Registration No. | 33-73734 | |||
811-08264 |
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FEES AND EXPENSES |
Location in Prospectus | |||||||||||
Charges for Early Withdrawals |
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Transaction Charges |
Transfers |
Ongoing Fees and Expenses (annual charges) |
The table below describes the fees and expenses that you may pay each year, for your Contract depending on the options you choose. Please refer to your Contract specifications page for information about the specific fees you will pay each year based on the options you have elected. |
Annuity Contract Fee Tables And Expense Examples | ||||||||||
Annual Fee |
Minimum |
Maximum |
Annual Contract Charges | |||||||||
Base Contract |
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Annual Contract Fee 1 |
$ |
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Investment options 2 |
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Optional Benefit Expenses |
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1 2 To help you understand the cost of owning your Contract, the following table shows the lowest and highest cost you could pay each year, based on current charges. This estimate assumes that you do not take withdrawals from the Contract. |
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Lowest Annual Cost Estimate: $ |
Highest Annual Cost Estimate: $ |
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Assumes: · Investment of $100,000 · 5% annual return · Least expensive fund fees and expenses · No optional benefits · No sales charges |
Assumes: · Investment of $100,000 · 5% annual return · Most expensive fund fees and expenses · No optional benefits · No sales charges |
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RISK |
Location in Prospectus | |||||||||||
Risk of Loss |
Principal Risks of Investing in the Contract | |||||||||||
Not a Short- Term Investment |
This Contract is not a short-term investment and is not appropriate for an investor who needs ready access to cash. |
Principal Risks of Investing in the Contract | ||||||||||
The Contract is designed and offered as funding vehicles for retirement plans maintained by state educational organizations, certain tax-exempt organizations, IRA contractholders, and taxed organizations in the case of the Section 401(a) |
Federal Income Tax Status |
and/or Section 401(k) contracts and corporate nonqualified deferred compensation contracts. |
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Risks Associated with Investment Choices |
An investment in the Contract is subject to the risk of poor investment performance. The investment performance of your Contract can vary depending on the performance of the Subaccounts options that you choose. Each Subaccount has its own unique risks. You should review the Subaccounts carefully before making an investment decision. |
Prospectus of each Portfolio Company/Investment Option | ||
Insurance Company Risks |
An investment in the Contract is subject to the risks related to Transamerica Financial Life Insurance Company. Any obligations, guarantees, and benefits under the Contract are subject to our claims-paying ability. More information about Transamerica Financial Life Insurance Company, including our financial strength ratings, is available by visiting www.transamerica.com or calling toll-free[(800) 755-5801. |
Principal Risks of Investing in the Contract |
RESTRICTIONS |
Location in Prospectus | |||
Investments |
Rights Reserved by TFLIC | |||
Optional Benefits |
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TAXES |
Location in Prospectus | |||
You should consult with a tax professional to determine the tax implications of an investment in and payments received under the Contract. If you purchased the Contract through a tax-qualified plan or individual retirement account (IRA), you do not get any additional tax deferral. Earnings on your Contract are taxed at ordinary income tax rates when you withdraw them, and you may have to pay a penalty if you take a withdrawal before age 59 1 ⁄ 2 . |
Federal Income Tax Status | |||
CONFLICT OF INTEREST |
Location in Prospectus | |||
Investment Professional Compensation |
Distribution of the Contracts | |||
Exchanges |
Federal Income Tax Status |
Transaction Expenses | ||
Sales Load On Purchase Payments | ||
Maximum Surrender Charge (as a % of premium payments surrendered) | ||
Exchange Fee | $ |
Base Contract Annual Expenses (as a percentage of average account value) |
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Annual Contract Fee |
$ (1) |
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Base Contract Fee |
(2) |
(1) |
(2) |
Annual Portfolio Company Expenses (1) |
Minimum |
Maximum |
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Expenses (expenses that are deducted from Underlying Investment assets, including management fees, distribution and/or service and 12b-1 fees, and other expenses) |
(1) |
After 1 Year |
After 3 Years |
After 5 Years |
After 10 Years | |||
$ |
$ |
$ |
$ |
• | TAM serves as the investment adviser to each Transamerica Fund. For information with respect to the arrangements under which TAM provides such advisory services, including charges and arrangements with sub-advisers, see the prospectus for each Portfolio Company. |
• |
Calvert Research and Management is the investment adviser to the Calvert Series and provides day-to-day investment management services to the Calvert Series. Information about the Calvert Series’ portfolio management team, as well as the investment management fees charged by CRM is contained in the Calvert Series prospectus. |
(i) |
Life Annuity — Annuity payments will be made during the lifetime of the annuitant. It would be possible for the annuitant to receive no annuity payment if the annuitant died prior to the date of the first annuity payment. Life Annuity With Period Certain — Annuity payments will be made during the lifetime of the annuitant with the guarantee that if the annuitant dies before a period certain elected, the beneficiary will receive payments for the duration of the period. The period certain may be 5, 10, 15 or 20 years. |
(ii) |
Specified Fixed Period Annuity — Annuity payments will be made for a specified fixed period selected by the annuitant. If the annuitant dies during the specified fixed period, the annuity payments for the remainder of the period will be paid to the beneficiary. No annuity payments are made after the expiration of the specified fixed period even if the annuitant survives. The specified fixed period may be for 10, 15, 20, 25 or 30 years. |
(iii) |
Contingent Annuity — Annuity payments will be made during the joint lifetimes of the annuitant and a designated second person (“contingent annuitant”) with payments continued during the remaining lifetime of the contingent annuitant. At the time of electing a contingent annuity, the participant may elect that the annuity payments to the contingent annuitant be made in the same amount paid while both annuitants lived or a lesser percentage (such as 50%) of this amount. For Section 401(a) and/or Section 401(k) Contracts, in the absence of a proper election by the Participant, a contingent annuity with a survivorship annuity benefit for the surviving spouse at least equal to 50% of the amount which would have been payable if the Participant were living will be the normal form of benefit. |
(iv) |
Contingent Annuity With Period Certain — Annuity payments will be made during the joint lifetimes of the annuitant and a designated second person (“contingent annuitant”). At the time of electing a Contingent Annuity, the participant may elect that the annuity payments to the contingent annuitant be made in the same amount paid while both annuitants lived or a lesser percentage (such as 50%) of this amount. Annuity payments will be made for a period certain of 5, 10, 15 or 20 years. In the event both annuitants die before the end of the period certain, payments will be made to the designated beneficiary for the remainder of the period. |
Name of Benefit |
Purpose |
Standard or Optional |
Maximum Fee |
Brief Description of Restrictions/Limitations | ||||
to the beneficiary. |
before the Annuity Purchase Date |
(a) |
is the aggregate net asset value on the Valuation Date of all investments by the Variable Funds Subaccount in the Underlying Investment in which the Variable Funds Subaccount invests; and |
(b) |
is the mortality and expense risk charge accrued as of that Valuation Date; and |
(c) |
is the total number of Units held in the Variable Funds Subaccount on the Valuation Date before the purchase or redemption of any Units on that date. |
1. |
Part of a series of substantially equal periodic payments (at least annually) for the participant’s life or life expectancy, the joint lives or life expectancies of the participant and his/her beneficiary, or a period certain of not less than 10 years, or |
2. |
Required by the Code upon the participant’s attainment of age 73 (age 72 if the Participant attained age 72 before 1/1/2023 (or age 70 1 ⁄2 if Participant attained age 70 1 ⁄2 prior to 1/1/2020) or retirement or death, or |
3. |
Made on account of hardship. |
• |
For further information with respect to TFLIC and the Contracts offered by this prospectus, including the Statement of Additional Information (which includes statutory basis financial statements relating to TFLIC), contact TFLIC at its address or phone number set forth on the cover of this prospectus. |
• |
For further information with respect to the Transamerica Funds or Transamerica Asset Management, Inc., including the Funds’ Statement of Additional Information, contact Transamerica Asset Management, Inc. at 1801 California Street, Suite 5200, Denver, CO 80202, or call 1-888-233-4339. |
• |
For further information with respect to the Calvert Series, CVS or Calvert Research and Management, including the Calvert Series’ Statement of Additional Information, contact CVS at1825 Connecticut Avenue NW, Suite 400, Washington, DC 20009, or call (301) 951-4820. |
(1) |
To operate Transamerica Variable Funds in any form permitted under the 1940 Act or in any other form permitted by law; |
(2) |
To take any action necessary to comply with or obtain and continue any exemptions from the 1940 Act; |
(3) |
To transfer any assets in a Subaccount to another Subaccount or to one or more Separate Accounts, or to TFLIC’s general account to the extent permitted by law or to add, combine or remove Subaccounts in a Separate Account; |
(4) |
To substitute, for the interests in an held in any Variable Funds Subaccount, interests in another Underlying Investment or interests in another investment company or any other investment permitted by law; and |
(5) |
To make any necessary technical changes in the Contracts in order to conform with any of the above- described actions or as may be required or permitted by applicable laws affecting Transamerica Variable Funds or the Contracts. |
Fund Objective |
Portfolio Company and Adviser/Sub-Adviser |
Current Expenses |
Average Annual Total Returns ( as of 12/31/2023) | |||||||
1 Year |
5 Years |
10 Years | ||||||||
1 Sub-Adviser: |
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4,12 Sub-Adviser: |
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5 Sub-Adviser: |
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appreciation of capital. |
3,14 Sub-Adviser: |
- |
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13 Sub-Adviser: |
N/A |
N/A | ||||||||
6 Sub-Adviser: |
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7 Sub-Adviser: |
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8, Sub-Adviser: |
9 Sub-Adviser: |
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Fund Objective |
Portfolio Company and Adviser/Sub-Adviser |
Current Expenses |
Average Annual Total Returns ( as of 12/31/2023) |
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1 Year |
5 Years |
10 Years |
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10 Sub-Adviser: |
N/A |
N/A |
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10 Sub-Adviser: |
N/A |
N/A |
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Fund Objective: Seeks maximum long-term total return consistent with reasonable risk to principal, by investing in a diversified portfolio of common stocks of primarily non-U.S. issuers. |
11 Sub-Adviser: |
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Adviser: |
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*Government Money Market: The 7-Day Yield was 3.69% as of December 31, 2023. The 7-Day Effective Yield was 3.76% as of December 31, 2023. |
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(1) Total returns calculated for any period for the Government Money Market reflect the performance of the Transamerica Partners Government Money Market Portfolio prior to October 13, 2017 and the performance of the Transamerica Government Money Market Fund thereafter. |
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(2) Transamerica Short Term Bond was added effective December 9, 2022 and as of December 31, 2023, does not have five or ten year annualized total returns. |
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(3) Transamerica Inflation Opportunities, was added effective October 27, 2023 and as of December 31, 2023 does not have any annualized total returns. |
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(4) Total returns calculated for any period for the Intermediate Bond reflect the performance of the Transamerica Partners Core Bond Portfolio prior to March 24, 2017 and the performance of the Transamerica Intermediate Bond Fund thereafter. |
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(5) Total returns calculated for any period for the High Yield Bond reflect the performance of the Transamerica Partners High Yield Bond Portfolio prior to March 24, 2017 and the performance of the Transamerica High Yield Bond Fund thereafter. |
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(6) Total returns calculated for any period for the Balanced II reflect the performance of the Transamerica Partners Balanced Portfolio prior to September 15, 2017 and the performance of the Transamerica Balanced II Fund thereafter. |
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(7) Total returns calculated for any period for the Large Value Opportunities reflect the performance of the Transamerica Partners Large Value Portfolio prior to May 5, 2017 and the performance of the Transamerica Large Value Opportunities thereafter. |
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(8) Effective March 1, 2023, Transamerica Large Core was renamed Transamerica Large Core ESG and the fund’s investment strategy was revised to include an ESG overlay. Total returns calculated for the period from March 17, 2017 to February 28, 2023 reflect the performance of the Transamerica Large Core. Total returns calculated for periods prior to March 17, 2017 reflect the performance of the Transamerica Partners Large Core Portfolio.. |
(9) Total returns calculated for any period for the Large Growth reflect the performance of the Transamerica Partners Large Growth Portfolio prior to March 10, 2017 and the performance of the Transamerica Large Growth Fund thereafter. |
(10) Small Cap Growth and Small Cap Value were added effective July 31, 2020, and as of December 31, 2023, do not have five or ten year annualized total returns. |
(11) Total returns calculated for any period for the International Equity reflect the performance of the Transamerica Partners International Equity Portfolio prior to March 10, 2017 and the performance of the Transamerica International Equity Fund thereafter. |
(12) Effective November 1, 2022, Transamerica Intermediate Bond was renamed Transamerica Core Bond. |
(13) Effective December 9, 2022, Transamerica High Quality Bond Fund merged into Transamerica Short-Term Bond Fund. |
(14) Effective October 27, 2023, Transamerica Inflation-Protected Securities Fund merged into Transamerica Inflation Opportunities Fund. |
Note: All Transamerica Fund underlying fund portfolios are advised by Transamerica Asset Management. The entities listed are the sub-advisers unless otherwise indicated. |
Statement of Additional Information
Group Variable Annuity Contracts
Issued By
Transamerica Variable Funds
and
Transamerica Financial Life Insurance Company
440 Mamaroneck Avenue, Harrison, NY 10528
(800) 755-5801
This Statement of Additional Information (“SAI”) is NOT a prospectus, but it relates to, and should be read in conjunction with, the prospectus dated May 1, 2024, and supplemented from time to time (the “Prospectus”), for the Group Variable Annuity Contracts issued by Transamerica Financial Life Insurance Company (“TFLIC”) which invest in Transamerica Variable Funds (the “Variable Funds Account” or “Account”). The Prospectus is available, at no charge, by writing TFLIC at 440 Mamaroneck Avenue, Harrison, New York 10528 or by calling (800) 755-5801.
Dated: May 1, 2024
TABLE OF CONTENTS
INFORMATION ABOUT US
Transamerica Financial Life Insurance Company
Transamerica Financial Life Insurance Company (TFLIC) was incorporated under the laws of the State of New York on October 3, 1947 and is licensed in all states and the District of Columbia. We are located at 440 Mamaroneck Avenue, Harrison, New York 10528
We are a wholly-owned indirect subsidiary of Transamerica Corporation which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. All of the stock of Transamerica Corporation is indirectly owned by Aegon Ltd., the securities of which are publicly traded. Aegon Ltd. a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business.
TFLIC holds the assets of the separate account physically segregated and apart from the general account All obligations arising under the contracts, including the promise to make annuity payments are general corporate obligations of ours and subject to our claims paying ability. Accordingly, no financial institution, brokerage firm or insurance agency is responsible for our financial obligations arising under the contracts.
Transamerica Variable Funds Subaccounts
The Transamerica Variable Funds Account (“Variable Funds Account”), 440 Mamaroneck Avenue, Harrison, New York, was established by the Company on November 30, 1993, and is a unit investment trust registered with the SEC under the 1940 Act (the “1940 Act”) and operating under New York law. The Variable Funds Account has underlying investments which are managed by Transamerica Asset Management, Inc. (“TAM”), except the Calvert Series Subaccount which invests in the Calvert VP SRI Balanced Portfolio, a mutual fund managed by Calvert Research and Management.
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NON-PRINCIPAL RISKS OF INVESTING IN THE CONTRACT
Cyber Security (continued from “Principal Risks” section of the Prospectus)
OPPORTUNITIES and CHALLENGES
The increasing digitalization of the financial services landscape has intensified the financial and reputational risk presented by cybersecurity threats. The COVID-19 pandemic, and the rise in remote working, have further escalated these threats. As our business becomes more technology driven and our digital reliance increases, we become a greater target for cybercriminals, and more vulnerable to threats such as ransomware attacks.
