       –  
  

 

 

  
   $ 35,688,468      $ 127,823      $ 601,658      $ 14,299,073     $ 2,428,955     $ 11,223,426     $ 7,237,770  
  

 

 

  

*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.

 

107

Table of Contents

Transamerica Life Insurance Company

Reinsurance

(Dollars in Thousands)

 

SCHEDULE IV

 

     Gross Amount    Ceded to Other
Companies		    Assumed From
Other
Companies		    Net Amount    Percentage of
Amount
Assumed to Net		     

Year ended December 31, 2017

 

                   

Life insurance in force

      $     533,085,617      $     887,695,994      $     484,569,310      $     129,958,933        373 %    
                                                                

Premiums:

                             

Individual life

      $ 2,443,494      $ 11,836,066      $ 1,580,429      $ (7,812,143 )        -20 %    

Individual health

        530,052        2,022,968        3,792        (1,489,124 )        0 %    

Group life and health

        802,090        321,533        27,466        508,023        5 %    

Annuity

        9,813,201        4,280,020        49,972        5,583,153        1 %          
     $ 13,588,837      $ 18,460,587      $ 1,661,659      $ (3,210,091 )        -52 %    
                                                                

Year ended December 31, 2016

 

                   

Life insurance in force

      $ 529,122,141      $ 916,395,356      $ 525,650,271      $ 138,377,056        380 %    

Premiums:

                             

Individual life

      $ 2,422,512      $ 2,887,979      $ 1,430,399      $ 964,932        148 %    

Individual health

        554,332        431,437        5,202        128,097        4 %    

Group life and health

        820,508        203,774        29,492        646,226        5 %    

Annuity

        10,283,875        (1,953,227 )        46,295        12,283,397        0 %          
     $ 14,081,227      $ 1,569,963      $ 1,511,388      $ 14,022,652        11 %    
                                                                

Year ended December 31, 2015

 

                   

Life insurance in force

      $ 526,735,949      $ 884,406,081      $ 541,956,160      $ 184,286,028        294 %    
                                                                

Premiums:

                             

Individual life

      $ 2,367,315      $ 2,771,123      $ 1,345,164      $ 941,356        143 %    

Individual health

        705,974        468,848        11,260        248,386        5 %    

Group life and health

        864,846        234,779        34,330        664,397        5 %    

Annuity

        13,177,620        826,310        94,476        12,445,786        1 %          
     $ 17,115,755      $ 4,301,060      $ 1,485,230      $ 14,299,925        10 %    
                                                                

 

108

Table of Contents

FINANCIAL STATEMENTS

Transamerica Life Insurance Company

Separate Account VA B

Years Ended December 31, 2017 and 2016

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Financial Statements

Years Ended December 31, 2017 and 2016

Contents

 

Report of Independent Registered Public Accounting Firm

     1  

Financial Statements

   

Statements of Assets and Liabilities

      2  

Statements of Operations and Changes in Net Assets

      7  

Notes to Financial Statements

      34  

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Transamerica Life Insurance Company and Contract Owners of Separate Account VA B

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities of each of the sub-accounts listed in the table below (constituting Separate Account VA B, hereafter collectively referred to as the “Sub-Accounts”) as of December 31, 2017 and the related statements of operations and change in net assets, including the related notes, for the periods listed in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Sub-Accounts as of December 31, 2017 and the results of each of their operations and changes in each of their net assets for the periods listed in the table below in conformity with accounting principles generally accepted in the United States of America.

 

AB Balanced Wealth Strategy Class B Shares (1)   TA Clarion Global Real Estate Securities Service Class (1)
AB Growth and Income Class B Shares (1)   TA International Equity Index Service Class (4)
AB Large Cap Growth Class B Shares (1)   TA International Moderate Growth Initial Class (1)
American Funds - Asset Allocation Class 2 Shares (1)   TA International Moderate Growth Service Class (1)
American Funds - Bond Class 2 Shares (1)   TA Janus Balanced Service Class (1)
American Funds - Growth Class 2 Shares (1)   TA Janus Mid-Cap Growth Initial Class (1)
American Funds - Growth-Income Class 2 Shares (1)   TA Janus Mid-Cap Growth Service Class (1)
American Funds - International Class 2 Shares (1)   TA Jennison Growth Initial Class (1)
BlackRock Basic Value V.I. Class I Shares (1)   TA Jennison Growth Service Class (1)
BlackRock Global Allocation V.I. Class I Shares (1)   TA JPMorgan Core Bond Service Class (1)
BlackRock High Yield V.I. Class I Shares (1)   TA JPMorgan Enhanced Index Initial Class (1)
Catalyst Dividend Capture VA (1)   TA JPMorgan Enhanced Index Service Class (1)
Catalyst Insider Buying VA (1)   TA JPMorgan Mid Cap Value Service Class (1)
Fidelity® VIP Balanced Service Class 2 (1)   TA JPMorgan Tactical Allocation Service Class (1)
Fidelity® VIP Contrafund® Initial Class (1)   TA Legg Mason Dynamic Allocation - Balanced Service Class (1)
Fidelity® VIP Contrafund® Service Class 2 (1)   TA Legg Mason Dynamic Allocation - Growth Service Class (1)
Fidelity® VIP Equity-Income Initial Class (1)   TA Madison Balanced Allocation Service Class (1)
Fidelity® VIP Equity-Income Service Class 2 (1)   TA Madison Conservative Allocation Service Class (1)
Fidelity® VIP Growth Initial Class (1)   TA Madison Diversified Income Service Class (1)
Fidelity® VIP Growth Service Class 2 (1)   TA Managed Risk - Balanced ETF Service Class (1)
Fidelity® VIP Growth Opportunities Service Class 2 (1)   TA Managed Risk - Conservative ETF Service Class (1)
Fidelity® VIP Mid Cap Initial Class (1)   TA Managed Risk - Growth ETF Service Class (1)
Fidelity® VIP Mid Cap Service Class 2 (1)   TA Market Participation Strategy Service Class (1)
Fidelity® VIP Value Strategies Initial Class (1)   TA MFS International Equity Initial Class (1)
Fidelity® VIP Value Strategies Service Class 2 (1)   TA MFS International Equity Service Class (1)
Franklin Founding Funds Allocation Class 4 Shares (1)   TA Morgan Stanley Capital Growth Initial Class (1)
Franklin Income Class 2 Shares (1)   TA Morgan Stanley Capital Growth Service Class (1)
Franklin Mutual Shares Class 2 Shares (1)   TA Multi-Managed Balanced Initial Class (1)
Franklin Templeton Foreign Class 2 Shares (1)   TA Multi-Managed Balanced Service Class (1)
Invesco V.I. American Franchise Series II Shares (1)   TA Multi-Manager Alternative Strategies Service Class (1)
Janus Henderson - Enterprise Service Shares (1)   TA PIMCO Tactical - Balanced Service Class (1)
Janus Henderson - Global Research Service Shares (1)   TA PIMCO Tactical - Conservative Service Class (1)
Janus Henderson - Mid Cap Value Service Shares (1)   TA PIMCO Tactical - Growth Service Class (1)
MFS® New Discovery Service Class (1)   TA PIMCO Total Return Initial Class (1)
MFS® Total Return Service Class (1)   TA PIMCO Total Return Service Class (1)
NVIT Emerging Markets Class D Shares (3)   TA PineBridge Inflation Opportunities Service Class (1)
State Street Total Return V.I.S. Class 3 Shares (1)   TA ProFunds UltraBear Service Class (OAM) (1)
TA AB Dynamic Allocation Initial Class (1)   TA QS Investors Active Asset Allocation - Conservative Service Class (1)
TA AB Dynamic Allocation Service Class (1)   TA QS Investors Active Asset Allocation - Moderate Service Class (1)
TA Aegon Government Money Market Initial Class (1)   TA QS Investors Active Asset Allocation - Moderate Growth Service Class (1)
TA Aegon Government Money Market Service Class (1)   TA Small/Mid Cap Value Initial Class (1)
TA Aegon High Yield Bond Initial Class (1)   TA Small/Mid Cap Value Service Class (1)
TA Aegon High Yield Bond Service Class (1)   TA T. Rowe Price Small Cap Initial Class (1)
TA Aegon U.S. Government Securities Initial Class (1)   TA T. Rowe Price Small Cap Service Class (1)
TA Aegon U.S. Government Securities Service Class (1)   TA Torray Concentrated Growth Initial Class (1)
TA American Funds Managed Risk - Balanced Service Class (1)   TA Torray Concentrated Growth Service Class (1)
TA Asset Allocation - Conservative Initial Class (1)   TA TS&W International Equity Initial Class (1)
TA Asset Allocation - Conservative Service Class (1)   TA TS&W International Equity Service Class (1)
TA Asset Allocation - Growth Initial Class (1)   TA U.S. Equity Index Service Class (4)
TA Asset Allocation - Growth Service Class (1)   TA WMC US Growth Initial Class (1)
TA Asset Allocation - Moderate Initial Class (1)   TA WMC US Growth Service Class (1)
TA Asset Allocation - Moderate Service Class (1)   Vanguard® Equity Index (1)
TA Asset Allocation - Moderate Growth Initial Class (1)   Vanguard® International (1)
TA Asset Allocation - Moderate Growth Service Class (1)   Vanguard® Mid-Cap Index (1)
TA Barrow Hanley Dividend Focused Initial Class (1)   Vanguard® REIT Index (1)
TA Barrow Hanley Dividend Focused Service Class (1)   Vanguard® Short-Term Investment Grade (1)
TA BlackRock Equity Smart Beta 100 Service Class (2)   Vanguard® Total Bond Market Index (1)
TA BlackRock Global Allocation Service Class (1)   Voya Global Perspectives Class S Shares (1)
TA BlackRock Global Allocation Managed Risk - Balanced Service Class (1)   Voya Large Cap Value Class S Shares (1)
TA BlackRock Global Allocation Managed Risk - Growth Service Class (1)   Voya Strategic Allocation Conservative Class S Shares (1)
TA BlackRock Smart Beta 50 Service Class (2)   Voya Strategic Allocation Moderate Class S Shares (1)
TA BlackRock Smart Beta 75 Service Class (2)   Wanger International (1)
TA BlackRock Tactical Allocation Service Class (1)   Wanger USA (1)
TA Clarion Global Real Estate Securities Initial Class (1)    

 

(1) Statement of assets and liabilities as of December 31, 2017, and statements of operations and change in net assets for the years ended December 31, 2017 and 2016.
(2) Statement of assets and liabilities as of December 31, 2017 and statements of operations and change in net assets for the year ended December 31, 2017 and the period March 21, 2016 (commencement of operations) through December 31, 2016.
(3) Statement of assets and liabilities as of December 31, 2017 and statements of operations and change in net assets for the year ended December 31, 2017 and the period August 4, 2016 (commencement of operations) through December 31, 2016.
(4) Statement of assets and liabilities as of December 31, 2017 and statement of operations and change in net assets for the period May 1, 2017 (commencement of operations) through December 31, 2017.

Basis for Opinions

These financial statements are the responsibility of the Transamerica Life Insurance Company’s management. Our responsibility is to express an opinion on the Sub-Accounts’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Sub-Accounts in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the investee mutual funds directly. We believe that our audits provide a reasonable basis for our opinions.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

April 23, 2018

We have served as the auditor of one or more Sub-Accounts in Separate Account VA B since 2014.

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2017

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

AB Balanced Wealth Strategy Class B Shares

     8,520,627.404     $ 98,602,530     $ 99,946,959     $ 17     $ 99,946,976       38,525,201     $ 1.433149     $ 13.835308  

AB Growth and Income Class B Shares

     7,496,292.811       212,830,300       246,478,108       (444 )      246,477,664       77,917,998       1.485256       17.045344  

AB Large Cap Growth Class B Shares

     600,799.611       20,200,608       32,262,939       (170 )      32,262,769       15,509,056       1.837390       12.809059  

American Funds—Asset Allocation Class 2 Shares

     32,740,053.215       687,684,802       769,063,850       (233 )      769,063,617       246,090,334       1.657911       14.874576  

American Funds—Bond Class 2 Shares

     20,350,595.169       221,559,062       217,547,862       106       217,547,968       73,725,508       1.048332       10.555130  

American Funds—Growth Class 2 Shares

     5,725,930.701       401,405,595       442,900,740       234       442,900,974       67,452,645       1.973277       18.833232  

American Funds—Growth-Income Class 2 Shares

     8,452,272.645       393,947,084       420,162,473       (20 )      420,162,453       60,250,249       1.977631       17.865875  

American Funds—International Class 2 Shares

     8,873,606.765       167,069,144       191,936,114       17       191,936,131       51,454,305       1.288256       13.995312  

BlackRock Basic Value V.I. Class I Shares

     1,391,181.464       20,275,139       21,702,431       (86 )      21,702,345       7,377,068       2.123349       10.375780  

BlackRock Global Allocation V.I. Class I Shares

     758,224.215       11,976,431       13,086,950       12       13,086,962       6,135,012       1.791876       11.051069  

BlackRock High Yield V.I. Class I Shares

     595,500.317       4,368,924       4,394,792       17,083       4,411,875       1,762,477       2.088061       10.482358  

Catalyst Dividend Capture VA

     150,226.914       1,834,422       1,769,673       9       1,769,682       1,280,691       1.254790       9.628379  

Catalyst Insider Buying VA

     179,988.725       3,006,218       2,476,645       34       2,476,679       1,462,179       1.540080       11.448036  

Fidelity® VIP Balanced Service Class 2

     20,848,799.266       341,205,230       382,158,491       79       382,158,570       147,985,403       1.546899       15.055664  

Fidelity® VIP Contrafund® Initial Class

     6,801.733       213,566       258,058       7       258,065       79,806       1.893037       17.381974  

Fidelity® VIP Contrafund® Service Class 2

     15,632,047.998       495,758,306       579,167,378       151       579,167,529       148,094,555       1.675124       17.057835  

Fidelity® VIP Equity-Income Initial Class

     1,814.874       36,522       43,357       (1 )      43,356       24,406       1.583139       10.951282  

Fidelity® VIP Equity-Income Service Class 2

     2,066,218.418       41,799,605       48,184,214       168       48,184,382       23,845,141       1.375979       11.004979  

Fidelity® VIP Growth Initial Class

     251.514       13,816       18,625       17       18,642       8,594       2.095510       13.150480  

Fidelity® VIP Growth Service Class 2

     549,216.814       22,877,309       40,015,937       203       40,016,140       19,553,603       1.808438       13.142960  

Fidelity® VIP Growth Opportunities Service Class 2

     76,192.353       1,755,510       2,711,686       27       2,711,713       1,207,203       1.739302       13.124508  

Fidelity® VIP Mid Cap Initial Class

     2,782.382       100,428       108,346       —         108,346       41,922       1.742901       17.241670  

Fidelity® VIP Mid Cap Service Class 2

     9,906,775.680       320,289,759       374,377,053       (145 )      374,376,908       84,005,052       1.681195       16.917674  

Fidelity® VIP Value Strategies Initial Class

     23,137.450       331,824       330,171       (2 )      330,169       86,820       1.720497       15.615309  

Fidelity® VIP Value Strategies Service Class 2

     10,410,809.157       138,746,831       149,707,436       (70 )      149,707,366       44,994,998       0.409609       15.315575  

Franklin Founding Funds Allocation Class 4 Shares

     13,926,422.090       101,039,253       104,865,958       (29 )      104,865,929       50,313,685       1.416966       10.959554  

Franklin Income Class 2 Shares

     4,702,789.645       70,101,638       76,044,109       (19 )      76,044,090       51,870,302       1.296251       10.821945  

Franklin Mutual Shares Class 2 Shares

     838,965.298       14,491,786       17,081,333       53       17,081,386       12,176,476       1.250036       10.613536  

Franklin Templeton Foreign Class 2 Shares

     2,122,899.961       29,316,694       32,841,262       147       32,841,409       29,509,124       1.012551       11.522134  

Invesco V.I. American Franchise Series II Shares

     120,157.789       4,957,841       7,305,594       67       7,305,661       3,978,534       1.736466       12.359359  

Janus Henderson—Enterprise Service Shares

     338,862.139       14,928,066       22,591,939       (181 )      22,591,758       9,702,261       1.487011       12.355010  

See accompanying notes

 

2

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2017

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

Janus Henderson—Global Research Service Shares

     580,965.250     $ 16,955,037     $ 29,147,027     $ (9 )    $ 29,147,018       21,574,448     $ 0.995559     $ 12.390415  

Janus Henderson—Mid Cap Value Service Shares

     184,575.681       2,884,397       3,228,229       (16 )      3,228,213       1,239,487       1.757328       11.116285  

MFS® New Discovery Service Class

     2,419,828.825       37,600,168       44,936,221       (27 )      44,936,194       17,571,221       1.545839       12.326078  

MFS® Total Return Service Class

     2,086,632.020       40,250,239       50,663,425       163       50,663,588       26,624,976       1.409775       11.022585  

NVIT Emerging Markets Class D Shares

     1,608.490       16,199       21,682       —         21,682       1,568       13.560156       13.859939  

State Street Total Return V.I.S. Class 3 Shares

     2,891,221.242       52,749,205       57,477,478       67       57,477,545       29,732,587       1.352050       13.307784  

TA AB Dynamic Allocation Initial Class

     1,946,650.447       17,854,336       19,894,768       173       19,894,941       11,583,518       1.158321       10.858787  

TA AB Dynamic Allocation Service Class

     31,952,934.819       284,401,766       324,322,288       106       324,322,394       153,773,203       1.049118       11.786306  

TA Aegon Government Money Market Initial Class

     89,165,493.033       89,165,492       89,165,493       (3 )      89,165,490       81,612,286       0.804807       9.879060  

TA Aegon Government Money Market Service Class

     296,558,503.893       296,558,502       296,558,504       (135 )      296,558,369       167,094,546       0.800650       9.926991  

TA Aegon High Yield Bond Initial Class

     10,445,305.052       82,078,346       82,935,722       62       82,935,784       36,693,553       1.202986       12.225409  

TA Aegon High Yield Bond Service Class

     19,559,878.137       156,351,061       157,652,618       103       157,652,721       40,594,624       1.379907       11.923442  

TA Aegon U.S. Government Securities Initial Class

     6,050,845.944       72,698,872       65,046,594       173       65,046,767       40,571,556       1.022423       10.196629  

TA Aegon U.S. Government Securities Service Class

     17,966,351.935       218,919,219       198,887,516       (168 )      198,887,348       90,224,835       1.044487       10.174151  

TA American Funds Managed Risk—Balanced Service Class

     56,308,265.117       575,959,455       652,612,793       (26 )      652,612,767       57,652,094       10.768933       11.621539  

TA Asset Allocation—Conservative Initial Class

     15,502,930.915       162,867,895       171,462,416       (124 )      171,462,292       95,917,441       1.247147       11.067865  

TA Asset Allocation—Conservative Service Class

     96,920,983.493       1,002,809,696       1,060,315,559       (108 )      1,060,315,451       432,130,521       1.210109       12.163620  

TA Asset Allocation—Growth Initial Class

     21,898,651.118       208,435,232       298,478,615       108       298,478,723       138,715,582       1.448546       12.252246  

TA Asset Allocation—Growth Service Class

     16,381,996.895       172,058,376       221,484,598       (258 )      221,484,340       71,714,802       1.291840       15.076009  

TA Asset Allocation—Moderate Initial Class

     32,999,010.035       350,905,691       416,447,507       (394 )      416,447,113       214,216,713       1.335628       11.394388  

TA Asset Allocation—Moderate Service Class

     421,907,452.286       4,748,158,765       5,252,747,781       (620 )      5,252,747,161       1,721,740,775       1.272466       12.947752  

TA Asset Allocation—Moderate Growth Initial Class

     39,052,750.729       434,224,957       524,868,970       (261 )      524,868,709       253,563,185       1.415472       11.786437  

TA Asset Allocation—Moderate Growth Service Class

     280,438,269.574       3,207,662,817       3,718,611,455       (961 )      3,718,610,494       1,392,455,162       1.283938       13.903796  

TA Barrow Hanley Dividend Focused Initial Class

     15,597,862.985       246,405,340       400,085,186       47       400,085,233       153,385,459       1.345130       16.642144  

TA Barrow Hanley Dividend Focused Service Class

     7,205,309.421       141,763,049       184,816,187       155       184,816,342       54,139,799       1.420480       16.199907  

TA BlackRock Equity Smart Beta 100 Service Class

     3,077,951.642       34,032,594       39,921,033       6       39,921,039       3,121,438       11.429473       12.976558  

TA BlackRock Global Allocation Service Class

     91,933,775.068       1,221,971,221       1,370,732,586       177       1,370,732,763       559,095,448       1.238638       12.646636  

TA BlackRock Global Allocation Managed Risk—Balanced Service Class

     20,072,397.268       190,793,754       198,315,285       (26 )      198,315,259       19,095,805       10.036075       11.071126  

TA BlackRock Global Allocation Managed Risk—Growth Service Class

     20,585,632.908       195,835,835       208,532,461       (68 )      208,532,393       19,697,962       10.237581       11.597828  

TA BlackRock Smart Beta 50 Service Class

     5,502,019.095       57,893,600       63,218,199       (20 )      63,218,179       5,580,252       10.736173       11.524406  

See accompanying notes.

 

3

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2017

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA BlackRock Smart Beta 75 Service Class

     2,173,779.038     $ 23,206,251     $ 26,367,940     $ 6     $ 26,367,946       2,206,073     $ 11.069156     $ 12.129099  

TA BlackRock Tactical Allocation Service Class

     92,104,219.693       1,403,360,380       1,483,798,979       273       1,483,799,252       488,544,310       1.248882       12.875920  

TA Clarion Global Real Estate Securities Initial Class

     3,450,190.145       41,591,372       45,370,000       142       45,370,142       17,217,524       1.074413       11.494653  

TA Clarion Global Real Estate Securities Service Class

     6,372,846.936       82,849,773       87,690,374       (77 )      87,690,297       32,087,719       1.064769       11.199269  

TA International Equity Index Service Class

     623,148.729       6,655,819       6,948,108       1       6,948,109       628,764       10.956037       11.123849  

TA International Moderate Growth Initial Class

     8,570.113       77,933       95,214       1       95,215       68,027       1.399658       11.902044  

TA International Moderate Growth Service Class

     59,977,890.897       558,214,841       660,356,579       47       660,356,626       334,110,132       1.044590       12.510625  

TA Janus Balanced Service Class

     54,883,678.292       722,707,525       836,976,094       (28 )      836,976,066       194,033,939       1.320669       14.268365  

TA Janus Mid-Cap Growth Initial Class

     2,283,628.895       67,302,830       73,761,213       75       73,761,288       43,015,893       1.364830       14.637584  

TA Janus Mid-Cap Growth Service Class

     2,692,626.118       77,330,880       83,552,188       37       83,552,225       21,217,980       1.342588       14.259368  

TA Jennison Growth Initial Class

     19,286,067.416       177,273,396       207,710,946       119       207,711,065       89,101,540       1.728298       20.467223  

TA Jennison Growth Service Class

     12,396,370.463       119,593,411       127,186,761       (41 )      127,186,720       23,745,417       2.134240       19.929148  

TA JPMorgan Core Bond Service Class

     17,023,874.286       236,871,428       234,929,465       74       234,929,539       72,762,576       1.033978       10.595392  

TA JPMorgan Enhanced Index Initial Class

     5,873,434.539       97,214,177       127,336,061       (76 )      127,335,985       46,939,835       1.782155       17.910468  

TA JPMorgan Enhanced Index Service Class

     3,130,598.070       56,833,319       67,683,530       29       67,683,559       12,493,704       1.739783       17.455874  

TA JPMorgan Mid Cap Value Service Class

     14,096,996.505       267,022,460       234,010,142       (22 )      234,010,120       49,949,595       1.511739       16.655633  

TA JPMorgan Tactical Allocation Service Class

     81,235,793.360       1,168,932,671       1,290,836,756       (370 )      1,290,836,386       336,938,291       1.169542       11.964839  

TA Legg Mason Dynamic Allocation—Balanced Service Class

     92,736,571.538       1,085,058,898       1,134,168,270       4       1,134,168,274       240,726,764       1.091108       11.895436  

TA Legg Mason Dynamic Allocation—Growth Service Class

     38,365,996.149       474,191,191       502,210,890       (105 )      502,210,785       111,240,123       1.219493       12.503305  

TA Madison Balanced Allocation Service Class

     9,622,120.289       105,203,272       111,712,817       (106 )      111,712,711       39,781,670       1.296900       12.459063  

TA Madison Conservative Allocation Service Class

     6,467,562.077       68,803,078       70,949,156       183       70,949,339       31,298,178       1.170432       11.366271  

TA Madison Diversified Income Service Class

     9,972,857.521       115,884,001       130,444,976       47       130,445,023       53,981,023       1.289311       12.194369  

TA Managed Risk—Balanced ETF Service Class

     488,126,161.034       5,591,157,866       6,047,883,135       (317 )      6,047,882,818       1,473,800,978       1.125658       12.556351  

TA Managed Risk—Conservative ETF Service Class

     60,561,908.836       722,370,228       771,558,719       (79 )      771,558,640       280,713,603       1.162095       12.248369  

TA Managed Risk—Growth ETF Service Class

     264,413,643.957       2,677,446,369       2,942,923,857       475       2,942,924,332       1,000,647,147       1.260306       13.515993  

TA Market Participation Strategy Service Class

     33,938,164.790       391,104,561       434,408,509       121       434,408,630       93,693,820       1.231311       13.011533  

TA MFS International Equity Initial Class

     8,728,764.813       69,161,448       86,502,059       (330 )      86,501,729       49,776,559       1.294632       13.281371  

TA MFS International Equity Service Class

     11,935,972.643       99,049,160       116,137,014       (174 )      116,136,840       29,599,165       1.197216       12.947634  

TA Morgan Stanley Capital Growth Initial Class

     7,010,995.943       96,383,314       126,618,587       (9 )      126,618,578       42,128,648       2.245444       13.765517  

TA Morgan Stanley Capital Growth Service Class

     5,201,680.902       80,416,875       91,705,634       (8 )      91,705,626       14,528,067       2.154551       21.875560  

TA Multi-Managed Balanced Initial Class

     6,044,079.232       82,104,748       91,688,682       (177 )      91,688,505       36,409,215       1.632049       11.220052  

See accompanying notes.

 

4

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2017

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

TA Multi-Managed Balanced Service Class

     86,418,261.820     $ 1,155,460,908     $ 1,284,175,371     $ (94 )    $ 1,284,175,277       245,736,768     $ 1.388095     $ 14.563549  

TA Multi-Manager Alternative Strategies Service Class

     168,999.890       1,713,633       1,693,379       20       1,693,399       166,567       9.907066       10.462560  

TA PIMCO Tactical—Balanced Service Class

     50,303,042.318       584,624,918       628,788,029       267       628,788,296       172,652,804       1.110903       12.839609  

TA PIMCO Tactical—Conservative Service Class

     23,416,065.085       266,539,143       282,866,066       (66 )      282,866,000       79,062,157       1.045084       12.436322  

TA PIMCO Tactical—Growth Service Class

     29,573,886.642       336,944,751       373,518,188       72       373,518,260       89,424,879       1.086116       13.237149  

TA PIMCO Total Return Initial Class

     15,108,333.645       173,594,065       174,652,337       110       174,652,447       108,525,289       1.045343       10.370480  

TA PIMCO Total Return Service Class

     70,117,790.844       810,273,959       803,549,883       60,013       803,609,896       381,085,363       1.081041       10.584377  

TA PineBridge Inflation Opportunities Service Class

     16,946,656.620       175,959,302       173,872,697       133       173,872,830       90,816,209       0.956644       10.265369  

TA ProFunds UltraBear Service Class (OAM)

     28,644,090.437       23,665,130       13,176,282       112       13,176,394       325,897,312       0.038746       7.383735  

TA QS Investors Active Asset Allocation—Conservative Service Class

     36,743,464.001       388,432,114       413,363,970       (515 )      413,363,455       167,288,266       1.094192       11.698713  

TA QS Investors Active Asset Allocation—Moderate Service Class

     125,468,334.282       1,415,545,687       1,515,657,478       (221 )      1,515,657,257       433,032,803       1.144725       12.092132  

TA QS Investors Active Asset Allocation—Moderate Growth Service Class

     53,764,601.824       597,893,156       650,551,682       198       650,551,880       225,073,336       1.178917       12.634102  

TA Small/Mid Cap Value Initial Class

     6,294,333.655       119,637,119       135,391,117       57       135,391,174       22,801,173       1.796908       17.276808  

TA Small/Mid Cap Value Service Class

     6,177,333.066       123,620,346       129,538,674       44       129,538,718       33,142,579       1.767066       16.826681  

TA T. Rowe Price Small Cap Initial Class

     8,324,843.307       103,805,527       129,784,307       (15 )      129,784,292       45,509,419       2.019850       18.922458  

TA T. Rowe Price Small Cap Service Class

     16,395,204.990       217,915,559       241,993,226       48       241,993,274       37,785,697       1.987216       18.434318  

TA Torray Concentrated Growth Initial Class

     7,207,736.178       113,726,068       157,200,726       147       157,200,873       41,463,687       1.822343       17.013197  

TA Torray Concentrated Growth Service Class

     1,825,634.935       35,240,578       40,766,428       (68 )      40,766,360       9,771,712       1.762693       16.571112  

TA TS&W International Equity Initial Class

     5,927,618.152       73,280,320       85,535,530       (151 )      85,535,379       40,975,824       1.140805       13.292263  

TA TS&W International Equity Service Class

     3,045,193.564       37,729,835       43,576,720       54       43,576,774       13,819,574       1.031522       12.944454  

TA U.S. Equity Index Service Class

     1,641,839.035       17,583,799       18,585,618       2       18,585,620       1,656,725       11.123126       11.293457  

TA WMC US Growth Initial Class

     9,466,787.811       226,421,854       276,903,543       190       276,903,733       139,553,543       1.683944       18.677090  

TA WMC US Growth Service Class

     4,317,117.030       107,150,615       123,555,889       (135 )      123,555,754       28,142,974       1.589620       18.191755  

Vanguard® Equity Index

     92,023.990       3,173,691       3,788,628       3       3,788,631       813,744       2.052353       17.962798  

Vanguard® International

     84,519.373       1,811,519       2,310,760       (2 )      2,310,758       767,522       1.448485       15.407065  

Vanguard® Mid-Cap Index

     58,829.150       1,179,396       1,395,427       (2 )      1,395,425       389,324       1.915393       17.087033  

Vanguard® REIT Index

     34,952.176       453,892       459,272       11       459,283       149,622       1.542912       13.103702  

Vanguard® Short-Term Investment Grade

     278,702.457       2,954,010       2,959,820       (7 )      2,959,813       878,234       1.071876       10.488135  

Vanguard® Total Bond Market Index

     177,184.374       2,092,674       2,099,635       4       2,099,639       402,636       1.135636       10.569253  

Voya Global Perspectives Class S Shares

     1,710.589       17,263       19,638       —         19,638       1,791       10.716410       11.195795  

See accompanying notes.

 

5

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statements of Assets and Liabilities

December 31, 2017

 

Subaccount

   Number of
Shares		     Cost     Assets at
Market Value		     Due
(to)/from
General
Account		     Net Assets     Units
Outstanding		     Range of Unit Values  

Voya Large Cap Value Class S Shares

     83.195     $ 893     $ 1,093     $ 1     $ 1,094       94     $ 11.020741     $ 11.631096  

Voya Strategic Allocation Conservative Class S Shares

     —         —         —         —         —         —         10.636208       10.879935  

Voya Strategic Allocation Moderate Class S Shares

     —         —         —         —         —         —         11.005874       11.258092  

Wanger International

     12,018.324       337,334       370,645       (1 )      370,644       108,448       1.495202       13.623048  

Wanger USA

     —         —         —         —         —         —         2.087177       17.080588  

See accompanying notes.

 

6

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    AB Balanced
Wealth
Strategy Class B
Shares		     AB Growth and
Income Class B
Shares		     AB Large
Cap Growth
Class B
Shares		    

American

Funds - Asset
Allocation Class

2 Shares

     American
Funds - Bond
Class 2 Shares		  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

   $ 95,500,596     $ 194,307,335     $ 30,693,993     $ 511,723,809     $ 168,449,072  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,726,409       1,672,743       —         9,668,445       3,406,309  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,555,412       2,900,764       426,912       9,450,490       3,306,661  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     170,997       (1,228,021 )      (426,912 )      217,955       99,648  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     6,390,894       12,421,233       3,428,931       13,205,395       670,487  

Realized Gain (Loss) on Investments

     (1,645,297 )      8,726,133       1,685,316       4,434,469       (432,581 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     4,745,597       21,147,366       5,114,247       17,639,864       237,906  

Net Change in Unrealized Appreciation (Depreciation)

     (2,418,416 )      (1,588,392 )      (4,514,642 )      22,855,077       1,009,600  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     2,327,181       19,558,974       599,605       40,494,941       1,247,506  

Net Increase (Decrease) in Net Assets Resulting from Operations

     2,498,178       18,330,953       172,693       40,712,896       1,347,154  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (3,914,917 )      7,646,377       (2,542,316 )      81,602,903       32,890,959  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (1,416,739 )      25,977,330       (2,369,623 )      122,315,799       34,238,113  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 94,083,857     $ 220,284,665     $ 28,324,370     $ 634,039,608     $ 202,687,185  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,757,555       2,948,666       —         11,319,204       4,101,380  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,578,714       3,382,610       456,309       12,242,819       3,432,100  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     178,841       (433,944 )      (456,309 )      (923,615 )      669,280  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     799,896       20,426,407       1,784,870       32,975,305       2,953,858  

Realized Gain (Loss) on Investments

     (785,572 )      11,724,260       2,411,493       13,942,491       (1,054,477 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     14,324       32,150,667       4,196,363       46,917,796       1,899,381  

Net Change in Unrealized Appreciation (Depreciation)

     12,264,594       4,943,149       4,197,338       49,060,945       1,235,417  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     12,278,918       37,093,816       8,393,701       95,978,741       3,134,798  

Net Increase (Decrease) in Net Assets Resulting from Operations

     12,457,759       36,659,872       7,937,392       95,055,126       3,804,078  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (6,594,640 )      (10,466,873 )      (3,998,993 )      39,968,883       11,056,705  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     5,863,119       26,192,999       3,938,399       135,024,009       14,860,783  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 99,946,976     $ 246,477,664     $ 32,262,769     $ 769,063,617     $ 217,547,968  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

See Accompanying Notes.