What Transamerica is doing
Transamerica maintains a well-documented information security program which is based on ISO 27000 series and incorporates aspects of COBIT, NIST, SANS, as well as other industry-recognized frameworks and best practices. The program is designed to protect the infrastructure, information systems, and the information in Transamerica’s systems from unauthorized access, use, or other malicious acts by enabling the organization to identify risks, implement the appropriate protections, and detect and respond to cybersecurity events. Transamerica has established strong security policies, procedures, guidelines, and standards that are reviewed regularly to ensure compliance with applicable laws, regulations, and alignment with industry standards. Our cybersecurity program covers every aspect of security management: data handling and classification; access controls and identity management; business continuity and disaster recovery; configuration management; asset management; risk assessment; data disposal; information security incident response; system operations;
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vulnerability and patch management; system, application, and network security and monitoring; systems and application development and performance; physical and environmental controls; data privacy; vendor and third-party service provider management; consistent use of multi-factor authentication; cybersecurity awareness training; and encryption.
We continue to take steps to strengthen our information security program, infrastructure, and ability to respond to cyberattacks, for example, by further developing our dedicated Information Security teams and strengthening controls. Transamerica’s Risk Management teams also periodically assesses known potential cyber risk factors, together with the first line functions such as the Security Operations Center, with known trends or material incidents reported to Transamerica’s Management and Supervisory Boards as necessary.
OVERVIEW
Information security and privacy regulation
Transamerica’s businesses are regulated with respect to information security, data breach response, privacy, and data use at both the federal and state levels. At the federal level, various Transamerica companies are subject to the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA), among other laws. At the state level, Departments of Insurance and Financial Services typically administer a series of privacy and information security laws and regulations that impact several Transamerica businesses such as the New Year Department of Financial Services Rule 500 (NYDFS Rule 500). NYDFS amended its Part 500 Cybersecurity Rules to adopt heightened information security requirements in relation to areas such as cybersecurity governance, cybersecurity risk assessments, and incident reporting. In addition, in recent years numerous state legislatures have passed or have attempted to pass additional, more broad-based general consumer privacy laws, such as the California Consumer Privacy Act and the California Privacy Rights Act. Additional laws and regulations with respect to these topics are also anticipated to be promulgated and to go into effect in the coming years, and they may be administered by new or different state agencies or by the offices of state Attorneys General. The White House, SEC, and other regulators have also increased their focus on companies’ cybersecurity vulnerabilities and risks, including in relation to third-party service providers. The SEC has recently adopted the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies on July 26, 2023 (the “Rule”). The Rule enhances and standardizes disclosures for public companies with regards to their cybersecurity risk strategy, management, and governance. The Rule also requires the reporting of a cybersecurity incident within four business days of determining that an incident is deemed material.
Operational Risks
A computer system failure or security breach of Transamerica’s IT systems or that of critical third parties may disrupt Transamerica’s business, damage Transamerica’s reputation and adversely affect Transamerica’s results of operations, financial condition, and cash flows.
Transamerica relies heavily on computer and information systems and internet and network connectivity (collectively, “IT systems”) to conduct a large portion of its business operations. This includes the need to securely store, process, transmit and dispose of confidential information, including personal information, through a number of complex systems. In many cases this also includes transmission and processing to or through customers, business partners, (semi-) governmental agencies and third-party service providers. Computer system failures, cyber-crime attacks or security or data privacy breaches may materially disrupt Transamerica’s business operations, damage Transamerica’s reputation, result in regulatory and litigation exposure, investigation and remediation costs, and materially and adversely affect Transamerica’s results of operations, financial condition and cash flows.
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The information security risk that Transamerica faces includes the risk of malicious outside forces using public networks and other methods, including social engineering and the exploitation of targeted offline processes, to attack Transamerica’s systems and information and potentially demand ransom. It also includes inside threats, both malicious and accidental. For example, human error, bugs and vulnerabilities that may exist in Transamerica’s systems or software, unauthorized user activity and lack of sufficiently automated processing or sufficient logging and monitoring can result in improper information exposure or failure or delayed detection of such activity in a timely manner. Transamerica also faces risk in this area due to its reliance in many cases on third-party systems, all of which may face cyber and information security risks of their own. Third-party administrators or distribution partners used by Transamerica or its subsidiaries may not adequately secure their own IT systems or may not adequately keep pace with the dynamic changes in this area. Potential bad actors that target Transamerica and applicable third parties may include, but are not limited to, criminal organizations, foreign government bodies, political factions, and others.
In recent years, information security risk has increased sharply due to a number of developments in how information systems are used, not only by companies such as Transamerica, but also by society in general. Threats have increased in frequency and magnitude, and are expected to continue to increase, as criminals and other bad actors become more organized and employ more sophisticated techniques. At the same time companies increasingly make information systems and data available through the internet, mobile devices or other network connections to customers, employees and business partners, thereby expanding the attack surface that bad actors can potentially exploit. As a result of the COVID-19 pandemic, Transamerica also faces increased cybersecurity risks due to the number of Transamerica’s and Transamerica’s service providers’ and partners’ employees who are working remotely, which creates additional opportunities for cybercriminals to launch social engineering attacks and exploit vulnerabilities in non-corporate IT environments. The White House, SEC and other regulators have also increased their focus on cybersecurity vulnerabilities and risks.
Large financial institutions such as and including Transamerica have been, and will continue to be, subject to information security attacks. The nature of these attacks will also continue to be unpredictable, and in many cases, may arise from circumstances that are beyond Transamerica’s control. Attackers are also increasingly using tools and techniques that are specifically designed to circumvent controls, to evade detection and even to remove or obfuscate forensic evidence. As a result, Transamerica may be unable to timely or effectively detect, identify, contain, investigate or remediate IT systems in response to, future cyberattacks or security breaches. Especially if and to the extent Transamerica fails to adequately invest in defensive infrastructure, timely response capabilities, technology, controls and processes, or to effectively execute against its information security strategy, it may suffer material adverse consequences.
Transamerica maintains cyber liability insurance to help decrease the financial impact of cyber-attacks and information security events, subject to the terms and conditions of the policy; however, such insurance may not be sufficient to cover all applicable losses that Transamerica may suffer.
A breach of data privacy or security obligations may disrupt Transamerica’s business, damage Transamerica’s reputation and adversely affect financial conditions and results of operations.
Pursuant to applicable laws, various government and semi-governmental and other administrative bodies have established numerous rules protecting the privacy and security of personal information and other confidential or sensitive information held by Transamerica. Notably, certain of Transamerica’s businesses are subject to laws and regulations enacted by US federal and state governments and/or various regulatory organizations relating to the privacy and/or information security of the information of customers, employees or others.
The New York Department of Finance Services (NYDFS), pursuant to its cybersecurity regulation, requires financial institutions regulated by the NYDFS, including certain Transamerica subsidiaries, to, among other things, satisfy an
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extensive set of minimum information security requirements, including but not limited to governance, management, reporting, policy, technology and control requirements. Other states have adopted similar cybersecurity laws and regulations.
Numerous other US state and federal laws also impose various information security and privacy related obligations with respect to Transamerica, including but not limited to the Gramm-Leach-Bliley Act and related state laws and implementing regulations (GLBA), the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), and the Health Insurance Portability and Accountability Act (HIPAA), among many others. These laws generally provide for governmental investigative and enforcement authority, and in certain cases provide for private rights of action.
Numerous other legislators and regulators with jurisdiction over Transamerica’s businesses are considering or have already enacted enhanced information security risk management and privacy laws and regulations, with the overall number and scope of such laws and regulations continuing to increase every year. A number of Transamerica companies are also subject to contractual restrictions with respect to the use and handling of the sensitive information of Transamerica’s clients and business partners.
Transamerica, and numerous of its systems, employees, third-party providers and business partners have access to, and routinely process, the personal information of consumers and employees. Transamerica relies on a large number of processes and controls to protect the confidentiality, integrity and availability of personal information and other confidential information that is accessible to, or in the possession of, Transamerica, its systems, employees and business partners. It is possible that a Transamerica or a third party’s employee, contractor, business partner or system could, intentionally or unintentionally, inappropriately disclose or misuse personal or confidential information. Transamerica’s data or data in its possession could also be the subject of an unauthorized information security attack. If Transamerica fails to maintain adequate processes and controls or if Transamerica or its business partners fail to comply with relevant laws and regulations, policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of personal information or other confidential information could occur. Such control inadequacies or non-compliance could cause disrupted operations and misstated or unreliable financial data, materially damage Transamerica’s reputation or lead to increased regulatory scrutiny or civil or criminal penalties or (class action) litigation, which, in turn, could have a material adverse effect on Transamerica’s business, financial condition and results of operations.
In addition, Transamerica analyzes personal information and customer data to better manage its business, subject to applicable laws and regulations and other restrictions. It is possible that additional regulatory or other restrictions regarding the use of such information may be imposed. Additional privacy and information security obligations have been imposed by various governments with jurisdiction over Transamerica or its subsidiaries in recent years, and more similar obligations are likely to be imposed in the near future across Transamerica’s operations. Such restrictions and obligations could have material impacts on Transamerica’s business, financial conditions and results of operations.
In order to supplement the description in the prospectus, the following provides additional information about us and the policy, which may be of interest to a prospective purchaser.
Market Risks
The market prices of a fund’s securities or other assets may go up or down, sometimes rapidly or unpredictably, due to general market conditions, overall economic trends or events, inflation, changes in interest rates, government actions or interventions, actions taken by the U.S. Federal Reserve or foreign central banks, market disruptions caused by tariffs, trade disputes or other factors, political developments, investor sentiment, the global and domestic effects of a pandemic, and other factors that may or may not be related to the issuer of the security or other asset. The market prices of securities and other assets also may go down due to events or conditions that affect particular sectors, industries, issuers, or geographies. Adverse market conditions may be prolonged and may not have the same impact on all types of securities or other assets. If the value of the fund’s securities and assets fall, the value of your investment will go down. A fund may experience a substantial or complete loss on any individual security or asset.
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In the past decade, financial markets throughout the world have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. Governmental and non-governmental issuers defaulted on, or were forced to restructure, their debts. These market conditions may continue, worsen or spread.
Economies and financial markets throughout the world are increasingly interconnected. Economic, financial or political events, trading and tariff arrangements, public health events (such as the spread of infectious disease), wars, terrorism, cybersecurity events, technology and data interruptions, natural disasters, and other circumstances in one or more countries or regions could be highly disruptive to, and have profound impacts on, global economies or markets. As a result, whether or not a fund invests in securities of issuers located in or with significant exposure to the countries directly affected, the value and liquidity of a fund’s investments may go down. Securities markets may also be susceptible to market manipulation or other fraudulent trade practices, which could disrupt the orderly functioning of these markets or adversely affect the value of securities traded in these markets, including a fund’s securities.
The pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in extreme volatility in the financial markets, a domestic and global economic downturn, severe losses, particularly to some sectors of the economy and individual issuers, and reduced liquidity of many instruments. There also have been significant disruptions to business operations, including business closures; strained healthcare systems; disruptions to supply chains and employee availability; large fluctuations in consumer demand; and widespread uncertainty regarding the duration and long-term effects of the pandemic. The domestic and global economic downturn may be prolonged. The pandemic may result in domestic and foreign political and social instability, damage to diplomatic and international trade relations, and continued volatility and/or decreased liquidity in the securities markets. Developing or emerging market countries may be more impacted by the pandemic.
The U.S. government and the Federal Reserve, as well as certain foreign governments and central banks, are taking extraordinary actions to support local and global economies and the financial markets in response to the COVID-19 pandemic, including by pushing interest rates to very low levels. This and other government intervention into the economy and financial markets to address the pandemic may not work as intended, particularly if the efforts are perceived by investors as being unlikely to achieve the desired results. Government actions to mitigate the economic impact of the pandemic have resulted in large expansion of government deficits and debt, the long-term consequences of which are not known. Rates of inflation have recently risen, which could adversely affect economies and markets. The pandemic could continue to adversely affect the value and liquidity of a fund’s investments, impair a fund’s ability to satisfy redemption requests, and negatively impact a fund’s performance.
Europe. A number of countries in Europe have experienced severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread within or outside Europe. Responses to the financial problems by European governments, central banks and others, including austerity measures and reforms, may not work, may result in conflicts and social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. On January 31, 2020, the United Kingdom withdrew from the European Union, commonly referred to as “Brexit.” Following a transition period, the United Kingdom’s post-Brexit trade agreement with the European Union passed into law in December 2020 and went into effect on January 1, 2021. There is significant market uncertainty regarding Brexit’s ramifications. The range and potential implications of possible political, regulatory, economic, and market outcomes cannot be fully known but could be significant, potentially resulting in increased volatility and illiquidity and lower economic growth for companies that rely significantly on Europe for their business activities and revenues. The United Kingdom has one of the largest economies in Europe and is a major trading partner with the other European Union countries and the United States. Brexit may create additional and substantial economic stresses for the United Kingdom, including a contraction of the United Kingdom’s economy, decreased trade, capital outflows, devaluation of the British pound, as well as a decrease in business and consumer spending and investment. The negative impact on not only the United Kingdom and European economies but also the broader global economy could be significant. Moreover, other countries may seek to withdraw from the European Union and/or abandon the euro, the common currency of the European Union. A number of countries in Europe have suffered terror attacks, and additional attacks may occur in the future. The Ukraine has experienced ongoing military conflict; this conflict may expand and military conflicts could potentially occur elsewhere in Europe. Europe has also been struggling with mass migration from the Middle East and Africa. The ultimate effects of these events and other socio-political or geopolitical issues are not known but could
7
profoundly affect global economies and markets. Whether or not a fund invests in securities of issuers located in Europe or with significant exposure to European issuers or countries, these events could negatively affect the value and liquidity of a fund’s investments due to the interconnected nature of the global economy and capital markets.
8
For each of the Transamerica Funds, TAM currently acts as a “manager of managers” and hires sub-advisers to furnish day-to-day investment advice and recommendations to the Funds.
TAM is directly owned by Transamerica Life Insurance Company (“TLIC”) (77%) and AUSA Holding, LLC (“AUSA”) (23%), both of which are indirect, wholly owned subsidiaries of Aegon N.V. TLIC is wholly owned by Commonwealth General Corporation (“Commonwealth”). Commonwealth and AUSA are wholly owned by Transamerica Corporation (DE), a financial services holding company whose primary emphasis is on life and health insurance, and annuity and investment products. Transamerica Corporation (DE) is wholly owned by Aegon International B.V., which is wholly owned by Aegon NV, a Netherlands corporation, and a publicly traded international insurance group.
9
Expense Limitation
TAM has entered into an expense limitation agreement with the Trust on behalf of certain funds, pursuant to which TAM has agreed to implement an expense cap to limit the ordinary operating expenses of one or more share classes of those funds. The expense caps and waived fees and/or reimbursed expenses exclude, as applicable, acquired fund fees and expenses, interest, taxes, brokerage commissions, dividend and interest expenses on securities sold short, extraordinary expenses, and other expenses not incurred in the ordinary course of the relevant fund’s business. TAM is permitted to recapture amounts waived and/or reimbursed to a class of a fund during the 36 months from the date on which TAM waived fees and/or reimbursed expenses for the class, but only if, after such recapture, the class’s expense ratio does not exceed the current expense cap or any other lower limit then in effect for the class. These recapture arrangements may be limited or terminated under certain circumstances. The expense limitation agreement continues automatically for one-year terms unless TAM provides written notice to the Trust prior to the end of the then-current term. In addition, the agreement will terminate automatically upon termination of the Management Agreement.