 

(1)  See Footnote 1

 

7

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

     American
Funds - Growth
Class 2 Shares		     American Funds -
Growth-Income
Class 2 Shares		     American
Funds - International
Class 2 Shares		     BlackRock
Basic Value
V.I. Class I
Shares		     BlackRock
Global
Allocation
V.I. Class I
Shares		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

    $ 241,712,021     $ 236,097,115     $ 114,935,590     $ 20,857,527     $ 14,520,562  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,142,815       4,189,447       1,783,610       316,880       171,223  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      4,302,075       4,324,268       2,062,245       301,923       197,744  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,159,260 )      (134,821 )      (278,635 )      14,957       (26,521 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      22,498,997       28,109,838       10,276,564       498,719       —    

Realized Gain (Loss) on Investments

      (1,802,721 )      (1,541,716 )      (4,497,431 )      142,249       26,109  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      20,696,276       26,568,122       5,779,133       640,968       26,109  

Net Change in Unrealized Appreciation (Depreciation)

      982,591       (1,580,080 )      (3,012,604 )      2,542,500       336,401  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      21,678,867       24,988,042       2,766,529       3,183,468       362,510  

Net Increase (Decrease) in Net Assets Resulting from Operations

      19,519,607       24,853,221       2,487,894       3,198,425       335,989  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      39,839,064       47,941,715       12,224,875       (1,986,027 )      (1,462,988 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      59,358,671       72,794,936       14,712,769       1,212,398       (1,126,999 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 301,070,692     $ 308,892,051     $ 129,648,359     $ 22,069,925     $ 13,393,563  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,012,383       5,436,965       2,154,436       327,291       169,049  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,277,435       6,028,332       2,709,539       309,812       199,371  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (4,265,052 )      (591,367 )      (555,103 )      17,479       (30,322 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      35,709,916       23,474,148       1,817,197       817,837       129,358  

Realized Gain (Loss) on Investments

      2,501,826       237,470       (342,853 )      386,085       397,852  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      38,211,742       23,711,618       1,474,344       1,203,922       527,210  

Net Change in Unrealized Appreciation (Depreciation)

      50,688,858       44,406,383       39,399,899       153,944       1,037,855  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      88,900,600       68,118,001       40,874,243       1,357,866       1,565,065  

Net Increase (Decrease) in Net Assets Resulting from Operations

      84,635,548       67,526,634       40,319,140       1,375,345       1,534,743  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      57,194,734       43,743,768       21,968,632       (1,742,925 )      (1,841,344 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      141,830,282       111,270,402       62,287,772       (367,580 )      (306,601 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 442,900,974     $ 420,162,453     $ 191,936,131     $ 21,702,345     $ 13,086,962  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

8

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

BlackRock High

Yield V.I. Class

I Shares

Subaccount

    

Catalyst

Dividend

Capture VA

Subaccount

    

Catalyst

Insider

Buying VA

Subaccount

    

Fidelity® VIP

Balanced

Service

Class 2

Subaccount

    

Fidelity® VIP

Contrafund®

Initial Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 5,188,905     $ 2,340,269     $ 2,588,982     $ 299,484,731     $ 716,924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      269,953       105,982       15,554       3,902,078       3,484  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      70,463       30,716       32,947       4,400,736       3,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      199,490       75,266       (17,393 )      (498,658 )      259  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         720,807       7,402,751       55,870  

Realized Gain (Loss) on Investments

      (23,177 )      40,858       (15,906 )      536,594       (18,385 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (23,177 )      40,858       704,901       7,939,345       37,485  

Net Change in Unrealized Appreciation (Depreciation)

      349,367       8,020       (474,026 )      9,081,134       (13,652 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      326,190       48,878       230,875       17,020,479       23,833  

Net Increase (Decrease) in Net Assets Resulting from Operations

      525,680       124,144       213,482       16,521,821       24,092  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (875,817 )      (246,361 )      (240,522 )      20,954,344       (309,335 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (350,137 )      (122,217 )      (27,040 )      37,476,165       (285,243 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 4,838,768     $ 2,218,052     $ 2,561,942     $ 336,960,896     $ 431,681  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      237,463       63,429       13,597       4,714,475       2,500  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      65,292       26,764       33,852       5,246,024       1,782  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      172,171       36,665       (20,255 )      (531,549 )      718  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         303,948       9,450,198       14,141  

Realized Gain (Loss) on Investments

      31,782       43,054       (91,311 )      5,987,743       4,384  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      31,782       43,054       212,637       15,437,941       18,525  

Net Change in Unrealized Appreciation (Depreciation)

      61,049       (145,345 )      176,794       34,332,976       36,326  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      92,831       (102,291 )      389,431       49,770,917       54,851  

Net Increase (Decrease) in Net Assets Resulting from Operations

      265,002       (65,626 )      369,176       49,239,368       55,569  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (691,895 )      (382,744 )      (454,439 )      (4,041,694 )      (229,185 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (426,893 )      (448,370 )      (85,263 )      45,197,674       (173,616 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 4,411,875     $ 1,769,682     $ 2,476,679     $ 382,158,570     $ 258,065  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

9

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

Fidelity® VIP

Contrafund®

Service

Class 2

Subaccount

    

Fidelity® VIP

Equity-Income

Initial Class

Subaccount

    

Fidelity®

VIP Equity-

Income

Service

Class 2

Subaccount

    

Fidelity® VIP

Growth

Initial Class

Subaccount

    

Fidelity®

VIP Growth

Service

Class 2

Subaccount

  

Net Assets as of December 31, 2015:

    $ 449,859,068     $ 70,747     $ 47,923,174     $ 40,557     $ 40,617,613  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,864,504       1,312       990,166       8       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      6,435,763       402       700,072       179       538,848  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (3,571,259 )      910       290,094       (171 )      (538,848 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      34,845,813       4,562       3,154,700       3,734       3,746,975  

Realized Gain (Loss) on Investments

      6,787,899       (1,999 )      233,152       8,495       2,821,129  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      41,633,712       2,563       3,387,852       12,229       6,568,104  

Net Change in Unrealized Appreciation (Depreciation)

      (11,502,168 )      4,722       3,345,510       (13,326 )      (6,540,553 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      30,131,544       7,285       6,733,362       (1,097 )      27,551  

Net Increase (Decrease) in Net Assets Resulting from Operations

      26,560,285       8,195       7,023,456       (1,268 )      (511,297 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (59,650 )      (17,873 )      (5,716,374 )      (19,734 )      (5,786,936 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      26,500,635       (9,678 )      1,307,082       (21,002 )      (6,298,233 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 476,359,703     $ 61,069     $ 49,230,256     $ 19,555     $ 34,319,380  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      4,206,437       736       705,663       43       32,379  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      7,669,169       346       718,518       142       565,104  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (3,462,732 )      390       (12,855 )      (99 )      (532,725 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      28,503,427       1,145       1,033,609       1,529       2,782,408  

Realized Gain (Loss) on Investments

      13,938,279       3,466       1,031,780       2,454       2,688,346  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      42,441,706       4,611       2,065,389       3,983       5,470,754  

Net Change in Unrealized Appreciation (Depreciation)

      56,527,961       393       2,978,803       1,673       5,748,411  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      98,969,667       5,004       5,044,192       5,656       11,219,165  

Net Increase (Decrease) in Net Assets Resulting from Operations

      95,506,935       5,394       5,031,337       5,557       10,686,440  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      7,300,891       (23,107 )      (6,077,211 )      (6,470 )      (4,989,680 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      102,807,826       (17,713 )      (1,045,874 )      (913 )      5,696,760  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 579,167,529     $ 43,356     $ 48,184,382     $ 18,642     $ 40,016,140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

10

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

Fidelity® VIP

Growth

Opportunities

Service

Class 2

Subaccount

    

Fidelity® VIP

Mid Cap

Initial Class

Subaccount

    

Fidelity® VIP

Mid Cap

Service

Class 2

Subaccount

    

Fidelity® VIP

Value

Strategies

Initial Class

Subaccount

    

Fidelity® VIP

Value

Strategies

Service Class 2

Subaccount

  

Net Assets as of December 31, 2015:

    $ 2,179,017     $ 51,157     $ 298,255,903     $ 89,494     $ 124,591,778  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      997       250       945,060       2,007       1,111,388  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      29,161       321       4,302,516       929       1,751,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (28,164 )      (71 )      (3,357,456 )      1,078       (640,596 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      41,055       3,122       18,184,106       —         —    

Realized Gain (Loss) on Investments

      161,808       (544 )      (1,011,452 )      11,600       6,606,582  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      202,863       2,578       17,172,654       11,600       6,606,582  

Net Change in Unrealized Appreciation (Depreciation)

      (213,033 )      3,151       14,705,971       7,015       2,621,496  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (10,170 )      5,729       31,878,625       18,615       9,228,078  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (38,334 )      5,658       28,521,169       19,693       8,587,482  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (148,002 )      (4,535 )      (10,550,550 )      77,843       (4,948,276 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (186,336 )      1,123       17,970,619       97,536       3,639,206  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,992,681     $ 52,280     $ 316,226,522     $ 187,030     $ 128,230,984  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,523       396       1,710,549       4,617       1,731,403  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      34,748       363       5,073,781       1,959       2,044,335  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (32,225 )      33       (3,363,232 )      2,658       (312,932 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      297,759       2,455       15,882,548       73,224       32,443,575  

Realized Gain (Loss) on Investments

      149,634       (3 )      5,110,071       2,565       5,182,451  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      447,393       2,452       20,992,619       75,789       37,626,026  

Net Change in Unrealized Appreciation (Depreciation)

      224,104       7,599       42,316,526       (27,440 )      (15,040,289 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      671,497       10,051       63,309,145       48,349       22,585,737  

Net Increase (Decrease) in Net Assets Resulting from Operations

      639,272       10,084       59,945,913       51,007       22,272,805  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      79,760       45,982       (1,795,527 )      92,132       (796,423 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      719,032       56,066       58,150,386       143,139       21,476,382  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 2,711,713     $ 108,346     $ 374,376,908     $ 330,169     $ 149,707,366  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

11

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

Franklin

Founding Funds

Allocation

Class 4 Shares
Subaccount

    

Franklin

Income Class

2 Shares

Subaccount

    

Franklin

Mutual Shares

Class 2 Shares

Subaccount

    

Franklin

Templeton

Foreign

Class 2 Shares

Subaccount

    

Invesco V.I.

American

Franchise Series

II Shares

Subaccount

  

Net Assets as of December 31, 2015:

    $ 115,509,798     $ 89,472,772     $ 18,306,795     $ 35,741,459     $ 7,414,245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      4,097,691       4,297,727       352,679       642,573       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,818,276       1,231,465       258,830       491,444       99,836  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,279,415       3,066,262       93,849       151,129       (99,836 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,606,410       —         1,452,874       575,540       616,766  

Realized Gain (Loss) on Investments

      (1,378,168 )      (211,397 )      503,479       (298,522 )      327,694  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,228,242       (211,397 )      1,956,353       277,018       944,460  

Net Change in Unrealized Appreciation (Depreciation)

      7,041,900       6,973,332       328,700       1,241,231       (827,299 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      9,270,142       6,761,935       2,285,053       1,518,249       117,161  

Net Increase (Decrease) in Net Assets Resulting from Operations

      11,549,557       9,828,197       2,378,902       1,669,378       17,325  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (14,959,677 )      (15,988,133 )      (2,326,995 )      (4,756,618 )      (888,100 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (3,410,120 )      (6,159,936 )      51,907       (3,087,240 )      (870,775 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 112,099,678     $ 83,312,836     $ 18,358,702     $ 32,654,219     $ 6,543,470  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      2,804,077       3,315,815       391,793       863,943       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,805,136       1,161,858       261,204       497,857       107,269  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      998,941       2,153,957       130,589       366,086       (107,269 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      4,496,968       —         710,509       —         579,240  

Realized Gain (Loss) on Investments

      174,838       1,109,068       629,157       414,507       368,735  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,671,806       1,109,068       1,339,666       414,507       947,975  

Net Change in Unrealized Appreciation (Depreciation)

      4,796,043       2,957,782       (294,548 )      3,864,363       754,245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      9,467,849       4,066,850       1,045,118       4,278,870       1,702,220  

Net Increase (Decrease) in Net Assets Resulting from Operations

      10,466,790       6,220,807       1,175,707       4,644,956       1,594,951  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (17,700,539 )      (13,489,553 )      (2,453,023 )      (4,457,766 )      (832,760 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (7,233,749 )      (7,268,746 )      (1,277,316 )      187,190       762,191  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 104,865,929     $ 76,044,090     $ 17,081,386     $ 32,841,409     $ 7,305,661  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

12

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

Janus Henderson -

Enterprise

Service

Shares
Subaccount

    

Janus Henderson -

Global Research

Service

Shares

Subaccount

    

Janus Henderson -

Mid Cap Value

Service

Shares

Subaccount

    

MFS® New

Discovery

Service

Class

Subaccount

    

MFS® Total

Return

Service

Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 19,764,226     $ 29,897,411     $ 2,735,038     $ 45,033,655     $ 55,241,989  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      139,288       255,751       24,773       —         1,415,825  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      288,240       398,630       39,767       611,267       780,587  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (148,952 )      (142,879 )      (14,994 )      (611,267 )      635,238  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,493,333       —         371,882       1,985,386       1,747,849  

Realized Gain (Loss) on Investments

      1,036,543       1,369,861       9,687       (743,625 )      1,709,584  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,529,876       1,369,861       381,569       1,241,761       3,457,433  

Net Change in Unrealized Appreciation (Depreciation)

      (446,215 )      (1,247,346 )      70,741       2,020,238       (369,178 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      2,083,661       122,515       452,310       3,261,999       3,088,255  

Net Increase (Decrease) in Net Assets Resulting from Operations

      1,934,709       (20,364 )      437,316       2,650,732       3,723,493  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,947,353 )      (4,072,103 )      (200,047 )      (6,348,826 )      (7,033,319 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (12,644 )      (4,092,467 )      237,269       (3,698,094 )      (3,309,826 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 19,751,582     $ 25,804,944     $ 2,972,307     $ 41,335,561     $ 51,932,163  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      115,262       190,513       19,514       —         1,108,023  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      314,743       409,770       44,192       631,488       752,548  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (199,481 )      (219,257 )      (24,678 )      (631,488 )      355,475  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      1,340,550       —         114,954       860,301       1,422,329  

Realized Gain (Loss) on Investments

      1,229,939       1,374,519       14,249       447,242       1,894,751  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      2,570,489       1,374,519       129,203       1,307,543       3,317,080  

Net Change in Unrealized Appreciation (Depreciation)

      2,425,196       4,967,587       244,440       8,676,946       1,419,095  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      4,995,685       6,342,106       373,643       9,984,489       4,736,175  

Net Increase (Decrease) in Net Assets Resulting from Operations

      4,796,204       6,122,849       348,965       9,353,001       5,091,650  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,956,028 )      (2,780,775 )      (93,059 )      (5,752,368 )      (6,360,225 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      2,840,176       3,342,074       255,906       3,600,633       (1,268,575 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 22,591,758     $ 29,147,018     $ 3,228,213     $ 44,936,194     $ 50,663,588  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

13

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

NVIT Emerging

Markets Class

D Shares
Subaccount(1)

    

State Street

Total Return

V.I.S. Class

3 Shares

Subaccount

    

TA AB

Dynamic

Allocation

Initial Class

Subaccount

    

TA AB

Dynamic

Allocation

Service Class

Subaccount

    

TA Aegon

Government

Money Market

Initial Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ —       $ 55,077,363     $ 23,447,568     $ 346,241,255     $ 118,060,897  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      164       871,307       328,523       4,342,754       6,614  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      42       902,389       329,186       4,826,497       1,740,504  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      122       (31,082 )      (663 )      (483,743 )      (1,733,890 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         1,010,082       —         —         —    

Realized Gain (Loss) on Investments

      (50 )      500,432       640,386       4,633,225       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (50 )      1,510,514       640,386       4,633,225       —    

Net Change in Unrealized Appreciation (Depreciation)

      (792 )      830,845       (464,247 )      (2,067,014 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (842 )      2,341,359       176,139       2,566,211       —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      (720 )      2,310,277       175,476       2,082,468       (1,733,890 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      19,494       (3,255,351 )      (2,127,500 )      (8,425,055 )      (6,953,071 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      18,774       (945,074 )      (1,952,024 )      (6,342,587 )      (8,686,961 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 18,774     $ 54,132,289     $ 21,495,544     $ 339,898,668     $ 109,373,936  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      184       976,370       349,550       4,919,858       5,176  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      100       904,227       294,690       4,514,302       1,506,954  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      84       72,143       54,860       405,556       (1,501,778 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         1,508,478       —         —         —    

Realized Gain (Loss) on Investments

      456       1,179,224       680,252       7,370,285       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      456       2,687,702       680,252       7,370,285       —    

Net Change in Unrealized Appreciation (Depreciation)

      6,275       4,166,449       863,185       17,729,992       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      6,731       6,854,151       1,543,437       25,100,277       —    

Net Increase (Decrease) in Net Assets Resulting from Operations

      6,815       6,926,294       1,598,297       25,505,833       (1,501,778 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,907 )      (3,581,038 )      (3,198,900 )      (41,082,107 )      (18,706,668 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      2,908       3,345,256       (1,600,603 )      (15,576,274 )      (20,208,446 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 21,682     $ 57,477,545     $ 19,894,941     $ 324,322,394     $ 89,165,490  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

14

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Aegon

Government

Money Market

Service Class

Subaccount

    

TA Aegon

High Yield

Bond Initial

Class

Subaccount

    

TA Aegon

High Yield

Bond Service

Class

Subaccount

    

TA Aegon

U.S.

Government

Securities

Initial Class

Subaccount

    

TA Aegon

U.S.

Government

Securities

Service Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 383,764,535     $ 79,539,458     $ 137,023,573     $ 71,113,835     $ 349,864,588  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      19,966       4,964,898       9,026,847       514,498       1,918,535  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,415,665       1,198,512       2,196,070       1,159,428       6,220,947  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (5,395,699 )      3,766,386       6,830,777       (644,930 )      (4,302,412 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      —         (420,462 )      (3,922,638 )      (1,190,529 )      389,755  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —         (420,462 )      (3,922,638 )      (1,190,529 )      389,755  

Net Change in Unrealized Appreciation (Depreciation)

      —         7,191,741       16,022,419       865,081       162,748  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —         6,771,279       12,099,781       (325,448 )      552,503  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (5,395,699 )      10,537,665       18,930,558       (970,378 )      (3,749,909 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      5,590,348       (4,677,617 )      (366,673 )      3,419,313       38,422,328  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      194,649       5,860,048       18,563,885       2,448,935       34,672,419  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 383,959,184     $ 85,399,506     $ 155,587,458     $ 73,562,770     $ 384,537,007  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      16,816       4,928,974       8,852,577       2,538,820       7,780,116  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      4,522,280       1,221,638       2,345,284       1,006,086       3,878,483  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (4,505,464 )      3,707,336       6,507,293       1,532,734       3,901,633  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         5,309,737       18,670,273  

Realized Gain (Loss) on Investments

      —         443,832       1,232,910       (2,122,871 )      (8,592,903 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      —         443,832       1,232,910       3,186,866       10,077,370  

Net Change in Unrealized Appreciation (Depreciation)

      —         688,740       1,189,438       (3,895,823 )      (10,566,137 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      —         1,132,572       2,422,348       (708,957 )      (488,767 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (4,505,464 )      4,839,908       8,929,641       823,777       3,412,866  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (82,895,351 )      (7,303,630 )      (6,864,378 )      (9,339,780 )      (189,062,525 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (87,400,815 )      (2,463,722 )      2,065,263       (8,516,003 )      (185,649,659 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 296,558,369     $ 82,935,784     $ 157,652,721     $ 65,046,767     $ 198,887,348  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

15

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA American

Funds Managed

Risk - Balanced

Service Class

Subaccount

    

TA Asset

Allocation -

Conservative

Initial Class

Subaccount

    

TA Asset

Allocation -

Conservative

Service Class

Subaccount

    

TA Asset

Allocation -

Growth

Initial Class

Subaccount

    

TA Asset

Allocation -

Growth

Service Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 119,855,246     $ 189,750,194     $ 1,039,218,010     $ 273,043,029     $ 197,157,455  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,398,218       3,824,970       18,785,162       5,643,952       3,494,762  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,949,953       2,789,492       14,446,620       3,807,339       2,597,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,551,735 )      1,035,478       4,338,542       1,836,613       896,858  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         4,172,201       23,463,654       —         —    

Realized Gain (Loss) on Investments

      3,230       (645,513 )      (2,920,930 )      10,367,544       5,398,467  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      3,230       3,526,688       20,542,724       10,367,544       5,398,467  

Net Change in Unrealized Appreciation (Depreciation)

      14,321,273       1,201,733       4,855,411       (1,185,117 )      306,619  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      14,324,503       4,728,421       25,398,135       9,182,427       5,705,086  

Net Increase (Decrease) in Net Assets Resulting from Operations

      12,772,768       5,763,899       29,736,677       11,019,040       6,601,944  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      229,949,565       (18,632,199 )      (47,297,042 )      (29,570,883 )      (19,093,951 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      242,722,333       (12,868,300 )      (17,560,365 )      (18,551,843 )      (12,492,007 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 362,577,579     $ 176,881,894     $ 1,021,657,645     $ 254,491,186     $ 184,665,448  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      3,498,623       3,636,647       19,586,273       4,002,104       2,538,341  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      7,466,405       2,578,649       14,266,476       4,078,112       2,871,190  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (3,967,782 )      1,057,998       5,319,797       (76,008 )      (332,849 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      492,161       2,729,846       16,664,670       6,043,863       4,532,063  

Realized Gain (Loss) on Investments

      5,227,773       1,219,384       4,030,895       10,900,393       8,504,103  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      5,719,934       3,949,230       20,695,565       16,944,256       13,036,166  

Net Change in Unrealized Appreciation (Depreciation)

      63,318,221       13,448,450       82,925,628       39,742,810       28,873,724  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      69,038,155       17,397,680       103,621,193       56,687,066       41,909,890  

Net Increase (Decrease) in Net Assets Resulting from Operations

      65,070,373       18,455,678       108,940,990       56,611,058       41,577,041  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      224,964,815       (23,875,280 )      (70,283,184 )      (12,623,521 )      (4,758,149 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      290,035,188       (5,419,602 )      38,657,806       43,987,537       36,818,892  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 652,612,767     $ 171,462,292     $ 1,060,315,451     $ 298,478,723     $ 221,484,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

16

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Asset

Allocation -

Moderate

Initial Class

Subaccount

    

TA Asset

Allocation -

Moderate

Service Class

Subaccount

    

TA Asset

Allocation -

Moderate

Growth Initial

Class

Subaccount

    

TA Asset

Allocation -

Moderate Growth

Service Class

Subaccount

    

TA Barrow

Hanley Dividend

Focused Initial

Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 418,714,217     $ 5,033,408,915     $ 499,970,785     $ 3,272,645,909     $ 349,809,796  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      8,882,508       96,247,253       9,746,867       56,957,967       7,455,376  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,964,442       66,093,891       7,117,512       46,501,257       5,024,268  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,918,066       30,153,362       2,629,355       10,456,710       2,431,108  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      10,122,008       124,897,398       26,214,499       176,561,797       —    

Realized Gain (Loss) on Investments

      6,571,800       15,643,392       9,183,006       33,846,317       16,331,527  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      16,693,808       140,540,790       35,397,505       210,408,114       16,331,527  

Net Change in Unrealized Appreciation (Depreciation)

      (3,909,028 )      13,812,981       (15,175,708 )      (73,965,923 )      24,445,825  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      12,784,780       154,353,771       20,221,797       136,442,191       40,777,352  

Net Increase (Decrease) in Net Assets Resulting from Operations

      15,702,846       184,507,133       22,851,152       146,898,901       43,208,460  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (31,114,607 )      (333,357,122 )      (45,330,832 )      (170,423,955 )      (29,019,235 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (15,411,761 )      (148,849,989 )      (22,479,680 )      (23,525,054 )      14,189,225  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 403,302,456     $ 4,884,558,926     $ 477,491,105     $ 3,249,120,855     $ 363,999,021  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      7,556,791       84,336,647       8,586,673       53,393,888       8,791,094  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      5,992,214       68,210,923       7,442,507       50,326,130       5,505,842  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,564,577       16,125,724       1,144,166       3,067,758       3,285,252  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      8,995,713       115,050,042       16,651,210       119,140,908       —    

Realized Gain (Loss) on Investments

      10,138,272       48,798,939       11,235,491       55,920,976       22,834,986  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      19,133,985       163,848,981       27,886,701       175,061,884       22,834,986  

Net Change in Unrealized Appreciation (Depreciation)

      35,246,376       511,850,858       53,776,236       393,086,994       26,815,156  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      54,380,361       675,699,839       81,662,937       568,148,878       49,650,142  

Net Increase (Decrease) in Net Assets Resulting from Operations

      55,944,938       691,825,563       82,807,103       571,216,636       52,935,394  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (42,800,281 )      (323,637,328 )      (35,429,499 )      (101,726,997 )      (16,849,182 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      13,144,657       368,188,235       47,377,604       469,489,639       36,086,212  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 416,447,113     $ 5,252,747,161     $ 524,868,709     $ 3,718,610,494     $ 400,085,233  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

17

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Barrow

Hanley Dividend

Focused Service

Class

Subaccount

    

TA BlackRock

Equity Smart

Beta 100

Service Class

Subaccount(1)

    

TA BlackRock

Global Allocation

Service Class

Subaccount

    

TA BlackRock

Global Allocation

Managed Risk -

Balanced Service

Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 145,023,856     $ —       $ 1,178,176,425     $ 128,198,295  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      2,939,251       —         4,606,808       2,971,545  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,180,690       59,366       17,009,729       1,995,164  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      758,561       (59,366 )      (12,402,921 )      976,381  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         7,136,776       9,905,149  

Realized Gain (Loss) on Investments

      4,909,031       (12,833 )      (4,943,716 )      (2,766,262 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,909,031       (12,833 )      2,193,060       7,138,887  

Net Change in Unrealized Appreciation (Depreciation)

      12,677,327       92,851       48,221,462       (9,013,055 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      17,586,358       80,018       50,414,522       (1,874,168 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      18,344,919       20,652       38,011,601       (897,787 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      5,005,046       23,102,327       51,869,511       34,838,452  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      23,349,965       23,122,979       89,881,112       33,940,665  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 168,373,821     $ 23,122,979     $ 1,268,057,537     $ 162,138,960  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      3,889,788       178,397       14,438,010       1,243,287  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,578,433       372,904       18,515,960       2,437,010  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,311,355       (194,507 )      (4,077,950 )      (1,193,723 ) 

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         32,993       —         —    

Realized Gain (Loss) on Investments

      10,132,751       734,896       11,151,896       (2,487,025 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      10,132,751       767,889       11,151,896       (2,487,025 ) 

Net Change in Unrealized Appreciation (Depreciation)

      12,636,937       5,795,587       142,522,093       22,485,113  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      22,769,688       6,563,476       153,673,989       19,998,088  

Net Increase (Decrease) in Net Assets Resulting from Operations

      24,081,043       6,368,969       149,596,039       18,804,365  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (7,638,522 )      10,429,091       (46,920,813 )      17,371,934  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      16,442,521       16,798,060       102,675,226       36,176,299  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 184,816,342     $ 39,921,039     $ 1,370,732,763     $ 198,315,259  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

18

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA BlackRock

Global Allocation

Managed Risk -

Growth Service

Class

    

TA BlackRock

Smart Beta 50

Service Class

    

TA BlackRock

Smart Beta 75

Service Class

    

TA BlackRock

Tactical Allocation

Service Class

  
     Subaccount     Subaccount(1)     Subaccount(1)     Subaccount  

Net Assets as of December 31, 2015:

    $ 150,650,346     $ —       $ —       $ 1,402,475,363  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      3,417,364       —         —         32,932,340  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,237,482       209,021       43,691       19,963,698  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,179,882       (209,021 )      (43,691 )      12,968,642  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      9,574,729       —         —         47,921,849  

Realized Gain (Loss) on Investments

      (3,284,911 )      30,186       15,965       5,164,483  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      6,289,818       30,186       15,965       53,086,332  

Net Change in Unrealized Appreciation (Depreciation)

      (9,554,872 )      (107,122 )      69,548       (17,726,377 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (3,265,054 )      (76,936 )      85,513       35,359,955  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (2,085,172 )      (285,957 )      41,822       48,328,597  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      19,846,947       42,260,756       11,464,594       (6,592,984 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      17,761,775       41,974,799       11,506,416       41,735,613  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 168,412,121     $ 41,974,799     $ 11,506,416     $ 1,444,210,976  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      1,172,119       414,758       97,774       21,612,290  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      2,451,205       717,888       244,320       20,490,691  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,279,086 )      (303,130 )      (146,546 )      1,121,599  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         85,812       27,849       24,436,099  

Realized Gain (Loss) on Investments

      (3,124,381 )      693,325       194,838       12,508,824  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (3,124,381 )      779,137       222,687       36,944,923  

Net Change in Unrealized Appreciation (Depreciation)

      31,372,175       5,431,722       3,092,141       104,506,238  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      28,247,794       6,210,859       3,314,828       141,451,161  

Net Increase (Decrease) in Net Assets Resulting from Operations

      26,968,708       5,907,729       3,168,282       142,572,760  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      13,151,564       15,335,651       11,693,248       (102,984,484 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      40,120,272       21,243,380       14,861,530       39,588,276  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 208,532,393     $ 63,218,179     $ 26,367,946     $ 1,483,799,252  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

19

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Clarion

Global Real

Estate Securities

Initial Class

    

TA Clarion

Global Real

Estate Securities
Service Class

    

TA International

Equity Index

Service Class

    

TA International
Moderate

Growth Initial
Class

    

TA International

Moderate

Growth Service

Class

  
     Subaccount     Subaccount     Subaccount(1)     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

    $ 50,028,208     $ 89,462,036     $ —       $ 78,116     $ 595,453,089  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      846,761       1,245,132       —         1,679       10,463,387  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      700,110       1,276,356       —         349       8,201,821  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      146,651       (31,224 )      —         1,330       2,261,566  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      1,299,128       1,175,789       —         34       3,144,149  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      1,299,128       1,175,789       —         34       3,144,149  

Net Change in Unrealized Appreciation (Depreciation)

      (1,903,615 )      (2,257,078 )      —         (739 )      (8,217,658 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (604,487 )      (1,081,289 )      —         (705 )      (5,073,509 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      (457,836 )      (1,112,513 )      —         625       (2,811,943 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (5,034,211 )      (4,037,900 )      —         1,381       (41,526,221 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (5,492,047 )      (5,150,413 )      —         2,006       (44,338,164 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 44,536,161     $ 84,311,623     $ —       $ 80,122     $ 551,114,925  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,607,121       2,767,019       —         1,620       9,723,149  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      644,489       1,226,576       24,375       397       8,601,965  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      962,632       1,540,443       (24,375 )      1,223       1,121,184  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         —         —         —    

Realized Gain (Loss) on Investments

      889,635       1,047,962       12,331       314       9,121,284  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      889,635       1,047,962       12,331       314       9,121,284  

Net Change in Unrealized Appreciation (Depreciation)

      2,272,362       5,152,464       292,290       15,366       96,636,872  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      3,161,997       6,200,426       304,621       15,680       105,758,156  

Net Increase (Decrease) in Net Assets Resulting from Operations

      4,124,629       7,740,869       280,246       16,903       106,879,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (3,290,648 )      (4,362,195 )      6,667,863       (1,810 )      2,362,361  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      833,981       3,378,674       6,948,109       15,093       109,241,701  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 45,370,142     $ 87,690,297     $ 6,948,109     $ 95,215     $ 660,356,626  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

20

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Janus

Balanced

Service

Class

Subaccount

    

TA Janus

Mid-Cap

Growth

Initial Class

Subaccount

    

TA Janus

Mid-Cap

Growth

Service

Class

Subaccount

    

TA Jennison

Growth

Initial Class

Subaccount

    

TA Jennison

Growth

Service

Class
Subaccount

  

Net Assets as of December 31, 2015:

    $ 562,408,813     $ 69,124,473     $ 68,159,564     $ 192,227,221     $ 96,681,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      6,859,000       —         —         —         —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      8,769,636       886,818       884,029       2,475,472       1,288,467  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,910,636 )      (886,818 )      (884,029 )      (2,475,472 )      (1,288,467 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      5,696,795       5,689,511       5,997,840       30,242,323       16,495,741  

Realized Gain (Loss) on Investments

      8,381,278       (960,178 )      (4,559,216 )      6,003,051       533,825  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      14,078,073       4,729,333       1,438,624       36,245,374       17,029,566  

Net Change in Unrealized Appreciation (Depreciation)

      7,012,769       (6,480,033 )      (3,241,525 )      (40,251,968 )      (19,026,960 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      21,090,842       (1,750,700 )      (1,802,901 )      (4,006,594 )      (1,997,394 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      19,180,206       (2,637,518 )      (2,686,930 )      (6,482,066 )      (3,285,861 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      106,359,221       (6,258,652 )      (2,150,732 )      (20,189,643 )      (4,969,002 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      125,539,427       (8,896,170 )      (4,837,662 )      (26,671,709 )      (8,254,863 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 687,948,240     $ 60,228,303     $ 63,321,902     $ 165,555,512     $ 88,426,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      10,235,658       70,225       —         12,425       —    

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      10,685,739       987,835       1,032,292       2,729,377       1,551,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (450,081 )      (917,610 )      (1,032,292 )      (2,716,952 )      (1,551,000 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      3,630,878       443,138       502,665       19,693,104       11,818,204  

Realized Gain (Loss) on Investments

      13,124,035       439,469       (1,616,980 )      6,516,720       (790,780 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      16,754,913       882,607       (1,114,315 )      26,209,824       11,027,424  

Net Change in Unrealized Appreciation (Depreciation)

      92,212,070       16,110,152       19,413,457       31,651,570       21,603,025  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      108,966,983       16,992,759       18,299,142       57,861,394       32,630,449  

Net Increase (Decrease) in Net Assets Resulting from Operations

      108,516,902       16,075,149       17,266,850       55,144,442       31,079,449  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      40,510,924       (2,542,164 )      2,963,473       (12,988,889 )      7,681,134  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      149,027,826       13,532,985       20,230,323       42,155,553       38,760,583  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 836,976,066     $ 73,761,288     $ 83,552,225     $ 207,711,065     $ 127,186,720  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

21

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA JPMorgan

Core Bond

Service Class

Subaccount

    

TA JPMorgan

Enhanced

Index Initial

Class

Subaccount

    

TA JPMorgan

Enhanced

Index Service

Class

Subaccount

    

TA JPMorgan

Mid Cap

Value Service

Class

Subaccount

    

TA JPMorgan

Tactical
Allocation

Service Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 173,901,984     $ 101,285,585     $ 39,714,319     $ 157,156,789     $ 1,097,074,756  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      4,016,554       410,103       78,214       3,377,193       13,684,866  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      2,855,817       1,449,464       611,090       2,502,761       15,208,773  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      1,160,737       (1,039,361 )      (532,876 )      874,432       (1,523,907 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         2,241,555       982,439       28,246,982       —    

Realized Gain (Loss) on Investments

      319,871       4,525,574       120,864       1,317,823       9,038,809  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      319,871       6,767,129       1,103,303       29,564,805       9,038,809  

Net Change in Unrealized Appreciation (Depreciation)

      (1,333,081 )      3,708,951       3,374,395       (10,255,191 )      24,826,380  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (1,013,210 )      10,476,080       4,477,698       19,309,614       33,865,189  

Net Increase (Decrease) in Net Assets Resulting from Operations

      147,527       9,436,719       3,944,822       20,184,046       32,341,282  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      51,354,701       (4,108,109 )      8,307,114       21,306,372       124,472,451  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      51,502,228       5,328,610       12,251,936       41,490,418       156,813,733  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 225,404,212     $ 106,614,195     $ 51,966,255     $ 198,647,207     $ 1,253,888,489  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      5,832,530       665,824       251,368       1,316,612       20,325,359  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      3,016,043       1,705,763       895,591       3,121,925       16,083,445  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      2,816,487       (1,039,939 )      (644,223 )      (1,805,313 )      4,241,914  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         2,347,479       1,255,601       49,319,651       —    

Realized Gain (Loss) on Investments

      (139,705 )      7,469,287       1,459,592       (2,247,733 )      18,158,168  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (139,705 )      9,816,766       2,715,193       47,071,918       18,158,168  

Net Change in Unrealized Appreciation (Depreciation)

      1,883,407       12,218,906       8,655,244       (21,421,469 )      66,030,970  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      1,743,702       22,035,672       11,370,437       25,650,449       84,189,138  

Net Increase (Decrease) in Net Assets Resulting from Operations

      4,560,189       20,995,733       10,726,214       23,845,136       88,431,052  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      4,965,138       (273,943 )      4,991,090       11,517,777       (51,483,155 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      9,525,327       20,721,790       15,717,304       35,362,913       36,947,897  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 234,929,539     $ 127,335,985     $ 67,683,559     $ 234,010,120     $ 1,290,836,386  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

22

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Legg Mason

Dynamic

Allocation - Balanced

Service Class

Subaccount

    

TA Legg Mason

Dynamic

Allocation - Growth

Service Class

Subaccount

    

TA Madison

Balanced

Allocation

Service Class

Subaccount

    

TA Madison

Conservative

Allocation

Service Class
Subaccount

  

Net Assets as of December 31, 2015:

    $ 1,125,801,306     $ 528,608,149     $ 98,601,791     $ 74,112,509  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      13,072,935       5,528,319       1,889,811       1,541,347  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      15,615,654       7,304,109       1,362,509       1,026,659  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (2,542,719 )      (1,775,790 )      527,302       514,688  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      25,657,065       10,154,887       2,282,273       561,806  

Realized Gain (Loss) on Investments

      7,622,987       4,367,250       (197,050 )      (224,877 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      33,280,052       14,522,137       2,085,223       336,929  

Net Change in Unrealized Appreciation (Depreciation)

      (54,146,056 )      (25,051,336 )      1,361,517       1,149,175  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (20,866,004 )      (10,529,199 )      3,446,740       1,486,104  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (23,408,723 )      (12,304,989 )      3,974,042       2,000,792  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      72,024,169       (2,419,076 )      2,436,708       (3,096,205 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      48,615,446       (14,724,065 )      6,410,750       (1,095,413 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,174,416,752     $ 513,884,084     $ 105,012,541     $ 73,017,096  
  

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

         

Reinvested Dividends

      12,915,580       4,889,974       1,924,085       1,393,880  

Investment Expense:

         

Mortality and Expense Risk and Administrative Charges

      14,826,248       6,736,065       1,441,798       977,154  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (1,910,668 )      (1,846,091 )      482,287       416,726  

Increase (Decrease) in Net Assets from Operations:

         

Capital Gain Distributions

      —         —         —         —    

Realized Gain (Loss) on Investments

      12,057,642       2,257,264       311,675       30,114  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      12,057,642       2,257,264       311,675       30,114  

Net Change in Unrealized Appreciation (Depreciation)

      88,728,628       54,915,721       9,492,640       4,262,719  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      100,786,270       57,172,985       9,804,315       4,292,833  

Net Increase (Decrease) in Net Assets Resulting from Operations

      98,875,602       55,326,894       10,286,602       4,709,559  
  

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (139,124,080 )      (67,000,193 )      (3,586,432 )      (6,777,316 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (40,248,478 )      (11,673,299 )      6,700,170       (2,067,757 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 1,134,168,274     $ 502,210,785     $ 111,712,711     $ 70,949,339  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

23

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

TA Madison

Diversified
Income

Service Class

Subaccount

    

TA Managed

Risk - Balanced

ETF Service

Class

Subaccount

    

TA Managed

Risk - Conservative
ETF Service Class

Subaccount

    

TA Managed

Risk - Growth

ETF Service

Class

Subaccount

    

TA Market

Participation

Strategy

Service Class

Subaccount

  

Net Assets as of December 31, 2015:

    $ 109,758,408     $ 5,493,942,298     $ 734,076,985     $ 2,828,869,757     $ 452,767,371  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,498,483       92,495,544       12,583,206       44,426,261       714,062  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,515,608       71,370,880       10,122,887       36,719,505       6,254,015  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      (17,125 )      21,124,664       2,460,319       7,706,756       (5,539,953 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      733,575       45,389,462       7,042,590       —         6,490,035  

Realized Gain (Loss) on Investments

      1,058,643       892,376       (554,939 )      (33,716,208 )      3,380,884  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      1,792,218       46,281,838       6,487,651       (33,716,208 )      9,870,919  

Net Change in Unrealized Appreciation (Depreciation)

      4,191,893       70,095,663       11,605,547       113,828,987       7,934,888  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      5,984,111       116,377,501       18,093,198       80,112,779       17,805,807  

Net Increase (Decrease) in Net Assets Resulting from Operations

      5,966,986       137,502,165       20,553,517       87,819,535       12,265,854  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      242,108       41,731,343       22,372,978       (217,014,991 )      (12,021,923 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      6,209,094       179,233,508       42,926,495       (129,195,456 )      243,931  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 115,967,502     $ 5,673,175,806     $ 777,003,480     $ 2,699,674,301     $ 453,011,302  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      1,965,339       98,736,631       14,038,933       45,378,154       1,355,027  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      1,620,670       74,090,044       9,872,468       37,289,218       5,977,877  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      344,669       24,646,587       4,166,465       8,088,936       (4,622,850 ) 