In addition, TAM or any of its affiliates, in addition to any contractual expense limitation arrangements in effect from time to time, may voluntarily waive fees and/or reimburse expenses of one or more classes of Transamerica Government Money Market to such level(s) as the Trust’s officers may reasonably determine from time to time in an effort to prevent the fund’s yield from falling below zero. Any such waiver or expense reimbursement may be discontinued by TAM or its affiliates at any time. TAM is entitled to reimbursement by the applicable class(es) of the fund of any amounts so waived and/or reimbursed by TAM or any of its affiliates during the previous 36 months so long as the reimbursement does not cause the class’s effective daily yield to be negative. Any reimbursement of amounts voluntarily waived and/or reimbursed may result
10
in the class’s expenses exceeding the contractual expense cap for the class. There is no guarantee that Transamerica Government Money Market will be able to prevent a negative yield.
11
Transamerica (or their affiliates), out of their past profits and other available sources, provide cash payments or non-cash compensation to brokers and other financial intermediaries to promote the distribution of Variable Funds Account and Other Accounts or the variable insurance contracts that invest in certain Other Accounts. These arrangements are sometimes referred to as “revenue sharing” arrangements. The amount of revenue sharing payments is substantial and may be substantial to any given recipient. The presence of these payments and the basis on which an intermediary compensates its registered representatives or salespersons may create an incentive for a particular intermediary, registered representative or salesperson to highlight, feature or recommend Variable Funds Account or Other Accounts, at least in part, based on the level of compensation paid. Revenue sharing payments benefit Transamerica to the extent the payments result in more assets being invested in Variable Funds Account and Other Accounts on which fees are being charged. Certain fund sub-advisers (or their affiliates) make revenue sharing payments to Transamerica in connection with investments by holders of variable insurance contracts and other retirement products in funds advised by the sub-adviser (or its affiliates)that are offered in Transamerica insurance and retirement products. Certain sub-advisers have funds that are offered in these products which make Rule 12b-1 and/or other payments to Transamerica. Certain fund sub-advisers (or their affiliates) also make revenue sharing payments to Transamerica for their participation in functions, events and meetings sponsored by Transamerica. These payments present certain conflicts of interest and may provide a disincentive for TAM to recommend the termination of such sub-advisers.
12
Certain Other Accounts are offered as investment options through variable insurance contracts and other retirement products offered and sold by Transamerica insurance companies. TAM also acts as an investment manager with respect to an asset allocation program offered for use in certain variable insurance contracts issued by Transamerica insurance companies. The performance of the Other Accounts and/or asset allocation models impacts Transamerica’s financial exposure under guarantees that the Transamerica insurance companies provide as issuers of the variable insurance contracts. TAM’s investment decisions and the design of the applicable funds and Other Accounts may be influenced by these factors. For example, fund or Other Account being managed or designed in a more conservative fashion may help reduce potential losses and/or mitigate financial risks to the Transamerica insurance companies that provide the guarantees, and facilitate the provision of those guaranteed benefits, including by making more predictable the costs of the guarantees and by reducing the capital needed to provide them. In addition, certain asset allocation models may include Other Accounts as investment options, and Transamerica will receive more revenue if TAM selects such Other Accounts to be included in the models.
TAM serves as investment advisor to and is responsible for all aspects of the day-to-day investment advice and management of certain funds and Other Accounts which operate as funds of funds and asset allocation accounts that invest in affiliated underlying investments and/or Other Accounts, and TAM is subject to conflicts of interest in allocating the funds of fund’s assets among the underlying fund or Other Accounts. For certain funds and Other Accounts that operate as funds of funds, TAM has hired a sub adviser or portfolio construction manager and is subject to conflicts of interest in connection with the selection and allocation by the sub-adviser or portfolio construction manager of the assets of the fund of funds or Other Account. TAM has designed certain funds and Other Accounts that operate as funds of funds where only affiliated funds are underlying investment options. This means that TAM or the fund of funds’ sub-adviser or portfolio construction managers, as applicable, does not, nor does it expect to, consider any unaffiliated funds as underlying investment options for these funds and Other Accounts. Transamerica will receive more revenue when it or a sub-adviser or portfolio construction manager selects an affiliated fund rather than an unaffiliated fund for inclusion in a fund of funds. This conflict may provide an incentive for TAM to include affiliated funds as investment options for funds of funds and, when making the underlying fund selections, to cause investments by funds of funds in affiliated funds that perform less well than unaffiliated funds. The inclusion of affiliated funds will also permit TAM and/or the sub-adviser to make increased revenue sharing payments, including to Transamerica. TAM has an incentive for a fund or Other Account’s assets to be allocated to those underlying investments or Other Accounts for which the net management fees payable to TAM are higher than the fees payable by other underlying investments or Other Accounts or to those underlying investments or Other Accounts for which an affiliate of TAM serves as the sub-adviser. TAM also has an incentive for a fund or Other Account’s assets to be allocated subscale underlying investments or Other Accounts to provide scale and reduce amounts waived and/or reimbursed by TAM to maintain applicable expense caps. Sub-advisers to certain funds or funds and certain funds or funds that are Other Accounts also have conflicts of interest in allocating the funds of funds’ assets among underlying investments, including where the sub-adviser acts as investment adviser or sub-adviser to available underlying investments. TAM Compliance monitors allocation changes by the funds of funds.
TAM may have a financial incentive to implement certain changes to Variable Funds Account or Other Accounts. TAM may, from time to time, recommend a change in sub-adviser or a fund combination. Transamerica will benefit to the extent that an affiliated sub-adviser replaces an unaffiliated sub-adviser or additional assets are combined into a fund or Other Account having a higher management or advisory fee payable to TAM and/or that is sub-advised by an affiliate of TAM. TAM will also benefit to the extent that it replaces a sub-adviser with a new sub-adviser with a lower sub-advisory fee. Any recommendation to the Board concerning the appointment of or continued service of an affiliated sub-adviser for a fund or a fund combination, is subject to TAM’s fiduciary duty to act in the best interests of a fund and its shareholders. Moreover, TAM’s “manager of managers” exemptive order from the SEC requires shareholder approval of any sub-advisory agreement appointing an affiliated sub-adviser as the sub-adviser to a fund (in the case of a new fund, the initial sole shareholder of the fund, typically an affiliate of Transamerica, may provide this approval).
The aggregation of assets of multiple funds or Other Accounts for purposes of calculating breakpoints in sub-advisory fees based on the level of assets allocated to a sub-adviser across funds and/or Other Accounts or otherwise, as applicable, give rise to actual, potential and/or perceived conflicts of interest that could disadvantage the funds and their shareholders.
Such aggregation of assets may create incentives for TAM to select sub-advisers, or allocate additional assets to a sub-adviser, where the selection or allocation may serve to lower a sub-advisory fee and possibly increase the management fee retained by TAM and provides a disincentive for TAM to recommend the termination of a sub-adviser from a fund if the
13
termination will cause the sub-advisory fee payable by TAM to increase on a fund and/or Other Account that aggregates its assets with the fund or if the assets of the fund are counted as part of a sub-advisory fee discount arrangement. TAM is a fiduciary for shareholders in the funds and must act in their best interests. As a fiduciary, TAM must put the interests of the funds ahead of its own interests (or the interests of its affiliates), and must conduct the affairs of the funds as would prudent and experienced money managers. Any decision by TAM to recommend the hiring, retention or termination of a sub-adviser for a fund to the fund’s Board and, if required, fund shareholders/investors, must serve the interests of shareholders in that fund without taking into account any potential benefit or harm to any other fund or Other Account or Transamerica .
Sale of Contracts/Principal Underwriter
Transamerica Capital, Inc. (“TCI”), which is an affiliate of TFLIC, is the principal underwriter and distributor of the Contracts which were sold by registered representatives who were also licensed insurance agents of TFLIC. We have discontinued new sales of the Contracts. TCI is registered with the Securities and Exchange Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority.
TCI will not receive underwriting commissions. Registration as a broker-dealer does not mean that the SEC has passed upon the financial standing, fitness or conduct of any broker or dealer, or upon the merits of any security offering or upon any other matter relating to the business of any broker or dealer.
Custodian
State Street, located at One Iron Street, Boston, MA 02110, serves as the Trust’s custodian. State Street, among other things, maintains a custody account or accounts in the name of each underlying investment, receives and delivers all assets for the underlying investments upon purchase and upon sale or maturity, collects and receives all income and other payments and distributions on account of the assets of the underlying investments and makes disbursements on behalf of the underlying investments. State Street neither determines the underlying investments’ investment policies nor decides which securities the Portfolios will buy or sell. For its services, State Street receives a monthly fee based upon the daily average market value of securities held in custody and also receives securities transaction charges, including out-of-pocket expenses. The Portfolios may also periodically enter into arrangements with other qualified custodians with respect to certain types of securities or other transactions such as repurchase agreements or derivatives transactions.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Unit Value Determination
TFLIC determines the unit value of each Subaccount each day on which the New York Stock Exchange (“NYSE”) is open for business. The unit value is not determined in days when the NYSE is closed. This daily determination of unit value is made as of the close of regular trading on the NYSE, currently 4:00 p.m., New York time unless the NYSE closes earlier, by dividing the total assets of a Subaccount less all of its liabilities, by the total number of units outstanding at the time the determination is made. Purchases and redemptions will be effected at the time of determination of unit value next following the receipt of any purchase or redemption order deemed to be in good order.
14
Units of each Variable Funds Subaccount are valued based upon the valuation of the securities held by the corresponding Underlying Investment in which the assets of the particular Variable Funds Subaccount are invested. Therefore, the valuation of units of the Variable Funds Subaccounts depends on the valuation policies of the Underlying Investments.
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 contract 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 contract, 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. 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 one 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. |
15
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. The total return will then be calculated according to the following formula.
P (1 + T)N = ERV
Where:
The average annual total return net of Subaccount | ||||
T | = | recurring charges. | ||
ERV | = | The ending redeemable value of the hypothetical | ||
P | = | account at the end of the period. | ||
N | = | A hypothetical initial payment of $1,000. | ||
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.
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.
CTR = (ERV / P)-1
Where:
CT | = | The cumulative total return net of Subaccount recurring | ||
R | = | charges for the period. | ||
ER | = | The ending redeemable value of the hypothetical | ||
V | = | 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 contract charges that are currently in effect.
16
SERVICES
We perform administrative services for the contracts. These services include issuance of the contracts, maintenance of records concerning the contracts, and certain valuation services.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The statutory-basis financial statements and supplementary information of TFLIC have been so included in reliance on the report of PricewaterhouseCoopers LLP, the independent auditors, given on the authority of said firm as experts in auditing and accounting.
The statements of assets and liabilities of Transamerica Variable Funds at December 31, 2023, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the years or periods indicated within the financial statements, appearing within the financial statements, appearing herein, have been audited by Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116, Independent Registered Public Accounting Firm, as set forth in their report thereon, and are included in reliance upon such report given upon the authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of the Transamerica Variable Funds and the statutory basis financial statements of TFLIC are included in Part B of this Registration Statement.
The statutory basis financial statements of TFLIC should be considered only as bearing upon the ability of TFLIC to meet its obligations under the Contracts and should not be considered as bearing on the investment performance of the assets held in Transamerica Variable Funds.
Requesting Documents. You may request a free copy of any or all of the information incorporated by reference into the Prospectus and/or SAI (other than exhibits not specifically incorporated by reference into the text of such documents). Please direct any oral or written requests for such documents to our Administrative and Service Office at:
6400 C Street SW
Cedar Rapids, IA 52499
Telephone: (800) 755-5801
17
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 2023
Government Money Market |
Short-Term Bond |
Inflation Opportunities (1) |
Core Bond |
High Yield Bond |
||||||||||||||||
Assets: |
||||||||||||||||||||
Investment in mutual fund, at net asset value |
$ | 24,355,011 | $ | 7,084,798 | $ | 12,211,887 | $ | 24,756,707 | $ | 2,540,255 | ||||||||||
Receivable for investments sold |