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      2,797,475       —         —         —         —    

Realized Gain (Loss) on Investments

      1,425,981       31,493,323       2,823,066       7,834,179       7,187,544  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      4,223,456       31,493,323       2,823,066       7,834,179       7,187,544  

Net Change in Unrealized Appreciation (Depreciation)

      4,903,225       609,243,142       63,758,495       424,830,314       36,315,807  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      9,126,681       640,736,465       66,581,561       432,664,493       43,503,351  

Net Increase (Decrease) in Net Assets Resulting from Operations

      9,471,350       665,383,052       70,748,026       440,753,429       38,880,501  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      5,006,171       (290,676,040 )      (76,192,866 )      (197,503,398 )      (57,483,173 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      14,477,521       374,707,012       (5,444,840 )      243,250,031       (18,602,672 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 130,445,023     $ 6,047,882,818     $ 771,558,640     $ 2,942,924,332     $ 434,408,630  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

24

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

   

TA MFS

International

Equity Initial

Class

    

TA MFS

International

Equity Service

Class

    

TA Morgan

Stanley Capital

Growth Initial

Class

    

TA Morgan

Stanley

Capital Growth

Service Class

    

TA Multi-

Managed

Balanced

Initial Class

  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

   $ 71,124,446     $ 82,697,711     $ 104,267,818     $ 53,335,138     $ 71,558,086  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     991,276       1,090,723       —         —         726,357  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     951,438       1,145,639       1,422,288       768,600       1,080,640  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     39,838       (54,916 )      (1,422,288 )      (768,600 )      (354,283 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     496,051       635,990       14,344,336       8,256,630       2,459,419  

Realized Gain (Loss) on Investments

     1,343,577       (425,275 )      3,794,332       (15,455 )      428,893  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     1,839,628       210,715       18,138,668       8,241,175       2,888,312  

Net Change in Unrealized Appreciation (Depreciation)

     (3,029,157 )      (1,543,402 )      (20,711,980 )      (9,585,791 )      2,050,774  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     (1,189,529 )      (1,332,687 )      (2,573,312 )      (1,344,616 )      4,939,086  

Net Increase (Decrease) in Net Assets Resulting from Operations

     (1,149,691 )      (1,387,603 )      (3,995,600 )      (2,113,216 )      4,584,803  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (4,680,935 )      3,112,737       (7,356,972 )      1,973,884       2,885,034  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (5,830,626 )      1,725,134       (11,352,572 )      (139,332 )      7,469,837  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 65,293,820     $ 84,422,845     $ 92,915,246     $ 53,195,806     $ 79,027,923  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     1,023,426       1,190,277       —         —         744,399  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,107,093       1,408,799       1,703,972       1,079,903       1,258,804  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (83,667 )      (218,522 )      (1,703,972 )      (1,079,903 )      (514,405 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     —         —         7,707,076       5,358,123       973,628  

Realized Gain (Loss) on Investments

     2,052,650       1,956,791       4,713,330       668,926       1,182,672  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     2,052,650       1,956,791       12,420,406       6,027,049       2,156,300  

Net Change in Unrealized Appreciation (Depreciation)

     14,911,412       20,339,433       27,471,214       18,937,537       8,510,914  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     16,964,062       22,296,224       39,891,620       24,964,586       10,667,214  

Net Increase (Decrease) in Net Assets Resulting from Operations

     16,880,395       22,077,702       38,187,648       23,884,683       10,152,809  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     4,327,514       9,636,293       (4,484,316 )      14,625,137       2,507,773  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     21,207,909       31,713,995       33,703,332       38,509,820       12,660,582  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 86,501,729     $ 116,136,840     $ 126,618,578     $ 91,705,626     $ 91,688,505  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

25

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

   

TA Multi-Managed

Balanced Service

Class

    

TA Multi-Manager

Alternative

Strategies Service

Class

    

TA PIMCO

Tactical -

Balanced
Service Class

    

TA PIMCO

Tactical -
Conservative
Service Class

    

TA PIMCO

Tactical -

Growth

Service Class

  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

   $ 347,407,856     $ 1,760,776     $ 571,936,975     $ 223,359,365     $ 288,604,027  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Investment Income:          

Reinvested Dividends

     5,228,016       41,999       1,686,498       987,047       —    
Investment Expense:          

Mortality and Expense Risk and Administrative Charges

     7,651,445       18,026       7,972,300       3,282,792       4,360,063  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (2,423,429 )      23,973       (6,285,802 )      (2,295,745 )      (4,360,063 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     20,339,320       —         —         —         —    

Realized Gain (Loss) on Investments

     1,620,349       (25,612 )      2,371,624       1,374,624       984,394  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     21,959,669       (25,612 )      2,371,624       1,374,624       984,394  

Net Change in Unrealized Appreciation (Depreciation)

     16,043,324       17,856       26,187,946       8,847,951       14,188,586  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     38,002,993       (7,756 )      28,559,570       10,222,575       15,172,980  

Net Increase (Decrease) in Net Assets Resulting from Operations

     35,579,564       16,217       22,273,768       7,926,830       10,812,917  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     521,856,234       (175,886 )      15,940,910       42,096,016       34,827,035  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     557,435,798       (159,669 )      38,214,678       50,022,846       45,639,952  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 904,843,654     $ 1,601,107     $ 610,151,653     $ 273,382,211     $ 334,243,979  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     9,259,180       21,232       1,848,041       3,659,724       1,426,772  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     15,664,154       17,970       8,424,648       3,848,852       4,880,053  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (6,404,974 )      3,262       (6,576,607 )      (189,128 )      (3,453,281 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     13,957,230       —         30,295,029       8,938,941       11,227,202  

Realized Gain (Loss) on Investments

     12,210,046       (16,421 )      8,096,077       3,384,909       3,507,169  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     26,167,276       (16,421 )      38,391,106       12,323,850       14,734,371  

Net Change in Unrealized Appreciation (Depreciation)

     114,383,168       71,720       30,599,474       12,108,531       32,763,564  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     140,550,444       55,299       68,990,580       24,432,381       47,497,935  

Net Increase (Decrease) in Net Assets Resulting from Operations

     134,145,470       58,561       62,413,973       24,243,253       44,044,654  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     245,186,153       33,731       (43,777,330 )      (14,759,464 )      (4,770,373 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     379,331,623       92,292       18,636,643       9,483,789       39,274,281  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 1,284,175,277     $ 1,693,399     $ 628,788,296     $ 282,866,000     $ 373,518,260  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

26

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

   

TA PIMCO

Total Return

Initial Class

    

TA PIMCO

Total Return

Service Class

    

TA PineBridge

Inflation

Opportunities

Service Class

    

TA ProFunds

UltraBear

Service Class

(OAM)

    

TA QS Investors

Active Asset

Allocation -
Conservative

Service Class

  
    Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

   $ 192,941,918     $ 833,576,453     $ 178,257,154     $ 32,809,667     $ 432,962,686  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     4,477,719       18,743,258       1,041,227       —         5,547,781  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     2,792,877       11,780,932       2,508,809       605,139       5,772,933  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     1,684,842       6,962,326       (1,467,582 )      (605,139 )      (225,152 ) 

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     148,397       691,966       —         —         —    

Realized Gain (Loss) on Investments

     (1,377,576 )      (6,181,135 )      (3,163,036 )      (9,349,658 )      (1,303,348 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     (1,229,179 )      (5,489,169 )      (3,163,036 )      (9,349,658 )      (1,303,348 ) 

Net Change in Unrealized Appreciation (Depreciation)

     1,836,492       7,649,836       8,321,693       (7,131,852 )      7,341,945  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     607,313       2,160,667       5,158,657       (16,481,510 )      6,038,597  

Net Increase (Decrease) in Net Assets Resulting from Operations

     2,292,155       9,122,993       3,691,075       (17,086,649 )      5,813,445  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (13,914,903 )      (15,794,282 )      (6,600,744 )      18,134,179       (13,639,563 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (11,622,748 )      (6,671,289 )      (2,909,669 )      1,047,530       (7,826,118 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 181,319,170     $ 826,905,164     $ 175,347,485     $ 33,857,197     $ 425,136,568  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     —         —         409,073       —         7,147,645  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     2,650,837       11,179,030       2,496,404       308,191       5,391,064  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (2,650,837 )      (11,179,030 )      (2,087,331 )      (308,191 )      1,756,581  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     1,739,756       8,083,194       —         —         —    

Realized Gain (Loss) on Investments

     (645,814 )      (4,447,760 )      (1,199,637 )      (10,141,176 )      1,208,893  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     1,093,942       3,635,434       (1,199,637 )      (10,141,176 )      1,208,893  

Net Change in Unrealized Appreciation (Depreciation)

     7,470,827       33,575,130       6,408,601       1,737,277       37,725,998  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     8,564,769       37,210,564       5,208,964       (8,403,899 )      38,934,891  

Net Increase (Decrease) in Net Assets Resulting from Operations

     5,913,932       26,031,534       3,121,633       (8,712,090 )      40,691,472  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (12,580,655 )      (49,326,802 )      (4,596,288 )      (11,968,713 )      (52,464,585 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (6,666,723 )      (23,295,268 )      (1,474,655 )      (20,680,803 )      (11,773,113 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 174,652,447     $ 803,609,896     $ 173,872,830     $ 13,176,394     $ 413,363,455  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

27

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

   

TA QS

Investors

Active Asset

Allocation -

Moderate

Service Class
Subaccount

    

TA QS

Investors

Active Asset

Allocation -

Moderate

Growth

Service Class
Subaccount

    

TA Small/Mid

Cap Value Initial

Class Subaccount

    

TA Small/

Mid Cap

Value

Service Class
Subaccount

  

Net Assets as of December 31, 2015:

   $ 1,537,126,518     $ 646,874,469     $ 123,688,215     $ 88,569,777  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     18,533,964       6,675,387       937,320       488,506  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     19,710,056       8,447,086       1,706,851       1,311,027  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (1,176,092 )      (1,771,699 )      (769,531 )      (822,521 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     —         —         12,083,953       9,420,132  

Realized Gain (Loss) on Investments

     (3,421,943 )      (8,043,648 )      1,232,919       (2,491,942 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     (3,421,943 )      (8,043,648 )      13,316,872       6,928,190  

Net Change in Unrealized Appreciation (Depreciation)

     17,811,376       13,180,018       9,055,489       10,002,219  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     14,389,433       5,136,370       22,372,361       16,930,409  

Net Increase (Decrease) in Net Assets Resulting from Operations

     13,213,341       3,364,671       21,602,830       16,107,888  
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (101,550,608 )      (58,800,055 )      (15,447,961 )      7,033,167  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     (88,337,267 )      (55,435,384 )      6,154,869       23,141,055  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 1,448,789,251     $ 591,439,085     $ 129,843,084     $ 111,710,832  
 

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

        

Reinvested Dividends

     22,694,448       7,869,723       1,486,161       1,178,729  

Investment Expense:

        

Mortality and Expense Risk and Administrative Charges

     19,125,329       8,268,246       1,870,446       1,760,282  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     3,569,119       (398,523 )      (384,285 )      (581,553 ) 

Increase (Decrease) in Net Assets from Operations:

        

Capital Gain Distributions

     —         —         11,573,916       11,124,252  

Realized Gain (Loss) on Investments

     6,448,187       (368,175 )      2,493,679       315,227  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     6,448,187       (368,175 )      14,067,595       11,439,479  

Net Change in Unrealized Appreciation (Depreciation)

     181,700,925       106,142,677       3,570,457       4,668,926  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     188,149,112       105,774,502       17,638,052       16,108,405  

Net Increase (Decrease) in Net Assets Resulting from Operations

     191,718,231       105,375,979       17,253,767       15,526,852  
 

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (124,850,225 )      (46,263,184 )      (11,705,677 )      2,301,034  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     66,868,006       59,112,795       5,548,090       17,827,886  
 

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 1,515,657,257     $ 650,551,880     $ 135,391,174     $ 129,538,718  
 

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

28

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

   

TA T. Rowe Price
Small Cap Initial
Class

Subaccount

    

TA T. Rowe Price
Small Cap
Service Class

Subaccount

    

TA Torray
Concentrated
Growth Initial

Class
Subaccount

     TA Torray
Concentrated
Growth Service
Class
Subaccount		     TA TS&W
International
Equity Initial
Class
Subaccount		  

Net Assets as of December 31, 2015:

   $ 108,382,266     $ 166,716,242     $ 150,665,726     $ 32,981,418     $ 76,568,954  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     —         —         699,544       44,491       1,992,611  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,522,633       2,462,346       2,110,392       481,142       1,042,729  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (1,522,633 )      (2,462,346 )      (1,410,848 )      (436,651 )      949,882  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     12,867,239       22,161,103       —         —         —    

Realized Gain (Loss) on Investments

     5,535,730       2,118,475       7,852,106       (741,465 )      366,738  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     18,402,969       24,279,578       7,852,106       (741,465 )      366,738  

Net Change in Unrealized Appreciation (Depreciation)

     (7,368,415 )      (6,290,023 )      931,430       2,553,875       (1,768,516 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     11,034,554       17,989,555       8,783,536       1,812,410       (1,401,778 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

     9,511,921       15,527,209       7,372,688       1,375,759       (451,896 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (5,603,856 )      9,269,323       (16,530,931 )      (1,825,549 )      (4,212,086 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     3,908,065       24,796,532       (9,158,243 )      (449,790 )      (4,663,982 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

   $ 112,290,331     $ 191,512,774     $ 141,507,483     $ 32,531,628     $ 71,904,972  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

          

Reinvested Dividends

     —         —         577,343       54,116       1,734,650  

Investment Expense:

          

Mortality and Expense Risk and Administrative Charges

     1,779,974       3,132,675       2,197,525       546,036       1,143,632  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

     (1,779,974 )      (3,132,675 )      (1,620,182 )      (491,920 )      591,018  

Increase (Decrease) in Net Assets from Operations:

          

Capital Gain Distributions

     7,432,884       14,022,111       2,675,509       624,984       —    

Realized Gain (Loss) on Investments

     6,290,678       5,108,563       8,962,896       395,865       1,357,784  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

     13,723,562       19,130,674       11,638,405       1,020,849       1,357,784  

Net Change in Unrealized Appreciation (Depreciation)

     10,921,683       24,084,619       21,049,107       6,903,426       13,032,548  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

     24,645,245       43,215,293       32,687,512       7,924,275       14,390,332  

Net Increase (Decrease) in Net Assets Resulting from Operations

     22,865,271       40,082,618       31,067,330       7,432,355       14,981,350  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

     (5,371,310 )      10,397,882       (15,373,940 )      802,377       (1,350,943 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

     17,493,961       50,480,500       15,693,390       8,234,732       13,630,407  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

   $ 129,784,292     $ 241,993,274     $ 157,200,873     $ 40,766,360     $ 85,535,379  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

29

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

     TA TS&W
International
Equity Service
Class		     TA U.S.
Equity Index
Service Class		     TA WMC
US Growth
Initial Class		     TA WMC
US Growth
Service Class		     Vanguard®
Equity Index		  
     Subaccount     Subaccount(1)     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

    $ 36,053,774     $ —       $ 257,886,335     $ 96,971,678     $ 1,852,623  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      927,427       —         986,109       170,663       46,967  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      522,220       —         3,544,463       1,390,765       13,365  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      405,207       —         (2,558,354 )      (1,220,102 )      33,602  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         10,189,114       4,166,092       38,366  

Realized Gain (Loss) on Investments

      (733,105 )      —         1,267,187       (3,290,490 )      36,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (733,105 )      —         11,456,301       875,602       74,366  

Net Change in Unrealized Appreciation (Depreciation)

      179,442       —         (5,959,260 )      1,120,971       108,455  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      (553,663 )      —         5,497,041       1,996,573       182,821  

Net Increase (Decrease) in Net Assets Resulting from Operations

      (148,456 )      —         2,938,687       776,471       216,423  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (1,794,580 )      —         (23,846,668 )      601,271       (148,300 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      (1,943,036 )      —         (20,907,981 )      1,377,742       68,123  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 34,110,738     $ —       $ 236,978,354     $ 98,349,420     $ 1,920,746  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      784,746       —         1,098,653       236,857       49,584  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      556,986       68,012       3,767,745       1,589,738       22,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      227,760       (68,012 )      (2,669,092 )      (1,352,881 )      27,016  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      —         —         6,217,116       2,757,270       84,690  

Realized Gain (Loss) on Investments

      110,455       62,482       5,547,134       (314,730 )      73,047  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      110,455       62,482       11,764,250       2,442,540       157,737  

Net Change in Unrealized Appreciation (Depreciation)

      6,888,443       1,001,819       53,182,305       25,262,181       404,643  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      6,998,898       1,064,301       64,946,555       27,704,721       562,380  

Net Increase (Decrease) in Net Assets Resulting from Operations

      7,226,658       996,289       62,277,463       26,351,840       589,396  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      2,239,378       17,589,331       (22,352,084 )      (1,145,506 )      1,278,489  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      9,466,036       18,585,620       39,925,379       25,206,334       1,867,885  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 43,576,774     $ 18,585,620     $ 276,903,733     $ 123,555,754     $ 3,788,631  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

30

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

     Vanguard®
International		     Vanguard®
Mid-Cap
Index		     Vanguard®
REIT Index		     Vanguard®
Short-Term
Investment
Grade		     Vanguard®
Total Bond
Market
Index		  
     Subaccount     Subaccount     Subaccount     Subaccount     Subaccount  

Net Assets as of December 31, 2015:

    $ 1,169,229     $ 888,668     $ 350,033     $ 2,902,363     $ 1,627,599  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      17,847       12,698       9,472       53,677       36,099  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      8,156       5,778       2,503       17,967       10,431  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      9,691       6,920       6,969       35,710       25,668  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      20,779       63,140       25,132       —         4,301  

Realized Gain (Loss) on Investments

      (1,711 )      (12,078 )      6,152       (4,329 )      (476 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      19,068       51,062       31,284       (4,329 )      3,825  

Net Change in Unrealized Appreciation (Depreciation)

      (501 )      28,394       (10,552 )      26,697       924  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      18,567       79,456       20,732       22,368       4,749  

Net Increase (Decrease) in Net Assets Resulting from Operations

      28,258       86,376       27,701       58,078       30,417  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      32,058       (129,206 )      (18,992 )      (242,521 )      (174,491 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      60,316       (42,830 )      8,709       (184,443 )      (144,074 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2016:

    $ 1,229,545     $ 845,838     $ 358,742     $ 2,717,920     $ 1,483,525  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment Income:

           

Reinvested Dividends

      16,692       11,727       9,801       59,101       41,539  

Investment Expense:

           

Mortality and Expense Risk and Administrative Charges

      12,920       7,974       2,958       19,615       12,506  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Investment Income (Loss)

      3,772       3,753       6,843       39,486       29,033  

Increase (Decrease) in Net Assets from Operations:

           

Capital Gain Distributions

      10,210       42,865       17,478       5,098       5,592  

Realized Gain (Loss) on Investments

      81,257       14,246       3,960       (3,424 )      (7,828 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Realized Capital Gains (Losses) on Investments

      91,467       57,111       21,438       1,674       (2,236 ) 

Net Change in Unrealized Appreciation (Depreciation)

      486,596       133,212       (12,168 )      2,098       20,009  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Gain (Loss) on Investment

      578,063       190,323       9,270       3,772       17,773  

Net Increase (Decrease) in Net Assets Resulting from Operations

      581,835       194,076       16,113       43,258       46,806  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      499,378       355,511       84,428       198,635       569,308  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Increase (Decrease) in Net Assets

      1,081,213       549,587       100,541       241,893       616,114  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net Assets as of December 31, 2017:

    $ 2,310,758     $ 1,395,425     $ 459,283     $ 2,959,813     $ 2,099,639  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

31

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

     Voya Global
Perspectives
Class S
Shares		      Voya Large
Cap Value
Class S
Shares		     Voya
Strategic
Allocation
Conservative
Class S
Shares		      Voya
Strategic
Allocation
Moderate
Class S
Shares		      Wanger
International		  
     Subaccount      Subaccount     Subaccount      Subaccount      Subaccount  

Net Assets as of December 31, 2015:

    $ 15,028      $ —       $ —        $ —        $ 318,081  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Investment Income:

              

Reinvested Dividends

      412        21       —          —          3,641  

Investment Expense:

              

Mortality and Expense Risk and Administrative Charges

      204        9       —          —          1,478  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      208        12       —          —          2,163  

Increase (Decrease) in Net Assets from Operations:

              

Capital Gain Distributions

      —          28       —          —          24,818  

Realized Gain (Loss) on Investments

      10        1       —          —          (13,782 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      10        29       —          —          11,036  

Net Change in Unrealized Appreciation (Depreciation)

      579        102       —          —          (19,559 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      589        131       —          —          (8,523 ) 

Net Increase (Decrease) in Net Assets Resulting from Operations

      797        143       —          —          (6,360 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      296        863       —          —          (3,438 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      1,093        1,006       —          —          (9,798 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2016:

    $ 16,121      $ 1,006     $ —        $ —        $ 308,283  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Investment Income:

              

Reinvested Dividends

      468        23       —          —          3,938  

Investment Expense:

              

Mortality and Expense Risk and Administrative Charges

      226        14       —          —          1,534  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Investment Income (Loss)

      242        9       —          —          2,404  

Increase (Decrease) in Net Assets from Operations:

              

Capital Gain Distributions

      —          —         —          —          2,265  

Realized Gain (Loss) on Investments

      26        8       —          —          (13,907 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Realized Capital Gains (Losses) on Investments

      26        8       —          —          (11,642 ) 

Net Change in Unrealized Appreciation (Depreciation)

      1,911        98       —          —          97,410  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Gain (Loss) on Investment

      1,937        106       —          —          85,768  

Net Increase (Decrease) in Net Assets Resulting from Operations

      2,179        115       —          —          88,172  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      1,338        (27 )      —          —          (25,811 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Total Increase (Decrease) in Net Assets

      3,517        88       —          —          62,361  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

Net Assets as of December 31, 2017:

    $ 19,638      $ 1,094     $ —        $ —        $ 370,644  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

32

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Statement of Operations and Change in Net Assets

Years Ended December 31, 2016 and 2017, Except as Noted

 

    

Wanger

USA

  
     Subaccount  

Net Assets as of December 31, 2015:

    $ 274,445  
  

 

 

  

Investment Income:

   

Reinvested Dividends

      —    

Investment Expense:

   

Mortality and Expense Risk and Administrative Charges

      1,066  
  

 

 

  

Net Investment Income (Loss)

      (1,066 ) 

Increase (Decrease) in Net Assets from Operations:

   

Capital Gain Distributions

      43,647  

Realized Gain (Loss) on Investments

      (15,073 ) 
  

 

 

  

Net Realized Capital Gains (Losses) on Investments

      28,574  

Net Change in Unrealized Appreciation (Depreciation)

      (9,800 ) 
  

 

 

  

Net Gain (Loss) on Investment

      18,774  

Net Increase (Decrease) in Net Assets Resulting from Operations

      17,708  
  

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (114,841 ) 
  

 

 

  

Total Increase (Decrease) in Net Assets

      (97,133 ) 
  

 

 

  

Net Assets as of December 31, 2016:

    $ 177,312  
  

 

 

  

Investment Income:

   

Reinvested Dividends

      —    

Investment Expense:

   

Mortality and Expense Risk and Administrative Charges

      603  
  

 

 

  

Net Investment Income (Loss)

      (603 ) 

Increase (Decrease) in Net Assets from Operations:

   

Capital Gain Distributions

      30,099  

Realized Gain (Loss) on Investments

      (52,534 ) 
  

 

 

  

Net Realized Capital Gains (Losses) on Investments

      (22,435 ) 

Net Change in Unrealized Appreciation (Depreciation)

      35,562  
  

 

 

  

Net Gain (Loss) on Investment

      13,127  

Net Increase (Decrease) in Net Assets Resulting from Operations

      12,524  
  

 

 

  

Increase (Decrease) in Net Assets from Contract Transactions

      (189,836 ) 
  

 

 

  

Total Increase (Decrease) in Net Assets

      (177,312 ) 
  

 

 

  

Net Assets as of December 31, 2017:

    $ —    
  

 

 

  

 

See Accompanying Notes.

 

(1)  See Footnote 1

 

33

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

1. Organization

Separate Account VA B (the Separate Account) is a segregated investment account of Transamerica Life Insurance Company (TLIC), an indirect wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of The Netherlands.

The Separate Account is registered with the Securities and Exchange Commission as a Unit Investment Trust pursuant to provisions of the Investment Company Act of 1940. TLIC and the Separate Account are regulated by the Securities and Exchange Commission. The assets and liabilities of the Separate Account are clearly identified and distinguished from TLIC’s other assets and liabilities. The Separate Account consists of multiple investment subaccounts. Each subaccount invests exclusively in the corresponding portfolio of a Mutual Fund. Each Mutual Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended. Activity in these specified investment subaccounts is available to contract owners of Transamerica Variable Annuity Series, MEMBERS® Variable Annuity Series, Partners Variable Annuity Series, Transamerica LandmarkSM Variable Annuity, MEMBERS® LandmarkSM Variable Annuity, Transamerica FreedomSM Variable Annuity, MEMBERS® FreedomSM Variable Annuity, Transamerica Advisor Elite II, Transamerica Income EliteSM II, Transamerica AxiomSM II, Transamerica PrincipiumSM III, Transamerica Retirement Income Plus, Transamerica Variable Annuity O-Share, Transamerica ABC Variable Annuity Series, Transamerica 123 Variable Annuity, Transamerica ExtraSM Variable Annuity, MEMBERS® ExtraSM Variable Annuity, Transamerica LibertySSM Variable Annuity, MEMBERS® LibertySM Variable Annuity, Transamerica Advisor EliteSM Variable Annuity, Income EliteSM Variable Annuity, Transamerica AxiomSM Variable Annuity, Transamerica PrincipiumSM II Variable Annuity, Transamerica I-Share Variable Annuity, and Transamerica InspireSM Variable Annuity.

The TA ProFunds UltraBear Service Class (OAM) is included in the subaccount listing only to facilitate a contract owner purchase option.

 

Subaccount Investment by Mutual Fund:

 

Subaccount

   

Mutual Fund

AB Variable Products Series Fund, Inc.    AB Variable Products Series Fund, Inc.

AB Balanced Wealth Strategy Class B Shares

   

AB Balanced Wealth Strategy Portfolio Class B Shares

AB Growth and Income Class B Shares

   

AB Growth and Income Portfolio Class B Shares

AB Large Cap Growth Class B Shares

   

AB Large Cap Growth Portfolio Class B Shares

American Funds Insurance Series®    American Funds Insurance Series®

American Funds - Asset Allocation Class 2 Shares

   

American Funds - Asset Allocation Fund Class 2 Shares

American Funds - Bond Class 2 Shares

   

American Funds - Bond Fund Class 2 Shares

American Funds - Growth Class 2 Shares

   

American Funds - Growth Fund Class 2 Shares

American Funds - Growth-Income Class 2 Shares

   

American Funds - Growth-Income Fund Class 2 Shares

American Funds - International Class 2 Shares

   

American Funds - International Fund Class 2 Shares

BlackRock Variable Series Funds, Inc.    BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Class I Shares

   

BlackRock Basic Value V.I. Fund Class I Shares

BlackRock Global Allocation V.I. Class I Shares

   

BlackRock Global Allocation V.I. Fund Class I Shares

BlackRock High Yield V.I. Class I Shares

   

BlackRock High Yield V.I. Fund Class I Shares

Mutual Fund and Variable Insurance Trust    Mutual Fund and Variable Insurance Trust

Catalyst Dividend Capture VA

   

Catalyst Dividend Capture VA Fund

Catalyst Insider Buying VA

   

Catalyst Insider Buying VA Fund

Fidelity® Variable Insurance Products Fund    Fidelity® Variable Insurance Products Fund

Fidelity® VIP Balanced Service Class 2

   

Fidelity® VIP Balanced Service Portfolio Class 2

Fidelity® VIP Contrafund® Initial Class

   

Fidelity® VIP Contrafund® Portfolio Initial Class

Fidelity® VIP Contrafund® Service Class 2

   

Fidelity® VIP Contrafund® Portfolio Service Class 2

Fidelity® VIP Equity-Income Initial Class

   

Fidelity® VIP Equity-Income Portfolio Initial Class

 

34

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:   

Subaccount

   

Mutual Fund

Fidelity® Variable Insurance Products Fund

   

Fidelity® Variable Insurance Products Fund

Fidelity® VIP Equity-Income Service Class 2

   

Fidelity® VIP Equity-Income Portfolio Service Class 2

Fidelity® VIP Growth Initial Class

   

Fidelity® VIP Growth Portfolio Initial Class

Fidelity® VIP Growth Service Class 2

   

Fidelity® VIP Growth Portfolio Service Class 2

Fidelity® VIP Growth Opportunities Service Class 2

   

Fidelity® VIP Growth Opportunities Portfolio Service Class 2

Fidelity® VIP Mid Cap Initial Class

   

Fidelity® VIP Mid Cap Portfolio Initial Class

Fidelity® VIP Mid Cap Service Class 2

   

Fidelity® VIP Mid Cap Portfolio Service Class 2

Fidelity® VIP Value Strategies Initial Class

   

Fidelity® VIP Value Strategies Portfolio Initial Class

Fidelity® VIP Value Strategies Service Class 2

   

Fidelity® VIP Value Strategies Portfolio Service Class 2

Franklin Templeton Variable Insurance Products Trust

   

Franklin Templeton Variable Insurance Products Trust

Franklin Founding Funds Allocation Class 4 Shares

   

Franklin Founding Funds Allocation Fund Class 4 Shares

Franklin Income Class 2 Shares

   

Franklin Income Class Fund 2 Shares

Franklin Mutual Shares Class 2 Shares

   

Franklin Mutual Shares Fund Class 2 Shares

Franklin Templeton Foreign Class 2 Shares

   

Franklin Templeton Foreign Fund Class 2 Shares

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

   

AIM Variable Insurance Funds (Invesco Variable Insurance Funds)

Invesco V.I. American Franchise Series II Shares

   

Invesco V.I. American Franchise Fund Series II Shares

Janus Aspen Series

   

Janus Aspen Series

Janus Henderson - Enterprise Service Shares

   

Janus Henderson - Enterprise Portfolio Service Shares

Janus Henderson - Global Research Service Shares

   

Janus Henderson - Global Research Portfolio Service Shares

Janus Henderson - Mid Cap Value Service Shares

   

Janus Henderson - Mid Cap Value Portfolio Service Shares

MFS® Variable Insurance Trust

   

MFS® Variable Insurance Trust

MFS® New Discovery Service Class

   

MFS® New Discovery Series Service Class

MFS® Total Return Service Class

   

MFS® Total Return Series Service Class

Nationwide Variable Insurance Trust

   

Nationwide Variable Insurance Trust

NVIT Emerging Markets Class D Shares

   

NVIT Emerging Markets Fund Class D Shares

State Street Variable Insurance Series Funds, Inc.

   

State Street Variable Insurance Series Funds, Inc.

State Street Total Return V.I.S. Class 3 Shares

   

State Street Total Return V.I.S. Fund Class 3 Shares

Transamerica Series Trust

   

Transamerica Series Trust

TA AB Dynamic Allocation Initial Class

   

Transamerica AB Dynamic Allocation VP Initial Class

TA AB Dynamic Allocation Service Class

   

Transamerica AB Dynamic Allocation VP Service Class

TA Aegon Government Money Market Initial Class

   

Transamerica Aegon Government Money Market VP Initial Class

TA Aegon Government Money Market Service Class

   

Transamerica Aegon Government Money Market VP Service Class

TA Aegon High Yield Bond Initial Class

   

Transamerica Aegon High Yield Bond VP Initial Class

TA Aegon High Yield Bond Service Class

   

Transamerica Aegon High Yield Bond VP Service Class

TA Aegon U.S. Government Securities Initial Class

   

Transamerica Aegon U.S. Government Securities VP Initial Class

TA Aegon U.S. Government Securities Service Class

   

Transamerica Aegon U.S. Government Securities VP Service Class

TA American Funds Managed Risk - Balanced Service Class

   

Transamerica American Funds Managed Risk - Balanced VP Service Class

TA Asset Allocation - Conservative Initial Class

   

Transamerica Asset Allocation - Conservative VP Initial Class

TA Asset Allocation - Conservative Service Class

   

Transamerica Asset Allocation - Conservative VP Service Class

TA Asset Allocation - Growth Initial Class

   

Transamerica Asset Allocation - Growth VP Initial Class

TA Asset Allocation - Growth Service Class

   

Transamerica Asset Allocation - Growth VP Service Class

TA Asset Allocation - Moderate Initial Class

   

Transamerica Asset Allocation - Moderate VP Initial Class

TA Asset Allocation - Moderate Service Class

   

Transamerica Asset Allocation - Moderate VP Service Class

 

35

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:   

Subaccount

   

Mutual Fund

Transamerica Series Trust

   

Transamerica Series Trust

TA Asset Allocation - Moderate Growth Initial Class

   

Transamerica Asset Allocation - Moderate Growth VP Initial Class

TA Asset Allocation - Moderate Growth Service Class

   

Transamerica Asset Allocation - Moderate Growth VP Service Class

TA Barrow Hanley Dividend Focused Initial Class

   

Transamerica Barrow Hanley Dividend Focused VP Initial Class

TA Barrow Hanley Dividend Focused Service Class

   

Transamerica Barrow Hanley Dividend Focused VP Service Class

TA BlackRock Equity Smart Beta 100 Service Class

   

Transamerica BlackRock Equity Smart Beta 100 VP Service Class

TA BlackRock Global Allocation Service Class

   

Transamerica BlackRock Global Allocation VP Service Class

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

   

Transamerica BlackRock Global Allocation Managed Risk - Balanced VP Service Class

TA BlackRock Global Allocation Managed Risk - Growth Service Class

   

Transamerica BlackRock Global Allocation Managed Risk - Growth VP Service Class

TA BlackRock Smart Beta 50 Service Class

   

Transamerica BlackRock Smart Beta 50 VP Service Class

TA BlackRock Smart Beta 75 Service Class

   

Transamerica BlackRock Smart Beta 75 VP Service Class

TA BlackRock Tactical Allocation Service Class

   

Transamerica BlackRock Tactical Allocation VP Service Class

TA Clarion Global Real Estate Securities Initial Class

   

Transamerica Clarion Global Real Estate Securities VP Initial Class

TA Clarion Global Real Estate Securities Service Class

   

Transamerica Clarion Global Real Estate Securities VP Service Class

TA International Equity Index Service Class

   

Transamerica International Equity Index VP Service Class

TA International Moderate Growth Initial Class

   

Transamerica International Moderate Growth VP Initial Class

TA International Moderate Growth Service Class

   

Transamerica International Moderate Growth VP Service Class

TA Janus Balanced Service Class

   

Transamerica Janus Balanced VP Service Class

TA Janus Mid-Cap Growth Initial Class

   

Transamerica Janus Mid-Cap Growth VP Initial Class

TA Janus Mid-Cap Growth Service Class

   

Transamerica Janus Mid-Cap Growth VP Service Class

TA Jennison Growth Initial Class

   

Transamerica Jennison Growth VP Initial Class

TA Jennison Growth Service Class

   

Transamerica Jennison Growth VP Service Class

TA JPMorgan Core Bond Service Class

   

Transamerica JPMorgan Core Bond VP Service Class

TA JPMorgan Enhanced Index Initial Class

   

Transamerica JPMorgan Enhanced Index VP Initial Class

TA JPMorgan Enhanced Index Service Class

   

Transamerica JPMorgan Enhanced Index VP Service Class

TA JPMorgan Mid Cap Value Service Class

   

Transamerica JPMorgan Mid Cap Value VP Service Class

TA JPMorgan Tactical Allocation Service Class

   

Transamerica JPMorgan Tactical Allocation VP Service Class

TA Legg Mason Dynamic Allocation - Balanced Service Class

   

Transamerica Legg Mason Dynamic Allocation - Balanced VP Service Class

TA Legg Mason Dynamic Allocation - Growth Service Class

   

Transamerica Legg Mason Dynamic Allocation - Growth VP Service Class

TA Madison Balanced Allocation Service Class

   

Transamerica Madison Balanced Allocation VP Service Class

TA Madison Conservative Allocation Service Class

   

Transamerica Madison Conservative Allocation VP Service Class

TA Madison Diversified Income Service Class

   

Transamerica Madison Diversified Income VP Service Class

TA Managed Risk - Balanced ETF Service Class

   

Transamerica Managed Risk - Balanced ETF VP Service Class

TA Managed Risk - Conservative ETF Service Class

   

Transamerica Managed Risk - Conservative ETF VP Service Class

TA Managed Risk - Growth ETF Service Class

   

Transamerica Managed Risk - Growth ETF VP Service Class

TA Market Participation Strategy Service Class

   

Transamerica Market Participation Strategy VP Service Class

TA MFS International Equity Initial Class

   

Transamerica MFS International Equity VP Initial Class

TA MFS International Equity Service Class

   

Transamerica MFS International Equity VP Service Class

TA Morgan Stanley Capital Growth Initial Class

   

Transamerica Morgan Stanley Capital Growth VP Initial Class

TA Morgan Stanley Capital Growth Service Class

   

Transamerica Morgan Stanley Capital Growth VP Service Class

 

36

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

1. Organization (continued)

 

Subaccount Investment by Mutual Fund:

Subaccount

   

Mutual Fund

Transamerica Series Trust

   

Transamerica Series Trust

TA Multi-Managed Balanced Initial Class

   

Transamerica Multi-Managed Balanced VP Initial Class

TA Multi-Managed Balanced Service Class

   

Transamerica Multi-Managed Balanced VP Service Class

TA Multi-Manager Alternative Strategies Service Class

   

Transamerica Multi-Manager Alternative Strategies VP Service Class

TA PIMCO Tactical - Balanced Service Class

   

Transamerica PIMCO Tactical - Balanced VP Service Class

TA PIMCO Tactical - Conservative Service Class

   

Transamerica PIMCO Tactical - Conservative VP Service Class

TA PIMCO Tactical - Growth Service Class

   

Transamerica PIMCO Tactical - Growth VP Service Class

TA PIMCO Total Return Initial Class

   

Transamerica PIMCO Total Return VP Initial Class

TA PIMCO Total Return Service Class

   

Transamerica PIMCO Total Return VP Service Class

TA PineBridge Inflation Opportunities Service Class

   

Transamerica PineBridge Inflation Opportunities VP Service Class

TA ProFunds UltraBear Service Class (OAM)

   

Transamerica ProFunds UltraBear VP Service Class (OAM)

TA QS Investors Active Asset Allocation - Conservative Service Class

   

Transamerica QS Investors Active Asset Allocation - Conservative VP Service Class

TA QS Investors Active Asset Allocation - Moderate Service Class

   

Transamerica QS Investors Active Asset Allocation - Moderate VP Service Class

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

   

Transamerica QS Investors Active Asset Allocation - Moderate Growth VP Service Class

TA Small/Mid Cap Value Initial Class

   

Transamerica Small/Mid Cap Value VP Initial Class

TA Small/Mid Cap Value Service Class

   

Transamerica Small/Mid Cap Value VP Service Class

TA T. Rowe Price Small Cap Initial Class

   

Transamerica T. Rowe Price Small Cap VP Initial Class

TA T. Rowe Price Small Cap Service Class

   

Transamerica T. Rowe Price Small Cap VP Service Class

TA Torray Concentrated Growth Initial Class

   

Transamerica Torray Concentrated Growth VP Initial Class

TA Torray Concentrated Growth Service Class

   

Transamerica Torray Concentrated Growth VP Service Class

TA TS&W International Equity Initial Class

   

Transamerica TS&W International Equity VP Initial Class

TA TS&W International Equity Service Class

   

Transamerica TS&W International Equity VP Service Class

TA U.S. Equity Index Service Class

   

Transamerica U.S. Equity Index VP Service Class

TA WMC US Growth Initial Class

   

Transamerica WMC US Growth VP Initial Class

TA WMC US Growth Service Class

   

Transamerica WMC US Growth VP Service Class

Vanguard® Variable Insurance Fund

   

Vanguard® Variable Insurance Fund

Vanguard® Equity Index

   

Vanguard® Equity Index Portfolio

Vanguard® International

   

Vanguard® International Portfolio

Vanguard® Mid-Cap Index

   

Vanguard® Mid-Cap Index Portfolio

Vanguard® REIT Index

   

Vanguard® REIT Index Portfolio

Vanguard® Short-Term Investment Grade

   

Vanguard® Short-Term Investment Grade Portfolio

Vanguard® Total Bond Market Index

   

Vanguard® Total Bond Market Index Portfolio

Voya Investors Trust

   

Voya Investors Trust

Voya Global Perspectives Class S Shares

   

Voya Global Perspectives Portfolio Class S Shares

Voya Large Cap Value Class S Shares

   

Voya Large Cap Value Portfolio Class S Shares

Voya Strategic Allocation Portfolios, Inc.