1,396 | 1,051 | 6,479 | 6,353 | 324 | |||||||||||||||
Receivable for units sold |
603 | 356 | 1,245 | 2,205 | 631 | |||||||||||||||
Dividends receivable |
106,660 | 24,249 | — | 89,410 | 11,984 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
24,463,670 | 7,110,454 | 12,219,611 | 24,854,675 | 2,553,194 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities: |
||||||||||||||||||||
Payable for units redeemed |
1,999 | 1,407 | 7,724 | 8,558 | 955 | |||||||||||||||
Accrued mortality and expense risk fees |
29,449 | 6,674 | 11,522 | 22,995 | 2,357 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
31,448 | 8,081 | 19,246 | 31,553 | 3,312 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net assets attributable to annuity contractholders |
$ | 24,432,222 | $ | 7,102,373 | $ | 12,200,365 | $ | 24,823,122 | $ | 2,549,882 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulation units |
1,093,885 | 679,032 | 1,152,510 | 528,899 | 64,456 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unit value |
$ | 22.34 | $ | 10.46 | $ | 10.59 | $ | 46.93 | $ | 39.56 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investment in mutual fund (Note 1): |
||||||||||||||||||||
Cost |
$ | 24,355,011 | $ | 6,960,154 | $ | 11,587,605 | $ | 25,810,147 | $ | 2,425,640 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Number of shares |
24,355,011 | 728,140 | 1,261,559 | 2,832,575 | 313,225 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Commencement of Operations was October 30, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
At December 31, 2023
Balanced II | Large Value Opportunities |
Large Core ESG (2) |
Large Growth |
|||||||||||||
Assets: |
||||||||||||||||
Investment in mutual fund, at net asset value |
$ | 41,357,361 | $ | 132,787,103 | $ | 105,307,272 | $ | 207,761,347 | ||||||||
Receivable for units sold |
4,037 | 4,097 | 4,917 | 7,327 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
41,361,398 | 132,791,200 | 105,312,189 | 207,768,674 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Payable for investments purchased |
2,309 | 2,557 | 2,769 | 3,169 | ||||||||||||
Payable for units redeemed |
1,729 | 1,540 | 2,148 | 4,158 | ||||||||||||
Accrued mortality and expense risk fees |
38,432 | 122,385 | 97,033 | 190,244 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
42,470 | 126,482 | 101,950 | 197,571 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net assets attributable to annuity contractholders |
$ | 41,318,928 | $ | 132,664,718 | $ | 105,210,239 | $ | 207,571,103 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Accumulation units |
373,266 | 975,131 | 1,056,428 | 933,488 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Unit value |
$ | 110.70 | $ | 136.05 | $ | 99.59 | $ | 222.36 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Investment in mutual fund (Note 1): |
||||||||||||||||
Cost |
$ | 38,032,804 | $ | 128,812,147 | $ | 96,977,705 | $ | 231,314,231 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Number of shares |
3,513,794 | 13,746,077 | 9,436,136 | 17,621,828 | ||||||||||||
|
|
|
|
|
|
|
|
(2) | Name changed from Large Core to Large Core ESG on March 1, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
At December 31, 2023
Small Cap Growth |
Small Cap Value |
International Equity |
Calvert | |||||||||||||
Assets: |
||||||||||||||||
Investment in mutual fund, at net asset value |
$ | 2,906,347 | $ | 2,400,494 | $ | 38,268,426 | $ | 9,721,671 | ||||||||
Receivable for investments sold |
— | — | — | 120 | ||||||||||||
Receivable for units sold |
1,154 | 1,207 | 2,800 | 818 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
2,907,501 | 2,401,701 | 38,271,226 | 9,722,609 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Payable for investments purchased |
955 | 1,044 | 1,837 | — | ||||||||||||
Payable for units redeemed |
199 | 163 | 963 | 938 | ||||||||||||
Accrued mortality and expense risk fees |
2,650 | 2,165 | 34,935 | 8,965 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
3,804 | 3,372 | 37,735 | 9,903 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net assets attributable to annuity contractholders |
$ | 2,903,697 | $ | 2,398,329 | $ | 38,233,491 | $ | 9,712,706 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Accumulation units |
249,620 | 152,541 | 1,319,097 | 134,039 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Unit value |
$ | 11.63 | $ | 15.72 | $ | 28.98 | $ | 72.46 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Investment in mutual fund (Note 1): |
||||||||||||||||
Cost |
$ | 2,678,006 | $ | 2,652,788 | $ | 32,946,467 | $ | 8,954,934 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Number of shares |
439,689 | 424,866 | 1,880,512 | 4,101,971 | ||||||||||||
|
|
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF OPERATIONS
For the Period/Year Ended December 31, 2023
Government Money Market |
Short-Term Bond |
Inflation Opportunities (1) |
Core Bond |
High Yield Bond |
||||||||||||||||
Investment income: |
||||||||||||||||||||
Dividend income |
$ | 1,209,450 | $ | 272,258 | $ | 75,419 | $ | 992,793 | $ | 144,411 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses: |
||||||||||||||||||||
Mortality and expense risk fees |
282,656 | 81,331 | 24,269 | 264,169 | 27,109 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net expenses |
282,656 | 81,331 | 24,269 | 264,169 | 27,109 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net investment income (loss) |
926,794 | 190,927 | 51,150 | 728,624 | 117,302 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net realized and unrealized gains (losses) on investments: |
||||||||||||||||||||
Realized gains (losses) on investments |
— | 3,444 | 29,345 | (973,602 | ) | 2,700 | ||||||||||||||
Change in net unrealized appreciation (depreciation) on investments |
— | 129,729 | 624,281 | 1,464,934 | 109,100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net realized and unrealized gains on investments |
— | 133,173 | 653,626 | 491,332 | 111,800 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net increase in net assets resulting from operations |
$ | 926,794 | $ | 324,100 | $ | 704,776 | $ | 1,219,956 | $ | 229,102 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Commencement of Operations was October 30, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF OPERATIONS (Continued)
For the Period/Year Ended December 31, 2023
Balanced II | Large Value Opportunities |
Large Core ESG (2) |
Large Growth |
|||||||||||||
Investment income: |
||||||||||||||||
Dividend income |
$ | 806,194 | $ | 2,677,864 | $ | 1,153,603 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Expenses: |
||||||||||||||||
Mortality and expense risk fees |
444,186 | 1,441,422 | 1,100,270 | 2,029,140 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net expenses |
444,186 | 1,441,422 | 1,100,270 | 2,029,140 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net investment income (loss) |
362,008 | 1,236,442 | 53,333 | (2,029,140 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized and unrealized gains (losses) on investments: |
||||||||||||||||
Realized gains (losses) on investments |
552,133 | (1,291,829 | ) | 872,503 | (197,650 | ) | ||||||||||
Capital gain distributions received |
764,455 | — | 6,860,933 | — | ||||||||||||
Change in net unrealized appreciation (depreciation) on investments |
4,839,548 | 8,908,319 | 14,184,833 | 66,367,386 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized and unrealized gains on investments |
6,156,136 | 7,616,490 | 21,918,269 | 66,169,736 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in net assets resulting from operations |
$ | 6,518,144 | $ | 8,852,932 | $ | 21,971,602 | $ | 64,140,596 | ||||||||
|
|
|
|
|
|
|
|
(2) | Name changed from Large Core to Large Core ESG on March 1, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF OPERATIONS (Continued)
For the Period/Year Ended December 31, 2023
Small Cap Growth |
Small Cap Value |
International Equity |
Calvert | |||||||||||||
Investment income: |
||||||||||||||||
Dividend income |
$ | — | $ | 69,834 | $ | 1,197,308 | $ | 147,126 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Expenses: |
||||||||||||||||
Mortality and expense risk fees |
29,438 | 25,162 | 412,685 | 102,861 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net expenses |
29,438 | 25,162 | 412,685 | 102,861 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net investment income (loss) |
(29,438 | ) | 44,672 | 784,623 | 44,265 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized and unrealized gains (losses) on investments: |
||||||||||||||||
Realized gains (losses) on investments |
6,181 | (66,269 | ) | 476,705 | 60,532 | |||||||||||
Capital gain distributions received |
124,879 | — | — | 35,245 | ||||||||||||
Change in net unrealized appreciation (depreciation) on investments |
344,325 | 185,245 | 3,932,021 | 1,213,227 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net realized and unrealized gains on investments |
475,385 | 118,976 | 4,408,726 | 1,309,004 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in net assets resulting from operations |
$ | 445,947 | $ | 163,648 | $ | 5,193,349 | $ | 1,353,269 | ||||||||
|
|
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Period/Year Ended December 31, 2023
Government Money Market |
Short-Term Bond |
Inflation Opportunities (1) |
Core Bond |
High Yield Bond |
||||||||||||||||
From operations: |
||||||||||||||||||||
Net investment income (loss) |
$ | 926,794 | $ | 190,927 | $ | 51,150 | $ | 728,624 | $ | 117,302 | ||||||||||
Net realized gains (losses) from investment |
— | 3,444 | 29,345 | (973,602 | ) | 2,700 | ||||||||||||||
Change in net unrealized appreciation (depreciation) on investment |
— | 129,729 | 624,281 | 1,464,934 | 109,100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net increase in net assets resulting from operations |
926,794 | 324,100 | 704,776 | 1,219,956 | 229,102 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
From unit transactions: |
||||||||||||||||||||
Units sold |
2,120,592 | 642,153 | 12,251,688 | 3,235,370 | 134,086 | |||||||||||||||
Units redeemed |
(4,801,921 | ) | (1,325,228 | ) | (756,099 | ) | (4,756,605 | ) | (280,944 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net increase (decrease) in net assets resulting from unit transactions |
(2,681,329 | ) | (683,075 | ) | 11,495,589 | (1,521,235 | ) | (146,858 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total increase (decrease) in net assets |
(1,754,535 | ) | (358,975 | ) | 12,200,365 | (301,279 | ) | 82,244 | ||||||||||||
Net assets: |
||||||||||||||||||||
Beginning of year |
26,186,757 | 7,461,348 | — | 25,124,401 | 2,467,638 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
End of year |
$ | 24,432,222 | $ | 7,102,373 | $ | 12,200,365 | $ | 24,823,122 | $ | 2,549,882 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Units outstanding beginning of year |
1,215,621 | 745,817 | — | 560,830 | 68,364 | |||||||||||||||
Units sold |
97,313 | 63,067 | 1,225,059 | 72,071 | 3,598 | |||||||||||||||
Units redeemed |
(219,049 | ) | (129,852 | ) | (72,549 | ) | (104,002 | ) | (7,506 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Units outstanding end of year |
1,093,885 | 679,032 | 1,152,510 | 528,899 | 64,456 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Commencement of Operations was October 30, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
For the Period/Year Ended December 31, 2023
Balanced II | Large Value Opportunities |
Large Core ESG (2) |
Large Growth |
|||||||||||||
From operations: |
||||||||||||||||
Net investment income (loss) |
$ | 362,008 | $ | 1,236,442 | $ | 53,333 | $ | (2,029,140 | ) | |||||||
Net realized gains (losses) from investment |
552,133 | (1,291,829 | ) | 872,503 | (197,650 | ) | ||||||||||
Capital gain distributions received |
764,455 | — | 6,860,933 | — | ||||||||||||
Change in net unrealized appreciation (depreciation) on investment |
4,839,548 | 8,908,319 | 14,184,833 | 66,367,386 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in net assets resulting from operations |
6,518,144 | 8,852,932 | 21,971,602 | 64,140,596 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
From unit transactions: |
||||||||||||||||
Units sold |
983,422 | 2,822,708 | 1,451,436 | 2,900,654 | ||||||||||||
Units redeemed |
(5,377,130 | ) | (13,854,270 | ) | (12,261,847 | ) | (19,241,689 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from unit transactions |
(4,393,708 | ) | (11,031,562 | ) | (10,810,411 | ) | (16,341,035 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in net assets |
2,124,436 | (2,178,630 | ) | 11,161,191 | 47,799,561 | |||||||||||
Net assets: |
||||||||||||||||
Beginning of year |
39,194,492 | 134,843,348 | 94,049,048 | 159,771,542 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of year |
$ | 41,318,928 | $ | 132,664,718 | $ | 105,210,239 | $ | 207,571,103 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding beginning of year |
415,960 | 1,061,190 | 1,176,926 | 1,020,734 | ||||||||||||
Units sold |
9,554 | 22,118 | 16,318 | 14,956 | ||||||||||||
Units redeemed |
(52,248 | ) | (108,177 | ) | (136,816 | ) | (102,202 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding end of year |
373,266 | 975,131 | 1,056,428 | 933,488 | ||||||||||||
|
|
|
|
|
|
|
|
(2) | Name changed from Large Core to Large Core ESG on March 1, 2023. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
For the Period/Year Ended December 31, 2023
Small Cap Growth |
Small Cap Value |
International Equity |
Calvert | |||||||||||||
From operations: |
||||||||||||||||
Net investment income (loss) |
$ | (29,438 | ) | $ | 44,672 | $ | 784,623 | $ | 44,265 | |||||||
Net realized gains (losses) from investment |
6,181 | (66,269 | ) | 476,705 | 60,532 | |||||||||||
Capital gain distributions received |
124,879 | — | — | 35,245 | ||||||||||||
Change in net unrealized appreciation (depreciation) on investment |
344,325 | 185,245 | 3,932,021 | 1,213,227 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in net assets resulting from operations |
445,947 | 163,648 | 5,193,349 | 1,353,269 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
From unit transactions: |
||||||||||||||||
Units sold |
483,035 | 157,024 | 711,700 | 286,747 | ||||||||||||
Units redeemed |
(476,127 | ) | (242,283 | ) | (3,895,164 | ) | (1,091,377 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from unit transactions |
6,908 | (85,259 | ) | (3,183,464 | ) | (804,630 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in net assets |
452,855 | 78,389 | 2,009,885 | 548,639 | ||||||||||||
Net assets: |
||||||||||||||||
Beginning of year |
2,450,842 | 2,319,940 | 36,223,606 | 9,164,067 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of year |
$ | 2,903,697 | $ | 2,398,329 | $ | 38,233,491 | $ | 9,712,706 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding beginning of year |
250,237 | 158,766 | 1,436,008 | 146,132 | ||||||||||||
Units sold |
44,009 | 10,531 | 26,220 | 4,291 | ||||||||||||
Units redeemed |
(44,626 | ) | (16,756 | ) | (143,131 | ) | (16,384 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding end of year |
249,620 | 152,541 | 1,319,097 | 134,039 | ||||||||||||
|
|
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Period/Year Ended December 31, 2022
Government Money Market |
Short-Term Bond (1) |
Core Bond (2) |
High Yield Bond |
|||||||||||||
From operations: |
||||||||||||||||
Net investment income (loss) |
$ | 178,218 | $ | 8,260 | $ | 451,356 | $ | 119,890 | ||||||||
Net realized gains (losses) from investment |
— | 24 | (2,804,508 | ) | (457,557 | ) | ||||||||||
Change in net unrealized appreciation (depreciation) on investment |
— | (5,086 | ) | (2,192,652 | ) | (55,675 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from operations |
178,218 | 3,198 | (4,545,804 | ) | (393,342 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
From unit transactions: |