   

Voya Strategic Allocation Portfolios, Inc.

Voya Strategic Allocation Conservative Class S Shares

   

Voya Strategic Allocation Conservative Portfolio Class S Shares

Voya Strategic Allocation Moderate Class S Shares

   

Voya Strategic Allocation Moderate Portfolio Class S Shares

Wanger Advisors Trust

   

Wanger Advisors Trust

Wanger International

   

Wanger International

Wanger USA

   

Wanger USA

 

37

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

1. Organization (continued)

 

Each period reported on reflects a full twelve month period except as follows:

Subaccount

   

Inception Date

TA International Equity Index Service Class

   

May 1, 2017

TA U.S. Equity Index Service Class

   

May 1, 2017

NVIT Emerging Markets Class D Shares

   

August 4, 2016

TA BlackRock Equity Smart Beta 100 Service Class

   

March 21, 2016

TA BlackRock Smart Beta 50 Service Class

   

March 21, 2016

TA BlackRock Smart Beta 75 Service Class

   

March 21, 2016

TA American Funds Managed Risk - Balanced Service Class

   

May 1, 2015

Voya Global Perspectives Class S Shares

   

May 1, 2015

Voya Large Cap Value Class S Shares

   

May 1, 2015

Voya Strategic Allocation Conservative Class S Shares

   

May 1, 2015

Voya Strategic Allocation Moderate Class S Shares

   

May 1, 2015

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

   

November 10, 2014

TA BlackRock Global Allocation Managed Risk - Growth Service Class

   

November 10, 2014

TA Multi-Manager Alternative Strategies Service Class

   

November 4, 2013

The following subaccount name changes were made effective during the fiscal year ended December 31, 2017:

 

Subaccount

   

Formerly

Janus Henderson - Enterprise Service Shares

   

Janus Aspen - Enterprise Service Shares

Janus Henderson - Global Research Service Shares

   

Janus Aspen - Global Research Service Shares

Janus Henderson - Mid Cap Value Service Shares

   

Janus Aspen - Perkins Mid Cap Value Service Shares

During the current year the following subaccounts were removed as available investment options to contract owners and subsequently replaced and reinvested:

 

Reinvested Subaccount

   

Removed Subaccount

TA Barrow Hanley Dividend Focused Initial Class

   

Invesco V.I. Value Opportunities Series II Shares

The transfers from the removed and liquidated subaccounts to the reinvested subaccounts for the period ended December 31, 2017 are reflected in the Statements of Changes in Net Assets within Increase (Decrease) in Net Assets from Contract Transactions and purchases and sales in Footnote 3.

 

38

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

2. Summary of Significant Accounting Policies

The financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for variable annuity separate accounts registered as unit investment trusts. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions regarding matters that affect the reported amount of assets and liabilities. Actual results could differ from those estimates.

Investments

Net purchase payments received by the Separate Account are invested in the portfolios of the Mutual Funds as selected by the contract owner. Investments are stated at the closing net asset values per share on December 31, 2017.

Realized capital gains and losses from sales of shares in the Separate Account are determined on the first-in, first-out basis. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date. Unrealized gains or losses from investments in the Mutual Funds are included in the Statements of Operations and Changes in Net Assets.

Dividend Income

Dividends received from the Mutual Fund investments are reinvested to purchase additional mutual fund shares.

Fair Value Measurements and Fair Value Hierarchy

The Accounting Standards Codification™ (ASC) 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the nature of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

The Separate Account has categorized its financial instruments into a three level hierarchy which is based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the Statements of Assets and Liabilities are categorized as follows:

Level 1. Unadjusted quoted prices for identical assets or liabilities in an active market.

Level 2. Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a) Quoted prices for similar assets or liabilities in active markets

b) Quoted prices for identical or similar assets or liabilities in non-active markets

c) Inputs other than quoted market prices that are observable

d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

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

All investments in the Mutual Funds included in the Statements of Assets and Liabilities are stated at fair value and are based upon published closing NAV per share and therefore are considered Level 1.

There were no transfers between Level 1, Level 2 and Level 3 during the year ended December 31, 2017.

 

39

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

3. Investments

The aggregate cost of purchases and proceeds from sales of investments for the period ended December 31, 2017 were as follows:

 

Subaccount

    Purchases      Sales  

AB Balanced Wealth Strategy Class B Shares

    $ 11,838,738      $ 17,454,736  

AB Growth and Income Class B Shares

      55,137,801        45,611,971  

AB Large Cap Growth Class B Shares

      2,673,594        5,343,984  

American Funds - Asset Allocation Class 2 Shares

      156,630,741        84,609,760  

American Funds - Bond Class 2 Shares

      55,570,977        40,891,148  

American Funds - Growth Class 2 Shares

      133,402,946        44,763,428  

American Funds - Growth-Income Class 2 Shares

      109,214,474        42,587,847  

American Funds - International Class 2 Shares

      50,004,212        26,773,465  

BlackRock Basic Value V.I. Class I Shares

      1,972,628        2,880,221  

BlackRock Global Allocation V.I. Class I Shares

      2,670,979        4,413,311  

BlackRock High Yield V.I. Class I Shares

      454,809        969,185  

Catalyst Dividend Capture VA

      96,547        442,628  

Catalyst Insider Buying VA

      355,131        525,891  

Fidelity® VIP Balanced Service Class 2

      57,410,015        52,533,219  

Fidelity® VIP Contrafund® Initial Class

      30,823        245,149  

Fidelity® VIP Contrafund® Service Class 2

      101,883,205        69,541,709  

Fidelity® VIP Equity-Income Initial Class

      1,881        23,452  

Fidelity® VIP Equity-Income Service Class 2

      2,367,529        7,424,065  

Fidelity® VIP Growth Initial Class

      1,573        6,622  

Fidelity® VIP Growth Service Class 2

      3,247,419        5,987,480  

Fidelity® VIP Growth Opportunities Service Class 2

      682,326        337,037  

Fidelity® VIP Mid Cap Initial Class

      53,022        4,552  

Fidelity® VIP Mid Cap Service Class 2

      60,781,754        50,057,856  

Fidelity® VIP Value Strategies Initial Class

      187,126        19,110  

Fidelity® VIP Value Strategies Service Class 2

      54,412,685        23,078,349  

Franklin Founding Funds Allocation Class 4 Shares

      7,459,047        19,663,590  

Franklin Income Class 2 Shares

      4,043,497        15,379,119  

Franklin Mutual Shares Class 2 Shares

      1,116,810        2,728,736  

Franklin Templeton Foreign Class 2 Shares

      1,188,749        5,280,428  

Invesco V.I. American Franchise Series II Shares

      586,063        946,872  

Janus Henderson - Enterprise Service Shares

      1,853,503        2,668,397  

Janus Henderson - Global Research Service Shares

      582,873        3,582,895  

Janus Henderson - Mid Cap Value Service Shares

      162,059        164,839  

MFS® New Discovery Service Class

      1,419,164        6,942,695  

MFS® Total Return Service Class

      3,155,877        7,738,304  

NVIT Emerging Markets Class D Shares

      184        4,006  

 

40

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

State Street Total Return V.I.S. Class 3 Shares

    $ 8,765,826      $ 10,766,229  

TA AB Dynamic Allocation Initial Class

      1,551,858        4,695,917  

TA AB Dynamic Allocation Service Class

      17,226,453        57,903,012  

TA Aegon Government Money Market Initial Class

      27,606,891        47,815,218  

TA Aegon Government Money Market Service Class

      232,110,859        319,511,691  

TA Aegon High Yield Bond Initial Class

      11,793,170        15,389,365  

TA Aegon High Yield Bond Service Class

      45,252,041        45,609,187  

TA Aegon U.S. Government Securities Initial Class

      14,162,658        16,659,995  

TA Aegon U.S. Government Securities Service Class

      60,753,105        227,243,529  

TA American Funds Managed Risk - Balanced Service Class

      264,492,705        43,003,471  

TA Asset Allocation - Conservative Initial Class

      21,154,425        41,241,502  

TA Asset Allocation - Conservative Service Class

      112,648,224        160,946,965  

TA Asset Allocation - Growth Initial Class

      26,432,093        33,087,852  

TA Asset Allocation - Growth Service Class

      32,897,882        33,456,744  

TA Asset Allocation - Moderate Initial Class

      30,040,813        62,280,528  

TA Asset Allocation - Moderate Service Class

      338,680,440        531,140,921  

TA Asset Allocation - Moderate Growth Initial Class

      46,614,501        64,248,542  

TA Asset Allocation - Moderate Growth Service Class

      429,452,395        408,969,389  

TA Barrow Hanley Dividend Focused Initial Class

      38,864,431        52,428,518  

TA Barrow Hanley Dividend Focused Service Class

      26,434,589        32,762,004  

TA BlackRock Equity Smart Beta 100 Service Class

      18,827,019        8,559,450  

TA BlackRock Global Allocation Service Class

      121,351,037        172,350,162  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      43,746,751        27,568,522  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      40,518,786        28,646,295  

TA BlackRock Smart Beta 50 Service Class

      25,982,866        10,864,516  

TA BlackRock Smart Beta 75 Service Class

      14,162,594        2,588,049  

TA BlackRock Tactical Allocation Service Class

      109,547,330        186,974,013  

TA Clarion Global Real Estate Securities Initial Class

      4,297,949        6,625,969  

TA Clarion Global Real Estate Securities Service Class

      10,794,920        13,616,707  

TA International Equity Index Service Class

      7,041,508        398,020  

TA International Moderate Growth Initial Class

      1,620        2,207  

TA International Moderate Growth Service Class

      82,829,279        79,345,956  

TA Janus Balanced Service Class

      122,421,344        78,729,821  

TA Janus Mid-Cap Growth Initial Class

      6,476,641        9,493,326  

TA Janus Mid-Cap Growth Service Class

      15,398,719        12,964,910  

TA Jennison Growth Initial Class

      30,754,648        26,767,521  

 

41

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA Jennison Growth Service Class

    $ 39,039,485      $ 21,091,135  

TA JPMorgan Core Bond Service Class

      51,735,794        43,954,232  

TA JPMorgan Enhanced Index Initial Class

      18,709,902        17,676,310  

TA JPMorgan Enhanced Index Service Class

      17,511,329        11,908,845  

TA JPMorgan Mid Cap Value Service Class

      97,236,409        38,204,195  

TA JPMorgan Tactical Allocation Service Class

      96,996,780        144,237,468  

TA Legg Mason Dynamic Allocation - Balanced Service Class

      44,113,999        185,148,601  

TA Legg Mason Dynamic Allocation - Growth Service Class

      31,073,238        99,919,534  

TA Madison Balanced Allocation Service Class

      6,124,872        9,228,961  

TA Madison Conservative Allocation Service Class

      2,299,473        8,660,164  

TA Madison Diversified Income Service Class

      19,263,089        11,114,748  

TA Managed Risk - Balanced ETF Service Class

      276,131,652        542,161,076  

TA Managed Risk - Conservative ETF Service Class

      65,209,903        137,236,359  

TA Managed Risk - Growth ETF Service Class

      169,929,503        359,344,707  

TA Market Participation Strategy Service Class

      11,489,081        73,595,181  

TA MFS International Equity Initial Class

      13,713,508        9,469,466  

TA MFS International Equity Service Class

      24,850,137        15,432,329  

TA Morgan Stanley Capital Growth Initial Class

      16,298,113        14,779,391  

TA Morgan Stanley Capital Growth Service Class

      33,657,502        14,754,149  

TA Multi-Managed Balanced Initial Class

      14,092,760        11,125,741  

TA Multi-Managed Balanced Service Class

      368,803,681        116,065,351  

TA Multi-Manager Alternative Strategies Service Class

      378,111        341,118  

TA PIMCO Tactical - Balanced Service Class

      62,519,794        82,579,001  

TA PIMCO Tactical - Conservative Service Class

      43,551,285        49,560,877  

TA PIMCO Tactical - Growth Service Class

      50,970,826        47,967,216  

TA PIMCO Total Return Initial Class

      16,861,997        30,353,848  

TA PIMCO Total Return Service Class

      66,687,703        119,170,195  

TA PineBridge Inflation Opportunities Service Class

      35,331,832        42,015,470  

TA ProFunds UltraBear Service Class (OAM)

      1,039,621        13,316,338  

TA QS Investors Active Asset Allocation - Conservative Service Class

      30,103,992        80,811,953  

TA QS Investors Active Asset Allocation - Moderate Service Class

      83,759,742        205,040,316  

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      43,860,388        90,522,028  

TA Small/Mid Cap Value Initial Class

      15,510,464        16,026,394  

TA Small/Mid Cap Value Service Class

      39,690,766        26,846,922  

TA T. Rowe Price Small Cap Initial Class

      19,262,158        18,980,611  

TA T. Rowe Price Small Cap Service Class

      53,763,828        32,476,491  

 

42

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

3. Investments (continued)

 

Subaccount

    Purchases      Sales  

TA Torray Concentrated Growth Initial Class

    $ 6,086,348      $ 20,404,985  

TA Torray Concentrated Growth Service Class

      9,048,820        8,113,366  

TA TS&W International Equity Initial Class

      9,814,893        10,574,656  

TA TS&W International Equity Service Class

      8,489,195        6,022,048  

TA U.S. Equity Index Service Class

      19,081,523        1,560,206  

TA WMC US Growth Initial Class

      18,157,740        36,961,628  

TA WMC US Growth Service Class

      17,081,703        16,822,753  

Vanguard® Equity Index

      1,867,666        477,472  

Vanguard® International

      918,593        405,233  

Vanguard® Mid-Cap Index

      548,591        146,462  

Vanguard® REIT Index

      175,940        67,193  

Vanguard® Short-Term Investment Grade

      1,028,533        785,306  

Vanguard® Total Bond Market Index

      868,480        264,545  

Voya Global Perspectives Class S Shares

      1,839        259  

Voya Large Cap Value Class S Shares

      24        42  

Voya Strategic Allocation Conservative Class S Shares

      —          —    

Voya Strategic Allocation Moderate Class S Shares

      —          —    

Wanger International

      32,560        53,701  

Wanger USA

      30,103        190,441  

 

43

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

4. Change in Units

The change in units outstanding were as follows:

 

     Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

      2,184,367        (7,693,644 )      (5,509,277 )      4,577,856        (7,871,857 )      (3,294,001 ) 

AB Growth and Income Class B Shares

      9,969,362        (18,232,403 )      (8,263,041 )      16,757,360        (17,469,368 )      (712,008 ) 

AB Large Cap Growth Class B Shares

      516,356        (2,602,177 )      (2,085,821 )      617,367        (2,249,013 )      (1,631,646 ) 

American Funds - Asset Allocation Class 2 Shares

      26,690,270        (30,743,455 )      (4,053,185 )      47,671,587        (27,321,969 )      20,349,618  

American Funds - Bond Class 2 Shares

      8,256,221        (20,780,510 )      (12,524,289 )      20,476,877        (18,150,697 )      2,326,180  

American Funds - Growth Class 2 Shares

      10,676,597        (11,736,881 )      (1,060,284 )      12,744,488        (13,575,516 )      (831,028 ) 

American Funds - Growth-Income Class 2 Shares

      10,263,558        (10,140,423 )      123,135       12,491,516        (9,359,598 )      3,131,918  

American Funds - International Class 2 Shares

      10,504,197        (8,983,955 )      1,520,242       8,751,397        (13,148,033 )      (4,396,636 ) 

BlackRock Basic Value V.I. Class I Shares

      302,443        (937,189 )      (634,746 )      205,685        (1,011,112 )      (805,427 ) 

BlackRock Global Allocation V.I. Class I Shares

      1,231,934        (2,151,853 )      (919,919 )      219,393        (1,007,025 )      (787,632 ) 

BlackRock High Yield V.I. Class I Shares

      88,272        (370,185 )      (281,913 )      51,530        (448,970 )      (397,440 ) 

Catalyst Dividend Capture VA

      25,547        (303,852 )      (278,305 )      28,250        (205,201 )      (176,951 ) 

Catalyst Insider Buying VA

      24,845        (316,354 )      (291,509 )      61,397        (248,311 )      (186,914 ) 

Fidelity® VIP Balanced Service Class 2

      11,954,659        (25,243,183 )      (13,288,524 )      28,760,829        (26,805,861 )      1,954,968  

Fidelity® VIP Contrafund® Initial Class

      3,972        (37,661 )      (33,689 )      18,534        (106,705 )      (88,171 ) 

Fidelity® VIP Contrafund® Service Class 2

      12,058,054        (22,222,791 )      (10,164,737 )      14,749,503        (28,635,135 )      (13,885,632 ) 

Fidelity® VIP Equity-Income Initial Class

      —          (14,439 )      (14,439 )      12,302        (25,718 )      (13,416 ) 

Fidelity® VIP Equity-Income Service Class 2

      340,406        (3,569,145 )      (3,228,739 )      337,338        (3,828,617 )      (3,491,279 ) 

Fidelity® VIP Growth Initial Class

      —          (3,561 )      (3,561 )      8,151        (21,195 )      (13,044 ) 

Fidelity® VIP Growth Service Class 2

      254,400        (2,873,370 )      (2,618,970 )      782,581        (4,585,757 )      (3,803,176 ) 

Fidelity® VIP Growth Opportunities Service Class 2

      177,959        (156,769 )      21,190       105,912        (201,872 )      (95,960 ) 

Fidelity® VIP Mid Cap Initial Class

      22,015        (1,228 )      20,787       560        (4,170 )      (3,610 ) 

Fidelity® VIP Mid Cap Service Class 2

      7,314,311        (13,097,849 )      (5,783,538 )      8,057,888        (16,295,207 )      (8,237,319 ) 

Fidelity® VIP Value Strategies Initial Class

      51,180        (9,392 )      41,788       21,120        (23,855 )      (2,735 ) 

Fidelity® VIP Value Strategies Service Class 2

      4,826,259        (8,499,004 )      (3,672,745 )      6,214,470        (11,246,409 )      (5,031,939 ) 

Franklin Founding Funds Allocation Class 4 Shares

      82,105        (8,917,934 )      (8,835,829 )      509,827        (9,042,678 )      (8,532,851 ) 

Franklin Income Class 2 Shares

      531,794        (10,057,056 )      (9,525,262 )      1,024,813        (13,767,939 )      (12,743,126 ) 

 

44

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

Franklin Mutual Shares Class 2 Shares

      10,802        (1,812,087 )      (1,801,285 )      181,921        (2,158,889 )      (1,976,968 ) 

Franklin Templeton Foreign Class 2 Shares

      322,067        (4,533,791 )      (4,211,724 )      568,053        (5,820,055 )      (5,252,002 ) 

Invesco V.I. American Franchise Series II Shares

      4,269        (485,362 )      (481,093 )      43,705        (662,328 )      (618,623 ) 

Janus Henderson - Enterprise Service Shares

      285,646        (1,168,127 )      (882,481 )      231,691        (1,343,533 )      (1,111,842 ) 

Janus Henderson - Global Research Service Shares

      378,693        (2,624,765 )      (2,246,072 )      369,955        (4,174,401 )      (3,804,446 ) 

Janus Henderson - Mid Cap Value Service Shares

      11,102        (50,009 )      (38,907 )      15,068        (118,736 )      (103,668 ) 

MFS® New Discovery Service Class

      244,514        (2,789,345 )      (2,544,831 )      634,982        (4,009,910 )      (3,374,928 ) 

MFS® Total Return Service Class

      359,371        (3,838,888 )      (3,479,517 )      152,891        (4,401,290 )      (4,248,399 ) 

NVIT Emerging Markets Class D Shares

      —          (339 )      (339 )      2,011        (104 )      1,907  

State Street Total Return V.I.S. Class 3 Shares

      1,711,490        (6,088,368 )      (4,376,878 )      3,334,812        (6,485,858 )      (3,151,046 ) 

TA AB Dynamic Allocation Initial Class

      753,761        (2,790,589 )      (2,036,828 )      1,240,382        (2,548,909 )      (1,308,527 ) 

TA AB Dynamic Allocation Service Class

      2,685,914        (30,514,401 )      (27,828,487 )      6,008,368        (24,731,613 )      (18,723,245 ) 

TA Aegon Government Money Market Initial Class

      26,608,695        (43,018,836 )      (16,410,141 )      56,224,988        (62,558,630 )      (6,333,642 ) 

TA Aegon Government Money Market Service Class

      112,680,805        (163,595,509 )      (50,914,704 )      178,862,053        (200,684,879 )      (21,822,826 ) 

TA Aegon High Yield Bond Initial Class

      3,152,598        (6,563,867 )      (3,411,269 )      6,640,395        (9,020,389 )      (2,379,994 ) 

TA Aegon High Yield Bond Service Class

      7,147,909        (10,824,818 )      (3,676,909 )      24,001,274        (26,126,532 )      (2,125,258 ) 

TA Aegon U.S. Government Securities Initial Class

      4,240,978        (10,021,317 )      (5,780,339 )      11,879,386        (9,868,404 )      2,010,982  

TA Aegon U.S. Government Securities Service Class

      11,613,702        (60,855,036 )      (49,241,334 )      75,622,651        (75,528,728 )      93,923  

TA American Funds Managed Risk - Balanced Service Class

      25,097,874        (3,669,481 )      21,428,393       24,615,790        (963,868 )      23,651,922  

TA Asset Allocation - Conservative Initial Class

      8,555,494        (23,089,351 )      (14,533,857 )      19,586,337        (31,111,191 )      (11,524,854 ) 

TA Asset Allocation - Conservative Service Class

      17,388,581        (76,988,666 )      (59,600,085 )      30,018,868        (88,082,485 )      (58,063,617 ) 

TA Asset Allocation - Growth Initial Class

      8,539,306        (15,184,634 )      (6,645,328 )      6,793,260        (24,512,256 )      (17,718,996 ) 

TA Asset Allocation - Growth Service Class

      4,284,131        (13,309,800 )      (9,025,669 )      6,414,031        (21,921,775 )      (15,507,744 ) 

TA Asset Allocation - Moderate Initial Class

      7,629,398        (31,368,018 )      (23,738,620 )      14,245,267        (33,604,411 )      (19,359,144 ) 

TA Asset Allocation - Moderate Service Class

      31,226,177        (210,638,007 )      (179,411,830 )      28,826,637        (232,781,096 )      (203,954,459 ) 

TA Asset Allocation - Moderate Growth Initial Class

      11,741,828        (30,381,678 )      (18,639,850 )      15,252,932        (42,180,513 )      (26,927,581 ) 

TA Asset Allocation - Moderate Growth Service Class

      45,942,561        (182,150,263 )      (136,207,702 )      44,580,749        (213,203,528 )      (168,622,779 ) 

 

45

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA Barrow Hanley Dividend Focused Initial Class

      13,171,148        (19,806,441 )      (6,635,293 )      6,321,900        (20,767,712 )      (14,445,812 ) 

TA Barrow Hanley Dividend Focused Service Class

      4,630,076        (11,433,873 )      (6,803,797 )      7,858,173        (10,458,110 )      (2,599,937 ) 

TA BlackRock Equity Smart Beta 100 Service Class

      1,638,985        (720,196 )      918,789       2,356,687        (154,038 )      2,202,649  

TA BlackRock Global Allocation Service Class

      15,303,828        (86,007,399 )      (70,703,571 )      31,886,592        (87,490,264 )      (55,603,672 ) 

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

      4,406,684        (2,644,637 )      1,762,047       6,377,216        (2,623,136 )      3,754,080  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

      4,026,852        (2,834,495 )      1,192,357       5,040,120        (2,836,125 )      2,203,995  

TA BlackRock Smart Beta 50 Service Class

      2,414,536        (964,328 )      1,450,208       4,361,085        (231,041 )      4,130,044  

TA BlackRock Smart Beta 75 Service Class

      1,300,153        (217,328 )      1,082,825       1,192,778        (69,530 )      1,123,248  

TA BlackRock Tactical Allocation Service Class

      14,692,214        (70,930,871 )      (56,238,657 )      21,474,186        (69,537,978 )      (48,063,792 ) 

TA Clarion Global Real Estate Securities Initial Class

      1,222,696        (2,469,046 )      (1,246,350 )      1,856,319        (4,051,687 )      (2,195,368 ) 

TA Clarion Global Real Estate Securities Service Class

      1,947,304        (6,166,292 )      (4,218,988 )      4,555,494        (10,572,342 )      (6,016,848 ) 

TA International Equity Index Service Class

      664,366        (35,602 )      628,764       —          —         —    

TA International Moderate Growth Initial Class

      —          (1,373 )      (1,373 )      1,849        (630 )      1,219  

TA International Moderate Growth Service Class

      23,520,888        (47,840,359 )      (24,319,471 )      16,224,478        (63,931,554 )      (47,707,076 ) 

TA Janus Balanced Service Class

      25,913,479        (29,378,202 )      (3,464,723 )      39,032,182        (33,567,931 )      5,464,251  

TA Janus Mid-Cap Growth Initial Class

      3,930,961        (5,691,726 )      (1,760,765 )      4,131,990        (8,874,027 )      (4,742,037 ) 

TA Janus Mid-Cap Growth Service Class

      2,344,165        (4,096,739 )      (1,752,574 )      3,608,727        (7,851,191 )      (4,242,464 ) 

TA Jennison Growth Initial Class

      5,313,280        (12,011,638 )      (6,698,358 )      4,439,921        (16,655,789 )      (12,215,868 ) 

TA Jennison Growth Service Class

      5,181,850        (5,282,983 )      (101,133 )      4,138,539        (9,768,111 )      (5,629,572 ) 

TA JPMorgan Core Bond Service Class

      8,953,808        (21,121,200 )      (12,167,392 )      25,022,781        (20,520,038 )      4,502,743  

TA JPMorgan Enhanced Index Initial Class

      6,954,811        (6,932,238 )      22,573       4,996,032        (7,280,429 )      (2,284,397 ) 

TA JPMorgan Enhanced Index Service Class

      2,265,507        (2,847,204 )      (581,697 )      3,811,970        (3,374,799 )      437,171  

TA JPMorgan Mid Cap Value Service Class

      8,653,775        (11,011,467 )      (2,357,692 )      13,507,757        (10,763,245 )      2,744,512  

TA JPMorgan Tactical Allocation Service Class

      13,980,067        (56,521,241 )      (42,541,174 )      33,415,860        (42,376,743 )      (8,960,883 ) 

TA Legg Mason Dynamic Allocation - Balanced Service Class

      5,448,376        (54,726,022 )      (49,277,646 )      27,463,153        (41,259,723 )      (13,796,570 ) 

TA Legg Mason Dynamic Allocation - Growth Service Class

      6,419,083        (27,324,786 )      (20,905,703 )      17,413,891        (34,950,045 )      (17,536,154 ) 

TA Madison Balanced Allocation Service Class

      943,576        (2,897,866 )      (1,954,290 )      1,707,056        (3,336,316 )      (1,629,260 ) 

 

46

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA Madison Conservative Allocation Service Class

      200,875        (3,585,221 )      (3,384,346 )      733,244        (4,546,770 )      (3,813,526 ) 

TA Madison Diversified Income Service Class

      3,609,815        (4,758,034 )      (1,148,219 )      2,446,006        (4,650,935 )      (2,204,929 ) 

TA Managed Risk - Balanced ETF Service Class

      30,922,891        (197,247,862 )      (166,324,971 )      70,078,652        (179,753,782 )      (109,675,130 ) 

TA Managed Risk - Conservative ETF Service Class

      13,969,521        (57,637,158 )      (43,667,637 )      31,195,491        (51,716,980 )      (20,521,489 ) 

TA Managed Risk - Growth ETF Service Class

      30,109,326        (158,428,620 )      (128,319,294 )      37,846,184        (210,585,217 )      (172,739,033 ) 

TA Market Participation Strategy Service Class

      2,871,744        (21,447,251 )      (18,575,507 )      9,303,963        (15,003,497 )      (5,699,534 ) 

TA MFS International Equity Initial Class

      8,185,845        (5,519,695 )      2,666,150       4,529,027        (8,434,870 )      (3,905,843 ) 

TA MFS International Equity Service Class

      5,473,524        (5,499,335 )      (25,811 )      4,704,689        (7,974,528 )      (3,269,839 ) 

TA Morgan Stanley Capital Growth Initial Class

      3,396,597        (4,966,118 )      (1,569,521 )      3,486,371        (7,070,316 )      (3,583,945 ) 

TA Morgan Stanley Capital Growth Service Class

      4,741,907        (3,645,097 )      1,096,810       3,011,586        (5,230,043 )      (2,218,457 ) 

TA Multi-Managed Balanced Initial Class

      5,316,036        (4,327,409 )      988,627       5,998,439        (4,667,176 )      1,331,263  

TA Multi-Managed Balanced Service Class

      57,946,841        (31,919,477 )      26,027,364       96,343,104        (19,787,266 )      76,555,838  

TA Multi-Manager Alternative Strategies Service Class

      35,958        (32,644 )      3,314       24,930        (42,740 )      (17,810 ) 

TA PIMCO Tactical - Balanced Service Class

      10,261,351        (30,271,841 )      (20,010,490 )      20,422,364        (22,592,129 )      (2,169,765 ) 

TA PIMCO Tactical - Conservative Service Class

      8,224,672        (16,927,901 )      (8,703,229 )      15,470,938        (11,805,874 )      3,665,064  

TA PIMCO Tactical - Growth Service Class

      8,000,167        (16,507,843 )      (8,507,676 )      14,216,644        (16,190,983 )      (1,974,339 ) 

TA PIMCO Total Return Initial Class

      9,922,532        (17,670,634 )      (7,748,102 )      16,071,319        (25,031,254 )      (8,959,935 ) 

TA PIMCO Total Return Service Class

      12,485,151        (63,599,837 )      (51,114,686 )      29,868,111        (72,805,371 )      (42,937,260 ) 

TA PineBridge Inflation Opportunities Service Class

      6,925,892        (17,977,262 )      (11,051,370 )      11,765,833        (20,093,418 )      (8,327,585 ) 

TA ProFunds UltraBear Service Class (OAM)

      22,101,178        (253,830,353 )      (231,729,175 )      686,441,209        (535,616,523 )      150,824,686  

TA QS Investors Active Asset Allocation - Conservative Service Class

      6,311,169        (40,694,270 )      (34,383,101 )      10,145,092        (33,723,903 )      (23,578,811 ) 

TA QS Investors Active Asset Allocation - Moderate Service Class

      17,554,145        (77,173,713 )      (59,619,568 )      10,330,505        (63,026,944 )      (52,696,439 ) 

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

      10,635,414        (39,577,395 )      (28,941,981 )      7,740,285        (50,946,692 )      (43,206,407 ) 

TA Small/Mid Cap Value Initial Class

      489,296        (2,554,540 )      (2,065,244 )      522,126        (4,143,308 )      (3,621,182 ) 

TA Small/Mid Cap Value Service Class

      4,293,154        (8,752,905 )      (4,459,751 )      7,977,974        (8,084,028 )      (106,054 ) 

 

47

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Units (continued)

 

     Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

    Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		     Units
Purchased		      Units Redeemed
and Transferred
to/from		     Net
Increase
(Decrease)		  

TA T. Rowe Price Small Cap Initial Class

      4,669,194        (6,675,304 )      (2,006,110 )      5,548,522        (8,335,225 )      (2,786,703 ) 

TA T. Rowe Price Small Cap Service Class

      4,697,334        (7,291,519 )      (2,594,185 )      6,357,624        (8,494,242 )      (2,136,618 ) 

TA Torray Concentrated Growth Initial Class

      969,461        (5,248,354 )      (4,278,893 )      1,616,487        (6,791,243 )      (5,174,756 ) 

TA Torray Concentrated Growth Service Class

      1,031,456        (2,474,122 )      (1,442,666 )      1,403,687        (3,156,100 )      (1,752,413 ) 

TA TS&W International Equity Initial Class

      4,534,985        (5,255,376 )      (720,391 )      4,441,998        (7,067,853 )      (2,625,855 ) 

TA TS&W International Equity Service Class

      2,431,042        (2,153,460 )      277,582       2,249,231        (5,495,812 )      (3,246,581 ) 

TA U.S. Equity Index Service Class

      1,800,369        (143,644 )      1,656,725       —          —         —    

TA WMC US Growth Initial Class

      5,804,477        (18,627,764 )      (12,823,287 )      8,822,726        (24,557,097 )      (15,734,371 ) 

TA WMC US Growth Service Class

      1,889,433        (5,084,140 )      (3,194,707 )      3,710,129        (6,247,767 )      (2,537,638 ) 

Vanguard® Equity Index

      503,337        (101,561 )      401,776       159,092        (209,979 )      (50,887 ) 

Vanguard® International

      427,138        (100,951 )      326,187       54,824        (39,634 )      15,190  

Vanguard® Mid-Cap Index

      167,261        (21,136 )      146,125       29,372        (102,492 )      (73,120 ) 

Vanguard® REIT Index

      33,283        (20,560 )      12,723       23,905        (37,266 )      (13,361 ) 

Vanguard® Short-Term Investment Grade

      349,897        (482,523 )      (132,626 )      107,340        (243,629 )      (136,289 ) 

Vanguard® Total Bond Market Index

      137,701        (180,793 )      (43,092 )      16,267        (114,873 )      (98,606 ) 

Voya Global Perspectives Class S Shares

      129        (3 )      126       55        (23 )      32  

Voya Large Cap Value Class S Shares

      —          (3 )      (3 )      97        —         97  

Voya Strategic Allocation Conservative Class S Shares

      —          —         —         —          —         —    

Voya Strategic Allocation Moderate Class S Shares

      —          —         —         —          —         —    

Wanger International

      5,594        (38,982 )      (33,388 )      24,261        (42,512 )      (18,251 ) 

Wanger USA

      1        (67,833 )      (67,832 )      918        (66,956 )      (66,038 ) 

 

48

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

AB Balanced Wealth Strategy Class B Shares

   $ 9,468,517     $ (16,063,157 )    $ (6,594,640 )    $ 11,799,095     $ (15,714,012 )    $ (3,914,917 ) 

AB Growth and Income Class B Shares

     32,409,700       (42,876,573 )      (10,466,873 )      45,454,355       (37,807,978 )      7,646,377  

AB Large Cap Growth Class B Shares

     891,772       (4,890,765 )      (3,998,993 )      916,454       (3,458,770 )      (2,542,316 ) 

American Funds - Asset Allocation Class 2 Shares

     116,038,980       (76,070,097 )      39,968,883       146,972,375       (65,369,472 )      81,602,903  

American Funds - Bond Class 2 Shares

     49,864,463       (38,807,758 )      11,056,705       65,269,511       (32,378,552 )      32,890,959  

American Funds - Growth Class 2 Shares

     98,323,541       (41,128,807 )      57,194,734       75,975,624       (36,136,560 )      39,839,064  

American Funds - Growth-Income Class 2 Shares

     82,957,637       (39,213,869 )      43,743,768       78,385,499       (30,443,784 )      47,941,715  

American Funds - International Class 2 Shares

     46,977,428       (25,008,796 )      21,968,632       40,700,972       (28,476,097 )      12,224,875  

BlackRock Basic Value V.I. Class I Shares

     854,223       (2,597,148 )      (1,742,925 )      580,348       (2,566,375 )      (1,986,027 ) 

BlackRock Global Allocation V.I. Class I Shares

     2,379,228       (4,220,572 )      (1,841,344 )      373,087       (1,836,075 )      (1,462,988 ) 

BlackRock High Yield V.I. Class I Shares

     214,351       (906,246 )      (691,895 )      115,750       (991,567 )      (875,817 ) 

Catalyst Dividend Capture VA

     35,232       (417,976 )      (382,744 )      38,967       (285,328 )      (246,361 ) 

Catalyst Insider Buying VA

     39,156       (493,595 )      (454,439 )      79,661       (320,183 )      (240,522 ) 

Fidelity® VIP Balanced Service Class 2

     44,427,137       (48,468,831 )      (4,041,694 )      68,631,757       (47,677,413 )      20,954,344  

Fidelity® VIP Contrafund® Initial Class

     14,222       (243,407 )      (229,185 )      53,743       (363,078 )      (309,335 ) 

Fidelity® VIP Contrafund® Service Class 2

     71,342,361       (64,041,470 )      7,300,891       73,039,231       (73,098,881 )      (59,650 ) 

Fidelity® VIP Equity-Income Initial Class

     —         (23,107 )      (23,107 )      16,848       (34,721 )      (17,873 ) 

Fidelity® VIP Equity-Income Service Class 2

     636,886       (6,714,097 )      (6,077,211 )      539,694       (6,256,068 )      (5,716,374 ) 

Fidelity® VIP Growth Initial Class

     —         (6,470 )      (6,470 )      12,359       (32,093 )      (19,734 ) 

Fidelity® VIP Growth Service Class 2

     437,125       (5,426,805 )      (4,989,680 )      1,216,160       (7,003,096 )      (5,786,936 ) 

Fidelity® VIP Growth Opportunities Service Class 2

     382,678       (302,918 )      79,760       176,363       (324,365 )      (148,002 ) 

Fidelity® VIP Mid Cap Initial Class

     50,190       (4,208 )      45,982       3,633       (8,168 )      (4,535 ) 

Fidelity® VIP Mid Cap Service Class 2

     44,374,920       (46,170,447 )      (1,795,527 )      35,863,728       (46,414,278 )      (10,550,550 ) 

Fidelity® VIP Value Strategies Initial Class

     109,343       (17,211 )      92,132       139,023       (61,180 )      77,843  

Fidelity® VIP Value Strategies Service Class 2

     20,667,588       (21,464,011 )      (796,423 )      19,606,698       (24,554,974 )      (4,948,276 ) 

Franklin Founding Funds Allocation Class 4 Shares

     162,173       (17,862,712 )      (17,700,539 )      858,522       (15,818,199 )      (14,959,677 ) 

Franklin Income Class 2 Shares

     732,594       (14,222,147 )      (13,489,553 )      1,269,839       (17,257,972 )      (15,988,133 ) 

 

49

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

Franklin Mutual Shares Class 2 Shares

   $ 14,720     $ (2,467,743 )    $ (2,453,023 )    $ 219,238     $ (2,546,233 )    $ (2,326,995 ) 

Franklin Templeton Foreign Class 2 Shares

     329,523       (4,787,289 )      (4,457,766 )      503,266       (5,259,884 )      (4,756,618 ) 

Invesco V.I. American Franchise Series II Shares

     7,096       (839,856 )      (832,760 )      60,086       (948,186 )      (888,100 ) 

Janus Henderson - Enterprise Service Shares

     399,049       (2,355,077 )      (1,956,028 )      473,566       (2,420,919 )      (1,947,353 ) 

Janus Henderson - Global Research Service Shares

     395,979       (3,176,754 )      (2,780,775 )      403,895       (4,475,998 )      (4,072,103 ) 

Janus Henderson - Mid Cap Value Service Shares

     28,135       (121,194 )      (93,059 )      30,526       (230,573 )      (200,047 ) 

MFS® New Discovery Service Class

     566,384       (6,318,752 )      (5,752,368 )      1,217,815       (7,566,641 )      (6,348,826 ) 

MFS® Total Return Service Class

     633,672       (6,993,897 )      (6,360,225 )      242,335       (7,275,654 )      (7,033,319 ) 

NVIT Emerging Markets Class D Shares

     —         (3,907 )      (3,907 )      20,512       (1,018 )      19,494  

State Street Total Return V.I.S. Class 3 Shares

     6,373,341       (9,954,379 )      (3,581,038 )      6,298,949       (9,554,300 )      (3,255,351 ) 

TA AB Dynamic Allocation Initial Class

     1,227,951       (4,426,851 )      (3,198,900 )      1,943,780       (4,071,280 )      (2,127,500 ) 

TA AB Dynamic Allocation Service Class

     12,991,231       (54,073,338 )      (41,082,107 )      32,344,874       (40,769,929 )      (8,425,055 ) 

TA Aegon Government Money Market Initial Class

     27,799,259       (46,505,927 )      (18,706,668 )      61,962,295       (68,915,366 )      (6,953,071 ) 

TA Aegon Government Money Market Service Class

     233,034,366       (315,929,717 )      (82,895,351 )      352,217,056       (346,626,708 )      5,590,348  

TA Aegon High Yield Bond Initial Class

     7,047,192       (14,350,822 )      (7,303,630 )      13,583,955       (18,261,572 )      (4,677,617 ) 

TA Aegon High Yield Bond Service Class

     37,108,537       (43,972,915 )      (6,864,378 )      75,925,907       (76,292,580 )      (366,673 ) 

TA Aegon U.S. Government Securities Initial Class

     6,427,099       (15,766,879 )      (9,339,780 )      18,913,159       (15,493,846 )      3,419,313  

TA Aegon U.S. Government Securities Service Class

     34,744,817       (223,807,342 )      (189,062,525 )      284,020,839       (245,598,511 )      38,422,328  

TA American Funds Managed Risk - Balanced Service Class

     264,552,695       (39,587,880 )      224,964,815       239,322,229       (9,372,664 )      229,949,565  

TA Asset Allocation - Conservative Initial Class

     14,952,498       (38,827,778 )      (23,875,280 )      30,750,848       (49,383,047 )      (18,632,199 ) 

TA Asset Allocation - Conservative Service Class

     78,654,792       (148,937,976 )      (70,283,184 )      112,211,098       (159,508,140 )      (47,297,042 ) 

TA Asset Allocation - Growth Initial Class

     16,702,310       (29,325,831 )      (12,623,521 )      11,114,899       (40,685,782 )      (29,570,883 ) 

TA Asset Allocation - Growth Service Class

     26,218,855       (30,977,004 )      (4,758,149 )      25,299,082       (44,393,033 )      (19,093,951 ) 

TA Asset Allocation - Moderate Initial Class

     13,889,951       (56,690,232 )      (42,800,281 )      24,091,043       (55,205,650 )      (31,114,607 ) 

TA Asset Allocation - Moderate Service Class

     149,989,022       (473,626,350 )      (323,637,328 )      123,033,381       (456,390,503 )      (333,357,122 ) 

TA Asset Allocation - Moderate Growth Initial Class

     22,140,136       (57,569,635 )      (35,429,499 )      25,811,572       (71,142,404 )      (45,330,832 ) 

TA Asset Allocation - Moderate Growth Service Class

     267,089,876       (368,816,873 )      (101,726,997 )      210,725,982       (381,149,937 )      (170,423,955 ) 

 

50

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Barrow Hanley Dividend Focused Initial Class

   $ 30,713,134     $ (47,562,316 )    $ (16,849,182 )    $ 13,456,258     $ (42,475,493 )    $ (29,019,235 ) 

TA Barrow Hanley Dividend Focused Service Class

     23,085,838       (30,724,360 )      (7,638,522 )      28,239,471       (23,234,425 )      5,005,046  

TA BlackRock Equity Smart Beta 100 Service Class

     18,678,537       (8,249,446 )      10,429,091       24,665,460       (1,563,133 )      23,102,327  

TA BlackRock Global Allocation Service Class

     111,171,075       (158,091,888 )      (46,920,813 )      199,822,270       (147,952,759 )      51,869,511  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

     43,460,307       (26,088,373 )      17,371,934       59,155,665       (24,317,213 )      34,838,452  

TA BlackRock Global Allocation Managed Risk - Growth Service Class

     40,236,176       (27,084,612 )      13,151,564       45,467,475       (25,620,528 )      19,846,947  

TA BlackRock Smart Beta 50 Service Class

     25,711,029       (10,375,378 )      15,335,651       44,618,681       (2,357,925 )      42,260,756  

TA BlackRock Smart Beta 75 Service Class

     14,070,643       (2,377,395 )      11,693,248       12,177,322       (712,728 )      11,464,594  

TA BlackRock Tactical Allocation Service Class

     67,522,081       (170,506,565 )      (102,984,484 )      139,679,982       (146,272,966 )      (6,592,984 ) 

TA Clarion Global Real Estate Securities Initial Class

     2,814,031       (6,104,679 )      (3,290,648 )      4,770,168       (9,804,379 )      (5,034,211 ) 

TA Clarion Global Real Estate Securities Service Class

     8,422,212       (12,784,407 )      (4,362,195 )      15,554,106       (19,592,006 )      (4,037,900 ) 

TA International Equity Index Service Class

     7,045,360       (377,497 )      6,667,863       —         —         —    

TA International Moderate Growth Initial Class

     —         (1,810 )      (1,810 )      2,115       (734 )      1,381  

TA International Moderate Growth Service Class

     75,090,666       (72,728,305 )      2,362,361       46,164,977       (87,691,198 )      (41,526,221 ) 

TA Janus Balanced Service Class

     113,039,966       (72,529,042 )      40,510,924       177,183,176       (70,823,955 )      106,359,221  

TA Janus Mid-Cap Growth Initial Class

     6,083,253       (8,625,417 )      (2,542,164 )      5,272,371       (11,531,023 )      (6,258,652 ) 

TA Janus Mid-Cap Growth Service Class

     15,119,944       (12,156,471 )      2,963,473       13,863,427       (16,014,159 )      (2,150,732 ) 

TA Jennison Growth Initial Class

     11,322,873       (24,311,762 )      (12,988,889 )      7,698,925       (27,888,568 )      (20,189,643 ) 

TA Jennison Growth Service Class

     27,573,871       (19,892,737 )      7,681,134       23,200,977       (28,169,979 )      (4,969,002 ) 

TA JPMorgan Core Bond Service Class

     47,288,258       (42,323,120 )      4,965,138       87,412,186       (36,057,485 )      51,354,701  

TA JPMorgan Enhanced Index Initial Class

     15,951,256       (16,225,199 )      (273,943 )      10,385,101       (14,493,210 )      (4,108,109 ) 

TA JPMorgan Enhanced Index Service Class

     16,184,281       (11,193,191 )      4,991,090       17,101,303       (8,794,189 )      8,307,114  

TA JPMorgan Mid Cap Value Service Class

     47,665,154       (36,147,377 )      11,517,777       57,022,033       (35,715,661 )      21,306,372  

TA JPMorgan Tactical Allocation Service Class

     81,888,531       (133,371,686 )      (51,483,155 )      210,438,567       (85,966,116 )      124,472,451  

TA Legg Mason Dynamic Allocation - Balanced Service Class

     33,719,878       (172,843,958 )      (139,124,080 )      174,350,460       (102,326,291 )      72,024,169  

TA Legg Mason Dynamic Allocation - Growth Service Class

     27,840,465       (94,840,658 )      (67,000,193 )      91,439,069       (93,858,145 )      (2,419,076 ) 

 

51

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Madison Balanced Allocation Service Class

   $ 4,337,828     $ (7,924,260 )    $ (3,586,432 )    $ 10,074,472     $ (7,637,764 )    $ 2,436,708  

TA Madison Conservative Allocation Service Class

     948,076       (7,725,392 )      (6,777,316 )      5,464,541       (8,560,746 )      (3,096,205 ) 

TA Madison Diversified Income Service Class

     14,669,824       (9,663,653 )      5,006,171       9,468,357       (9,226,249 )      242,108  

TA Managed Risk - Balanced ETF Service Class

     193,272,570       (483,948,610 )      (290,676,040 )      412,893,951       (371,162,608 )      41,731,343  

TA Managed Risk - Conservative ETF Service Class

     52,916,417       (129,109,283 )      (76,192,866 )      126,094,830       (103,721,852 )      22,372,978  

TA Managed Risk - Growth ETF Service Class

     131,935,300       (329,438,698 )      (197,503,398 )      183,488,838       (400,503,829 )      (217,014,991 ) 

TA Market Participation Strategy Service Class

     11,148,212       (68,631,385 )      (57,483,173 )      33,875,388       (45,897,311 )      (12,021,923 ) 

TA MFS International Equity Initial Class

     12,936,663       (8,609,149 )      4,327,514       6,490,882       (11,171,817 )      (4,680,935 ) 

TA MFS International Equity Service Class

     24,050,412       (14,414,119 )      9,636,293       18,223,889       (15,111,152 )      3,112,737  

TA Morgan Stanley Capital Growth Initial Class

     8,813,659       (13,297,975 )      (4,484,316 )      7,456,615       (14,813,587 )      (7,356,972 ) 

TA Morgan Stanley Capital Growth Service Class

     28,566,746       (13,941,609 )      14,625,137       17,294,161       (15,320,277 )      1,973,884  

TA Multi-Managed Balanced Initial Class

     12,579,290       (10,071,517 )      2,507,773       12,785,644       (9,900,610 )      2,885,034  

TA Multi-Managed Balanced Service Class

     353,009,221       (107,823,068 )      245,186,153       567,124,285       (45,268,051 )      521,856,234  

TA Multi-Manager Alternative Strategies Service Class

     360,190       (326,459 )      33,731       242,550       (418,436 )      (175,886 ) 

TA PIMCO Tactical - Balanced Service Class

     31,996,612       (75,773,942 )      (43,777,330 )      64,517,391       (48,576,481 )      15,940,910  

TA PIMCO Tactical - Conservative Service Class

     31,844,067       (46,603,531 )      (14,759,464 )      66,357,295       (24,261,279 )      42,096,016  

TA PIMCO Tactical - Growth Service Class

     39,745,565       (44,515,938 )      (4,770,373 )      70,321,227       (35,494,192 )      34,827,035  

TA PIMCO Total Return Initial Class

     15,529,007       (28,109,662 )      (12,580,655 )      25,341,461       (39,256,364 )      (13,914,903 ) 

TA PIMCO Total Return Service Class

     61,499,147       (110,825,949 )      (49,326,802 )      108,085,761       (123,880,043 )      (15,794,282 ) 

TA PineBridge Inflation Opportunities Service Class

     35,811,788       (40,408,076 )      (4,596,288 )      44,051,179       (50,651,923 )      (6,600,744 ) 

TA ProFunds UltraBear Service Class (OAM)

     1,073,871       (13,042,584 )      (11,968,713 )      58,145,177       (40,010,998 )      18,134,179  

TA QS Investors Active Asset Allocation - Conservative Service Class

     23,599,475       (76,064,060 )      (52,464,585 )      43,554,540       (57,194,103 )      (13,639,563 ) 

TA QS Investors Active Asset Allocation - Moderate Service Class

     63,344,006       (188,194,231 )      (124,850,225 )      38,093,100       (139,643,708 )      (101,550,608 ) 

TA QS Investors Active Asset Allocation - Moderate Growth Service Class

     37,240,892       (83,504,076 )      (46,263,184 )      38,457,289       (97,257,344 )      (58,800,055 ) 

TA Small/Mid Cap Value Initial Class

     2,560,954       (14,266,631 )      (11,705,677 )      2,380,933       (17,828,894 )      (15,447,961 ) 

 

52

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

 

4. Change in Unit Dollars (continued)

 

    Year Ended December 31, 2017     Year Ended December 31, 2016  

Subaccount

   Units Purchased in
Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net
Increase
(Decrease)		     Units Purchased
in Dollars		     Units Redeemed
and Transferred
to/from in Dollars		     Dollar Net Increase
(Decrease)		  

TA Small/Mid Cap Value Service Class

   $ 27,862,945     $ (25,561,911 )    $ 2,301,034     $ 25,805,765     $ (18,772,598 )    $ 7,033,167  

TA T. Rowe Price Small Cap Initial Class

     12,147,642       (17,518,952 )      (5,371,310 )      12,421,822       (18,025,678 )      (5,603,856 ) 

TA T. Rowe Price Small Cap Service Class

     40,718,092       (30,320,210 )      10,397,882       39,755,899       (30,486,576 )      9,269,323  

TA Torray Concentrated Growth Initial Class

     2,973,031       (18,346,971 )      (15,373,940 )      4,145,727       (20,676,658 )      (16,530,931 ) 

TA Torray Concentrated Growth Service Class

     8,428,310       (7,625,933 )      802,377       5,967,912       (7,793,461 )      (1,825,549 ) 

TA TS&W International Equity Initial Class

     8,269,943       (9,620,886 )      (1,350,943 )      6,916,000       (11,128,086 )      (4,212,086 ) 

TA TS&W International Equity Service Class

     7,812,313       (5,572,935 )      2,239,378       9,555,073       (11,349,653 )      (1,794,580 ) 

TA U.S. Equity Index Service Class

     19,103,992       (1,514,661 )      17,589,331       —         —         —    

TA WMC US Growth Initial Class

     11,233,951       (33,586,035 )      (22,352,084 )      14,451,763       (38,298,431 )      (23,846,668 ) 

TA WMC US Growth Service Class

     14,393,677       (15,539,183 )      (1,145,506 )      18,622,658       (18,021,387 )      601,271  

Vanguard® Equity Index

     1,733,871       (455,382 )      1,278,489       324,385       (472,685 )      (148,300 ) 

Vanguard® International

     891,820       (392,442 )      499,378       147,782       (115,724 )      32,058  

Vanguard® Mid-Cap Index

     494,137       (138,626 )      355,511       69,512       (198,718 )      (129,206 ) 

Vanguard® REIT Index

     148,737       (64,309 )      84,428       45,917       (64,909 )      (18,992 ) 

Vanguard® Short-Term Investment Grade

     965,099       (766,464 )      198,635       217,258       (459,779 )      (242,521 ) 

Vanguard® Total Bond Market Index

     821,823       (252,515 )      569,308       111,343       (285,834 )      (174,491 ) 

Voya Global Perspectives Class S Shares

     1,375       (37 )      1,338       515       (219 )      296  

Voya Large Cap Value Class S Shares

     —         (27 )      (27 )      862       1       863  

Voya Strategic Allocation Conservative Class S Shares

     —         —         —         —         —         —    

Voya Strategic Allocation Moderate Class S Shares

     —         —         —         —         —         —    

Wanger International

     26,400       (52,211 )      (25,811 )      50,848       (54,286 )      (3,438 ) 

Wanger USA

     14       (189,850 )      (189,836 )      1,329       (116,170 )      (114,841 ) 

 

53

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

5. Financial Highlights

The Separate Account offers various death benefit options, which have differing fees that are charged against the contract owner’s account balance. These charges are discussed in more detail in the individual’s policy. Differences in the fee structures for these units result in different unit values, expense ratios, and total returns.

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

AB Balanced Wealth Strategy Class B Shares

 

     

12/31/2017

      38,525,201      $ 13.84        to      $ 11.22      $ 99,946,976        1.81 %      0.40 %      to        2.85 %      14.88 %      to        12.43 % 

12/31/2016

      44,034,478        12.01        to        1.63        94,083,857        1.82       0.65       to        2.65       3.77       to        1.75  

12/31/2015

      47,328,479        11.58        to        1.60        95,500,596        2.02       0.65       to        2.65       0.64       to        (1.32 ) 

12/31/2014

      47,372,152        11.51        to        1.62        91,875,603        2.43       0.65       to        2.65       6.42       to        4.34  

12/31/2013

      50,928,333        1.19        to        1.56        87,360,846        2.31       0.65       to        2.65       15.52       to        13.27  

AB Growth and Income Class B Shares

 

     

12/31/2017

      77,917,998        2.38        to        11.42        246,477,664        1.27       0.30       to        2.80       18.24       to        15.38  

12/31/2016

      86,181,039        2.02        to        1.37        220,284,665        0.84       0.30       to        2.30       10.74       to        8.58  

12/31/2015

      86,893,047        1.82        to        1.26        194,307,335        1.19       0.30       to        2.30       1.12       to        (0.85 ) 

12/31/2014

      94,663,141        1.80        to        1.27        190,026,748        1.14       0.30       to        2.30       8.96       to        6.83  

12/31/2013

      96,773,079        1.65        to        1.19        156,306,109        1.06       0.30       to        2.30       34.19       to        31.57  

AB Large Cap Growth Class B Shares

 

     

12/31/2017

      15,509,056        2.79        to        12.61        32,262,769        —         0.30       to        2.80       31.28       to        28.10  

12/31/2016

      17,594,877        2.12        to        1.57        28,324,370        —         0.30       to        2.30       2.05       to        0.06  

12/31/2015

      19,226,523        2.08        to        1.57        30,693,993        —         0.30       to        2.30       10.52       to        8.36  

12/31/2014

      24,431,104        1.88        to        1.45        35,592,264        —         0.30       to        2.30       13.50       to        11.28  

12/31/2013

      27,375,375        1.66        to        1.30        35,597,034        —         0.30       to        2.30       36.59       to        33.92  

American Funds - Asset Allocation Class 2 Shares

 

     

12/31/2017

      246,090,334        14.87        to        11.22        769,063,617        1.56       0.60       to        2.95       15.37       to        12.91  

12/31/2016

      250,143,519        12.88        to        1.60        634,039,608        1.74       0.75       to        2.75       8.60       to        6.49  

12/31/2015

      229,793,901        11.86        to        1.50        511,723,809        1.70       0.75       to        2.75       0.64       to        (1.31 ) 

12/31/2014

      238,074,048        11.78        to        1.52        468,882,755        1.58       0.75       to        2.75       4.61       to        2.57  

12/31/2013

      233,042,233        1.33        to        1.48        379,469,267        1.66       0.75       to        2.75       22.77       to        20.38  

American Funds - Bond Class 2 Shares

 

     

12/31/2017

      73,725,508        10.56        to        10.12        217,547,968        2.00       0.60       to        2.95       2.89       to        0.70  

12/31/2016

      86,249,797        10.24        to        1.04        202,687,185        1.75       0.75       to        2.75       2.18       to        0.20  

12/31/2015

      83,923,617        10.03        to        1.04        168,449,072        1.79       0.75       to        2.75       (0.47 )      to        (2.41 ) 

12/31/2014

      83,916,301        10.07        to        1.06        142,447,050        2.18       0.75       to        2.75       4.50       to        2.46  

12/31/2013

      85,631,756        1.05        to        1.04        103,432,773        1.87       0.75       to        2.75       (2.89 )      to        (4.78 ) 

American Funds - Growth Class 2 Shares

 

     

12/31/2017

      67,452,645        18.83        to        12.29        442,900,974        0.53       0.60       to        2.95       27.34       to        24.63  

12/31/2016

      68,512,929        14.77        to        1.85        301,070,692        0.84       0.75       to        2.60       8.67       to        6.72  

12/31/2015

      69,343,957        13.59        to        1.74        241,712,021        0.67       0.75       to        2.60       6.06       to        4.15  

12/31/2014

      65,675,816        12.81        to        1.67        174,197,876        0.95       0.75       to        2.60       7.70       to        5.76  

12/31/2013

      61,017,259        1.32        to        1.58        116,392,175        1.03       0.75       to        2.60       29.13       to        26.81  

American Funds - Growth-Income Class 2 Shares

 

     

12/31/2017

      60,250,249        17.87        to        11.76        420,162,453        1.48       0.60       to        2.95       21.47       to        18.89  

12/31/2016

      60,127,114        14.69        to        1.81        308,892,051        1.61       0.75       to        2.60       10.69       to        8.70  

12/31/2015

      56,995,196        13.27        to        1.66        236,097,115        1.44       0.75       to        2.60       0.70       to        (1.12 ) 

12/31/2014

      55,861,390        13.18        to        1.68        180,173,950        1.59       0.75       to        2.60       9.81       to        7.83  

12/31/2013

      47,215,255        1.41        to        1.56        93,879,498        1.63       0.75       to        2.60       32.51       to        30.12  

American Funds - International Class 2 Shares

 

     

12/31/2017

      51,454,305        14.00        to        12.84        191,936,131        1.34       0.60       to        2.95       31.16       to        28.37  

12/31/2016

      49,934,063        10.66        to        1.04        129,648,359        1.48       0.75       to        2.60       2.76       to        0.92  

12/31/2015

      54,330,699        10.37        to        1.03        114,935,590        1.62       0.75       to        2.60       (5.24 )      to        (6.95 ) 

12/31/2014

      52,391,548        10.94        to        1.11        94,057,736        1.62       0.75       to        2.60       (3.38 )      to        (5.12 ) 

12/31/2013

      50,035,861        1.10        to        1.17        69,810,558        1.55       0.75       to        2.60       20.73       to        18.55  

 

54

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

BlackRock Basic Value V.I. Class I Shares

 

              

12/31/2017

      7,377,068      $ 2.36        to      $ 10.38      $ 21,702,345        1.54 %      1.25 %      to        2.65 %      6.91 %      to        5.45 % 

12/31/2016

      8,011,814        2.21        to        2.40        22,069,925        1.52       1.25       to        2.30       16.73       to        15.54  

12/31/2015

      8,817,241        1.89        to        2.07        20,857,527        1.42       1.25       to        2.30       (7.11 )      to        (8.07 ) 

12/31/2014

      11,168,612        2.04        to        2.26        28,532,280        1.38       1.25       to        2.30       8.57       to        7.46  

12/31/2013

      12,781,068        1.88        to        2.10        30,389,242        1.44       1.25       to        2.30       36.37       to        34.97  

BlackRock Global Allocation V.I. Class I Shares

 

              

12/31/2017

      6,135,012        2.99        to        11.05        13,086,962        1.26       1.25       to        2.65       12.46       to        10.93  

12/31/2016

      7,054,931        2.66        to        2.61        13,393,563        1.25       1.25       to        2.30       2.83       to        1.78  

12/31/2015

      7,842,563        2.58        to        2.57        14,520,562        1.04       1.25       to        2.30       (1.94 )      to        (2.94 ) 

12/31/2014

      10,125,330        2.63        to        2.64        19,447,094        2.05       1.25       to        2.30       0.85       to        (0.19 ) 

12/31/2013

      11,656,814        2.61        to        2.65        22,385,439        1.15       1.25       to        2.30       13.34       to        12.18  

BlackRock High Yield V.I. Class I Shares

 

                          

12/31/2017

      1,762,477        2.59        to        10.48        4,411,875        5.18       1.25       to        2.65       6.00       to        4.56  

12/31/2016

      2,044,390        2.44        to        1.99        4,838,768        5.46       1.25       to        2.30       11.52       to        10.38  

12/31/2015

      2,441,830        2.19        to        1.80        5,188,905        5.10       1.25       to        2.30       (4.77 )      to        (5.74 ) 

12/31/2014

      3,187,284        2.30        to        1.91        7,122,273        5.37       1.25       to        2.30       1.62       to        0.58  

12/31/2013

      3,709,697        2.26        to        1.90        8,168,931        5.90       1.25       to        2.30       7.99       to        6.88  

Catalyst Dividend Capture VA

 

                          

12/31/2017

      1,280,691        9.63        to        9.51        1,769,682        3.17       1.25       to        2.50       (2.85 )      to        (3.80 ) 

12/31/2016

      1,558,996        1.43        to        1.30        2,218,052        4.61       1.30       to        2.30       5.60       to        4.57  

12/31/2015

      1,735,947        1.35        to        1.25        2,340,269        4.11       1.30       to        2.30       (4.30 )      to        (5.24 ) 

12/31/2014

      2,178,735        1.41        to        1.32        3,069,679        4.32       1.30       to        2.30       8.75       to        7.68  

12/31/2013

      3,214,274        1.30        to        1.22        4,166,880        3.17       1.30       to        2.30       18.42       to        17.27  

Catalyst Insider Buying VA

 

                          

12/31/2017

      1,462,179        11.45        to        11.31        2,476,679        0.54       1.25       to        2.50       16.01       to        14.88  

12/31/2016

      1,753,688        1.47        to        1.34        2,561,942        0.64       1.30       to        2.30       9.58       to        8.52  

12/31/2015

      1,940,602        1.34        to        1.24        2,588,982        0.51       1.30       to        2.30       (8.36 )      to        (9.25 ) 

12/31/2014

      2,714,936        1.46        to        1.36        3,951,760        0.42       1.30       to        2.30       (3.32 )      to        (4.27 ) 

12/31/2013

      3,253,720        1.51        to        1.42        4,902,232        0.34       1.30       to        2.30       30.23       to        28.96  

Fidelity® VIP Balanced Service Class 2

 

                          

12/31/2017

      147,985,403        1.92        to        11.24        382,158,570        1.28       0.30       to        2.65       15.77       to        13.13  

12/31/2016

      161,273,927        1.66        to        1.38        336,960,896        1.26       0.30       to        2.45       6.66       to        4.43  

12/31/2015

      159,318,959        1.56        to        1.32        299,484,731        1.43       0.30       to        2.45       0.06       to        (2.04 ) 

12/31/2014

      146,071,274        1.56        to        1.35        250,216,054        1.51       0.30       to        2.45       9.69       to        7.39  

12/31/2013

      129,108,936        1.42        to        1.26        181,860,843        1.44       0.30       to        2.45       18.93       to        16.43  

Fidelity® VIP Contrafund® Initial Class

 

             

12/31/2017

      79,806        2.19        to        11.66        258,065        0.91       0.30       to        2.70       21.51       to        20.67  

12/31/2016

      113,495        1.80        to        1.57        431,681        0.73       0.30       to        1.00       7.68       to        6.93  

12/31/2015

      201,666        1.67        to        1.47        716,924        1.05       0.30       to        1.00       0.37       to        (0.33 ) 

12/31/2014

      215,716        1.67        to        1.47        798,211        0.87       0.30       to        1.00       11.61       to        10.83  

12/31/2013

      263,301        1.49        to        1.33        875,305        1.72       0.30       to        1.00       30.89       to        29.99  

Fidelity® VIP Contrafund® Service Class 2

 

                      

12/31/2017

      148,094,555        2.62        to        11.68        579,167,529        0.78       0.30       to        2.80       21.22       to        18.29  

12/31/2016

      158,259,292        2.16        to        1.41        476,359,703        0.64       0.30       to        2.30       7.41       to        5.31  

12/31/2015

      172,144,924        2.01        to        1.34        449,859,068        0.80       0.30       to        2.30       0.11       to        (1.84 ) 

12/31/2014

      198,325,170        2.01        to        1.36        465,848,417        0.81       0.30       to        2.30       11.32       to        9.14  

12/31/2013

      196,958,822        1.81        to        1.25        377,299,296        0.88       0.30       to        2.30       30.56       to        28.01  

Fidelity® VIP Equity-Income Initial Class

 

                       

12/31/2017

      24,406        1.68        to        10.82        43,356        1.50       0.30       to        2.70       12.56       to        11.78  

12/31/2016

      38,845        1.49        to        1.61        61,069        2.28       0.30       to        1.00       17.67       to        16.85  

12/31/2015

      52,261        1.27        to        1.38        70,747        3.01       0.30       to        1.00       (4.25 )      to        (4.92 ) 

12/31/2014

      63,434        1.33        to        1.45        89,679        2.89       0.30       to        1.00       8.39       to        7.64  

12/31/2013

      64,315        1.22        to        1.35        84,226        2.26       0.30       to        1.00       27.76       to        26.88  

 

55

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Fidelity® VIP Equity-Income Service Class 2

 

                          

12/31/2017

      23,845,141      $ 2.13        to      $ 10.84      $ 48,184,382        1.46 %      0.30 %      to        2.80 %      12.31 %      to        9.59 % 

12/31/2016

      27,073,880        1.90        to        1.25        49,230,256        2.09       0.30       to        2.30       17.36       to        15.07  

12/31/2015

      30,565,159        1.62        to        1.09        47,923,174        2.74       0.30       to        2.30       (4.52 )      to        (6.39 ) 

12/31/2014

      38,349,894        1.70        to        1.16        63,824,949        2.52       0.30       to        2.30       8.16       to        6.04  

12/31/2013

      44,412,638        1.57        to        1.09        69,246,230        2.24       0.30       to        2.30       27.45       to        24.95  

Fidelity® VIP Growth Initial Class

 

                             

12/31/2017

      8,594        2.49        to        12.90        18,642        0.23       0.30       to        2.70       34.73       to        33.80  

12/31/2016

      12,155        1.85        to        1.61        19,555        0.03       0.30       to        1.00       0.50       to        (0.19 ) 

12/31/2015

      25,199        1.84        to        1.61        40,557        0.26       0.30       to        1.00       6.85       to        6.11  

12/31/2014

      25,431        1.72        to        1.52        38,477        0.19       0.30       to        1.00       10.96       to        10.20  

12/31/2013

      25,647        1.55        to        1.38        35,124        0.20       0.30       to        1.00       35.93       to        34.99  

Fidelity® VIP Growth Service Class 2

 

                             

12/31/2017

      19,553,603        2.79        to        12.94        40,016,140        0.08       0.30       to        2.80       34.41       to        31.16  

12/31/2016

      22,172,573        2.08        to        1.37        34,319,380        —         0.30       to        2.30       0.25       to        (1.71 ) 

12/31/2015

      25,975,749        2.07        to        1.40        40,617,613        0.03       0.30       to        2.30       6.58       to        4.50  

12/31/2014

      32,507,157        1.94        to        1.34        48,200,149        —         0.30       to        2.30       10.68       to        8.52  

12/31/2013

      37,005,028        1.76        to        1.23        50,162,145        0.04       0.30       to        2.30       35.59       to        32.94  

Fidelity® VIP Growth Opportunities  Service Class 2

 

                          

12/31/2017

      1,207,203        13.12        to        12.92        2,711,713        0.11       1.25       to        2.80       32.53       to        30.53  

12/31/2016

      1,186,013        1.83        to        1.32        1,992,681        0.05       1.25       to        1.75       (1.17 )      to        (1.65 ) 

12/31/2015

      1,281,973        1.85        to        1.34        2,179,017        0.00       1.25       to        1.75       4.04       to        3.53  

12/31/2014

      1,532,255        1.78        to        1.30        2,517,712        0.01       1.25       to        1.75       10.57       to        10.02  

12/31/2013

      1,760,793        1.61        to        1.18        2,628,111        0.05       1.25       to        1.75       35.84       to        35.18  

Fidelity® VIP Mid Cap Initial Class

 

                             

12/31/2017

      41,922        2.26        to        11.50        108,346        0.70       0.30       to        2.70       20.45       to        19.61  

12/31/2016

      21,135        1.88        to        1.46        52,280        0.50       0.30       to        1.00       11.90       to        11.12  

12/31/2015

      24,745        1.68        to        1.31        51,157        0.42       0.30       to        1.00       (1.68 )      to        (2.37 ) 

12/31/2014

      31,431        1.71        to        1.34        59,307        0.26       0.30       to        1.00       5.97       to        5.23  

12/31/2013

      31,222        1.61        to        1.28        48,484        0.53       0.30       to        1.00       35.82       to        34.88  

Fidelity® VIP Mid Cap Service Class 2

 

                             

12/31/2017

      84,005,052        2.79        to        11.57        374,376,908        0.49       0.30       to        2.80       20.18       to        17.26  

12/31/2016

      89,788,590        2.32        to        1.48        316,226,522        0.32       0.30       to        2.30       11.59       to        9.41  

12/31/2015

      98,025,909        2.08        to        1.35        298,255,903        0.24       0.30       to        2.30       (1.92 )      to        (3.84 ) 

12/31/2014

      114,999,325        2.12        to        1.41        345,744,918        0.02       0.30       to        2.30       5.71       to        3.65  

12/31/2013

      124,383,437        2.01        to        1.36        334,770,485        0.29       0.30       to        2.30       35.46       to        32.82  

Fidelity® VIP Value Strategies Initial Class

 

                          

12/31/2017

      86,820        1.82        to        11.36        330,169        1.51       0.30       to        2.50       19.00       to        18.17  

12/31/2016

      45,032        1.53        to        1.48        187,030        1.43       0.30       to        1.00       9.30       to        8.54  

12/31/2015

      47,767        1.40        to        1.37        89,494        1.13       0.30       to        1.00       (3.28 )      to        (3.95 ) 

12/31/2014

      46,549        1.45        to        1.42        104,026        1.15       0.30       to        1.00       6.48       to        5.73  

12/31/2013

      45,742        1.36        to        1.35        84,623        1.04       0.30       to        1.00       30.10       to        29.20  

Fidelity® VIP Value Strategies Service Class 2

 

                          

12/31/2017

      44,994,998        2.39        to        11.45        149,707,366        1.23       0.30       to        2.80       18.73       to        15.85  

12/31/2016

      48,667,743        2.02        to        1.31        128,230,984        0.93       0.30       to        2.30       8.95       to        6.82  

12/31/2015

      53,699,682        1.85        to        1.23        124,591,778        0.85       0.30       to        2.30       (3.48 )      to        (5.37 ) 

12/31/2014

      63,993,977        1.92        to        1.30        144,232,335        0.84       0.30       to        2.30       6.19       to        4.12  

12/31/2013

      67,754,937        1.80        to        1.25        134,957,220        0.73       0.30       to        2.30       29.79       to        27.26  

Franklin Founding Funds Allocation Class 4 Shares

 

                          

12/31/2017

      50,313,685        1.50        to        10.81        104,865,929        2.55       0.60       to        2.80       11.12       to        8.74  