||||||||||||||||
Units sold |
58,902,022 | 7,482,643 | 10,445,436 | 2,369,518 | ||||||||||||
Units redeemed |
(60,617,723 | ) | (24,493 | ) | (14,143,310 | ) | (2,843,406 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from unit transactions |
(1,715,701 | ) | 7,458,150 | (3,697,874 | ) | (473,888 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in net assets |
(1,537,483 | ) | 7,461,348 | (8,243,678 | ) | (867,230 | ) | |||||||||
Net assets: |
||||||||||||||||
Beginning of year |
27,724,240 | — | 33,368,079 | 3,334,868 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of year |
$ | 26,186,757 | $ | 7,461,348 | $ | 25,124,401 | $ | 2,467,638 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding beginning of year |
1,295,538 | — | 639,737 | 80,968 | ||||||||||||
Units sold |
2,746,066 | 748,262 | 236,967 | 65,854 | ||||||||||||
Units redeemed |
(2,825,983 | ) | (2,445 | ) | (315,874 | ) | (78,458 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding end of year |
1,215,621 | 745,817 | 560,830 | 68,364 | ||||||||||||
|
|
|
|
|
|
|
|
(1) | Commencement of Operations was December 12, 2022. |
(2) | Effective November 1, 2022, Intermediate Bond was renamed Core Bond. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
For the Period/Year Ended December 31, 2022
Balanced II | Large Value Opportunities |
Large Core |
Large Growth |
|||||||||||||
From operations: |
||||||||||||||||
Net investment income (loss) |
$ | 199,299 | $ | 1,262,477 | $ | 126,623 | $ | (2,284,031 | ) | |||||||
Net realized gains (losses) from investment |
843,912 | (1,122,951 | ) | 624,997 | 917,455 | |||||||||||
Capital gain distributions received |
1,675,361 | 8,410,016 | 4,731,454 | 2,218,188 | ||||||||||||
Change in net unrealized appreciation (depreciation) on investment |
(11,424,064 | ) | (16,129,102 | ) | (26,843,666 | ) | (147,590,666 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from operations |
(8,705,492 | ) | (7,579,560 | ) | (21,360,592 | ) | (146,739,054 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
From unit transactions: |
||||||||||||||||
Units sold |
1,578,736 | 11,971,613 | 3,068,934 | 14,893,391 | ||||||||||||
Units redeemed |
(6,453,003 | ) | (26,888,533 | ) | (11,549,107 | ) | (32,807,758 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from unit transactions |
(4,874,267 | ) | (14,916,920 | ) | (8,480,173 | ) | (17,914,367 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in net assets |
(13,579,759 | ) | (22,496,480 | ) | (29,840,765 | ) | (164,653,421 | ) | ||||||||
Net assets: |
||||||||||||||||
Beginning of year |
52,774,251 | 157,339,828 | 123,889,813 | 324,424,963 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of year |
$ | 39,194,492 | $ | 134,843,348 | $ | 94,049,048 | $ | 159,771,542 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding beginning of year |
464,442 | 1,179,428 | 1,278,582 | 1,108,800 | ||||||||||||
Units sold |
15,718 | 95,076 | 35,693 | 80,795 | ||||||||||||
Units redeemed |
(64,200 | ) | (213,314 | ) | (137,349 | ) | (168,861 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding end of year |
415,960 | 1,061,190 | 1,176,926 | 1,020,734 | ||||||||||||
|
|
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
For the Period/Year Ended December 31, 2022
Small Cap Growth |
Small Cap Value |
International Equity |
Calvert | |||||||||||||
From operations: |
||||||||||||||||
Net investment income (loss) |
$ | (27,822 | ) | $ | 23,097 | $ | (22,460 | ) | $ | 104,195 | ||||||
Net realized gains (losses) from investment |
(532,099 | ) | (453,630 | ) | (254,946 | ) | 356,312 | |||||||||
Capital gain distributions received |
98,374 | 360,637 | — | 855,105 | ||||||||||||
Change in net unrealized appreciation (depreciation) on investment |
(599,422 | ) | (361,270 | ) | (6,840,500 | ) | (3,316,622 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from operations |
(1,060,969 | ) | (431,166 | ) | (7,117,906 | ) | (2,001,010 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
From unit transactions: |
||||||||||||||||
Units sold |
2,838,896 | 2,566,745 | 7,687,402 | 427,774 | ||||||||||||
Units redeemed |
(2,779,772 | ) | (3,153,710 | ) | (11,692,748 | ) | (2,146,286 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from unit transactions |
59,124 | (586,965 | ) | (4,005,346 | ) | (1,718,512 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in net assets |
(1,001,845 | ) | (1,018,131 | ) | (11,123,252 | ) | (3,719,522 | ) | ||||||||
Net assets: |
||||||||||||||||
Beginning of year |
3,452,687 | 3,338,071 | 47,346,858 | 12,883,589 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of year |
$ | 2,450,842 | $ | 2,319,940 | $ | 36,223,606 | $ | 9,164,067 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding beginning of year |
241,038 | 196,874 | 1,595,538 | 171,856 | ||||||||||||
Units sold |
279,270 | 170,125 | 330,991 | 6,453 | ||||||||||||
Units redeemed |
(270,071 | ) | (208,233 | ) | (490,521 | ) | (32,177 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Units outstanding end of year |
250,237 | 158,766 | 1,436,008 | 146,132 | ||||||||||||
|
|
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
FINANCIAL HIGHLIGHTS
For an accumulation unit outstanding throughout the period/year:
Income (Loss) from Investment Operations |
Ratios to Average Net Assets (c) | |||||||||||||||||||||||||||||||||||||||||||
For the Period/ Year Ended |
Unit Value Beginning of Period/ Year |
Net Investment Income (Loss) (a) |
Net Realized and Unrealized Gains (Losses) on Investments |
Total Income (Loss) from Investment Operations |
Unit Value, End of Period/ Year |
Net Assets, End of Period/Year |
Total Return (b) |
Gross Expenses |
Net Expenses, (Net of Reimbursements) |
Net Investment Income (Loss) (Net of Reimbursements) |
Portfolio Turnover |
|||||||||||||||||||||||||||||||||
Government Money Market |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
$ | 21.54 | $ | 0.79 | $ | 0.01 | $ | 0.80 | $ | 22.34 | $ | 24,432,222 | 3.65 | % | 1.10 | % | 1.10 | % | 3.61 | % | 11 | % | ||||||||||||||||||||||
12/31/2022 |
21.40 | 0.14 | 0.00 | 0.14 | 21.54 | 26,186,757 | 0.70 | 1.10 | 0.66 | (d) | 0.64 | 135 | ||||||||||||||||||||||||||||||||
12/31/2021 |
21.39 | 0.01 | (0.00 | ) | 0.01 | 21.40 | 27,724,240 | 0.03 | 1.10 | 0.23 | (e) | 0.03 | 12 | |||||||||||||||||||||||||||||||
12/31/2020 |
21.39 | 0.01 | (0.01 | ) | (0.00 | ) | 21.39 | 30,582,036 | 0.04 | 1.10 | 0.36 | (f) | 0.03 | 39 | ||||||||||||||||||||||||||||||
12/31/2019 |
21.20 | 0.18 | 0.01 | 0.19 | 21.39 | 18,063,384 | 0.92 | 1.10 | 1.10 | 0.86 | 22 | |||||||||||||||||||||||||||||||||
Short-Term Bond |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
10.00 | 0.26 | 0.20 | 0.46 | 10.46 | 7,102,373 | 4.54 | 1.10 | 1.10 | 2.58 | 11 | |||||||||||||||||||||||||||||||||
12/31/2022 ^ |
10.00 | 0.01 | (0.01 | ) | — | 10.00 | 7,461,348 | — | 1.10 | 1.10 | 1.83 | 0 | (g) | |||||||||||||||||||||||||||||||
Inflation Opportunities |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 ^^ |
10.00 | 0.04 | 0.55 | 0.59 | 10.59 | 12,200,365 | 5.86 | 1.10 | 1.10 | 2.32 | 6 | |||||||||||||||||||||||||||||||||
Core Bond (1) |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
44.80 | 1.37 | 0.76 | 2.13 | 46.93 | 24,823,122 | 4.74 | 1.10 | 1.10 | 3.03 | 16 | |||||||||||||||||||||||||||||||||
12/31/2022 |
52.16 | 0.75 | (8.11 | ) | (7.36 | ) | 44.80 | 25,124,401 | (14.11 | ) | 1.10 | 1.10 | 1.60 | 46 | ||||||||||||||||||||||||||||||
12/31/2021 |
53.23 | 0.39 | (1.46 | ) | (1.07 | ) | 52.16 | 33,368,079 | (2.02 | ) | 1.10 | 1.10 | 0.75 | 9 | ||||||||||||||||||||||||||||||
12/31/2020 |
49.99 | 1.35 | 1.89 | 3.24 | 53.23 | 38,246,916 | 6.48 | 1.10 | 1.10 | 2.60 | 18 | |||||||||||||||||||||||||||||||||
12/31/2019 |
46.38 | 0.82 | 2.79 | 3.61 | 49.99 | 36,406,821 | 7.79 | 1.10 | 1.10 | 1.68 | 11 | |||||||||||||||||||||||||||||||||
High Yield Bond |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
36.10 | 1.78 | 1.68 | 3.46 | 39.56 | 2,549,882 | 9.56 | 1.10 | 1.10 | 4.76 | 10 | |||||||||||||||||||||||||||||||||
12/31/2022 |
41.19 | 1.60 | (6.69 | ) | (5.09 | ) | 36.10 | 2,467,638 | (12.36 | ) | 1.10 | 1.10 | 4.25 | 108 | ||||||||||||||||||||||||||||||
12/31/2021 |
39.22 | 1.40 | 0.57 | 1.97 | 41.19 | 3,334,868 | 5.03 | 1.10 | 1.10 | 3.47 | 11 | |||||||||||||||||||||||||||||||||
12/31/2020 |
38.11 | 1.55 | (0.44 | ) | 1.11 | 39.22 | 3,198,014 | 2.90 | 1.10 | 1.10 | 4.26 | 13 | ||||||||||||||||||||||||||||||||
12/31/2019 |
33.73 | 1.71 | 2.67 | 4.38 | 38.11 | 3,052,520 | 12.99 | 1.10 | 1.10 | 4.69 | 9 | |||||||||||||||||||||||||||||||||
Balanced II |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
94.23 | 0.91 | 15.56 | 16.47 | 110.70 | 41,318,928 | 17.48 | 1.10 | 1.10 | 0.90 | 5 | |||||||||||||||||||||||||||||||||
12/31/2022 |
113.63 | 0.46 | (19.86 | ) | (19.40 | ) | 94.23 | 39,194,492 | (17.08 | ) | 1.10 | 1.10 | 0.46 | 7 | ||||||||||||||||||||||||||||||
12/31/2021 |
98.14 | 0.79 | 14.70 | 15.49 | 113.63 | 52,774,251 | 15.78 | 1.10 | 1.10 | 0.75 | 11 | |||||||||||||||||||||||||||||||||
12/31/2020 |
85.74 | 0.28 | 12.12 | 12.40 | 98.14 | 51,298,929 | 14.46 | 1.10 | 1.10 | 0.32 | 13 | |||||||||||||||||||||||||||||||||
12/31/2019 |
71.08 | 0.80 | 13.86 | 14.66 | 85.74 | 47,067,645 | 20.64 | 1.10 | 1.10 | 1.01 | 6 |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
FINANCIAL HIGHLIGHTS (Continued)
For an accumulation unit outstanding throughout the period/year:
Income (Loss) from Investment Operations |
Ratios to Average Net Assets (c) | |||||||||||||||||||||||||||||||||||||||||||
For the Period/ Year Ended |
Unit Value Beginning of Period/ Year |
Net Investment Income (Loss) (a) |
Net Realized and Unrealized Gains (Losses) on Investments |
Total Income (Loss) from Investment Operations |
Unit Value, End of Period/ Year |
Net Assets, End of Period/Year |
Total Return (b) |
Gross Expenses |
Net Expenses, (Net of Reimbursements) |
Net Investment Income (Loss) (Net of Reimbursements) |
Portfolio Turnover |
|||||||||||||||||||||||||||||||||
Large Value Opportunities |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
$ | 127.07 | $ | 1.21 | $ | 7.77 | $ | 8.98 | $ | 136.05 | $ | 132,664,718 | 7.07 | % | 1.10 | % | 1.10 | % | 0.94 | % | 3 | % | ||||||||||||||||||||||
12/31/2022 |
133.40 | 1.13 | (7.46 | ) | (6.33 | ) | 127.07 | 134,843,348 | (4.73 | ) | 1.10 | 1.10 | 0.89 | 16 | ||||||||||||||||||||||||||||||
12/31/2021 |
104.67 | 9.93 | 18.80 | 28.73 | 133.40 | 157,339,828 | 27.46 | 1.10 | 1.10 | 8.22 | 17 | |||||||||||||||||||||||||||||||||
12/31/2020 |
106.76 | 1.26 | (3.35 | ) | (2.09 | ) | 104.67 | 141,612,832 | (1.96 | ) | 1.10 | 1.10 | 1.34 | 5 | ||||||||||||||||||||||||||||||
12/31/2019 |
87.50 | 1.30 | 17.96 | 19.26 | 106.76 | 162,541,643 | 22.02 | 1.10 | 1.10 | 1.32 | 4 | |||||||||||||||||||||||||||||||||
Large Core ESG (2) |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
79.91 | 0.05 | 19.63 | 19.68 | 99.59 | 105,210,239 | 24.63 | 1.10 | 1.10 | 0.05 | 8 | |||||||||||||||||||||||||||||||||
12/31/2022 |
96.90 | 0.10 | (17.09 | ) | (16.99 | ) | 79.91 | 94,049,048 | (17.53 | ) | 1.10 | 1.10 | 0.12 | 7 | ||||||||||||||||||||||||||||||
12/31/2021 |
75.51 | 3.63 | 17.76 | 21.39 | 96.90 | 123,889,813 | 28.33 | 1.10 | 1.10 | 4.21 | 13 | |||||||||||||||||||||||||||||||||
12/31/2020 |
66.00 | 0.40 | 9.11 | 9.51 | 75.51 | 106,615,592 | 14.40 | 1.10 | 1.10 | 0.61 | 11 | |||||||||||||||||||||||||||||||||
12/31/2019 |
52.50 | 0.44 | 13.06 | 13.50 | 66.00 | 102,787,882 | 25.71 | 1.10 | 1.10 | 0.73 | 3 | |||||||||||||||||||||||||||||||||
Large Growth |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
156.53 | (2.08 | ) | 67.91 | 65.83 | 222.36 | 207,571,103 | 42.06 | 1.10 | 1.10 | (1.10 | ) | 0 | (g) | ||||||||||||||||||||||||||||||
12/31/2022 |
292.59 | (2.16 | ) | (133.90 | ) | (136.06 | ) | 156.53 | 159,771,542 | (46.50 | ) | 1.10 | 1.10 | (1.10 | ) | 5 | ||||||||||||||||||||||||||||
12/31/2021 |
269.00 | 1.43 | 22.16 | 23.59 | 292.59 | 324,424,963 | 8.77 | 1.10 | 1.10 | 0.49 | 15 | |||||||||||||||||||||||||||||||||
12/31/2020 |
156.78 | 14.49 | 97.73 | 112.22 | 269.00 | 340,772,620 | 71.58 | 1.10 | 1.10 | 7.22 | 17 | |||||||||||||||||||||||||||||||||
12/31/2019 |
117.87 | (0.54 | ) | 39.45 | 38.91 | 156.78 | 229,745,304 | 33.02 | 1.10 | 1.10 | (0.38 | ) | 12 | |||||||||||||||||||||||||||||||
Small Cap Growth |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
9.79 | (0.12 | ) | 1.96 | 1.84 | 11.63 | 2,903,697 | 18.77 | 1.10 | 1.10 | (1.10 | ) | 18 | |||||||||||||||||||||||||||||||
12/31/2022 |
14.32 | (0.12 | ) | (4.41 | ) | (4.53 | ) | 9.79 | 2,450,842 | (31.63 | ) | 1.10 | 1.10 | (1.10 | ) | 140 | ||||||||||||||||||||||||||||
12/31/2021 |
12.29 | 0.10 | 1.93 | 2.03 | 14.32 | 3,452,687 | 16.55 | 1.10 | 1.10 | 0.70 | 14 | |||||||||||||||||||||||||||||||||
12/31/2020 ^^^ |
10.00 | (0.05 | ) | 2.34 | 2.29 | 12.29 | 3,335,771 | 22.91 | 1.10 | 1.10 | (1.10 | ) | 9 | |||||||||||||||||||||||||||||||
Small Cap Value |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
14.61 | 0.29 | 0.82 | 1.11 | 15.72 | 2,398,329 | 7.60 | 1.10 | 1.10 | 1.95 | 9 | |||||||||||||||||||||||||||||||||
12/31/2022 |
16.96 | 0.13 | (2.48 | ) | (2.35 | ) | 14.61 | 2,319,940 | (13.88 | ) | 1.10 | 1.10 | 0.83 | 137 | ||||||||||||||||||||||||||||||
12/31/2021 |
13.39 | 4.51 | (0.94 | ) | 3.57 | 16.96 | 3,338,071 | 26.61 | 1.10 | 1.10 | 28.26 | 30 | ||||||||||||||||||||||||||||||||
12/31/2020 ^^^ |
10.00 | (0.02 | ) | 3.41 | 3.39 | 13.39 | 3,373,665 | 33.92 | 1.10 | 1.10 | (0.47 | ) | 17 | |||||||||||||||||||||||||||||||
International Equity |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
25.23 | 0.57 | 3.18 | 3.75 | 28.98 | 38,233,491 | 14.90 | 1.10 | 1.10 | 2.09 | 4 | |||||||||||||||||||||||||||||||||
12/31/2022 |
29.67 | (0.01 | ) | (4.43 | ) | (4.44 | ) | 25.23 | 36,223,606 | (14.96 | ) | 1.10 | 1.10 | (0.06 | ) | 26 | ||||||||||||||||||||||||||||
12/31/2021 |
26.48 | 0.68 | 2.51 | 3.19 | 29.67 | 47,346,858 | 12.05 | 1.10 | 1.10 | 2.36 | 7 | |||||||||||||||||||||||||||||||||
12/31/2020 |
25.06 | 0.07 | 1.35 | 1.42 | 26.48 | 46,652,934 | 5.70 | 1.10 | 1.10 | 0.31 | 7 | |||||||||||||||||||||||||||||||||
12/31/2019 |
20.90 | 0.42 | 3.74 | 4.16 | 25.06 | 47,688,477 | 19.90 | 1.10 | 1.10 | 1.83 | 6 | |||||||||||||||||||||||||||||||||
Calvert |
|
|||||||||||||||||||||||||||||||||||||||||||
12/31/2023 |
62.71 | 0.32 | 9.43 | 9.75 | 72.46 | 9,712,706 | 15.55 | 1.10 | 1.10 | 0.47 | 4 | |||||||||||||||||||||||||||||||||
12/31/2022 |
74.97 | 0.67 | (12.93 | ) | (12.26 | ) | 62.71 | 9,064,067 | (16.35 | ) | 1.10 | 1.10 | 1.01 | 13 | ||||||||||||||||||||||||||||||
12/31/2021 |
65.84 | 0.27 | 8.86 | 9.13 | 74.97 | 12,883,589 | 13.87 | 1.10 | 1.10 | 0.38 | 6 | |||||||||||||||||||||||||||||||||
12/31/2020 |
57.74 | 0.92 | 7.18 | 8.10 | 65.84 | 12,984,735 | 14.01 | 1.10 | 1.10 | 1.56 | 12 | |||||||||||||||||||||||||||||||||
12/31/2019 |
46.81 | 0.38 | 10.55 | 10.93 | 57.74 | 12,348,847 | 23.36 | 1.10 | 1.10 | 0.71 | 8 |
^ | Commencement of Operations was December 12, 2022. Total return and portfolio turnover are not annualized. |
^^ | Commencement of Operations was October 30, 2023. Total return and portfolio turnover are not annualized. |
^^^ | Commencement of Operations was August 1, 2020. Total return and portfolio turnover are not annualized. |
(1) | Formerly, Intermediate Bond. |
(2) | Formerly, Large Core. |
(a) | Calculated based upon average units outstanding. |
(b) | Actual return presented may differ from calculated return due to rounding of unit value for financial statement purposes. |
(c) | Ratios exclude expenses incurred by the Underlying Fund or Calvert VP SRI Balanced Portfolio. |
(d) | Expenses waived to sustain a positive yield had an impact of 0.44%. |
(e) | Expenses waived to sustain a positive yield had an impact of 0.87%. |
(f) | Expenses waived to sustain a positive yield had an impact of 0.74%. |
(g) | Amount rounds to less than 1%. |
The notes to the financial statements are an integral part of this report.