12/31/2016

      59,149,514        1.35        to        1.76        112,099,678        3.70       0.60       to        2.60       12.25       to        10.07  

12/31/2015

      67,682,365        1.20        to        1.60        115,509,798        2.72       0.60       to        2.60       (6.80 )      to        (8.62 ) 

12/31/2014

      80,598,108        1.29        to        1.75        149,122,631        2.72       0.60       to        2.60       2.14       to        0.15  

12/31/2013

      93,477,182        1.26        to        1.75        171,063,034        10.55       0.60       to        2.60       22.94       to        20.55  

 

56

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Franklin Income Class 2 Shares

 

                          

12/31/2017

      51,870,302      $ 1.51        to      $ 10.66      $ 76,044,090        4.16 %      1.00 %      to        2.80 %      8.59 %      to        6.69 % 

12/31/2016

      61,395,564        1.39        to        1.23        83,312,836        5.07       1.00       to        2.30       12.90       to        11.47  

12/31/2015

      74,138,690        1.23        to        1.10        89,472,772        4.62       1.00       to        2.30       (7.97 )      to        (9.14 ) 

12/31/2014

      95,658,242        1.34        to        1.22        125,848,593        4.99       1.00       to        2.30       3.58       to        2.26  

12/31/2013

      108,189,372        1.29        to        1.19        138,042,260        6.43       1.00       to        2.30       12.81       to        11.38  

Franklin Mutual Shares Class 2 Shares

 

                             

12/31/2017

      12,176,476        1.43        to        10.45        17,081,386        2.20       1.00       to        2.80       7.28       to        5.40  

12/31/2016

      13,977,761        1.34        to        1.18        18,358,702        1.99       1.00       to        2.30       14.91       to        13.46  

12/31/2015

      15,954,729        1.16        to        1.04        18,306,795        2.83       1.00       to        2.30       (5.88 )      to        (7.07 ) 

12/31/2014

      21,834,462        1.23        to        1.12        26,638,380        2.00       1.00       to        2.30       6.06       to        4.71  

12/31/2013

      24,724,453        1.16        to        1.07        28,581,308        2.06       1.00       to        2.30       26.99       to        25.38  

Franklin Templeton Foreign Class 2 Shares

 

                             

12/31/2017

      29,509,124        1.16        to        11.34        32,841,409        2.59       1.00       to        2.80       15.54       to        13.52  

12/31/2016

      33,720,848        1.00        to        0.89        32,654,219        1.95       1.00       to        2.30       6.12       to        4.77  

12/31/2015

      38,972,850        0.95        to        0.85        35,741,459        3.22       1.00       to        2.30       (7.42 )      to        (8.60 ) 

12/31/2014

      49,701,555        1.02        to        0.93        49,421,163        1.89       1.00       to        2.30       (12.01 )      to        (13.13 ) 

12/31/2013

      57,209,468        1.16        to        1.07        64,992,850        2.37       1.00       to        2.30       21.75       to        20.21  

Invesco V.I. American Franchise Series II Shares

 

                          

12/31/2017

      3,978,534        1.96        to        12.17        7,305,661        —         0.30       to        2.80       26.65       to        23.58  

12/31/2016

      4,459,627        1.55        to        1.41        6,543,470        —         0.30       to        2.30       1.71       to        (0.27 ) 

12/31/2015

      5,078,250        1.52        to        1.42        7,414,245        —         0.30       to        2.30       4.44       to        2.39  

12/31/2014

      6,712,184        1.46        to        1.38        9,493,323        —         0.30       to        2.30       7.85       to        5.74  

12/31/2013

      8,029,737        1.35        to        1.31        10,656,379        0.25       0.30       to        2.30       39.38       to        36.65  

Janus Henderson - Enterprise Service  Shares

 

                             

12/31/2017

      9,702,261        3.57        to        12.16        22,591,758        0.54       0.30       to        2.80       26.71       to        23.64  

12/31/2016

      10,584,742        2.82        to        1.78        19,751,582        0.71       0.30       to        2.30       11.77       to        9.59  

12/31/2015

      11,696,584        2.52        to        1.62        19,764,226        0.74       0.30       to        2.30       3.46       to        1.43  

12/31/2014

      14,698,057        2.43        to        1.60        24,097,729        0.03       0.30       to        2.30       11.91       to        9.72  

12/31/2013

      16,708,779        2.18        to        1.46        24,789,340        0.37       0.30       to        2.30       31.64       to        29.07  

Janus Henderson - Global Research Service  Shares

 

                          

12/31/2017

      21,574,448        2.01        to        12.20        29,147,018        0.68       0.30       to        2.80       26.30       to        23.24  

12/31/2016

      23,820,520        1.59        to        1.00        25,804,944        0.94       0.30       to        2.30       1.51       to        (0.47 ) 

12/31/2015

      27,624,966        1.56        to        1.01        29,897,411        0.50       0.30       to        2.30       (2.82 )      to        (4.72 ) 

12/31/2014

      37,018,168        1.61        to        1.06        41,374,871        0.96       0.30       to        2.30       6.86       to        4.77  

12/31/2013

      41,929,396        1.51        to        1.01        44,449,345        1.08       0.30       to        2.30       27.69       to        25.20  

Janus Henderson - Mid Cap Value Service Shares

 

                          

12/31/2017

      1,239,487        11.12        to        10.95        3,228,213        0.64       1.25       to        2.80       12.23       to        10.55  

12/31/2016

      1,278,394        2.41        to        2.22        2,972,307        0.90       1.25       to        1.75       17.30       to        16.73  

12/31/2015

      1,382,062        2.06        to        1.90        2,735,038        1.00       1.25       to        1.75       (4.88 )      to        (5.35 ) 

12/31/2014

      1,766,515        2.16        to        2.01        3,689,741        3.33       1.25       to        1.75       7.10       to        6.57  

12/31/2013

      1,956,635        2.02        to        1.89        3,820,732        1.10       1.25       to        1.75       24.26       to        23.65  

MFS® New Discovery Service Class

 

                          

12/31/2017

      17,571,221        2.87        to        12.14        44,936,194        —         0.30       to        2.80       25.95       to        22.90  

12/31/2016

      20,116,052        2.28        to        1.60        41,335,561        —         0.30       to        2.30       8.47       to        6.36  

12/31/2015

      23,490,980        2.10        to        1.50        45,033,655        —         0.30       to        2.30       (2.44 )      to        (4.35 ) 

12/31/2014

      30,112,422        2.15        to        1.57        59,862,477        —         0.30       to        2.30       (7.77 )      to        (9.58 ) 

12/31/2013

      36,964,451        2.33        to        1.74        80,534,952        —         0.30       to        2.30       40.80       to        38.05  

MFS® Total Return Service Class

 

                          

12/31/2017

      26,624,976        1.97        to        10.85        50,663,588        2.15       0.30       to        2.80       11.69       to        8.98  

12/31/2016

      30,104,493        1.76        to        1.29        51,932,163        2.65       0.30       to        2.30       8.49       to        6.38  

12/31/2015

      34,352,892        1.62        to        1.21        55,241,989        2.24       0.30       to        2.30       (0.88 )      to        (2.82 ) 

12/31/2014

      44,471,420        1.64        to        1.25        73,196,447        1.69       0.30       to        2.30       7.91       to        5.80  

12/31/2013

      51,491,986        1.52        to        1.18        79,265,752        1.63       0.30       to        2.30       18.38       to        16.07  

 

57

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

NVIT Emerging Markets Class D Shares

 

                    

12/31/2017

      1,568      $ 13.86        to      $ 13.56      $ 21,682        0.91 %      0.30 %      to        2.50 %      40.67 %      to        39.98 % 

12/31/2016(1)

      1,907        9.85        to        9.83        18,774        0.83       0.30       to        0.80       —         to        —    

State Street Total Return V.I.S. Class 3 Shares

 

                    

12/31/2017

      29,732,587        13.31        to        11.19        57,477,545        1.77       0.40       to        2.85       14.52       to        12.08  

12/31/2016

      34,109,465        11.59        to        1.25        54,132,289        1.59       0.65       to        2.65       5.40       to        3.35  

12/31/2015

      37,260,511        11.00        to        1.21        55,077,363        1.49       0.65       to        2.65       (1.98 )      to        (3.89 ) 

12/31/2014

      41,034,372        11.22        to        1.26        59,012,874        1.54       0.65       to        2.65       4.40       to        2.36  

12/31/2013

      40,799,489        1.16        to        1.23        53,548,298        1.36       0.65       to        2.65       13.90       to        11.68  

TA AB Dynamic Allocation Initial Class

 

                    

12/31/2017

      11,583,518        1.61        to        10.69        19,894,941        1.73       0.30       to        2.80       9.42       to        6.76  

12/31/2016

      13,620,346        1.48        to        1.50        21,495,544        1.45       0.30       to        2.05       1.92       to        0.18  

12/31/2015

      14,928,873        1.45        to        1.49        23,447,568        1.24       0.30       to        2.05       (0.37 )      to        (2.08 ) 

12/31/2014

      18,258,426        1.45        to        1.53        29,143,207        1.00       0.30       to        2.05       5.24       to        3.44  

12/31/2013

      17,270,135        1.38        to        1.48        26,503,255        1.16       0.30       to        2.05       6.86       to        5.03  

TA AB Dynamic Allocation Service Class

 

                    

12/31/2017

      153,773,203        11.79        to        10.69        324,322,394        1.49       0.20       to        2.65       9.19       to        6.70  

12/31/2016

      181,601,690        1.27        to        1.11        339,898,668        1.25       0.30       to        2.45       1.69       to        (0.44 ) 

12/31/2015

      200,324,935        1.25        to        1.12        346,241,255        1.06       0.30       to        2.45       (0.72 )      to        (2.80 ) 

12/31/2014

      214,985,976        1.26        to        1.15        339,267,725        0.80       0.30       to        2.45       5.04       to        2.84  

12/31/2013

      232,172,788        1.20        to        1.12        321,999,069        0.99       0.30       to        2.45       6.57       to        4.33  

TA Aegon Government Money Market Initial Class

 

                    

12/31/2017

      81,612,286        1.10        to        9.72        89,165,490        0.01       0.30       to        2.80       (0.30 )      to        (2.71 ) 

12/31/2016

      98,022,427        1.10        to        0.88        109,373,936        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2015

      104,356,069        1.11        to        0.90        118,060,897        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2014

      100,630,309        1.11        to        0.92        115,039,216        0.01       0.30       to        2.05       (0.30 )      to        (2.00 ) 

12/31/2013

      115,626,119        1.11        to        0.94        134,398,735        0.01       0.30       to        2.05       (0.29 )      to        (2.00 ) 

TA Aegon Government Money Market Service Class

 

                    

12/31/2017

      167,094,546        9.82        to        9.74        296,558,369        0.01       0.20       to        2.65       (0.44 )      to        (2.57 ) 

12/31/2016

      218,009,250        9.84        to        0.82        383,959,184        0.01       0.45       to        2.45       (0.44 )      to        (2.38 ) 

12/31/2015

      239,832,076        9.88        to        0.84        383,764,535        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

12/31/2014

      234,252,333        9.93        to        0.86        345,246,865        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

12/31/2013

      233,587,476        0.99        to        0.88        313,266,679        0.01       0.45       to        2.45       (0.44 )      to        (2.39 ) 

TA Aegon High Yield Bond Initial Class

 

                    

12/31/2017

      36,693,553        2.18        to        10.50        82,935,784        5.86       0.30       to        2.80       7.12       to        4.52  

12/31/2016

      40,104,822        2.03        to        2.05        85,399,506        6.01       0.30       to        2.05       15.00       to        13.03  

12/31/2015

      42,484,816        1.77        to        1.82        79,539,458        5.83       0.30       to        2.05       (4.51 )      to        (6.15 ) 

12/31/2014

      51,869,537        1.85        to        1.94        102,904,592        5.51       0.30       to        2.05       3.67       to        1.89  

12/31/2013

      59,560,153        1.78        to        1.90        114,989,061        5.61       0.30       to        2.05       6.28       to        4.46  

TA Aegon High Yield Bond Service Class

 

                    

12/31/2017

      40,594,624        11.92        to        10.49        157,652,721        5.44       0.20       to        2.65       6.25       to        4.45  

12/31/2016

      44,271,533        11.15        to        1.49        155,587,458        5.98       0.90       to        2.30       13.97       to        12.42  

12/31/2015

      46,396,791        9.78        to        1.33        137,023,573        5.96       0.90       to        2.30       (5.16 )      to        (6.45 ) 

12/31/2014

      51,566,530        10.31        to        1.42        132,109,914        5.60       0.90       to        2.30       2.68       to        1.28  

12/31/2013

      62,948,842        1.62        to        1.40        147,133,548        5.62       1.00       to        2.30       5.28       to        3.94  

TA Aegon U.S. Government Securities Initial Class

 

                    

12/31/2017

      40,571,556        1.48        to        10.04        65,046,767        3.69       0.30       to        2.80       2.35       to        (0.13 ) 

12/31/2016

      46,351,895        1.44        to        1.27        73,562,770        0.65       0.30       to        2.05       0.00       to        (1.71 ) 

12/31/2015

      44,340,913        1.44        to        1.29        71,113,835        2.10       0.30       to        2.05       (0.20 )      to        (1.91 ) 

12/31/2014

      53,809,524        1.45        to        1.32        87,871,181        3.98       0.30       to        2.05       4.34       to        2.55  

12/31/2013

      56,147,152        1.39        to        1.28        88,308,492        2.18       0.30       to        2.05       (2.53 )      to        (4.20 ) 

 

58

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Aegon U.S. Government Securities Service Class

 

                 

12/31/2017

      90,224,835      $ 10.11        to      $ 10.02      $ 198,887,348        2.79 %      0.20 %      to        2.80 %      2.05 %      to        (0.42 )% 

12/31/2016

      139,466,169        1.27        to        1.05        384,537,007        0.43       0.30       to        2.45       (0.16 )      to        (2.25 ) 

12/31/2015

      139,372,246        1.27        to        1.08        349,864,588        1.40       0.30       to        2.45       (0.47 )      to        (2.56 ) 

12/31/2014

      117,104,047        1.28        to        1.10        211,171,453        3.42       0.30       to        2.45       4.11       to        1.92  

12/31/2013

      146,722,112        1.23        to        1.08        221,420,439        1.78       0.30       to        2.45       (2.78 )      to        (4.82 ) 

TA American Funds Managed Risk - Balanced Service Class

 

                 

12/31/2017

      57,652,094        11.62        to        10.77        652,612,767        0.63       0.20       to        2.50       14.11       to        11.84  

12/31/2016

      36,223,701        10.16        to        9.83        362,577,579        0.63       0.45       to        2.45       5.94       to        3.87  

12/31/2015(1)

      12,571,779        9.59        to        9.46        119,855,246        —         0.45       to        2.45       —         to        —    

TA Asset Allocation - Conservative Initial Class

 

              

12/31/2017

      95,917,441        1.75        to        10.98        171,462,292        2.09       0.30       to        2.80       12.47       to        9.75  

12/31/2016

      110,451,298        1.56        to        1.51        176,881,894        2.02       0.30       to        2.05       4.31       to        2.53  

12/31/2015

      121,976,152        1.49        to        1.47        189,750,194        2.14       0.30       to        2.05       (2.25 )      to        (3.93 ) 

12/31/2014

      149,407,114        1.53        to        1.53        239,339,037        2.63       0.30       to        2.05       1.88       to        0.14  

12/31/2013

      182,063,673        1.50        to        1.53        289,462,189        3.08       0.30       to        2.05       9.04       to        7.17  

TA Asset Allocation - Conservative Service Class

 

            

12/31/2017

      432,130,521        12.16        to        10.97        1,060,315,451        1.88       0.20       to        2.65       12.06       to        9.67  

12/31/2016

      491,730,606        10.83        to        1.10        1,021,657,645        1.80       0.45       to        2.45       3.84       to        1.82  

12/31/2015

      549,794,223        10.43        to        1.08        1,039,218,010        1.98       0.45       to        2.45       (2.58 )      to        (4.49 ) 

12/31/2014

      626,987,083        10.70        to        1.13        1,091,927,020        2.46       0.45       to        2.45       1.49       to        (0.49 ) 

12/31/2013

      715,012,210        1.13        to        1.14        1,111,348,299        2.92       0.45       to        2.45       8.60       to        6.48  

TA Asset Allocation - Growth Initial Class

 

              

12/31/2017

      138,715,582        2.03        to        12.06        298,478,723        1.44       0.30       to        2.80       24.26       to        21.25  

12/31/2016

      145,360,910        1.64        to        1.64        254,491,186        2.18       0.30       to        2.05       5.76       to        3.95  

12/31/2015

      163,079,906        1.55        to        1.58        273,043,029        1.55       0.30       to        2.05       (2.22 )      to        (3.90 ) 

12/31/2014

      208,960,284        1.58        to        1.64        361,493,975        2.34       0.30       to        2.05       2.42       to        0.67  

12/31/2013

      226,469,806        1.55        to        1.63        387,054,260        1.22       0.30       to        2.05       26.43       to        24.26  

TA Asset Allocation - Growth Service Class

 

              

12/31/2017

      71,714,802        15.08        to        12.06        221,484,340        1.24       0.20       to        2.65       23.82       to        21.17  

12/31/2016

      80,740,471        12.15        to        1.06        184,665,448        1.91       0.45       to        2.30       5.35       to        3.45  

12/31/2015

      96,248,215        11.53        to        1.03        197,157,455        1.43       0.45       to        2.30       (2.55 )      to        (4.32 ) 

12/31/2014

      104,915,264        11.83        to        1.07        203,683,787        2.23       0.45       to        2.30       1.98       to        0.13  

12/31/2013

      112,093,073        1.32        to        1.07        186,689,604        1.03       0.45       to        2.30       25.82       to        23.55  

TA Asset Allocation - Moderate Initial Class

 

                 

12/31/2017

      214,216,713        1.90        to        11.30        416,447,113        1.86       0.30       to        2.80       16.12       to        13.30  

12/31/2016

      237,955,333        1.64        to        1.60        403,302,456        2.19       0.30       to        2.05       5.25       to        3.45  

12/31/2015

      257,314,477        1.56        to        1.55        418,714,217        1.92       0.30       to        2.05       (2.52 )      to        (4.19 ) 

12/31/2014

      330,908,687        1.60        to        1.62        558,320,285        2.22       0.30       to        2.05       2.46       to        0.70  

12/31/2013

      367,006,552        1.56        to        1.61        611,618,677        2.45       0.30       to        2.05       13.16       to        11.22  

TA Asset Allocation - Moderate Service Class

 

                 

12/31/2017

      1,721,740,775        12.95        to        11.29        5,252,747,161        1.65       0.20       to        2.65       15.60       to        13.13  

12/31/2016

      1,901,152,605        11.17        to        1.14        4,884,558,926        1.96       0.45       to        2.45       4.78       to        2.74  

12/31/2015

      2,105,107,064        10.66        to        1.11        5,033,408,915        1.84       0.45       to        2.45       (2.91 )      to        (4.81 ) 

12/31/2014

      2,294,467,597        10.98        to        1.16        5,316,426,982        2.16       0.45       to        2.45       2.15       to        0.16  

12/31/2013

      2,350,061,942        1.18        to        1.16        4,173,835,738        2.36       0.45       to        2.45       12.73       to        10.53  

TA Asset Allocation - Moderate Growth Initial Class

 

                 

12/31/2017

      253,563,185        1.98        to        11.60        524,868,709        1.71       0.30       to        2.80       19.42       to        16.52  

12/31/2016

      272,203,035        1.65        to        1.65        477,491,105        2.03       0.30       to        2.05       6.23       to        4.41  

12/31/2015

      299,130,616        1.56        to        1.58        499,970,785        2.09       0.30       to        2.05       (2.53 )      to        (4.20 ) 

12/31/2014

      379,652,087        1.60        to        1.65        658,335,948        2.68       0.30       to        2.05       2.27       to        0.51  

12/31/2013

      414,888,563        1.56        to        1.64        710,476,313        2.28       0.30       to        2.05       19.03       to        16.99  

 

59

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Asset Allocation - Moderate Growth Service Class

 

                 

12/31/2017

      1,392,455,162      $ 13.90        to      $ 11.59      $ 3,718,610,494        1.52 %      0.20 %      to        2.65 %      18.96 %      to        16.42 % 

12/31/2016

      1,528,662,864        11.66        to        1.15        3,249,120,855        1.78       0.45       to        2.45       5.78       to        3.72  

12/31/2015

      1,697,285,643        11.02        to        1.11        3,272,645,909        1.98       0.45       to        2.45       (2.96 )      to        (4.85 ) 

12/31/2014

      1,876,616,300        11.36        to        1.17        3,454,997,510        2.50       0.45       to        2.45       1.99       to        (0.00 ) 

12/31/2013

      2,079,647,029        1.24        to        1.17        3,503,337,599        2.11       0.45       to        2.45       18.51       to        16.20  

TA Barrow Hanley Dividend Focused Initial Class

 

                 

12/31/2017

      153,385,459        2.17        to        11.21        400,085,233        2.31       0.30       to        2.80       16.08       to        13.27  

12/31/2016

      160,020,752        1.87        to        2.04        363,999,021        2.15       0.30       to        2.05       14.57       to        12.61  

12/31/2015

      174,466,564        1.63        to        1.81        349,809,796        1.81       0.30       to        2.05       (3.88 )      to        (5.53 ) 

12/31/2014

      218,849,432        1.69        to        1.92        461,315,863        1.33       0.30       to        2.05       11.83       to        9.92  

12/31/2013

      238,118,309        1.51        to        1.75        453,761,343        2.30       0.30       to        2.05       29.85       to        27.63  

TA Barrow Hanley Dividend Focused Service Class

 

              

12/31/2017

      54,139,799        16.20        to        11.20        184,816,342        2.18       0.20       to        2.65       15.09       to        13.14  

12/31/2016

      60,943,596        13.98        to        1.25        168,373,821        1.97       0.90       to        2.30       13.57       to        12.02  

12/31/2015

      63,543,533        12.31        to        1.12        145,023,856        1.69       0.90       to        2.30       (4.69 )      to        (5.99 ) 

12/31/2014

      71,214,054        12.92        to        1.19        153,661,743        1.21       0.90       to        2.30       10.93       to        9.42  

12/31/2013

      70,626,332        1.30        to        1.09        121,748,244        2.16       1.00       to        2.30       28.64       to        27.01  

TA BlackRock Equity Smart Beta 100 Service Class

 

                 

12/31/2017

      3,121,438        12.98        to        11.43        39,921,039        0.54       0.20       to        2.50       22.68       to        20.23  

12/31/2016(1)

      2,202,649        10.55        to        10.39        23,122,979        —         0.45       to        2.45       —         to        —    

TA BlackRock Global Allocation Service Class

 

            

12/31/2017

      559,095,448        12.65        to        11.02        1,370,732,763        1.08       0.20       to        2.65       12.99       to        10.57  

12/31/2016

      629,799,019        11.17        to        1.42        1,268,057,537        0.38       0.45       to        2.30       4.09       to        2.22  

12/31/2015

      685,402,691        10.73        to        1.39        1,178,176,425        1.68       0.45       to        2.30       (1.67 )      to        (3.45 ) 

12/31/2014

      759,341,068        10.91        to        1.44        1,227,043,635        1.75       0.45       to        2.30       1.29       to        (0.63 ) 

12/31/2013

      821,637,564        1.18        to        1.45        1,266,112,947        1.12       0.45       to        2.40       13.92       to        11.75  

TA BlackRock Global Allocation Managed Risk - Balanced Service Class

 

              

12/31/2017

      19,095,805        10.70        to        10.64        198,315,259        0.68       0.20       to        2.50       12.00       to        9.77  

12/31/2016

      17,333,758        9.53        to        9.14        162,138,960        2.00       0.45       to        2.45       (0.08 )      to        (2.02 ) 

12/31/2015

      13,579,678        9.54        to        9.33        128,198,295        —         0.45       to        2.45       (3.86 )      to        (5.73 ) 

12/31/2014(1)

      964,927        9.92        to        9.89        9,560,920        —         0.45       to        2.45       —         to        —    

TA BlackRock Global Allocation Managed Risk - Growth Service Class

 

                 

12/31/2017

      19,697,962        10.92        to        11.04        208,532,393        0.65       0.20       to        2.50       17.34       to        15.00  

12/31/2016

      18,505,605        9.28        to        8.90        168,412,121        2.10       0.45       to        2.45       (0.63 )      to        (2.57 ) 

12/31/2015

      16,301,610        9.34        to        9.13        150,650,346        —         0.45       to        2.45       (5.48 )      to        (7.33 ) 

12/31/2014(1)

      1,085,461        9.88        to        9.85        10,712,850        —         0.45       to        2.45       —         to        —    

TA BlackRock Smart Beta 50 Service Class

 

                 

12/31/2017

      5,580,252        11.52        to        10.74        63,218,179        0.74       0.20       to        2.50       12.34       to        10.10  

12/31/2016(1)

      4,130,044        10.23        to        10.08        41,974,799        —         0.45       to        2.45       —         to        —    

TA BlackRock Smart Beta 75 Service Class

 

                 

12/31/2017

      2,206,073        12.13        to        11.07        26,367,946        0.46       0.20       to        2.50       17.44       to        15.10  

12/31/2016(1)

      1,123,248        10.30        to        10.15        11,506,416        —         0.45       to        2.45       —         to        —    

TA BlackRock Tactical Allocation Service Class

 

                 

12/31/2017

      488,544,310        12.88        to        10.86        1,483,799,252        1.46       0.20       to        2.80       11.18       to        8.65  

12/31/2016

      544,782,967        11.55        to        1.34        1,444,210,976        2.31       0.45       to        2.30       4.44       to        2.56  

12/31/2015

      592,846,759        11.06        to        1.31        1,402,475,363        1.75       0.45       to        2.30       (0.57 )      to        (2.37 ) 

12/31/2014

      644,924,677        11.13        to        1.34        1,394,587,714        1.32       0.45       to        2.30       4.60       to        2.71  

12/31/2013

      595,858,562        1.18        to        1.31        1,085,728,107        1.34       0.45       to        2.30       11.84       to        9.82  

 

60

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Clarion Global Real Estate Securities Initial Class

 

                 

12/31/2017

      17,217,524      $ 1.82        to      $ 10.98      $ 45,370,142        3.62 %      0.30 %      to        2.80 %      10.99 %      to        8.30 % 

12/31/2016

      18,463,874        1.64        to        2.35        44,536,161        1.76       0.30       to        2.05       0.32       to        (1.39 ) 

12/31/2015

      20,659,242        1.64        to        2.38        50,028,208        4.17       0.30       to        2.05       (0.90 )      to        (2.60 ) 

12/31/2014

      24,884,480        1.65        to        2.44        61,698,855        1.53       0.30       to        2.05       13.22       to        11.28  

12/31/2013

      25,898,917        1.46        to        2.19        57,062,615        5.48       0.30       to        2.05       3.59       to        1.81  

TA Clarion Global Real Estate Securities Service Class

 

                 

12/31/2017

      32,087,719        11.20        to        10.98        87,690,297        3.23       0.20       to        2.65       10.02       to        8.16  

12/31/2016

      36,306,707        10.11        to        0.98        84,311,623        1.41       0.90       to        2.30       (0.48 )      to        (1.83 ) 

12/31/2015

      42,323,555        10.16        to        1.00        89,462,036        4.08       0.90       to        2.30       (1.76 )      to        (3.10 ) 

12/31/2014

      49,196,924        10.34        to        1.03        92,625,420        1.31       0.90       to        2.30       12.28       to        10.75  

12/31/2013

      42,999,885        1.12        to        0.93        67,513,394        5.20       1.00       to        2.30       2.68       to        1.37  

TA International Equity Index Service Class

 

                 

12/31/2017(1)

      628,764        11.12        to        10.96        6,948,109        —         0.35       to        2.65       —         to        —    

TA International Moderate Growth Initial Class

 

                 

12/31/2017

      68,027        1.42        to        11.76        95,215        1.82       0.30       to        2.50       21.42       to        21.24  

12/31/2016

      69,400        1.17        to        1.15        80,122        2.15       0.30       to        0.45       0.92       to        0.77  

12/31/2015

      68,181        1.16        to        1.15        78,116        1.96       0.30       to        0.45       (1.93 )      to        (2.08 ) 

12/31/2014

      68,194        1.19        to        1.17        79,791        2.28       0.30       to        0.45       (0.77 )      to        (0.92 ) 

12/31/2013

      68,883        1.19        to        1.18        81,344        2.06       0.30       to        0.45       12.38       to        12.21  

TA International Moderate Growth Service Class

 

                 

12/31/2017

      334,110,132        12.51        to        11.85        660,356,626        1.62       0.20       to        2.80       20.93       to        18.17  

12/31/2016

      358,429,603        10.32        to        0.92        551,114,925        1.85       0.45       to        2.45       0.62       to        (1.33 ) 

12/31/2015

      406,136,679        10.26        to        0.93        595,453,089        1.79       0.45       to        2.45       (2.32 )      to        (4.23 ) 

12/31/2014

      425,154,870        10.50        to        0.98        560,090,151        2.11       0.45       to        2.45       (1.23 )      to        (3.16 ) 

12/31/2013

      462,667,833        1.19        to        1.01        540,097,455        1.89       0.45       to        2.45       11.96       to        9.77  

TA Janus Balanced Service Class

 

                 

12/31/2017

      194,033,939        14.27        to        11.29        836,976,066        1.32       0.20       to        2.65       16.21       to        13.73  

12/31/2016

      197,498,662        12.25        to        1.16        687,948,240        1.09       0.45       to        2.30       3.65       to        1.78  

12/31/2015

      192,034,411        11.82        to        1.14        562,408,813        0.84       0.45       to        2.30       (0.33 )      to        (2.13 ) 

12/31/2014

      155,749,876        11.86        to        1.17        351,230,964        0.65       0.45       to        2.30       7.35       to        5.41  

12/31/2013

      134,857,638        1.26        to        1.11        202,083,341        0.79       0.45       to        2.30       18.49       to        16.34  

TA Janus Mid-Cap Growth Initial Class

 

                 

12/31/2017

      43,015,893        2.62        to        12.36        73,761,288        0.10       0.30       to        2.80       28.62       to        25.51  

12/31/2016

      44,776,658        2.04        to        1.64        60,228,303        —         0.30       to        2.05       (2.34 )      to        (4.01 ) 

12/31/2015

      49,518,695        2.09        to        1.71        69,124,473        —         0.30       to        2.05       (5.32 )      to        (6.94 ) 

12/31/2014

      66,529,721        2.20        to        1.84        99,193,842        —         0.30       to        2.05       (0.28 )      to        (1.99 ) 

12/31/2013

      71,916,354        2.21        to        1.87        108,803,629        0.81       0.30       to        2.05       38.72       to        36.35  

TA Janus Mid-Cap Growth Service Class

 

                 

12/31/2017

      21,217,980        14.26        to        12.35        83,552,225        —         0.20       to        2.65       27.59       to        25.42  

12/31/2016

      22,970,554        11.10        to        1.32        63,321,902        —         0.90       to        2.30       (3.18 )      to        (4.49 ) 

12/31/2015

      27,213,018        11.47        to        1.38        68,159,564        —         0.90       to        2.30       (6.11 )      to        (7.39 ) 

12/31/2014

      28,962,016        12.21        to        1.49        69,299,132        —         0.90       to        2.30       (1.15 )      to        (2.50 ) 

12/31/2013

      30,804,833        2.05        to        1.53        66,970,148        0.59       1.00       to        2.30       37.45       to        35.71  

TA Jennison Growth Initial Class

 

                 

12/31/2017

      89,101,540        3.03        to        13.09        207,711,065        0.01       0.30       to        2.80       36.03       to        32.74  

12/31/2016

      95,799,898        2.23        to        1.95        165,555,512        —         0.30       to        2.05       (1.94 )      to        (3.62 ) 

12/31/2015

      108,015,766        2.27        to        2.03        192,227,221        —         0.30       to        2.05       11.07       to        9.16  

12/31/2014

      135,122,880        2.05        to        1.86        218,374,436        —         0.30       to        2.05       9.63       to        7.75  

12/31/2013

      144,329,746        1.87        to        1.72        215,213,377        0.26       0.30       to        2.05       37.29       to        34.94  

 

61

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Jennison Growth Service Class

 

                 

12/31/2017

      23,745,417      $ 19.93        to      $ 13.07      $ 127,186,720        —   %      0.20 %      to        2.65 %      34.82 %      to        32.53 % 

12/31/2016

      23,846,550        14.68        to        1.60        88,426,137        —         0.90       to        2.30       (2.78 )      to        (4.10 ) 

12/31/2015

      29,476,122        15.10        to        1.67        96,681,000        —         0.90       to        2.30       10.12       to        8.61  

12/31/2014

      26,708,592        13.72        to        1.54        67,454,449        —         0.90       to        2.30       8.81       to        7.32  

12/31/2013

      27,380,560        1.80        to        1.44        54,998,264        0.07       1.00       to        2.30       35.94       to        34.21  

TA JPMorgan Core Bond Service Class

 

                 

12/31/2017

      72,762,576        10.60        to        10.12        234,929,539        2.56       0.20       to        2.65       2.96       to        0.76  

12/31/2016

      84,929,968        10.27        to        1.02        225,404,212        1.90       0.45       to        2.30       1.60       to        (0.23 ) 

12/31/2015

      80,427,225        10.10        to        1.03        173,901,984        1.82       0.45       to        2.30       (0.11 )      to        (1.92 ) 

12/31/2014

      83,188,018        10.12        to        1.05        139,476,584        1.77       0.45       to        2.30       4.63       to        2.74  

12/31/2013

      73,167,181        1.07        to        1.02        90,622,618        2.78       0.45       to        2.30       (2.57 )      to        (4.33 ) 

TA JPMorgan Enhanced Index Initial Class

 

                 

12/31/2017

      46,939,835        2.63        to        11.64        127,335,985        0.56       0.30       to        2.80       20.79       to        17.86  

12/31/2016

      46,917,262        2.18        to        1.98        106,614,195        0.41       0.30       to        2.05       11.02       to        9.12  

12/31/2015

      49,201,659        1.96        to        1.82        101,285,585        0.93       0.30       to        2.05       (0.37 )      to        (2.08 ) 

12/31/2014

      56,840,615        1.97        to        1.85        117,249,774        0.81       0.30       to        2.05       13.84       to        11.89  

12/31/2013

      55,031,777        1.73        to        1.66        100,660,653        0.67       0.30       to        2.05       32.12       to        29.86  

TA JPMorgan Enhanced Index Service Class

 

                 

12/31/2017

      12,493,704        17.46        to        11.62        67,683,559        0.41       0.20       to        2.65       19.74       to        17.71  

12/31/2016

      13,075,401        14.48        to        1.47        51,966,255        0.18       0.90       to        2.30       10.13       to        8.63  

12/31/2015

      12,638,230        13.15        to        1.36        39,714,319        0.85       0.90       to        2.30       (1.25 )      to        (2.60 ) 

12/31/2014

      13,180,874        13.32        to        1.39        36,235,761        0.66       0.90       to        2.30       12.95       to        11.41  

12/31/2013

      9,913,185        1.56        to        1.25        20,941,794        0.52       1.00       to        2.30       30.83       to        29.16  

TA JPMorgan Mid Cap Value Service Class

 

                 

12/31/2017

      49,949,595        16.66        to        10.86        234,010,120        0.60       0.20       to        2.80       12.68       to        10.11  

12/31/2016

      52,307,287        14.75        to        2.21        198,647,207        1.97       0.45       to        2.30       13.77       to        11.71  

12/31/2015

      49,562,775        12.96        to        1.98        157,156,789        0.75       0.45       to        2.30       (3.37 )      to        (5.12 ) 

12/31/2014

      51,842,761        13.41        to        2.09        151,741,957        0.60       0.45       to        2.30       14.47       to        12.40  

12/31/2013

      44,759,206        1.49        to        1.85        92,720,076        0.40       0.45       to        2.30       30.88       to        28.51  

TA JPMorgan Tactical Allocation Service Class

 

                 

12/31/2017

      336,938,291        11.96        to        10.57        1,290,836,386        1.59       0.20       to        2.65       8.02       to        5.71  

12/31/2016

      379,479,465        11.05        to        1.10        1,253,888,489        1.15       0.45       to        2.30       3.73       to        1.86  

12/31/2015

      388,440,348        10.65        to        1.08        1,097,074,756        1.14       0.45       to        2.30       (0.85 )      to        (2.64 ) 

12/31/2014

      374,130,018        10.74        to        1.11        825,197,475        0.95       0.45       to        2.30       5.81       to        3.89  

12/31/2013

      375,443,522        1.12        to        1.07        546,988,848        1.04       0.45       to        2.30       4.82       to        2.92  

TA Legg Mason Dynamic Allocation - Balanced Service Class

 

                 

12/31/2017

      240,726,764        11.90        to        1.09        1,134,168,274        1.13       0.20       to        2.50       9.97       to        7.78  

12/31/2016

      290,004,410        10.79        to        1.07        1,174,416,752        1.09       0.45       to        2.05       (1.11 )      to        (2.66 ) 

12/31/2015

      303,800,980        10.91        to        1.10        1,125,801,306        0.92       0.45       to        2.05       (2.51 )      to        (4.04 ) 

12/31/2014

      249,433,962        11.19        to        1.15        738,870,798        0.66       0.45       to        2.05       8.00       to        6.30  

12/31/2013

      197,557,983        1.11        to        1.08        365,842,243        0.23       0.45       to        2.05       8.88       to        7.18  

TA Legg Mason Dynamic Allocation - Growth Service Class

 

                 

12/31/2017

      111,240,123        12.50        to        1.22        502,210,785        0.98       0.20       to        2.50       12.70       to        10.45  

12/31/2016

      132,145,826        11.07        to        1.11        513,884,084        1.03       0.45       to        2.05       (1.43 )      to        (2.97 ) 

12/31/2015

      149,681,980        11.23        to        1.14        528,608,149        0.69       0.45       to        2.05       (3.38 )      to        (4.90 ) 

12/31/2014

      99,859,668        11.62        to        1.20        297,102,967        0.57       0.45       to        2.05       7.69       to        6.00  

12/31/2013

      76,448,745        1.16        to        1.13        144,223,614        0.21       0.45       to        2.05       15.09       to        13.29  

TA Madison Balanced Allocation Service Class

 

                 

12/31/2017

      39,781,670        12.46        to        10.59        111,712,711        1.77       1.15       to        2.50       10.14       to        8.70  

12/31/2016

      41,735,960        11.31        to        1.19        105,012,541        1.84       1.15       to        1.90       4.05       to        3.28  

12/31/2015

      43,365,220        10.87        to        1.15        98,601,791        1.83       1.15       to        1.90       (1.87 )      to        (2.60 ) 

12/31/2014

      44,591,131        11.08        to        1.18        94,800,820        0.69       1.15       to        1.90       4.53       to        3.75  

12/31/2013

      42,293,805        1.15        to        1.14        64,564,165        1.09       1.30       to        1.90       11.90       to        11.24  

 

62

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Madison Conservative Allocation Service Class

 

                 

12/31/2017

      31,298,178      $ 11.37        to      $ 10.39      $ 70,949,339        1.94 %      1.15 %      to        2.50 %      6.98 %      to        5.59 % 

12/31/2016

      34,682,524        10.62        to        1.10        73,017,096        2.05       1.15       to        1.90       2.90       to        2.14  

12/31/2015

      38,496,050        10.32        to        1.08        74,112,509        1.72       1.15       to        1.90       (1.88 )      to        (2.61 ) 

12/31/2014

      41,143,456        10.52        to        1.11        74,746,336        1.32       1.15       to        1.90       3.56       to        2.78  

12/31/2013

      44,440,435        1.09        to        1.08        64,098,730        1.26       1.30       to        1.90       5.49       to        4.87  

TA Madison Diversified Income Service Class

 

                 

12/31/2017

      53,981,023        12.19        to        10.51        130,445,023        1.60       0.20       to        2.50       8.28       to        6.86  

12/31/2016

      55,129,242        11.20        to        1.20        115,967,502        1.32       1.15       to        1.90       5.62       to        4.83  

12/31/2015

      57,334,171        10.60        to        1.14        109,758,408        1.03       1.15       to        1.90       (1.00 )      to        (1.74 ) 

12/31/2014

      59,704,752        10.71        to        1.16        105,588,057        0.70       1.15       to        1.90       4.60       to        3.82  

12/31/2013

      60,053,544        1.14        to        1.12        86,025,931        0.36       1.30       to        1.90       7.82       to        7.18  

TA Managed Risk - Balanced ETF Service Class

 

                 

12/31/2017

      1,473,800,978        12.56        to        11.02        6,047,882,818        1.68       0.20       to        2.80       13.10       to        10.36  

12/31/2016

      1,640,125,949        1.36        to        1.13        5,673,175,806        1.65       0.30       to        2.45       3.44       to        1.28  

12/31/2015

      1,749,801,079        1.31        to        1.11        5,493,942,298        1.28       0.30       to        2.45       (2.06 )      to        (4.12 ) 

12/31/2014

      1,756,579,111        1.34        to        1.16        4,522,734,970        0.95       0.30       to        2.45       4.24       to        2.05  

12/31/2013

      1,613,603,415        1.28        to        1.14        2,666,435,334        1.17       0.30       to        2.45       11.10       to        8.77  

TA Managed Risk - Conservative ETF Service Class

 

                 

12/31/2017

      280,713,603        12.25        to        10.81        771,558,640        1.82       0.20       to        2.80       10.54       to        8.02  

12/31/2016

      324,381,240        11.05        to        1.18        777,003,480        1.61       0.45       to        2.45       3.61       to        1.59  

12/31/2015

      344,902,729        10.67        to        1.17        734,076,985        1.52       0.45       to        2.45       (1.13 )      to        (3.06 ) 

12/31/2014

      363,756,951        10.79        to        1.20        674,485,127        1.28       0.45       to        2.45       4.77       to        2.73  

12/31/2013

      361,224,917        1.12        to        1.17        519,638,980        1.35       0.45       to        2.45       6.99       to        4.90  

TA Managed Risk - Growth ETF Service Class

 

                 

12/31/2017

      1,000,647,147        13.52        to        11.47        2,942,924,332        1.61       0.20       to        2.80       18.12       to        15.25  

12/31/2016

      1,128,966,441        1.36        to        1.13        2,699,674,301        1.61       0.30       to        2.45       4.36       to        2.17  

12/31/2015

      1,301,705,474        1.30        to        1.11        2,828,869,757        1.46       0.30       to        2.45       (3.80 )      to        (5.82 ) 

12/31/2014

      1,447,006,616        1.35        to        1.18        2,857,654,356        1.03       0.30       to        2.45       3.66       to        1.48  

12/31/2013

      1,349,170,047        1.31        to        1.16        2,009,478,549        1.29       0.30       to        2.45       18.43       to        15.94  

TA Market Participation Strategy Service Class

 

                 

12/31/2017

      93,693,820        13.01        to        10.71        434,408,630        0.31       0.20       to        2.50       10.30       to        8.10  

12/31/2016

      112,269,327        11.77        to        1.13        453,011,302        0.16       0.45       to        2.05       3.70       to        2.07  

12/31/2015

      117,968,861        11.35        to        1.11        452,767,371        —         0.45       to        2.05       (3.68 )      to        (5.19 ) 

12/31/2014

      111,054,031        11.78        to        1.17        418,144,147        —         0.45       to        2.05       7.56       to        5.87  

12/31/2013

      82,457,456        1.13        to        1.11        172,219,479        —         0.45       to        2.05       13.78       to        12.00  

TA MFS International Equity Initial Class

 

                 

12/31/2017

      49,776,559        2.04        to        12.43        86,501,729        1.33       0.30       to        2.80       26.87       to        23.79  

12/31/2016

      47,110,409        1.61        to        1.51        65,293,820        1.51       0.30       to        2.05       (0.22 )      to        (1.93 ) 

12/31/2015

      51,016,252        1.61        to        1.54        71,124,446        1.55       0.30       to        2.05       (0.22 )      to        (1.93 ) 

12/31/2014

      56,412,797        1.61        to        1.57        79,559,722        0.95       0.30       to        2.05       (5.46 )      to        (7.08 ) 

12/31/2013

      59,179,818        1.71        to        1.68        88,662,107        1.17       0.30       to        2.05       17.74       to        15.72  

TA MFS International Equity Service Class

 

                 

12/31/2017

      29,599,165        12.95        to        12.41        116,136,840        1.17       0.20       to        2.65       25.85       to        23.72  

12/31/2016

      29,624,976        10.22        to        0.96        84,422,845        1.35       0.90       to        2.30       (1.03 )      to        (2.37 ) 

12/31/2015

      32,894,815        10.33        to        0.99        82,697,711        1.54       0.90       to        2.30       (1.14 )      to        (2.49 ) 

12/31/2014

      29,976,630        10.44        to        1.01        62,827,783        0.83       0.90       to        2.30       (6.26 )      to        (7.54 ) 

12/31/2013

      29,425,992        1.37        to        1.10        52,282,886        1.08       1.00       to        2.30       16.60       to        15.12  

TA Morgan Stanley Capital Growth Initial Class

 

                 

12/31/2017

      42,128,648        3.26        to        13.73        126,618,578        —         0.30       to        2.80       43.17       to        39.70  

12/31/2016

      43,698,169        2.27        to        2.05        92,915,246        —         0.30       to        2.05       (2.56 )      to        (4.22 ) 

12/31/2015

      47,282,114        2.33        to        2.14        104,267,818        —         0.30       to        2.05       11.45       to        9.54  

12/31/2014

      59,235,134        2.09        to        1.96        118,184,347        —         0.30       to        2.05       5.69       to        3.87  

12/31/2013

      63,858,118        1.98        to        1.88        122,190,639        0.68       0.30       to        2.05       47.81       to        45.27  

 

63

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Morgan Stanley Capital Growth Service Class

 

                    

12/31/2017

      14,528,067      $ 21.88        to      $ 13.71      $ 91,705,626        —   %      0.20 %      to        2.65 %      41.99 %      to        39.58 % 

12/31/2016

      13,431,257        15.30        to        1.54        53,195,806        —         0.90       to        2.30       (3.37 )      to        (4.69 ) 

12/31/2015

      15,649,714        15.84        to        1.61        53,335,138        —         0.90       to        2.30       10.45       to        8.95  

12/31/2014

      12,651,656        14.34        to        1.48        34,839,910        —         0.90       to        2.30       4.84       to        3.41  

12/31/2013

      14,630,108        1.74        to        1.43        30,532,381        0.52       1.00       to        2.30       46.42       to        44.56  

TA Multi-Managed Balanced Initial Class

 

                    

12/31/2017

      36,409,215        2.46        to        11.05        91,688,505        0.86       0.30       to        2.80       13.80       to        11.04  

12/31/2016

      35,420,588        2.16        to        2.08        79,027,923        0.97       0.30       to        2.50       7.55       to        5.25  

12/31/2015

      34,089,325        2.01        to        1.98        71,558,086        1.35       0.30       to        2.50       (0.09 )      to        (1.80 ) 

12/31/2014

      34,836,857        2.01        to        2.02        73,575,633        1.41       0.30       to        2.05       10.48       to        8.58  

12/31/2013

      31,688,745        1.82        to        1.86        60,860,817        1.66       0.30       to        2.05       17.74       to        15.72  

TA Multi-Managed Balanced Service Class

 

                    

12/31/2017

      245,736,768        14.56        to        11.03        1,284,175,277        0.79       0.20       to        2.65       13.48       to        10.89  

12/31/2016

      219,709,404        1.82        to        1.53        904,843,654        0.93       0.30       to        2.45       7.32       to        5.07  

12/31/2015

      143,153,566        1.70        to        1.46        347,407,856        1.16       0.30       to        2.45       (0.36 )      to        (2.45 ) 

12/31/2014

      134,975,301        1.71        to        1.49        270,653,285        1.19       0.30       to        2.45       10.17       to        7.86  

12/31/2013

      121,925,978        1.55        to        1.38        209,521,553        1.51       0.30       to        2.45       17.40       to        14.94  

TA Multi-Manager Alternative Strategies Service Class

 

                 

12/31/2017

      166,567        10.46        to        10.17        1,693,399        1.28       0.20       to        2.50       4.29       to        3.05  

12/31/2016

      163,253        10.01        to        9.64        1,601,107        2.52       0.45       to        1.65       1.56       to        0.35  

12/31/2015

      181,063        9.85        to        9.60        1,760,776        0.36       0.45       to        1.65       (6.03 )      to        (7.15 ) 

12/31/2014

      98,872        10.49        to        10.34        1,029,166        0.68       0.45       to        1.65       2.49       to        1.27  

12/31/2013(1)

      3,504        10.23        to        10.21        35,815        —         0.45       to        1.65       —         to        —    

TA PIMCO Tactical - Balanced Service Class

 

                    

12/31/2017

      172,652,804        12.84        to        10.92        628,788,296        0.30       0.20       to        2.65       11.54       to        9.15  

12/31/2016

      192,663,294        11.48        to        1.01        610,151,653        0.29       0.45       to        2.30       4.91       to        3.02  

12/31/2015

      194,833,059        10.95        to        0.98        571,936,975        —         0.45       to        2.30       (2.98 )      to        (4.74 ) 

12/31/2014

      195,521,348        11.28        to        1.03        533,120,857        1.07       0.45       to        2.30       7.35       to        5.41  

12/31/2013

      171,119,545        1.10        to        0.98        288,333,349        0.68       0.45       to        2.30       11.35       to        9.33  

TA PIMCO Tactical - Conservative Service Class

 

                    

12/31/2017

      79,062,157        12.44        to        10.76        282,866,000        1.29       0.20       to        2.65       9.90       to        7.55  

12/31/2016

      87,765,386        11.29        to        0.97        273,382,211        0.41       0.45       to        2.30       4.51       to        2.62  

12/31/2015

      84,100,322        10.80        to        0.94        223,359,365        0.30       0.45       to        2.30       (2.52 )      to        (4.28 ) 

12/31/2014

      72,728,605        11.08        to        0.99        132,338,428        1.23       0.45       to        2.30       8.24       to        6.28  

12/31/2013

      70,134,516        1.07        to        0.93        88,003,434        0.70       0.45       to        2.30       7.67       to        5.72  

TA PIMCO Tactical - Growth Service Class

 

                    

12/31/2017

      89,424,879        13.24        to        11.15        373,518,260        0.40       0.20       to        2.65       14.31       to        11.87  

12/31/2016

      97,932,555        11.55        to        0.97        334,243,979        —         0.45       to        2.30       4.40       to        2.52  

12/31/2015

      99,906,894        11.07        to        0.94        288,604,027        —         0.45       to        2.30       (3.89 )      to        (5.63 ) 

12/31/2014

      77,908,150        11.51        to        1.00        171,846,465        1.80       0.45       to        2.30       5.92       to        4.00  

12/31/2013

      69,528,331        1.14        to        0.96        99,998,339        0.86       0.45       to        2.30       16.28       to        14.18  

TA PIMCO Total Return Initial Class

 

                    

12/31/2017

      108,525,289        1.67        to        10.29        174,652,447        —         0.30       to        2.80       4.57       to        2.04  

12/31/2016

      116,273,391        1.59        to        1.46        181,319,170        2.37       0.30       to        2.05       2.41       to        0.65  

12/31/2015

      125,233,326        1.56        to        1.45        192,941,918        2.51       0.30       to        2.05       0.39       to        (1.33 ) 

12/31/2014

      158,410,090        1.55        to        1.47        245,905,910        1.89       0.30       to        2.05       4.36       to        2.57  

12/31/2013

      186,503,559        1.49        to        1.44        280,476,932        2.07       0.30       to        2.05       (2.84 )      to        (4.50 ) 

TA PIMCO Total Return Service Class

 

                    

12/31/2017

      381,085,363        10.58        to        10.29        803,609,896        —         0.20       to        2.65       4.33       to        1.95  

12/31/2016

      432,200,049        1.34        to        1.11        826,905,164        2.20       0.30       to        2.45       2.17       to        0.03  

12/31/2015

      475,137,309        1.31        to        1.11        833,576,453        2.54       0.30       to        2.45       0.22       to        (1.89 ) 

12/31/2014

      530,733,545        1.31        to        1.13        859,856,281        1.62       0.30       to        2.45       4.03       to        1.84  

12/31/2013

      616,854,993        1.26        to        1.11        867,475,116        2.00       0.30       to        2.45       (3.06 )      to        (5.09 ) 

 

64

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA PineBridge Inflation Opportunities Service Class

 

                 

12/31/2017

      90,816,209      $ 9.48        to      $ 10.12      $ 173,872,830        0.23 %      0.20 %      to        2.65 %      2.67 %      to        0.48 % 

12/31/2016

      101,867,579        9.21        to        0.95        175,347,485        0.58       0.45       to        2.30       3.34       to        1.47  

12/31/2015

      110,195,164        8.91        to        0.94        178,257,154        1.24       0.45       to        2.30       (3.30 )      to        (5.05 ) 

12/31/2014

      121,100,596        9.22        to        0.98        182,242,932        0.29       0.45       to        2.30       2.92       to        1.05  

12/31/2013

      129,606,833        1.02        to        0.97        146,927,777        0.33       0.45       to        2.30       (9.95 )      to        (11.58 ) 

TA ProFunds UltraBear Service Class (OAM)

 

                 

12/31/2017

      325,897,312        0.13        to        6.79        13,176,394        —         0.45       to        2.65       (32.66 )      to        (34.10 ) 

12/31/2016

      557,626,487        0.19        to        0.06        33,857,197        —         0.45       to        2.00       (23.94 )      to        (25.08 ) 

12/31/2015

      406,801,801        0.25        to        0.08        32,809,667        —         0.45       to        2.00       (7.71 )      to        (9.10 ) 

12/31/2014

      204,831,841        0.27        to        0.09        18,066,570        —         0.45       to        2.00       (25.91 )      to        (27.04 ) 

12/31/2013

      150,209,677        0.37        to        0.12        18,076,038        —         0.45       to        2.00       (45.35 )      to        (46.19 ) 

TA QS Investors Active Asset Allocation -  Conservative Service Class

 

                 

12/31/2017

      167,288,266        11.70        to        10.88        413,363,455        1.72       0.20       to        2.65       11.20       to        8.82  

12/31/2016

      201,671,367        10.50        to        1.06        425,136,568        1.26       0.45       to        2.45       2.19       to        0.20  

12/31/2015

      225,250,178        10.27        to        1.05        432,962,686        1.01       0.45       to        2.45       (2.80 )      to        (4.70 ) 

12/31/2014

      245,264,820        10.57        to        1.11        413,140,719        1.06       0.45       to        2.45       3.14       to        1.13  

12/31/2013

      257,252,633        1.12        to        1.09        339,176,868        1.15       0.45       to        2.45       6.59       to        4.51  

TA QS Investors Active Asset Allocation - Moderate Service Class

 

                 

12/31/2017

      433,032,803        12.09        to        11.23        1,515,657,257        1.55       0.20       to        2.65       14.93       to        12.47  

12/31/2016

      492,652,371        10.50        to        1.04        1,448,789,251        1.23       0.45       to        2.50       1.73       to        (0.30 ) 

12/31/2015

      545,348,810        10.32        to        1.04        1,537,126,518        0.97       0.45       to        2.50       (4.71 )      to        (6.61 ) 

12/31/2014

      581,745,788        10.83        to        1.11        1,586,689,643        0.67       0.45       to        2.50       3.15       to        1.29  

12/31/2013

      532,328,826        1.16        to        1.10        928,089,349        0.59       0.45       to        2.30       10.62       to        8.62  

TA QS Investors Active Asset Allocation -  Moderate Growth Service Class

 

              

12/31/2017

      225,073,336        12.63        to        11.67        650,551,880        1.28       0.20       to        2.65       19.77       to        17.21  

12/31/2016

      254,015,317        10.52        to        1.04        591,439,085        1.07       0.45       to        2.30       1.51       to        (0.32 ) 

12/31/2015

      297,221,724        10.37        to        1.04        646,874,469        1.01       0.45       to        2.30       (6.95 )      to        (8.64 ) 

12/31/2014

      328,199,796        11.14        to        1.14        650,876,591        0.77       0.45       to        2.30       2.76       to        0.90  

12/31/2013

      305,459,347        1.23        to        1.13        450,516,479        0.93       0.45       to        2.30       15.99       to        13.89  

TA Small/Mid Cap Value Initial Class

 

                 

12/31/2017

      22,801,173        2.71        to        11.07        135,391,174        1.13       0.30       to        2.80       15.21       to        12.42  

12/31/2016

      24,866,417        2.35        to        3.68        129,843,084        0.78       0.30       to        2.05       20.76       to        18.70  

12/31/2015

      28,487,599        1.94        to        3.10        123,688,215        0.98       0.30       to        2.05       (2.80 )      to        (4.47 ) 

12/31/2014

      35,048,217        2.00        to        3.25        156,210,025        0.77       0.30       to        2.05       4.91       to        3.11  

12/31/2013

      39,773,037        1.91        to        3.15        170,851,041        0.41       0.30       to        2.05       35.91       to        33.58  

TA Small/Mid Cap Value Service Class

 

                 

12/31/2017

      33,142,579        16.83        to        11.05        129,538,718        0.97       0.20       to        2.65       14.23       to        12.29  

12/31/2016

      37,602,330        14.63        to        1.92        111,710,832        0.54       0.90       to        2.30       19.73       to        18.10  

12/31/2015

      37,708,384        12.22        to        1.63        88,569,777        0.81       0.90       to        2.30       (3.60 )      to        (4.92 ) 

12/31/2014

      41,438,730        12.68        to        1.71        91,247,465        0.63       0.90       to        2.30       3.99       to        2.57  

12/31/2013

      42,265,850        1.80        to        1.67        78,397,395        0.31       1.00       to        2.30       34.69       to        32.98  

TA T. Rowe Price Small Cap Initial Class

 

                 

12/31/2017

      45,509,419        3.39        to        11.75        129,784,292        —         0.30       to        2.80       22.02       to        19.07  

12/31/2016

      47,515,529        2.78        to        2.65        112,290,331        —         0.30       to        2.05       10.89       to        8.99  

12/31/2015

      50,302,232        2.51        to        2.43        108,382,266        —         0.30       to        2.05       2.13       to        0.38  

12/31/2014

      59,507,563        2.46        to        2.42        126,270,687        —         0.30       to        2.05       6.23       to        4.41  

12/31/2013

      66,357,693        2.31        to        2.32        133,781,369        0.07       0.30       to        2.05       43.64       to        41.18  

TA T. Rowe Price Small Cap Service Class

 

                 

12/31/2017

      37,785,697        18.43        to        11.74        241,993,274        —         0.20       to        2.65       20.93       to        18.88  

12/31/2016

      40,379,882        15.14        to        1.97        191,512,774        —         0.90       to        2.30       10.01       to        8.51  

12/31/2015

      42,516,500        13.76        to        1.82        166,716,242        —         0.90       to        2.30       1.24       to        (0.14 ) 

12/31/2014

      41,706,081        13.60        to        1.82        141,930,797        —         0.90       to        2.30       5.29       to        3.86  

12/31/2013

      43,650,997        2.20        to        1.75        116,003,107        —         1.00       to        2.30       42.28       to        40.47  

 

65

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

TA Torray Concentrated Growth Initial Class

 

                    

12/31/2017

      41,463,687      $ 2.73        to      $ 11.93      $ 157,200,873        0.38 %      0.30 %      to        2.80 %      24.35 %      to        21.33 % 

12/31/2016

      45,742,580        2.20        to        2.08        141,507,483        0.48       0.30       to        2.05       6.42       to        4.60  

12/31/2015

      50,917,336        2.06        to        1.99        150,665,726        0.52       0.30       to        2.05       (1.87 )      to        (3.55 ) 

12/31/2014

      63,395,151        2.10        to        2.06        191,072,993        0.88       0.30       to        2.05       9.67       to        7.79  

12/31/2013

      70,219,032        1.92        to        1.92        194,713,563        0.97       0.30       to        2.05       32.70       to        30.43  

TA Torray Concentrated Growth Service Class

 

                    

12/31/2017

      9,771,712        16.57        to        11.92        40,766,360        0.15       0.20       to        2.65       23.30       to        21.21  

12/31/2016

      11,214,378        13.35        to        1.45        32,531,628        0.14       0.90       to        2.30       5.52       to        4.09  

12/31/2015

      12,966,791        12.65        to        1.39        32,981,418        0.31       0.90       to        2.30       (2.72 )      to        (4.04 ) 

12/31/2014

      15,772,261        13.00        to        1.45        36,258,952        0.67       0.90       to        2.30       8.76       to        7.28  

12/31/2013

      17,913,730        1.71        to        1.35        34,001,123        0.79       1.00       to        2.30       31.49       to        29.82  

TA TS&W International Equity Initial Class

 

                    

12/31/2017

      40,975,824        1.83        to        11.98        85,535,379        2.19       0.30       to        2.80       22.54       to        19.57  

12/31/2016

      41,696,215        1.49        to        1.56        71,904,972        2.76       0.30       to        2.05       0.78       to        (0.95 ) 

12/31/2015

      44,322,070        1.48        to        1.57        76,568,954        2.98       0.30       to        2.05       1.01       to        (0.72 ) 

12/31/2014

      50,729,871        1.46        to        1.59        87,463,695        2.35       0.30       to        2.05       (5.47 )      to        (7.09 ) 

12/31/2013

      52,989,718        1.55        to        1.71        97,474,795        2.32       0.30       to        2.05       23.97       to        21.85  

TA TS&W International Equity Service Class

 

                    

12/31/2017

      13,819,574        12.94        to        11.96        43,576,774        2.01       0.20       to        2.65       21.56       to        19.50  

12/31/2016

      13,541,992        10.58        to        0.86        34,110,738        2.57       0.90       to        2.30       (0.13 )      to        (1.49 ) 

12/31/2015

      16,788,573        10.59        to        0.87        36,053,774        2.99       0.90       to        2.30       0.13       to        (1.23 ) 

12/31/2014

      15,903,634        10.58        to        0.88        29,124,189        2.20       0.90       to        2.30       (6.23 )      to        (7.51 ) 

12/31/2013

      15,102,094        1.23        to        0.96        25,313,843        2.17       1.00       to        2.30       22.84       to        21.28  

TA U.S. Equity Index Service Class

 

                    

12/31/2017(1)

      1,656,725        11.29        to        11.12        18,585,620        —         0.35       to        2.65       —         to        —    

TA WMC US Growth Initial Class

 

                    

12/31/2017

      139,553,543        2.44        to        12.35        276,903,733        0.42       0.30       to        2.80       28.81       to        25.69  

12/31/2016

      152,376,830        1.89        to        1.36        236,978,354        0.40       0.30       to        2.30       2.50       to        0.50  

12/31/2015

      168,111,201        1.85        to        1.35        257,886,335        0.70       0.30       to        2.30       6.53       to        4.45  

12/31/2014

      206,111,980        1.73        to        1.29        301,151,694        0.88       0.30       to        2.30       10.77       to        8.61  

12/31/2013

      228,609,102        1.56        to        1.19        305,498,682        1.04       0.30       to        2.30       32.07       to        29.49  

TA WMC US Growth Service Class

 

                    

12/31/2017

      28,142,974        18.19        to        12.34        123,555,754        0.21       0.20       to        2.65       27.71       to        25.55  

12/31/2016

      31,337,681        14.15        to        1.26        98,349,420        0.18       0.90       to        2.30       1.62       to        0.24  

12/31/2015

      33,875,319        13.92        to        1.26        96,971,678        0.54       0.90       to        2.30       5.66       to        4.21  

12/31/2014

      32,953,962        13.18        to        1.21        77,258,557        0.70       0.90       to        2.30       9.84       to        8.34  

12/31/2013

      34,571,986        1.37        to        1.11        61,053,692        0.80       1.00       to        2.30       30.82       to        29.16  

Vanguard® Equity Index

 

                    

12/31/2017

      813,744        2.17        to        11.70        3,788,631        1.63       0.30       to        2.50       21.29       to        20.45  

12/31/2016

      411,968        1.79        to        1.74        1,920,746        2.45       0.30       to        1.00       11.48       to        10.70  

12/31/2015

      462,855        1.60        to        1.57        1,852,623        1.41       0.30       to        1.00       0.96       to        0.26  

12/31/2014

      476,937        1.59        to        1.57        948,899        1.65       0.30       to        1.00       13.17       to        12.38  

12/31/2013

      378,998        1.40        to        1.40        578,435        1.71       0.30       to        1.00       31.79       to        30.87  

Vanguard® International

 

                    

12/31/2017

      767,522        1.66        to        13.67        2,310,758        0.93       0.30       to        2.70       42.25       to        41.26  

12/31/2016

      441,335        1.17        to        1.05        1,229,545        1.47       0.30       to        1.00       1.57       to        0.87  

12/31/2015

      426,145        1.15        to        1.04        1,169,229        1.30       0.30       to        1.00       (1.06 )      to        (1.76 ) 

12/31/2014

      390,264        1.16        to        1.06        424,932        1.53       0.30       to        1.00       (6.34 )      to        (6.99 ) 

12/31/2013

      472,637        1.24        to        1.14        538,704        1.42       0.30       to        1.00       22.89       to        22.04  

 

66

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

     At December 31      For the Year Ended December 31  
            Unit Fair Value                   Expense     Total Return***  
            Corresponding to             Investment     Ratio**     Corresponding to  
            Lowest to Highest      Net      Income     Lowest to     Lowest to Highest  

Subaccount

    Units      Expense Ratio      Assets      Ratio*     Highest     Expense Ratio  

Vanguard® Mid-Cap Index

 

                          

12/31/2017

      389,324      $ 2.20        to      $ 11.36      $ 1,395,425        1.05 %      0.30 %      to        2.70 %      18.72 %      to        17.90 % 

12/31/2016

      243,199        1.85        to        1.62        845,838        1.52       0.30       to        1.00       10.78       to        10.01  

12/31/2015

      316,319        1.67        to        1.48        888,668        0.88       0.30       to        1.00       (1.73 )      to        (2.42 ) 

12/31/2014

      249,421        1.70        to        1.51        427,668        0.93       0.30       to        1.00       13.25       to        12.46  

12/31/2013

      230,296        1.50        to        1.35        340,922        1.05       0.30       to        1.00       34.52       to        33.59  

Vanguard® REIT Index

 

                          

12/31/2017

      149,622        1.61        to        10.03        459,283        2.34       0.30       to        2.50       4.46       to        3.74  

12/31/2016

      136,899        1.54        to        1.58        358,742        2.67       0.30       to        1.00       8.03       to        7.28  

12/31/2015

      150,260        1.43        to        1.47        350,033        1.66       0.30       to        1.00       1.92       to        1.21  

12/31/2014

      174,728        1.40        to        1.45        315,866        3.46       0.30       to        1.00       29.72       to        28.82  

12/31/2013

      103,087        1.08        to        1.13        158,694        1.90       0.30       to        1.00       2.03       to        1.32  

Vanguard® Short-Term Investment Grade

 

                          

12/31/2017

      878,234        1.35        to        9.94        2,959,813        1.95       0.30       to        2.70       1.79       to        1.08  

12/31/2016

      1,010,860        1.33        to        1.06        2,717,920        1.92       0.30       to        1.00       2.41       to        1.70  

12/31/2015

      1,147,149        1.30        to        1.04        2,902,363        1.62       0.30       to        1.00       0.82       to        0.12  

12/31/2014

      931,975        1.29        to        1.04        1,468,028        1.79       0.30       to        1.00       1.45       to        0.74  

12/31/2013

      1,376,709        1.27        to        1.03        1,873,277        1.85       0.30       to        1.00       0.78       to        0.08  

Vanguard® Total Bond Market Index

 

                          

12/31/2017

      402,636        1.49        to        10.07        2,099,639        2.30       0.30       to        2.70       3.17       to        2.45  

12/31/2016

      445,728        1.44        to        1.11        1,483,525        2.33       0.30       to        1.00       2.16       to        1.45  

12/31/2015

      544,334        1.41        to        1.09        1,627,599        1.97       0.30       to        1.00       0.03       to        (0.66 ) 

12/31/2014

      581,416        1.41        to        1.10        823,633        2.48       0.30       to        1.00       5.58       to        4.84  

12/31/2013

      650,046        1.34        to        1.05        799,864        3.26       0.30       to        1.00       (2.58 )      to        (3.26 ) 

Voya Global Perspectives Class S Shares

 

                          

12/31/2017

      1,791        10.96        to        10.72        19,638        2.66       1.29       to        2.14       13.25       to        12.29  

12/31/2016

      1,665        9.68        to        9.54        16,121        2.60       1.29       to        2.14       5.19       to        4.30  

12/31/2015(1)

      1,633        9.20        to        9.15        15,028        —         1.29       to        2.14       —         to        —    

Voya Large Cap Value Class S Shares

 

                          

12/31/2017

      94        11.63        to        11.37        1,094        2.26       1.29       to        2.14       11.78       to        10.84  

12/31/2016

      97        10.40        to        10.26        1,006        3.01       1.29       to        2.14       12.13       to        11.18  

12/31/2015(1)

      —          9.28        to        9.23        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Conservative Class S Shares

 

                          

12/31/2017

      —          10.88        to        10.64        —          —         1.29       to        2.14       8.77       to        7.86  

12/31/2016

      —          10.00        to        9.86        —          —         1.29       to        2.14       4.12       to        3.25  

12/31/2015(1)

      —          9.61        to        9.55        —          —         1.29       to        2.14       —         to        —    

Voya Strategic Allocation Moderate Class S Shares

 

                          

12/31/2017

      —          11.26        to        11.01        —          —         1.29       to        2.14       12.83       to        11.88  

12/31/2016

      —          9.98        to        9.84        —          —         1.29       to        2.14       4.96       to        4.07  

12/31/2015(1)

      —          9.51        to        9.45        —          —         1.29       to        2.14       —         to        —    

Wanger International

 

                          

12/31/2017

      108,448        1.67        to        12.85        370,644        1.23       0.30       to        2.50       32.52       to        31.86  

12/31/2016

      141,836        1.26        to        1.13        308,283        1.18       0.30       to        0.80       (1.70 )      to        (2.19 ) 

12/31/2015

      160,087        1.29        to        1.16        318,081        1.51       0.30       to        0.80       (0.20 )      to        (0.70 ) 

12/31/2014

      145,508        1.29        to        1.17        232,919        1.44       0.30       to        0.80       (4.69 )      to        (5.17 ) 

12/31/2013

      218,810        1.35        to        1.23        304,394        2.78       0.30       to        0.80       22.00       to        21.40  

Wanger USA

                                

12/31/2017

      —          2.21        to        11.46        —          —         0.30       to        2.50       19.22       to        18.63  

12/31/2016

      67,832        1.85        to        1.82        177,312        —         0.30       to        0.80       13.35       to        12.78  

12/31/2015

      133,870        1.64        to        1.62        274,445        —         0.30       to        0.80       (0.91 )      to        (1.40 ) 

12/31/2014

      89,393        1.65        to        1.64        204,779        —         0.30       to        0.80       4.47       to        3.95  

12/31/2013

      88,252        1.58        to        1.58        139,724        0.14       0.30       to        0.80       33.35       to        32.69  

 

(1)  See footnote 1

 

67

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

5. Financial Highlights (continued)

 

* These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the Mutual Fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the Mutual Fund in which the subaccounts invest.
** These amounts represent the annualized contract expenses of the subaccount, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the Mutual Fund have been excluded.
*** These amounts represent the total return for the periods indicated, including changes in the value of the Mutual Fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. Total returns reflect a full twelve month period and total returns for subaccounts opened during the year have not been disclosed as they may not be indicative of a full year return. Expense ratios not in effect for the full twelve months are not reflected in the total return as they may not be indicative of a full year return.

 

68

Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

6. Administrative and Mortality and Expense Risk Charges

TLIC 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. TLIC also deducts an annual charge during the accumulation phase, not to exceed $50, proportionately from the subaccounts’ unit values. An annual charge ranging from 0.15% to 2.30% is deducted (based on the death benefit selected) from the unit values of the subaccounts of the Separate Account for TLIC’s assumption of certain mortality and expense risks incurred in connection with the contract. The charge is assessed daily based on the net asset value of the Mutual Fund. Charges for administrative and mortality and expense risk are an expense of the subaccount. Charges reflected above are those currently assessed and may be subject to change. Contract owners should see their actual policy and any related attachments to determine their specific charges.

In addition to M&E, the following subaccounts are assessed a daily charge for fund facilitation fees that is based on their actual policy:

 

     Additional Fund  

Subaccount

    Facilitation Fee Assessed  

AB Balanced Wealth Strategy Class B Shares

      0.20 % 

AB Growth and Income Class B Shares

      0.20 % 

American Funds - Asset Allocation Class 2 Shares

      0.30% - 0.40 %

American Funds - Bond Class 2 Shares

      0.30% - 0.40 % 

American Funds - Growth Class 2 Shares

      0.30% - 0.40 % 

American Funds - Growth-Income Class 2 Shares

      0.30% - 0.40 % 

American Funds - International Class 2 Shares

      0.30% - 0.40 % 

Fidelity® VIP Balanced Service Class 2

      0.20 % 

Fidelity® VIP Contrafund® Initial Class

      0.20 % 

Fidelity® VIP Contrafund® Service Class 2

      0.20 % 

Fidelity® VIP Equity-Income Initial Class

      0.20 % 

Fidelity® VIP Growth Initial Class

      0.20 % 

Fidelity® VIP Mid Cap Initial Class

      0.20 % 

Fidelity® VIP Mid Cap Service Class 2

      0.20 % 

Fidelity® VIP Value Strategies Initial Class

      0.20 % 

Fidelity® VIP Value Strategies Service Class 2

      0.20 % 

Franklin Founding Funds Allocation Class 4 Shares

      0.15 % 

State Street Total Return V.I.S. Class 3 Shares

      0.20 % 

TA International Equity Index Service Class

      0.15 % 

TA U.S. Equity Index Service Class

      0.15 %

Vanguard® Equity Index

      0.20% - 0.60 %

Vanguard® International

      0.20% - 0.60 %

Vanguard® Mid-Cap Index

      0.20% - 0.60 % 

Vanguard® REIT Index

      0.20% - 0.60 %

Vanguard® Short-Term Investment Grade

      0.20% - 0.60 % 

Vanguard® Total Bond Market Index

      0.20% - 0.60 %

Voya Global Perspectives Class S Shares

      0.14 % 

Voya Large Cap Value Class S Shares

      0.14 % 

Voya Strategic Allocation Conservative Class S Shares

      0.14 % 

Voya Strategic Allocation Moderate Class S Shares

      0.14 % 

Wanger International

      0.30 % 

Wanger USA

      0.30 % 

 

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Table of Contents

Transamerica Life Insurance Company

Separate Account VA B

Notes to Financial Statements

December 31, 2017

 

7. Income Tax

Operations of the Separate Account form a part of TLIC, which is taxed as a life insurance company under Subchapter L of the Internal Revenue Code of 1986, as amended (the Code). The operations of the Separate Account are accounted for separately from other operations of TLIC for purposes of federal income taxation. The Separate Account is not separately taxable as a regulated investment company under Subchapter M of the Code and is not otherwise taxable as an entity separate from TLIC. Under existing federal income tax laws, the income of the Separate Account is not taxable to TLIC, as long as earnings are credited under the variable annuity contracts.    

8. Subsequent Events    

The Separate Account has evaluated the financial statements for subsequent events through the date which the financial statements were issued. During this period, there were no subsequent events requiring recognition or disclosure in the financial statements.    