TRANSAMERICA VARIABLE FUNDS
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Transamerica Variable Funds (individually, a “Subaccount” and collectively, “TVF”) is a separate investment account established on November 30, 1993, by Transamerica Financial Life Insurance Company (“TFLIC”). TFLIC is incorporated under the laws of the State of New York and is a wholly-owned indirect subsidiary of Transamerica Corporation, which conducts most of its operations through subsidiary companies engaged in the insurance business or in providing non-insurance financial services. Transamerica Corporation is indirectly owned by Aegon Ltd., the securities of which are publicly traded. Aegon Ltd., a holding company, conducts its business through subsidiary companies engaged primarily in the insurance business.
TVF operates as a unit investment trust under the Investment Company Act of 1940, as amended. TVF holds assets that are segregated from all of TFLIC’s other assets and, at present, is used as an investment vehicle under certain tax-deferred annuity contracts issued by TFLIC to fund retirement plans maintained by certain not-for-profit and other organizations (“Group Plans”). TFLIC is the legal holder of the assets in TVF.
There are currently thirteen Subaccounts within TVF which are available to contractholders of Group Plans. Each Subaccount operates as a “fund of fund”, and with the exception of the Calvert Subaccount, invests all of its investable assets in a corresponding series of Transamerica Funds (the “Trust”). Effective close of business on October 27, 2023, the Inflation-Protected Securities Subaccount was liquidated, and proceeds were invested in the newly created Inflation Opportunities Subaccount. Therefore, these financial statements exclude any reference to Inflation-Protected Securities. The Calvert Subaccount invests in the Calvert VP SRI Balanced Portfolio (the “Calvert Portfolio”), a series of Calvert Variable Series, Inc. The shareholder reports of the Trust and the Calvert Portfolio (collectively, the “Underlying Funds”), including the Schedules of Investments, should be read in conjunction with TVF’s financial statements.
Subaccount |
Underlying Fund | |
Government Money Market (1) | Transamerica Government Money Market Fund, Class I3 | |
Short-Term Bond (2) | Transamerica Short-Term Bond Fund, Class I3 | |
Inflation Opportunities (3) | Transamerica Inflation Opportunities Fund, Class I3 | |
Core Bond (1)(4) | Transamerica Core Bond Fund, Class I3 (3) | |
High Yield Bond (1) | Transamerica High Yield Bond Fund, Class I3 | |
Balanced II (1) | Transamerica Balanced II Fund, Class I3 | |
Large Value Opportunities (1) | Transamerica Large Value Opportunities Fund, Class I3 | |
Large Core ESG (1)(5) | Transamerica Large Core ESG Fund, Class I3 | |
Large Growth (1) | Transamerica Large Growth Fund, Class I3 | |
Small Cap Value (6) | Transamerica Small Cap Value Fund, Class I3 | |
Small Cap Growth (6) | Transamerica Small Cap Growth Fund, Class I3 | |
International Equity (1) | Transamerica International Equity Fund, Class I3 | |
Calvert (1) | Calvert VP SRI Balanced Portfolio (“Calvert Portfolio’) |
(1) | Commencement of operations was August 18, 1994. |
(2) | Commencement of operations was December 12, 2022. |
(3) | Commencement of Operations was October 30, 2023. |
(4) | Effective November 1, 2022, name changed from Intermediate Bond to Core Bond. |
(5) | Effective March 1, 2023, name changed from Large Core to Large Core ESG |
(6) | Commencement of operations was August 1, 2020. |
From time to time, TVF may have a concentration of several contractholders holding a significant percentage of shares outstanding. Investment activities of these contractholders could have a material impact on TVF.
TRANSAMERICA VARIABLE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
In preparing the Subaccounts’ financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), estimates or assumptions (which could differ from actual results) may be used that affect reported amounts and disclosures. The Subaccounts apply investment company accounting and reporting guidance Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 946 Financial Services – Investment Companies. The following is a summary of significant accounting policies consistently followed by TVF.
Investments: The investments by the Subaccounts in the Underlying Funds or the Calvert Portfolio are valued at the net asset value per share determined as of the close of business of the New York Stock Exchange (“NYSE”) (typically, 4:00 P.M. Eastern time) on the valuation date. A description of the portfolio valuation policy for the Trust can be found in Note 3 of the Trust’s Notes to Financial Statements or for the Calvert Portfolio, in Note A of the Calvert Portfolio’s Notes to Financial Statements.
Investment Income and Expenses: Dividend income is recorded on the ex-dividend date and realized gains and losses from the sale of investments are determined on the basis of identified cost.
In addition to an asset-based fee assessed to the Subaccounts, each Subaccount will indirectly bear the fees and expenses reflected in the corresponding Underlying Fund’s or Calvert Portfolio’s unit value.
Distributions to Contractholders: The net investment income, if any, and realized and unrealized gains and losses earned by each Subaccount are accumulated and reinvested in the Subaccount, rather than distributed or allocated to the contractholders.
Contributions and Withdrawals: The unit value of each Subaccount is determined as of the close of the NYSE each day the NYSE is open for business. Participants may contribute to or withdraw from the Subaccounts at the stated unit value on a particular day based upon the terms described in the prospectus.
Federal Income Taxes: The operations of TVF form a part of, and are taxed with, the operations of TFLIC. TFLIC does not expect, based upon current tax law, to incur any income tax upon the earnings or realized or unrealized capital gains attributable to TVF. Based upon this expectation, no charges are currently being deducted from TVF for federal income tax purposes. TFLIC identifies its major tax jurisdictions as US Federal, all fifty states and the District of Columbia.
TVF recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. If applicable, TVF recognizes interest accrued related to unrecognized tax liabilities and related penalties as “tax expense” on the Statement of Operations. Management has evaluated TVF’s tax provisions taken for all open tax years 2020-2022, as 2023 has not yet been filed, and has concluded that no provision for income tax is required in TVF’s financial statements.
Indemnification: In the normal course of business, TVF enters into contracts that contain a variety of representations that provide general indemnifications. TVF’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against TVF and/or its affiliates that have not yet occurred. However, based on experience, TVF expects the risk of loss to be remote.
NOTE 2. SECURITY VALUATIONS
All investments in securities are recorded at their estimated fair value. The values of the Subaccounts’ investments in the Trust and in the Calvert Portfolio are valued at the net asset value per share at the close of
TRANSAMERICA VARIABLE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 2. SECURITY VALUATIONS (continued)
business of the NYSE, each day the NYSE is open for business. The Subaccounts utilize various methods to measure the fair value of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three Levels of inputs are:
Level 1 – Unadjusted quoted prices in active markets for identical securities.
Level 2 – Inputs, other than quoted prices included in Level 1 that are observable, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 – Unobservable inputs, which may include management’s own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange- traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, but not limited to, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is generally greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy that is assigned to the fair value measurement of a security is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.
Fair value measurement: Certain investment companies are valued at the net asset value of the underlying portfolio as a practical expedient. These investment companies are not included within the fair value hierarchy. Certain other investment companies are valued at the actively traded net asset value and no valuation adjustments are applied. These investment companies are categorized in Level 1 of the fair value hierarchy. There are no Level 2 or Level 3 investments held as of December 31, 2023 and during the period/year then ended.
NOTE 3. FEES AND RELATED PARTY TRANSACTIONS
All Subaccounts, except the Calvert Subaccount, purchase shares of a series of the Trust. The unit value of each series of the Trust reflects the investment management fee charged by Transamerica Asset Management, Inc. (“TAM”), the investment manager of the Trust, which provides investment advice and related services to the Trust. TAM is directly owned by Transamerica Life Insurance Company (“TLIC”) and AUSA Holding, LLC (“AUSA”), both of which are indirect, wholly owned subsidiaries of AEGON Ltd. TLIC is owned by Commonwealth General Corporation (“Commonwealth”). Commonwealth and AUSA are wholly owned by Transamerica Corporation (DE). Transamerica Corporation (DE) is wholly owned by AEGON International B.V., which is wholly owned by AEGON Ltd., a Bermuda exempted company with liability limited by shares (formerly AEGON NV, a Netherlands corporation) and a publicly traded international insurance group.
TFLIC reserves the right to deduct an annual contract charge from a participant’s account to reimburse TFLIC for administrative expenses relating to the maintenance of the group variable annuity contracts. TFLIC has no present intention to impose such a charge but may do so in the future. Any such annual charge will not exceed $50.
TRANSAMERICA VARIABLE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. FEES AND RELATED PARTY TRANSACTIONS (continued)
Daily charges to TVF for mortality and expense risk fees assumed by TFLIC were computed at an annual rate of 1.10%; however, TFLIC reserves the right to charge maximum fees of 1.25% of daily average net assets upon written notice.
In order to avoid a negative yield in the Government Money Market Subaccount (“Money Market”), TFLIC may waive fees or reimburse expenses of Money Market. Any such waiver or expense reimbursement would be voluntary, could be discontinued at any time, and is subject to recapture by TFLIC during the calendar year in which it was waived. There were no amounts recaptured during the year ended December 31, 2023 and no amounts subject to recoupment in future years.
Waived expenses related to the maintenance of the yield are included in the Statement of Operations within the captions “Expenses reimbursed”. There is no guarantee that Money Market will be able to avoid a negative yield. There was no amount waived during the year ended December 31, 2023.
NOTE 4. PORTFOLIO TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments for the year ended December 31, 2023 were as follows:
Subaccount |
Cost of Purchases | Proceeds from Sales | ||||||
Government Money Market |
$ | 2,743,465 | $ | 4,599,804 | ||||
Short-Term Bond |
805,411 | 1,320,094 | ||||||
Inflation Opportunities |
12,309,147 | 750,886 | ||||||
Core Bond |
3,790,373 | 4,673,128 | ||||||
High Yield Bond |
240,050 | 281,572 | ||||||
Balanced II |
1,945,446 | 5,211,670 | ||||||
Large Value Opportunities |
4,186,850 | 13,987,047 | ||||||
Large Core ESG |
8,367,587 | 12,256,567 | ||||||
Large Growth |
888,679 | 19,224,157 | ||||||
Small Cap Growth |
588,376 | 485,703 | ||||||
Small Cap Value |
207,955 | 248,591 | ||||||
International Equity |
1,555,809 | 3,953,797 | ||||||
Calvert |
376,803 | 1,101,695 |
NOTE 5. RISK FACTORS
Market risk: The market values of the Underlying Funds’ securities and other assets will fluctuate, sometimes sharply and unpredictably, due to changes in general market conditions, overall economic trends or events, governmental actions or interventions, actions taken by the U.S. Federal Reserve or foreign central banks, political developments, investor sentiment, public health emergencies such as a pandemic, and other factors that may or may not be related to the issuer of the security or other asset. The market prices of securities and other assets also may go down due to events or conditions that affect particular sectors, industries or issuers. Adverse market conditions may be prolonged and may not have the same impact on all types of securities or other assets.
Economies and financial markets throughout the world are increasingly interconnected. Economic, financial or political events, trading and tariff arrangements, public health events, terrorism, technology and data interruptions, natural disasters, and other circumstances in one or more countries or regions could be highly disruptive to, and have profound impacts on, global economies or markets. As a result, whether or not an Underlying Fund invests in securities of issuers located in or with significant exposure to the countries directly affected, the value and liquidity of an Underlying Fund’s investments may go down.
TRANSAMERICA VARIABLE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5. RISK FACTORS (continued)
In recent years, the COVID-19 pandemic, the large expansion of government deficits and debt as a result of government actions to mitigate the effects of the pandemic, the Russian invasion of Ukraine and the rise of inflation have resulted in extreme volatility in the global economy and in global financial markets. These events could be prolonged and could continue to adversely affect the value and liquidity of an Underlying Fund’s investments, impair an Underlying Fund’s ability to satisfy redemption requests, and negatively impact an Underlying Fund’s performance.
Underlying funds risk: Because each Subaccount invests its assets in an Underlying Fund, its ability to achieve its investment objective depends largely on the performance on the Underlying Fund in which it invests. Investing in Underlying Funds subjects the Subaccounts to the risks of investing in the underlying securities or assets held by those Underlying Funds. Each Underlying Fund has its own investment risks, and those risks can affect the value of the Underlying Fund’s shares, and therefore the value of a Subaccount’s investment. There can be no assurance that the investment objective of any Underlying Fund will be achieved. In addition, a Subaccount will bear a pro rata portion of the operating expenses of the Underlying Fund in which it invests.
NOTE 6. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events through February 28, 2024, which is the date that these financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment to or disclosure in the financial statements.
Report of Independent Registered Public Accounting Firm
To the Contractholders of Transamerica Variable Funds and the Board of Directors of Transamerica Financial Life Insurance Company
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of Transamerica Variable Funds (“TVF”) (comprising Government Money Market, Short-Term Bond, Inflation Opportunities, Core Bond, High Yield Bond, Balanced II, Large Value Opportunities, Large Core ESG (formerly, Large Core), Large Growth, Small Cap Growth, Small Cap Value, International Equity, and Calvert (collectively referred to as the “Subaccounts”)) as of December 31, 2023, and the related statements of operations and changes in net assets, and the financial highlights for each of the periods indicated in the table below and the related notes (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 Subaccounts comprising TVF at December 31, 2023, the results of their operations, changes in net assets and financial highlights for each of the periods indicated in the table below, in conformity with U.S. generally accepted accounting principles.
Subaccounts comprising TVF | Statements of operations |
Statements of changes in net assets |
Financial highlights | |||
Government Money Market Core Bond High Yield Bond Balanced II Large Value Opportunities Large Core ESG (formerly, Large Core) Large Growth International Equity Calvert |
For the year ended December 31, 2023 | For each of the two years in the period ended December 31, 2023 | For each of the five years in the period ended December 31, 2023 | |||
Small Cap Growth Small Cap Value |
For the year ended December 31, 2023 | For each of the two years in the period ended December 31, 2023 | For each of the three years ended December 31, 2023, and the period from August 1, 2020 (commencement of operations) to December 31, 2020 | |||
Short-Term Bond |
For the year ended December 31, 2023 | For the year ended December 31, 2023, and the period from December 12, 2022 (commencement of operations) to December 31, 2022 | ||||
Inflation Opportunities |
For the period from October 30, 2023 (commencement of operations) through December 31, 2023 |
Basis for Opinion
These financial statements are the responsibility of TVF’s management. Our responsibility is to express an opinion on each of the Subaccounts’ 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 TVF 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 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. TVF is not required to have, nor were we engaged to perform, an audit of TVF’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of TVF’s internal control over financial reporting. Accordingly, we express no such opinion.
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 procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, brokers and others; when replies were not received from brokers and others, we performed other auditing procedures. 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. We believe that our audits provide a reasonable basis for our opinion.
We have served as the TVF’s auditor since 2010.