9. Related Parties    

Transamerica Capital, Inc. (“TCI”), a wholesaling broker-dealer, is an affiliated entity of TLIC and an indrect wholly owned subsidiary of AEGON N.V.. TCI distributes TLIC’s products through broker-dealers and other financial intermediaries.    

The subaccounts invest in the mutual funds listed in Footnote 1. These investments include funds managed by Transamerica Asset Management, Inc. (“TAM”). Transamerica Fund Services, Inc. (“TFS”) serves as a transfer agent to TAM, and AEGON USA Asset Management Holding, LLC (“AAM”) serves as a sub-advisor for certain funds managed by TAM. TAM, TFS and AAM are affiliated entities of TLIC and indirect wholly owned subsidiaries of AEGON N.V.. Funds managed by TAM are identified by their fund name, which includes reference to Aegon, Transamerica or both. The Separate Account pays management fees to the related funds as detailed in the fund prospectus.    

No charges other than those disclosed in Footnote 6 are deducted for the service rendered by related parties.    

Contract owners may transfer funds between available subaccount options within the Separate Account. These transfers are performed at unit value at the time of the transfer.    

 

70

Table of Contents
PART C      OTHER INFORMATION
Item 24.      Financial Statements and Exhibits
(a)      Financial Statements
     All required financial statements are included in Part B of this Registration Statement.
(b)      Exhibits:      
     (1)    (a)    Resolution of the Board of Directors of Transamerica Life Insurance Company authorizing establishment of the Separate Account. Note 1
        (b)    Resolution of the Board of Directors of Transamerica Life Insurance Company authorizing the consolidation of the Separate Account. Note 19
     (2)       Not Applicable.
     (3)    (a)    Amended and restated Principal Underwriting Agreement by and between Transamerica Life Insurance Company, on its own behalf and on the behalf of the Separate Account, and Transamerica Capital, Inc. Note 17
        (b)    Form of Broker/Dealer and Sales Agreement. Note 1
     (4)    (a)    Form of Policy. Note 2
        (b)    Form of Policy Rider (Additional Death Distribution). Note 3
        (c)    Form of Policy Endorsement (Initial Payment Guarantee). Note 3
        (d)    Form of Policy Rider (GPS). Note 25
        (e)    Form of Policy Rider (Return of Premium). Note 5
        (f)    Form of Policy Rider (Double Enhanced). Note 6
        (g)    Form of Policy Rider (Annual Step-Up). Note 7
        (h)    Form of Policy Rider (ADD +). Note 4
        (i)    Form of Policy Rider (C-Share Rider). Note 8
        (j)    Form of Policy Rider (Retirement Income Choice ). Note 25
        (k)    Form of Policy Rider (Retirement Income Choice – Double Withdrawal Base Benefit). Note 25
        (l)    Form of Pol.icy Rider (Retirement Income Choice 1.2). Note 25
        (m)    Form of Policy Rider (Retirement Income Choice 1.4). Note 25
        (n)    Form of Policy Rider (Income Link). Note 25
        (o)    Form of Policy Rider (Retirement Income Max). Note 25
        (p)    Form of Policy Rider (Retirement Income Choice 1.6). Note 17
        (q)    Form of Policy. Note 17

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     (5)    (a)    Form of Application. Note 15
        (b)    Form of Application. Note 17
     (6)    (a)    Articles of Incorporation of Transamerica Life Insurance Company. Note 16
        (b)    By-Laws of Transamerica Life Insurance Company. Note 16
     (7)    Reinsurance Agreements. Not applicable.
     (8)    (a)    Participation Agreement (TST). Note 17
        (a)(1)    Amendment No. 1 to Participation Agreement (TST). Note 18
        (a)(2)    Amended Schedule A to Participation Agreement dated September 18, 2013 (TST). Note 21
        (a)(3)    Amended Schedule A to Participation Agreement dated May 1, 2014 (TST). Note 22
        (a)(4)    Amendment No. 2 to Participation Agreement (TST). Note 23
        (a)(5)    Amended Schedule A to Participation Agreement dated May 1, 2015 (TST). Note 25
        (a)(6)    Amended Schedule A to Participation Agreement dated July 1, 2015 (TST). Note 26
        (a)(7)    Amended Schedule A to Participation Agreement dated December 18, 2015 (TST). Note 27
        (a)(8)    Amended Schedule A to Participation Agreement dated March 21, 2016 (TST). Note 27
        (a)(9)    Amended Schedule A to Participation Agreement dated May 1, 2016 (TST). Note 27
        (a)(10)    Amended Schedule A to Participation Agreement dated December 16, 2016 (TST). Note 28
        (a)(11)    Amended Schedule A to Participation Agreement dated May 1, 2017 (TST). Note 29
        (a)(12)    Amended Schedule A to Participation Agreement dated September 29, 2017 (TST). Note 31
     (9)       Opinion and Consent of Counsel. Note 32
     (10)       Consent of Independent Registered Public Accounting Firm. Note 32
     (11)       Not applicable.
     (12)       Not applicable.
     (13)       Powers of Attorney. (Blake S. Bostwick, Eric J. Martin, Mark W. Mullin, Jay Orlandi, David Schulz, C. Michiel van Katwijk) Note 32.

 

  Note 1.       Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-185573) filed on December 20, 2012.
  Note 2       Incorporated herein by reference to Pre-Effective Amendment No. 1 to form N-4 Registration Statement (File No. 333-109580) filed on December 30, 2003.
  Note 3.       Incorporated herein by reference to Post-Effective Amendment No. 25 to form N-4 Registration Statement (File No. 033-33085) filed on April 27, 2001.
  Note 4.       Incorporated herein by reference to Post-Effective Amendment No. 19 to form N-4 Registration Statement (File No. 333-83957) filed on April 27, 2005.
  Note 5.       Incorporated herein by reference to Initial Filing on form N-4 Registration Statement (File No. 333-110049) filed on October 29, 2003.
  Note 6.       Incorporated herein by reference to Post-Effective Amendment No. 2 to form N-4 Registration Statement (File No. 333-131987) filed on September 21, 2007.
  Note 7.       Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-131987) filed on February 22, 2006.
  Note 8.       Incorporated herein by reference to Pre-Effective Amendment No. 1 to form Registration Statement (File No. 333-131987) filed on July 19, 2006.
  Note 9.       Incorporated herein by reference to Post-Effective Amendment No. 22 to form N-4 Registration Statement (File No. 333-83957) filed on September 21, 2007.
  Note 10.       Incorporated herein by reference to Post-Effective Amendment No. 5 to form N-4 Registration Statement (File No. 333-131987) filed on August 14, 2008.
  Note 11.       Incorporated herein by reference to Post-Effective Amendment No. 26 to form N-4 Registration Statement (File No. 333-83957) filed on April 30, 2009.

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   Note 12.       Incorporated herein by reference to Post-Effective Amendment No. 9 to form N-4 Registration Statement (File No. 333-142762) filed on August 31, 2009.
   Note 13.       Incorporated herein by reference to Post-Effective Amendment No. 30 to form N-4 Registration Statement (File No. 333-83957) filed on August 6, 2010.
   Note 14.       Incorporated herein by reference to Post-Effective Amendment No. 32 to form N-4 Registration Statement (File No. 333-83957) filed on April 28, 2011.
   Note 15.       Incorporated herein by reference to Pre-Effective Amendment No. 2 to form N-4 Registration Statement (File No. 333-149336) filed on August 7, 2008.
   Note 16.       Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-169445) filed on September 17, 2010.
   Note 17.       Incorporated herein by reference to Initial Filing to form N-4 Registration Statement (File No. 333-187912) filed on April 15, 2013.
   Note 18.       Incorporated herein by reference to Post-Effective Amendment No. 59 to form N-4 Registration Statement
(File No. 33-33085) filed on August 16, 2013.
   Note 19.       Incorporated herein by reference to the Initial Filing of form N-4 Registration Statement (File No. 333-190757) filed on August 21, 2013.
   Note 20.       Incorporated herein by reference to the Initial Filing of form N-4 Registration Statement (File No. 333-189435) filed on September 11, 2013.
   Note 21.       Incorporated herein by reference to Pre-Effective Amendment No. 2 to form N-4 Registration Statement
(File No. 333-189435) filed on October 2, 2013.
   Note 22.       Incorporated herein by reference to Post-Effective Amendment No. 2 to form N-4 Registration Statement (File No. 333-187912) filed on April 29, 2014.
   Note 23.       Incorporated herein by reference to Post-Effective Amendment No. 67 to form N-4 Registration Statement (File No. 33-56908) filed on December 30, 2014.
   Note 24.       Incorporated herein by reference to Post-Effective Amendment No. 2 to form N-4 Registration Statement (File No. 333-189435) filed on February 19, 2015.
   Note 25.       Incorporated herein by reference to Post-Effective Amendment No. 3 to form N-4 Registration Statement (File No. 333-187912) filed on April 27, 2015.
   Note 26.       Incorporated herein by reference to Post-Effective Amendment No. 4 to form N-4 Registration Statement (File No. 333-186029) filed on October 13, 2015.
   Note 27.       Incorporated herein by reference to Post-Effective Amendment No. 4 to form N-4 Registration Statement (File No. 333-187912) filed on April 25, 2016.
   Note 28.       Incorporated herein by reference to the Initial Filing to form N-4 Registration Statement (File No. 333-215598) filed on January 18, 2017.
   Note 29.       Incorporated herein by reference to Post-Effective Amendment No. 9 to form N-4 Registration Statement (File No. 333-185573) filed on April 24, 2017.
   Note 30.       Incorporated herein by reference to Post-Effective Amendment No. 5 to form N-4 Registration Statement (File No. 333-187912) filed on April 26, 2017.
   Note 31.       Incorporated herein by reference to Post-Effective Amendment No. 10 to form N-4 Registration Statement (File No. 333-185573) filed on April 30, 2018.
   Note 32.       Filed herewith.

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Item 25. Directors and Officers of the Depositor (Transamerica Life Insurance Company)

 

Name and Business Address

  

Principal Positions and Offices with Depositor

Blake S. Bostwick

1801 California St. Suite 5200

Denver, CO 80202

   Director and President

Eric J. Martin

4333 Edgewood Road, N.E.

Cedar Rapids, IA 52499-0001

   Controller, Senior Vice President and Assistant Treasurer

Mark W. Mullin

100 Light Street

Baltimore, MD 21202

   Director and Chairman of the Board

Jay Orlandi

100 Light Street

Baltimore, MD 21202

   Director, Executive Vice President, Secretary and General Counsel

David Schulz

4333 Edgewood Road, N.E.

Cedar Rapids, IA 52499

   Director, Chief Tax Officer, and Senior Vice President

C. Michiel van Katwijk

100 Light Street

Baltimore, MD 21202

   Director, Executive Vice President, Chief Financial Officer and Treasurer

Table of Contents

Item 26. Persons Controlled by or under Common Control with the Depositor or Registrant.

As of December 31, 2017, the following pages shows all corporations directly or indirectly controlled or under common control, with the Depositor, showing the state or other sovereign power under the laws of which each is organized and the percentage ownership of voting securities giving rise to the control relationship.

 

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
AEGON Affordable Housing Debt Fund I, LLC   Delaware  

Members: AHDF Manager I, LLC (0.01%), Mangaging Member; Transamerica Life Insurance Company (5%); non-AEGON affiliates: Dominium Taxable Fund I, LLC (94.99%)

 

   Affordable housing loans
Aegon Affordable Housing Debt Fund II, LLC   Delaware  

Members: Manager Member - AHDF Manager II, LLC (0.01%); Transamerica Life Insurance Company (99.99%)

 

   Affordable housing loans
AEGON AM Funds, LLC   Delaware  

AEGON USA Investment Management, LLC is the Manager; equity will be owned by clients/investors of AEGON USA Investment Management, LLC

 

   To serve as a fund for a client and offer flexilbility to accommodate other similarly situated clients.
AEGON Asset Management Services, Inc.   Delaware  

100% AUSA Holding, LLC

 

   Registered investment advisor
Aegon Community Investments 50, LLC   Delaware  

Members: Aegon Community Investments 50, LLC (0.10%); Transamerica Financial Life Insurance Company (25.49750%); Transamerica Premier Life Insurance Company (25.49750%); non-AEGON affiliate, Citibank, N.A. (48.9950%)

 

   Investments
Aegon Community Investments 51, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 52, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 53, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 54, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Aegon Community Investments 55, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
AEGON Direct Marketing Services, Inc.   Maryland  

Transamerica Premier Life Insurance Company owns 103,324 shares; Commonwealth General Corporation owns 37,161 shares

 

   Marketing company
AEGON Direct Marketing Services International, LLC   Maryland  

100% AUSA Holding, LLC

 

  

Marketing arm for sale of mass marketed insurance coverage

 

AEGON Direct Marketing Services Mexico,

S.A. de C.V.

   Mexico  

100% AEGON DMS Holding B.V.

 

  

Provide management advisory and technical consultancy services.

 

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Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
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 Financial Services Group, Inc.   Minnesota  

100% Transamerica Life Insurance Company

 

   Marketing
AEGON Funding Company, LLC.   Delaware   Sole Member: Transamerica Corporation  

Issue debt securities-net proceeds used to make loans to affiliates

 

Aegon Global Services, LLC   Iowa  

Sole Member: Commonwealth General Corporation

 

   Holding company
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 LIHTC Fund 50, LLC   Delaware  

Members: Aegon Community Investments 50, LLC (0.01%); Transamerica Financial Life Insurance Company (25.49750%); Transamerica Premier Life Insurance Company (25.49750%); non-affiliate of AEGON, Citibank, N.A. (48.9950%)

 

   Investments
Aegon LIHTC Fund 51, LLC   Delaware  

Members: Aegon Community Investments 51, LLC (.01%) as Managing Member; non-affiliate of AEGON, Citibank, N.A. (99.99%)

 

   Investments
Aegon LIHTC Fund 52, LLC   Delaware  

Members: Transamerica Financial Life Insurance Company (49.099490%); Transamerica Life Insurance Company (1%); Managing Member - Aegon Community Investments 52, LLC (0.01%); non-affiliate of AEGON, Citibank, N.A. (48.99510%)

 

   Investments
Aegon LIHTC Fund 54, LLC   Delaware  

Sole Member: Aegon Community Investments 54, LLC

 

   Investments
Aegon LIHTC Fund 55, LLC   Delaware  

Members: Investor Member - Transamerica Premier Life Insurance Company (99.99%); Managing Member - Aegon Community Investments 55, LLC.

 

   Investments
AEGON Managed Enhanced Cash, LLC   Delaware  

Members: Transamerica Life Insurance Company (85.1798%); Transamerica Premier Life Insurance Company (14.8202%)

 

   Investment vehicle for securities lending cash collateral
AEGON Management Company   Indiana  

100% Transamerica Corporation

 

   Holding company
Aegon Multi-Family Equity Fund, LLC   Delaware  

Members: Transamerica Life Insurance Company (63%); Transamerica Financial Life Insurance Company (20%); Transamerica Premier Life Insurance Company (17%)

 

   Investments
AEGON N.V.   Netherlands  

22.446% of Vereniging AEGON Netherlands Membership Association

 

   Holding company
AEGON USA Asset Management Holding, LLC   Iowa  

Sole Member: AUSA Holding, LLC

 

   Holding company

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Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
AEGON USA Investment Management, LLC   Iowa  

Sole Member: 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
AFSG Securities Corporation   Pennsylvania  

100% Commonwealth General Corporation

 

   Inactive
AHDF Manager I, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
AHDF Manager II, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
ALH Properties Eight LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Eleven LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Four LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Nine LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Seven LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Seventeen LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Sixteen LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Ten LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Twelve LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
ALH Properties Two LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
AMFETF Manager, LLC   Delaware  

Sole Member: AEGON USA Realty Advisors, LLC

 

   Investments
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

Table of Contents
Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
AMTAX HOLDINGS 567, LLC   Ohio  

TAHP Fund I, LLC - 100% MEMBER;

TAH Pentagon Funds LLC - non-owner manager

 

   Affordable housing
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  

Sole Member: Garnet LIHTC Fund XXXV, LLC

 

   Affordable housing
AUIM Credit Opportunities Fund, Ltd.   Delaware  

100% AEGON USA Investment Management, LLC

 

   Investment vehicle
AUSA Holding, LLC   Maryland  

Sole Member: 100% Transamerica Corporation

 

   Holding company
AUSA Properties, Inc.   Iowa  

100% AEGON USA Realty Advisors, LLC

 

   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
Barfield Ranch Associates, LLC   Florida  

Members: Mitigation Manager, LLC (50%); non-affiliate of AEGON, OBPFL- Barfield, LLC (50%)

 

   Investments
Bay Area Community Investments I, LP   California  

Partners: 69.995% Transamerica Life Insurance Company; 29.995% Transamerica Premier Life Insurance Company; 0.01% Transamerica Affordable housing, Inc.

 

   Investments in low income housing tax credit properties
Bay State Community Investments I, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments in low income housing tax credit properties
Bay State Community Investments II, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments in low income housing tax credit properties
Carle Place Leasehold SPE, LLC   Delaware  

Sole Member: Transamerica Financial Life Insurance Company

 

   Lease holder
Cedar Funding, Ltd.   Cayman Islands  

100% Transamerica Life Insurance Company

 

   Investments
Commonwealth General Corporation   Delaware  

100% Transamerica Corporation

 

   Holding company

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Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Creditor Resources, Inc.   Michigan  

100% AUSA Holding, LLC

 

   Credit insurance
CRI Solutions Inc.   Maryland  

100% Creditor Resources, Inc.

 

   Sales of reinsurance and credit insurance
Cupples State LIHTC Investors, LLC   Delaware  

Sole Member: Garnet LIHTC Fund VIII, LLC

 

   Investments
FD TLIC, Limited Liability Company   New York  

100% Transamerica Life Insurance Company

 

   Broadway production
FGH Realty Credit LLC   Delaware  

Sole Member: FGH USA, LLC

 

   Real estate
FGH USA LLC   Delaware  

Sole Member: RCC North America LLC

 

   Real estate
FGP 90 West Street LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
FGP West Street LLC   Delaware  

Sole Member: FGP West Mezzanine LLC

 

   Real estate
Fifth FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Financial Planning Services, Inc.  

District of Columbia

 

  

100% Commonwealth General Corporation

 

   Special-purpose subsidiary
Firebird Re Corp.   Arizona  

100% Transamerica Corporation

 

   Captive insurance company
First FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Fourth FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
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  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments III, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Business investments
Garnet Community Investments IV, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments V, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments VI, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments VII, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments VIII, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments IX, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments X, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments XI, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments

Table of Contents
Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Garnet Community Investments XII, LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Investments
Garnet Community Investments XVIII, LLC   Delaware  

Sole Member: 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

 

   Investments
Garnet Community Investments XXV, LLC   Delaware  

Sole Member - Transamerica Life Insurance Company

 

   Investments
Garnet Community Investment XXVI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
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 Community Investments XLIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLIV, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments

Table of Contents
Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Garnet Community Investments XLVI, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLVII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLVIII, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet Community Investments XLIX, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Garnet ITC Fund XLIII, LLC   Delaware  

Members: Garnet Community Investments XLIII, LLC (0%) asset manager: non-affiliate of AEGON, Solar TC Corp. (100%) investor member

 

   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
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 (99.99%); Transamerica Life Insurance Company (0.01%)

 

   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 (99.99%); Transamerica Life Insurance Company (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 (99.99%); Transamerica Life Insurance Company (0.01%)

 

   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  

Members: 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

Table of Contents
Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XII-A, LLC   Delaware  

Members: 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  

Members: 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  

Members: Garnet Community Investments XII, LLC (.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XIII, LLC   Delaware  

Members: Garnet Community Investments 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  

Members: 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  

Members: Garnet Community Investments XII, LLC (.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)

 

   Investments
Garnet LIHTC Fund XIV, LLC   Delaware  

Members: 0.01% Garnet Community Investments, LLC (0.01%); Wells Fargo Bank, N.A. (49.995%); and Goldenrod Asset Management, Inc.(49.995%), both non-AEGON affiliates

 

   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%); Special Situations Investing Group II, LLC, a non-affiliate of AEGON (99.99%)

 

   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  

Sole Member: Garnet Community Investments, LLC

 

   Investments

Table of Contents
Name  

Jurisdiction
of
Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Garnet LIHTC Fund XXII, LLC   Delaware  

Members: Garnet Community Investments, LLC (0.01%); NorLease, Inc., a non-AEGON affiliate (99.99%)

 

   Investments
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%)

 

   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  

Members: Garnet Community Investments XXX, LLC (0.01%); non- affiliate of AEGON, New York Life Insurance Company (99.99%)

 

   Investments

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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  

Members: Garnet Community Investments XXXVIII, LLC, non- member manager; non-affiliate of AEGON, Norlease, Inc. (100%)

 

   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  

Members: Transamerica Life Insurance Company (9.990%) and Garnet Community Investments XLI, LLC (.01% managing member); non- AEGON affiliates : BBCN Bank (1.2499%), East West Bank (12.4988%), Opus Bank (12.4988%), Standard Insurance Company (24.9975%), Mutual of Omaha (12.4988%), Pacific Western Bank (7.4993%) and Principal Life Insurance Company (18.7481%).

 

   Investments

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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.

 

   Investments
Garnet LIHTC Fund XLIV-A, LLC   Delaware  

Sole Member: ING Capital, LLC; Asset Manager: Garnet Community Investments XLIV, LLC (0% interest)

 

   Investments
Garnet LIHTC Fund XLIV-B, LLC   Delaware  

Sole Member: Lion Capital Delaware, Inc.; Asset Manager: Garnet Community Investments XLIV, LLC (0% interest)

 

   Investments
Garnet LIHTC Fund XLVI, LLC   Delaware  

Members: Garnet Community Investments XLVI, LLC (0.01%) managing member; non-affiliate of AEGON, Standard Life Insurance Company (99.99%) investor member

 

   Investments
Garnet LIHTC Fund XLVII, LLC   Delaware  

Members: Garnet Community Investments XLVII, LLC (1%) managing member; Transamerica Premire Life Insurance Company (14%) investor member; non-affiliate of AEGON: Citibank, N.A. (49%) investor member; New York Life Insurance Company (20.5%) investor member and New York Life Insurance and Annuity Corporation (15.5%) investor member.

 

   Investments
Garnet LIHTC Fund XLVIII, LLC   Delaware  

Members: Transamerica Financial Life Insurance Company (75.18%) and Garnet Community Investments XXXLVIII, LLC (.01%); non-affiliates of AEGON: U.S. Bancorp Community Development Corporation (21.04%), American Republic Insurance Company (2.84%), Bank of Hope (.93%)

 

   Investments
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% Transamerica Premier Life Insurance Company

 

   Insurance agency

Table of Contents
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Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Interstate North Office Park GP, LLC   Delaware  

Sole Member: 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  

Sole Member: RCC North America LLC

 

   Investments
Interstate North Office Park (Land) GP, LLC   Delaware  

Sole Member: 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, LLC   Iowa  

Sole Member: RCC North America LLC

 

   Leases business equipment
Ironwood Re Corp.   Hawaii  

100% Transamerica Corporation

 

   Captive insurance company
LCS Associates, LLC   Delaware  

Sole Member: RCC North America LLC

 

   Investments
Life Investors Alliance LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Purchase, own, and hold the equity interest of other entities
LIHTC Fund 53, LLC   Delaware  

Non-Member Manager, AEGON Community Investments 53, LLC (0%); non-affiliates of AEGON: Bank of America, National Association (98%); MUFG Union Bank, N.A. (2%)

 

   Investments
LIHTC Fund XLV, LLC   Delaware  

Non-Member Manager: Garnet Community Investments XLV, LLC (0%)

 

   Investments
LIHTC Fund XLIX, LLC   Delaware  

Sole Member: Garnet Community Investments XLIX, LLC

 

   Investments
LIICA Holdings, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   To form and capitalize LIICA Re I, Inc.
LIICA Re II, Inc.   Vermont  

100% Transamerica Life Insurance Company

 

   Captive insurance company
Massachusetts Fidelity Trust Company   Iowa  

100% AUSA Holding, LLC

 

   Trust company
Mitigation Manager, LLC   Delaware  

Sole Member: RCC North America LLC

 

   Investments
MLIC Re I, Inc.   Vermont  

100% Transamerica Life Insurance Company

 

   Captive insurance company
Money Services, Inc.   Delaware   100% AUSA Holding, LLC   Provides certain financial services for affiliates including, but not limited to, certain intellectual property, computer and computer- related software and hardware services, including procurement and contract services to some or all of the members of the AEGON Group in the United States and Canada.
Monumental Financial Services, Inc.   Maryland  

100% Transamerica Corporation

 

   DBA in the State of West Virginia for United Financial Services, Inc.
Monumental General Administrators, Inc.   Maryland  

100% AUSA Holding, LLC

 

   Provides management services to unaffiliated third party administrator

Table of Contents
Name  

Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Natural Resources Alternatives Portfolio I, LLC   Delaware  

Members: Transamerica Life Insurance Company (64%); Transamerica Premier Life Insurance Company (32%); Transamerica Financial Life Insurance Company (4%); Managing Member: AEGON USA Realty Advisors, LLC

 

   Investment vehicle - to invest in Natural Resources
New Markets Community Investment Fund, LLC   Iowa  

Members: AEGON Institutional Markets, Inc. (50%); AEGON USA Realty Advisors, Inc. (50%)

 

   Community development entity
Oncor Insurance Services, LLC   Iowa  

Sole Member - Life Investors Financial Group, Inc.

 

   Direct sales of term life insurance
Osceola Mitigation Partners, LLC   Florida  

Members: Mitigation Manager, LLC (50%); non-affiliate of AEGON, OBPFL - MITBK, LLC (50%)

 

   Investmetns
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 - Transamerica Life Insurance Company

 

   Special-purpose subsidiary
Pine Falls Re, Inc.   Vermont  

100% Transamerica Life Insurance Company

 

   Captive insurance company
Placer 400 Investors, LLC   California  

Members: RCC North Amerivca LLC (50%); non-affiliate of AEGON, AKT Placer 400 Investors, LLC (50%)

 

   Investments
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: RCC North America LLC

 

   Owner of Core subsidiary entities
RCC North America LLC   Delaware  

Sole Member: Transamerica Corporation

 

   Real estate
Real Estate Alternatives Portfolio 2 LLC   Delaware  

Members are: Transamerica Life Insurance Company (92.%); Transamerica Financial Life Insurance Company (7.5%). Manager: AEGON USA Realty Advisors, Inc.

 

   Real estate alternatives investment
Real Estate Alternatives Portfolio 3 LLC   Delaware  

Members are: Transamerica Life Insurance Company (74.4% ); Transamerica Premier Life Insurance Company (25.6%). Manager: AEGON USA Realty Advisors, Inc.

 

   Real estate alternatives investment
Real Estate Alternatives Portfolio 3A, Inc.   Delaware  

Members: Transamerica Premier Life Insurance Company (37%); Transamerica Financial Life Insurance Company (9.4%); Transamerica Life Insurance Company (53.6%).

 

   Real estate alternatives investment

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Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Real Estate Alternatives Portfolio 4 HR, LLC   Delaware  

Members: Transamerica Life Insurance Company (64%); Transamerica Premier 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: Transamerica Life Insurance Company (64%); Transamerica Premier 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
Rock Springs Drive, LLC   Maryland  

Members: RCC North America LLC (98%); non-affiliate of AEGON, Longshore Ventures, LLC (2%)

 

   Investments
SB Frazer Owner, LLC   Delaware  

Sole Member: Transamerica Life Insurance Company

 

   Investments
Second FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Seventh FGP LLC   Delaware  

Sole Member: FGH USA LLC

 

   Real estate
Short Hills Management Company   New Jersey  

100% Transamerica Corporation

 

   Dormant
Southwest Equity General Company   Arizona  

Sole Shareholder: AEGON Direct Marketing Services International, LLC

 

   General corporation
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 Reinsurance Company   Vermont  

100% Transamerica 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

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Name  

Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
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 Jay Orlandi   Delaware  

100% AEGON International B.V.

 

   Voting Trust
THH Acquisitions, LLC   Iowa  

Sole Member - Transamerica Life Insurance Company

 

   Acquirer of Core South Carolina mortgage loans from Investors Warranty of America, LLC and holder of foreclosed real estate.
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
TLIC Watertree 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: RCC North America LLC

 

   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% Transamerica Corporation

 

   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, LLC

 

   Special purpose subsidiary
Transamerica Asset Management, Inc.   Florida  

Transamerica Premier Life Insurance Company owns 77%; AUSA Holding, LLC owns 23%.

 

   Fund advisor
Transamerica Aviation LLC   Delaware  

Sole Member: 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, LLC

 

   Broker/Dealer
Transamerica Casualty Insurance Company   Ohio  

100% Transamerica Corporation

 

   Insurance company
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

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Name  

Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Transamerica Corporation   Delaware  

100% The AEGON Trust

 

   Major interest in insurance and finance
Transamerica Corporation   Oregon  

100% Transamerica Corporation

 

   Holding company
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, LLC; 209 shares owned by Commonwealth General Corporation; 729 shares owned by AEGON Asset Management Services, Inc.

 

   Broker/Dealer
Transamerica Financial Life Insurance Company   New York  

88% Transamerica Corporation; 12% Transamerica Life Insurance Company

 

   Insurance
Transamerica Fund Services, Inc.   Florida  

Transamerica Premier Life Insurance Company owns 44%; AUSA Holding, LLC 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  

Members: 51% Beth Lewellyn; 49% AEGON Direct Marketing Services, Inc.

 

   Provide consulting services ancillary to the marketing of insurance products overseas.
Transamerica International RE (Bermuda) Ltd.   Bermuda  

100% Transamerica Corporation

 

   Reinsurance
Transamerica International Re Escritório de Representação no Brasil Ltd   Brazil  

95% Transamerica International Re(Bermuda) Ltd.; 5% Commonwealth General Corporation

 

   Insurance and reinsurance consulting
Transamerica Investment Management, LLC   Delaware  

Sole Member - AEGON USA Asset Management Holding, LLC

 

   Investment advisor
Transamerica Investors Securities Corporation   Delaware  

100% Transamerica Retirement Solutions, LLC

 

   Broker/Dealer
Transamerica Leasing Holdings Inc.   Delaware  

100% Transamerica Finance Corporation

 

   Holding company
Transamerica Life Insurance Company   Iowa  

100% - Commonwealth General Corporation

 

   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 Pacific Insurance Company, Ltd.   Hawaii  

100% Commonwealth General Corporation

 

   Life insurance

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Name  

Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business
Transamerica Premier Life Insurance Company   Iowa  

100% Commonwealth General Corporation

 

   Insurance Company
Transamerica Pyramid Properties LLC   Iowa  

Sole Member: Transamerica Premier Life Insurance Company

 

   Realty limited liability company
Transamerica Realty Investment Properties LLC   Delaware  

Sole Member: Transamerica Premier Life Insurance Company

 

   Realty limited liability company
TABR Realty Services, LLC   Delaware  

Sole Member: AUSA Holding, LLC

 

   Real estate investments
Transamerica Resources, Inc.   Maryland   100% Monumental General Administrators, Inc.  

Provides education and information regarding retirement and economic issues.

 

Transamerica Retirement Advisors, LLC   Delaware  

Sole Member: Transamerica Retirement Solutions, LLC

 

   Investment advisor
Transamerica Retirement Insurance Agency, LLC   Delaware  

Sole Member: Transamerica Retirement Solutions, LLC

 

   Conduct business as an insurance agency.
Transamerica Retirement Solutions, LLC   Delaware  

Sole Member: AUSA Holding, LLC

 

   Retirement plan services.
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  

Sole Member: 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  

Sole Member: AUSA Holding, LLC

 

   Investments
Transamerica Ventures Fund, LLC   Delaware  

100% AUSA Holding, LLC

 

   Investments
United Financial Services, Inc.   Maryland  

100% Transamerica Corporation

 

   General agency
Universal Benefits, LLC   Iowa  

Sole Member: AUSA Holding, LLC

 

   Third party administrator
US PENG, INC.   Delaware  

Sole Member: AEGON Levensverzekering N.V.

 

   Energy investment strategy
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  

Sole Member: World Financial Group, Inc.

 

   Marketing
WFG Reinsurance Limited   Hawaii  

51% owned by World Financial Group, Inc.; remaining 49% is annually offered to independent contractors associated with WFG Reinsurance Ltd.

 

   Reinsurance
WFG Securities Inc.   Canada  

100% World Financial Group Holding Company of Canada, Inc.

 

   Mutual fund dealer
World Financial Group Canada Inc.   Canada  

100% World Financial Group Holding Company of Canada Inc.

 

   Marketing

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Name  

Jurisdiction

of

Incorporation

 

  

Percent of Voting

Securities Owned

   Business

World Financial Group Holding Company of Canada Inc.

 

   Canada   100% Commonwealth General Corporation   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
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% Transamerica Premier Life Insurance Company

 

   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, LLC

 

   Inactive
Zero Beta Fund, LLC   Delaware  

Members are: Transamerica Life Insurance Company (44.17%); Transamerica Premier Life Insurance Company (36.40%); Transamerica Financial Life Insurance Company (18.13%); Firebird Re Corp. (1.30%). Manager: AEGON USA Investment Management LLC

 

   Aggregating vehicle formed to hold various fund investments.

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Item 27. Number of Contract Owners

As of March 31, 2018, there were 6,008 Contract owners.

 

Item 28. Indemnification

The Iowa Code (Sections 490.850 et. seq.) provides for permissive indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The Code also specifies procedures for determining when indemnification payments can be made.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event 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.

Table of Contents

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, TFLIC Pooled Account No. 44, Transamerica Variable Funds, 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 VA U, Separate Account VA V, Separate Account VA AA, WRL Series Annuity Account, WRL Series Annuity Account B, WRL Series Life Account, WRL Series Life Account G, WRL Series Life Corporate Account and Separate Account VL E. This account is a separate account of Transamerica Premier 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., and Transamerica Asset Allocation Variable Funds.

Table of Contents
(b) Directors and Officers of Transamerica Capital, Inc.:

 

Name

   

Principal

Business Address

  

Position and Offices with Underwriter

Brian Beitzel

    (2)   Director, Treasurer and Chief Financial Officer

Joe Boan

    (1)   Director and Vice President

David R. Paulsen

    (3)   Director, Chief Executive Officer, President and Chairman of the Board

Mike Curran

    (3)   Chief Compliance Officer

Gregory E. Miller-Breetz

    (1)   Secretary

Vincent J. Toner

    (3)   Vice President

John Koehler

    (3)   Vice President

Alison Ryan

    (3)   Assistant Secretary

 

(1) 100 Light Street, Floor B1, Baltimore, MD 21202
(2) 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001
(3) 1801 California Street, Suite 5200, Denver, CO 80202

Table of Contents
(c) Compensation to Principal Underwriter:

 

Name of Principal Underwriter

    Net Underwriting
Discounts and
Commissions(1)		      Compensation on
Redemption		      Brokerage
Commissions		      Compensation  

Transamerica Capital, Inc.

    $ 3,873,634        0        0        0  

 

(1)  Fiscal Year 2017

 

Item 30. Location of Accounts and Records

The records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by Manager Regulatory Filing Unit, Transamerica Life Insurance Company at 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001.

 

Item 31. Management Services.

All management Contracts are discussed in Part A or Part B.

 

Item 32. Undertakings

 

(a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as Premiums under the Contract may be accepted.

 

(b) Registrant undertakes that it will include either (i) a postcard or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information or (ii) a space in the Policy application that an applicant can check to request a Statement of Additional Information.

 

(c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to Transamerica Life Insurance Company at the address or phone number listed in the Prospectus.

 

(d) Transamerica Life Insurance Company hereby represents that the fees and charges deducted under the contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Transamerica Life Insurance Company.

SECTION 403(B) REPRESENTATIONS

Transamerica Life Insurance Company represents that it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88), regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in connection with redeemability restrictions on Section 403(b) Policies, and that paragraphs numbered (1) through (4) of that letter will be complied with.

TEXAS ORP REPRESENTATION

The Registrant intends to offer policies to participants in the Texas Option Retirement Program. In connection with that offering, the Registrant is relying on Rule 6c-7 under the Investment Company Act of 1940 and is complying with, or shall comply with, paragraphs (a) – (d) of that Rule.

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SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant hereby certifies that this Amendment to the Registration Statement meets the requirements for effectiveness pursuant to paragraph (b) of Securities Act Rule 485 and has caused this Registration Statement to be signed on its behalf, in the City of Cedar Rapids and State of Iowa, on this 30th day of April, 2018.

 

SEPARATE ACCOUNT VA B
TRANSAMERICA LIFE INSURANCE COMPANY
Depositor

*

Blake S. Bostwick
President

As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signatures

   

Title

  

Date

*

Blake S. Bostwick

    Director and President   April 30, 2018

*

Eric J. Martin

    Controller, Senior Vice President and Assistant Treasurer   April 30, 2018

*

Mark W. Mullin

    Director and Chairman of the Board   April 30, 2018

*

Jay Orlandi

    Director, Executive Vice President, Secretary and General Counsel   April 30, 2018

*

David Schulz

    Director, Chief Tax Officer and Senior Vice President   April 30, 2018

*

C. Michiel van Katwijk

    Director, Executive Vice President, Chief Financial Officer and Treasurer   April 30, 2018

/s/ Alison Ryan

Alison Ryan

    Assistant Secretary   April 30, 2018

 

* By: Alison Ryan—Attorney-in-Fact pursuant to Powers of Attorney filed previously and/or herewith.

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Registration No.  333-187912

811-06032

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

EXHIBITS

TO

FORM N-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FOR

TRANSAMERICA PRINCIPIUM II VARIABLE ANNUITY

 

 

Table of Contents

EXHIBIT INDEX

 

Exhibit No.   Description of Exhibit   Page No.*      
  9   Opinion and Consent of Counsel  
10   Consent of Independent Registered Public Accounting Firm  
13   Powers of Attorney  

 

 

 

 

 

* Page numbers included only in manually executed original.