Boston, Massachusetts
February 28, 2024
FINANCIAL STATEMENTS – STATUTORY BASIS
AND SUPPLEMENTARY INFORMATION
Transamerica Financial Life Insurance Company
Years Ended December 31, 2023, 2022 and 2021
Transamerica Financial Life Insurance Company
Financial Statements – Statutory Basis
and Supplementary Information
Years Ended December 31, 2023, 2022 and 2021
Contents
1 | ||||
Audited Financial Statements |
||||
3 | ||||
4 | ||||
Statements of Changes in Capital and Surplus – Statutory Basis |
5 | |||
7 | ||||
8 | ||||
8 | ||||
2. Basis of Presentation and Summary of Significant Accounting Policies |
8 | |||
20 | ||||
21 | ||||
29 | ||||
47 | ||||
63 | ||||
64 | ||||
71 | ||||
71 | ||||
73 | ||||
74 | ||||
78 | ||||
78 | ||||
15. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities |
80 | |||
81 | ||||
82 | ||||
84 | ||||
Summary of Investments – Other Than Investments in Related Parties |
85 | |||
86 | ||||
87 |
Report of Independent Auditors
To the Board of Directors of Transamerica Financial Life Insurance Company
Opinions
We have audited the accompanying statutory basis financial statements of Transamerica Financial Life Insurance Company (the “Company”), which comprise the balance sheets – statutory basis as of December 31, 2023 and 2022, and the related statements of operations - statutory basis, of changes in capital and surplus - statutory basis, and of cash flow - statutory basis for each of the three years in the period ended December 31, 2023, including the related notes and summary of investments - other than investments in related parties at December 31, 2023, supplementary insurance information at December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021, and reinsurance at December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 listed in the accompanying index (collectively referred to as the “financial statements”).
Unmodified Opinion on Statutory Basis of Accounting
In our opinion, the accompanying financial statements present fairly, in all material respects, the admitted assets, liabilities and capital and surplus of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in accordance with the accounting practices prescribed or permitted by the New York Department of Financial Services described in Note 2.
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” section of our report, the accompanying financial statements 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, 2023 and 2022, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2023.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
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 New York Department of Financial Services, 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.
PricewaterhouseCoopers LLP, One North Wacker, Chicago, IL 60606
T: (312) 298 2000, www.pwc.com/us
Responsibilities of Management 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 New York Department of Financial Services. 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are available to be issued.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with US GAAS, we:
● | Exercise professional judgment and maintain professional skepticism throughout the audit. |
● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
● | Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed. |
● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
/s/PricewaterhouseCoopers LLP
Chicago, Illinois
April 11, 2024
2
Transamerica Financial Life Insurance Company
Balance Sheets – Statutory Basis
(Dollars in Millions)
December 31 | ||||||||
2023 | 2022 | |||||||
|
|
| ||||||
Admitted assets |
||||||||
Cash, cash equivalents and short-term investments |
$ | 1,247 | $ | 205 | ||||
Bonds |
4,953 | 5,243 | ||||||
Preferred stocks |
4 | 4 | ||||||
Common stocks |
3 | 6 | ||||||
Mortgage loans on real estate |
1,841 | 1,853 | ||||||
Policy loans |
151 | 143 | ||||||
Securities lending reinvested collateral assets |
321 | 412 | ||||||
Derivatives |
39 | 204 | ||||||
Other invested assets |
285 | 268 | ||||||
|
|
| ||||||
Total cash and invested assets |
8,844 | 8,338 | ||||||
Accrued investment income |
58 | 62 | ||||||
Premiums deferred and uncollected |
8 | 8 | ||||||
Net deferred income tax asset |
24 | 30 | ||||||
Other assets |
14 | 38 | ||||||
Separate account assets |
18,447 | 16,412 | ||||||
|
|
| ||||||
Total admitted assets |
$ | 27,395 | $ | 24,888 | ||||
|
|
| ||||||
Liabilities and capital and surplus |
||||||||
Aggregate reserves for policies and contracts |
$ | 6,173 | $ | 6,540 | ||||
Policy and contract claim reserves |
37 | 35 | ||||||
Liability for deposit-type contracts |
30 | 31 | ||||||
Transfers from separate accounts due or accrued |
(65 | ) | (96 | ) | ||||
Asset valuation reserve |
114 | 106 | ||||||
Interest maintenance reserve |
4 | 13 | ||||||
Derivatives |
59 | 224 | ||||||
Payable for collateral under securities loaned and other transactions |
359 | 463 | ||||||
Borrowed money |
20 | 20 | ||||||
Remittances and items not allocated |
1,265 | 190 | ||||||
Other liabilities |
42 | 103 | ||||||
Separate account liabilities |
18,447 | 16,412 | ||||||
|
|
| ||||||
Total liabilities |
26,485 | 24,041 | ||||||
|
|
| ||||||
Total capital and surplus |
910 | 847 | ||||||
|
|
| ||||||
Total liabilities and capital and surplus |
$ | 27,395 | $ | 24,888 | ||||
|
|
|
See accompanying notes.
3
Transamerica Financial Life Insurance Company
Statements of Operations – Statutory Basis
(Dollars in Millions)
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Revenues |
||||||||||||
Premiums and annuity considerations |
$ | 3,517 | $ | 5,185 | $ | 5,222 | ||||||
Net investment income |
330 | 333 | 342 | |||||||||
Fee revenue and other income |
238 | 250 | 292 | |||||||||
|
|
|||||||||||
Total revenue |
4,085 | 5,768 | 5,856 | |||||||||
Benefits and expenses |
||||||||||||
Death benefits |
92 | 84 | 95 | |||||||||
Annuity benefits |
180 | 136 | 176 | |||||||||
Accident and health benefits |
69 | 58 | 62 | |||||||||
Surrender benefits |
3,902 | 10,801 | 5,642 | |||||||||
Other benefits |
11 | 9 | 10 | |||||||||
Net increase (decrease) in reserves |
(360 | ) | (182 | ) | (287) | |||||||
Commissions |
89 | 87 | 104 | |||||||||
Net transfers to (from) separate accounts |
(365 | ) | (5,617 | ) | (387) | |||||||
General insurance expenses and other |
153 | 144 | 120 | |||||||||
|
|
|||||||||||
Total benefits and expenses |
3,771 | 5,520 | 5,535 | |||||||||
|
|
|||||||||||
Gain (loss) from operations before federal income taxes |
314 | 248 | 321 | |||||||||
Federal income tax (benefit) expense |
24 | 1 | 17 | |||||||||
|
|
|||||||||||
Net gain (loss) from operations |
290 | 247 | 304 | |||||||||
Net realized capital gains (losses), after tax and amounts transferred to interest maintenance reserve |
(100 | ) | (179 | ) | (115) | |||||||
|
|
|||||||||||
Net income (loss) |
$ | 190 | $ | 68 | $ | 189 | ||||||
|
|
See accompanying notes.
4
Transamerica Financial Life Insurance Company
Statements of Changes in Capital and Surplus – Statutory Basis
(Dollars in Millions)
Common Stock |
Paid-in Surplus |
Special Surplus Funds |
Unassigned Surplus |
Total Capital and Surplus |
||||||||||||||||
|
|
|||||||||||||||||||
Balance at January 1, 2021 |
$ | 2 | $ | 684 | $ | 13 | $ | 379 | $ | 1,078 | ||||||||||
Net income (loss) |
— | — | — | 189 | 189 | |||||||||||||||
Change in net unrealized capital gains/losses, net of taxes |
— | — | — | 12 | 12 | |||||||||||||||
Change in net deferred income tax asset |
— | — | — | 7 | 7 | |||||||||||||||
Change in nonadmitted assets |
— | — | — | (11 | ) | (11) | ||||||||||||||
Change in asset valuation reserve |
— | — | — | 14 | 14 | |||||||||||||||
Dividends to stockholders |
— | — | — | (200 | ) | (200) | ||||||||||||||
Other changes - net |
— | — | 2 | (2 | ) | — | ||||||||||||||
|
|
|||||||||||||||||||
Balance at December 31, 2021 |
$ | 2 | $ | 684 | $ | 15 | $ | 388 | $ | 1,089 | ||||||||||
Net income (loss) |
— | — | — | 68 | 68 | |||||||||||||||
Change in net unrealized capital gains/losses, net of taxes |
— | — | — | (23 | ) | (23) | ||||||||||||||
Change in net deferred income tax asset |
— | — | — | 12 | 12 | |||||||||||||||
Change in nonadmitted assets |
— | — | — | (26 | ) | (26) | ||||||||||||||
Change in reserve on account of change valuation basis |
— | — | — | 51 | 51 | |||||||||||||||
Change in asset valuation reserve |
— | — | — | (2 | ) | (2) | ||||||||||||||
Dividends to stockholders |
— | — | — | (300 | ) | (300) | ||||||||||||||
Other changes - net |
— | — | (8 | ) | (14 | ) | (22) | |||||||||||||
|
|
|||||||||||||||||||
Balance at December 31, 2022 |
$ | 2 | $ | 684 | $ | 7 | $ | 154 | $ | 847 | ||||||||||
|
|
Continued on next page.
5
Transamerica Financial Life Insurance Company
Statements of Changes in Capital and Surplus – Statutory Basis
(Dollars in Millions)
Common Stock |
Paid-in Surplus |
Special Surplus Funds |
Unassigned Surplus |
Total Capital and Surplus |
||||||||||||||||
|
|
|||||||||||||||||||
Balance at December 31, 2022 |
$ | 2 | $ | 684 | $ | 7 | $ | 154 | $ | 847 | ||||||||||
Net income (loss) |
— | — | — | 190 | 190 | |||||||||||||||
Change in net unrealized capital gains/losses, net of taxes |
— | — | — | 14 | 14 | |||||||||||||||
Change in net deferred income tax asset |
— | — | — | 1 | 1 | |||||||||||||||
Change in nonadmitted assets |
— | — | — | 6 | 6 | |||||||||||||||
Change in reserve on account of change in valuation basis |
— | — | — | — | — | |||||||||||||||
Change in asset valuation reserve |
— | — | — | (8 | ) | (8) | ||||||||||||||
Return of capital |
— | (1 | ) | — | — | (1) | ||||||||||||||
Dividends to stockholders |
— | — | — | (170 | ) | (170) | ||||||||||||||
Other changes - net |
— | 1 | 5 | 25 | 31 | |||||||||||||||
|
|
|||||||||||||||||||
Balance at December 31, 2023 |
$ | 2 | $ | 684 | $ | 12 | $ | 212 | $ | 910 | ||||||||||
|
|
See accompanying notes.
6
Transamerica Financial Life Insurance Company
Statements of Cash Flow – Statutory Basis
(Dollars in Millions)
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
| ||||||||||
Operating activities |
||||||||||||
Premiums and annuity considerations |
$ | 3,518 | $ | 5,186 | $ | 5,229 | ||||||
Net investment income |
333 | 331 | 348 | |||||||||
Other income |
238 | 251 | 291 | |||||||||
Benefit and loss related payments |
(4,262 | ) | (11,090 | ) | (5,993) | |||||||
Net transfers from separate accounts |
395 | 5,605 | 405 | |||||||||
Commissions and operating expenses |
(240 | ) | (234 | ) | (217) | |||||||
Federal income taxes (paid) received |
(23 | ) | (19 | ) | (4) | |||||||
|
|
| ||||||||||
Net cash provided by (used in) operating activities |
$ | (41 | ) | $ | 30 | $ | 59 | |||||
Investing activities |
||||||||||||
Proceeds from investments sold, matured or repaid |
$ | 680 | $ | 1,040 | $ | 1,709 | ||||||
Costs of investments acquired |
(408 | ) | (925 | ) | (1,662) | |||||||
Net change in policy loans |
(7 | ) | (7 | ) | (5) | |||||||
|
|
| ||||||||||
Net cash provided by (used in) investing activities |
$ | 265 | $ | 108 | $ | 42 | ||||||
Financing and miscellaneous activities |
||||||||||||
Capital and paid in surplus received (returned) |
$ | 1 | $ | — | $ | — | ||||||
Net deposits (withdrawals) on deposit-type contracts |
1 | (4 | ) | 2 | ||||||||
Net change in borrowed money |
— | — | (126) | |||||||||
Net change in payable for collateral under securities lending and other transactions |
(104 | ) | 27 | (5) | ||||||||
Other cash (applied) provided | 1,090 | 1 | (27) | |||||||||
Dividends to stockholders |
(170 | ) | (300 | ) | (200) | |||||||
|
|
| ||||||||||
Net cash provided by (used in) financing and miscellaneous activities |
$ | 818 | $ | (276 | ) | $ | (356) | |||||
|
|
| ||||||||||
Net increase (decrease) in cash, cash equivalents and short-term investments |
1,042 | (138 | ) | (255) | ||||||||
Cash, cash equivalents and short-term investments: |
||||||||||||
Beginning of year |
205 | 343 | 598 | |||||||||
|
|
| ||||||||||
End of year |
$ | 1,247 | $ | 205 | $ | 343 | ||||||
|
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See accompanying notes.
7
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31, 2023
1. Organization and Nature of Business
Transamerica Financial Life Insurance Company (the Company) is a stock life insurance company domiciled in the State of New York and is owned by Transamerica Corporation (TA Corp). TA Corp is an indirect, wholly-owned subsidiary of Aegon Ltd., a holding company organized under the laws of Bermuda.
Nature of Business
The Company sells individual life insurance, including indexed universal life, whole life, term life, and final expense life. It also sells variable annuities. In addition, the Company offers supplemental health insurance, group life insurance, group annuity contracts and stable value solutions. The Company is licensed in 50 states and the District of Columbia. Sales of the Company’s products are primarily through a network of independent agents and broker-dealers, affiliated agencies, and financial institutions.
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 New York Department of Financial Services (NYDFS), which differ from accounting principles generally accepted in the United States of America (GAAP).
The NYDFS recognizes only statutory accounting practices prescribed or permitted by the State of New York for determining and reporting the financial condition and results of operations of an insurance company, and for determining its solvency under the New York Insurance Law. The Commissioner of Insurance has the right to permit specific practices that deviate from prescribed practices.
The State of New York has adopted a prescribed accounting practice that differs from that found in the National Association of Insurance Commissioners’ (NAIC) Accounting Practices and Procedures Manual (NAIC SAP) related to the reported value of the assets supporting the Company’s guaranteed separate accounts. As prescribed by Section 1414 of the New York Insurance Law, 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 Statement of Statutory Accounting Principle (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.
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.
8
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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. 26R, Bonds, 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 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
9
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 Statements 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 Statements 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 or the entity will likely not 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 redeemable preferred stocks in good standing (those with NAIC designations 1 to 3), are reported at cost or amortized cost, depending on the characteristics of the securities. Investments in both affiliated and unaffiliated redeemable preferred stocks not in good standing (those with NAIC designations 4 to 6), are reported at the lower of cost, amortized cost, or fair value, depending on the characteristics of the securities. Investment in perpetual preferred stocks are reported at fair value, not to exceed any currently effective call price. Investment in mandatory convertible preferred stocks (regardless if the preferred stock is redeemable or perpetual) are reported at fair value, not to exceed any currently effective call price, in the periods prior to conversion. For preferred stocks reported at fair value, the related net unrealized capital gains and losses for all NAIC designations are reported in accordance with SSAP No. 7, Asset Valuation Reserve and Interest Maintenance Reserve.
Common stocks of affiliated noninsurance subsidiaries are reported based on underlying audited GAAP equity. The net change in the subsidiaries’ equity is included in net unrealized capital gains or losses and are reported in changes in capital and surplus.
10
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The Company owns stock issued by the Federal Home Loan Bank (FHLB), which is only redeemable at par, and its fair value is presumed to be par, unless other-than-temporarily impaired.
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 Statements 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 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, an allowance for credit loss is recognized in earnings at time of purchase or origination based on an expected lifetime credit loss, which is an amount that represents the portion of the amortized cost basis of the mortgage loans that the Company does not expect to collect.
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.
The Company has interests in joint ventures and limited partnerships. The Company carries these investments based on its interest in the underlying audited GAAP equity of the investee.
For a decline in the fair value of an investment in a joint venture or limited partnership which is determined to be other-than-temporary, the Company writes it down to fair value as the new cost basis and the amount of the write down is accounted for as a realized loss in the Statements 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.
11
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 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.
Other invested assets include surplus notes which are valued at either amortized cost (those that have an NAIC designation of 1 or 2) or the lesser of amortized cost or fair value (those that have an NAIC designation of 3 through 6).
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. Due and accrued amounts determined to be uncollectible are written off through the Statements of Operations.
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. The 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 Statements of Operations on a pre-tax basis in the period that the assets giving rise to the gains or losses are sold.
The AVR provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP.
Derivative Instruments
Overview: The Company may use various derivative instruments (swaps 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
12
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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, Derivatives.
(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 (amortized cost or fair value). Embedded derivatives are not accounted for separately from the host contract. Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value, and the changes in the fair value are recorded in unassigned surplus as unrealized gains and losses. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of OCI rather than to income as required for fair value hedges, and an embedded derivative within a contract that is not clearly and closely related to the economic characteristics and 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 (RSAT). 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. In these transactions, the derivative is accounted for in a manner consistent with the cash instrument and replicated asset. For 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). |
(D) | Derivative instruments held for other investment/risk management activities are measured at fair value with value adjustments recorded in unassigned surplus. |
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 their obligations given their high credit rating of ‘BBB’ 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
13
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 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, in the financial statements. If the swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the underlying instrument receives that treatment. Swaps not meeting hedge accounting rules are carried at fair value with fair value adjustments recorded in unassigned surplus.
Cross currency swaps are utilized to mitigate risks when the Company holds foreign denominated assets or liabilities; therefore, converting the asset or liability to a U.S. dollar 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 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 market risk on 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 Standard & Poor’s (S&P) or other global market financial index) and floating leg (tied to the Secured Overnight Financing Rate (SOFR)) 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, in the financial statements. If the swap is terminated prior to maturity, proceeds are exchanged equal to the fair value of the contract. These gains and losses may be included in IMR or AVR if the 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 when the Company issues products providing the customer a return based on various global market indices. Futures are marked to market on a
14
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 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 equal to the notional amount of the contract will be made by the Company and recognized as a capital loss.
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 Sheets (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 Sheets. Under GAAP, the reinvested collateral is included within invested assets and is not reported as a single line item.
Repurchase Agreements
For dollar repurchase agreements accounted for as secured borrowings, 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 Sheets, 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 reinsurance receivable and accounts receivable. Other “admitted assets” are valued principally at cost, as required or permitted by New York Insurance Laws.
Other liabilities consist primarily of amounts withheld by the Company, accrued expenses, unearned investment income, current federal and foreign income taxes, and other policyholders’ funds.
Separate Accounts
The majority of separate accounts held by the Company represent funds which are administered for pension plans. The assets in the managed separate accounts consist of common stock, long-term bonds, real estate and short-term investments. The non-managed separate accounts are invested by the Company in a corresponding portfolio of Diversified Investors Portfolios. The
15
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
portfolios are registered under the Investment Company Act of 1940, as amended, as open-ended, diversified, management investment companies.
Except for some guaranteed separate accounts, which are carried at amortized cost, the assets are carried at fair value, and the investment risks associated with fair value changes are borne entirely by the policyholder. Some of the guaranteed separate accounts provide a guarantee of principal and some include an interest guarantee of 4% or less, so long as the contract is in effect. Separate account asset performance less than guaranteed requirements is transferred from the general account and reported in the Statements of Operations.
Assets held in trust for purchases of separate account contracts and the Company’s corresponding obligation to the contract owners are shown separately in the Balance Sheets. Income and gains and losses with respect to these assets 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 account are borne entirely by the contract owners except in cases where minimum guarantees exist. Income and gains and losses with respect to the assets in the separate accounts supporting modified guaranteed annuity contracts are included in the Company’s Statements of Operations as a component of net transfers from separate accounts.
Separate account assets and liabilities reported in the accompanying financial statements consist of two types: non-indexed guaranteed and nonguaranteed. Non-indexed guaranteed separate accounts represent funds invested by the Company for the benefit of contract holders who are guaranteed certain returns as specified in the contracts. Separate account asset performance different than the guaranteed requirements is either transferred to or received from the general account and reported in the Statements of Operations. Non-indexed guaranteed separate account assets and liabilities are carried at amortized cost.
The non-guaranteed separate account assets and liabilities represent group annuity funds segregated by the Company for the benefit of contract owners. The assets and liabilities of the nonguaranteed separate accounts are carried at fair value.
Aggregate Reserves for Policies and Contracts
Life, annuity and accident and health benefit reserves are 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.
Surrender values are not promised in excess of the legally computed reserves. For annual premium variable life insurance there is an extra premium charged to the policyholder before the premium is transferred to the Separate Accounts. An additional reserve for this policy is held in the General Account that is a multiple of the reserve that would otherwise be held.
16
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
In accordance with SSAP No. 51R, Life Contracts, and No. 54R, Individual and Group Accident and Health Contracts, the Company reports the amount of insurance, if any, for which the gross premiums are less than the net premiums according to the valuation standards and any related premium deficiency reserve established. Anticipated investment income is not included as a factor in the health contract premium deficiency calculation.
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 Sheets 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.
Deposit-Type Contracts
Deposit-type contracts do not incorporate risk from the death or disability of policyholders. These types of contracts may include guaranteed investment contracts (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 Statements 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
17
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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.
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. Unlike GAAP, SSAP No. 101 does not consider state income taxes in the measurement of deferred taxes. SSAP No. 101 also requires additional testing to measure gross deferred tax assets. The additional testing limits gross deferred tax asset admission to 1) the amount of federal income taxes paid in prior years recoverable through hypothetical loss carrybacks of existing temporary differences expected to reverse during a timeframe corresponding with the Internal Revenue Service tax loss carryback provisions, not to exceed three years, plus 2) the amount of remaining gross deferred 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 gross deferred tax assets that can be offset against existing gross deferred tax liabilities after considering character (i.e. ordinary versus capital) and reversal patterns. The Company’s reported deferred tax asset or liability is the sum of gross deferred tax assets admitted through this three-part test plus the sum of all deferred tax liabilities.
18
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 are 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 the NAIC SAP.
Subsidiaries and Affiliated Companies
Investments in subsidiaries, controlled and affiliated companies (SCA) are stated in accordance with the Purposes and Procedures Manual of the NAIC SVO, as well as SSAP No. 97, Investments in Subsidiary, Controlled and Affiliated Entities.
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).
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 Sheets 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
19
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 Correction of Errors
The Company’s policy is to disclose recently adopted accounting pronouncements with a current year effective date, that have been classified by the NAIC as a new statutory accounting principle (SAP) concept change, as well as items classified by the NAIC as SAP clarification changes that have been adopted and have had a material impact on the financial position or results of operations of the Company.
Recent Accounting Pronouncements
On August 13, 2023, the Statutory Accounting Principles Working Group (SAPWG) adopted INT 23-01, Net Negative (Disallowed) Interest Maintenance Reserve, effective immediately. INT 23-01 provides optional, limited-time guidance, which allows the admittance of net negative (disallowed) IMR if certain conditions are met, up to 10% of adjusted general account capital and surplus. Refer to Note 5 for further detail.
On August 13, 2023, the SAPWG adopted revisions to SSAP No. 26R and SSAP No. 43R, Loan-Backed and Structured Securities, for the principles-based bond definition, the accounting for bonds (issuer credit obligations and asset-backed securities), as well as revisions to various SSAPs, that have been updated to reflect the revised definition and/or SSAP references. Additional revisions were adopted on December 1, 2023 to SSAP No. 2R, Cash, Cash Equivalents, Drafts and Short-Term Investments, in relation to the bond project, with all revisions effective January 1, 2025. The Company has been monitoring the progress of the project, and will continue to do so, but the specific impact to the Company’s financials is indeterminable at this time.
Change in Valuation Basis
During 2022, the Company converted its Actuarial Guideline 36 reserve calculation for the Indexed Universal Life block of business to a new actuarial valuation system. At the same time, as a result of increased functionality to allow for more precision and to ensure consistency, the Company refined its statutory valuation rate for specific states to utilize the maximum standard valuation interest rate. This resulted in a reserve decrease of $51 as of January 1, 2022, which has been reported in the Statement of Changes in Capital and Surplus.
Correction of Errors
During 2023, management identified and corrected an error in the Company’s prior year cash. The error resulted in an understatement of premiums and annuity considerations in the amount of $19, net of tax, which was corrected in accordance with SSAP No. 3, Accounting Changes and Corrections of Errors. This is reflected as a correction of an error in Other Changes - net in the Statements of Changes in Capital and Surplus.
20
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
During 2022, management identified and corrected an error in the Company’s prior year statutory reserves. The error resulted in an understatement of aggregate reserves for life contracts of $16, net of tax, which was corrected in accordance with SSAP No. 3. This is reflected as a correction of an error in the Statements of Changes in Capital and Surplus.
There were additional errors identified in prior year financial statements that have been corrected in the current year financial statements in accordance with SSAP No. 3. These errors do not have a material impact on the financial statements, individually or in aggregate, and therefore have not been separately disclosed.
Reclassifications
Certain amounts in prior year financial statement balances and footnote disclosures have been reclassified to conform to the current year presentation.
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 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 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
21
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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. 100R, Fair Value. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:
Level 1 - |
Unadjusted quoted prices for identical assets or liabilities in active markets accessible at the measurement date. | |
Level 2 - |
Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following: | |
a) Quoted prices for similar assets or liabilities in active markets | ||
b) Quoted prices for identical or similar assets or liabilities in non-active markets | ||
c) Inputs other than quoted market prices that are observable | ||
d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means | ||
Level 3 - |
Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect the Company’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. |
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.
22
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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.
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, are determined primarily by using indices, third-party pricing services and internal models.
Derivative Financial Instruments: The fair value of futures and forwards are based upon the latest quoted market price and spot rates at the Balance Sheets date. The estimated fair values of equity and interest rate options (calls, puts, caps) are based upon the latest quoted market price at the Balance Sheets date. The estimated fair values of swaps, including interest rate and currency swaps, are based on pricing models or formulas using current assumptions. The estimated fair 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 book value of policy loans is considered to approximate the fair 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
23
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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.
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.
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 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.
24
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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, 2023 and 2022, respectively:
December 31, 2023 | ||||||||||||||||||||
|
|
|||||||||||||||||||
Aggregate Fair Value |
Admitted Value |
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
|
|
|||||||||||||||||||
Admitted assets |
||||||||||||||||||||
Cash equivalents and short-term investments, other than affiliates |
$ | 1,189 | $ | 1,189 | $ | 1,189 | $ | — | $ | — | ||||||||||
Bonds |
4,395 | 4,953 | 337 | 4,051 | 7 | |||||||||||||||
Preferred stocks, other than affiliates |
4 | 4 | — | 4 | — | |||||||||||||||
Common stocks, other than affiliates |
3 | 3 | — | — | 3 | |||||||||||||||
Mortgage loans on real estate |
1,632 | 1,841 | — | — | 1,632 | |||||||||||||||
Other invested assets |
22 | 23 | — | 22 | — | |||||||||||||||
Derivative assets: |
||||||||||||||||||||
Interest rate swaps |
26 | 26 | — | 26 | — | |||||||||||||||
Currency swaps |
9 | 7 | — | 9 | — | |||||||||||||||
Credit default swaps |
10 | 6 | — | 10 | — | |||||||||||||||
Derivative assets total |
45 | 39 | — | 45 | — | |||||||||||||||
Policy loans |
151 | 151 | — | 151 | — | |||||||||||||||
Securities lending reinvested collateral |
269 | 269 | 269 | — | — | |||||||||||||||
Separate account assets |
18,401 | 18,410 | 17,733 | 668 | — | |||||||||||||||
Liabilities |
||||||||||||||||||||
Investment contract liabilities |
3,844 | 3,864 | — | 1 | 3,843 | |||||||||||||||
Derivative liabilities: |
||||||||||||||||||||
Options |
1 | 1 | — | 1 | — | |||||||||||||||
Interest rate swaps |
27 | 32 | — | 27 | — | |||||||||||||||
Currency swaps |
1 | 1 | — | 1 | — | |||||||||||||||
Credit default swaps |
1 | 1 | — | 1 | — | |||||||||||||||
Equity swaps |
23 | 23 | — | 23 | — | |||||||||||||||
Interest rate futures |
1 | 1 | 1 | — | — | |||||||||||||||
Derivative liabilities total |
54 | 59 | 1 | 53 | — | |||||||||||||||
Dollar repurchase agreements |
20 | 20 | — | 20 | — | |||||||||||||||
Payable for securities lending |
321 | 321 | — | 321 | — | |||||||||||||||
Payable for derivative cash collateral |
38 | 38 | — | 38 | — | |||||||||||||||
Separate account liabilities |
18,102 | 18,102 | — | 17,729 | 373 |
25
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31, 2022 | ||||||||||||||||||||
|
|
|||||||||||||||||||
Aggregate Fair Value |
Admitted Value |
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
|
|
|||||||||||||||||||
Admitted assets |
||||||||||||||||||||
Cash equivalents and short-term investments, other than affiliates |
$ | 157 | $ | 157 | $ | 84 | $ | 73 | $ | — | ||||||||||
Bonds |
4,536 | 5,243 | 378 | 4,158 | — | |||||||||||||||
Preferred stocks, other than affiliates |
4 | 4 | — | 4 | — | |||||||||||||||
Common stocks, other than affiliates |
6 | 6 | — | 3 | 3 | |||||||||||||||
Mortgage loans on real estate |
1,637 | 1,853 | — | — | 1,637 | |||||||||||||||
Other invested assets |
22 | 24 | — | 22 | — | |||||||||||||||
Derivative assets: |
||||||||||||||||||||
Interest rate swaps |
181 | 181 | — | 181 | — | |||||||||||||||
Currency swaps |
20 | 12 | — | 20 | — | |||||||||||||||
Credit default swaps |
4 | 5 | — | 4 | — | |||||||||||||||
Equity swaps |
5 | 5 | — | 5 | — | |||||||||||||||
Equity futures |
1 | 1 | 1 | — | — | |||||||||||||||
Derivative assets total |
211 | 204 | 1 | 210 | — | |||||||||||||||
Policy loans |
143 | 143 | — | 143 | — | |||||||||||||||
Securities lending reinvested collateral |
309 | 309 | 183 | 126 | — | |||||||||||||||
Separate account assets |
16,371 | 16,399 | 15,518 | 853 | — | |||||||||||||||
Liabilities |
||||||||||||||||||||
Investment contract liabilities |
4,236 | 4,245 | — | 1 | 4,235 | |||||||||||||||
Derivative liabilities: |
||||||||||||||||||||
Interest rate swaps |
212 | 216 | — | 212 | — | |||||||||||||||
Currency swaps |
1 | — | — | 1 | — | |||||||||||||||
Equity swaps |
7 | 7 | — | 7 | — | |||||||||||||||
Equity futures |
1 | 1 | 1 | — | — | |||||||||||||||
Derivative liabilities total |
221 | 224 | 1 | 220 | — | |||||||||||||||
Dollar repurchase agreements |
20 | 20 | — | 20 | — | |||||||||||||||
Payable for securities lending |
412 | 412 | — | 412 | — | |||||||||||||||
Payable for derivative cash collateral |
51 | 51 | — | 51 | — | |||||||||||||||
Separate account liabilities |
16,107 | 16,107 | — | 15,636 | 471 |
26
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The following tables provide information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2023 and 2022:
2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Bonds |
||||||||||||||||
Industrial and miscellaneous |
$ | — | $ | 4 | $ | — | $ | 4 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total bonds |
— | 4 | — | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stock |
||||||||||||||||
Industrial and miscellaneous |
— | 4 | — | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total preferred stock |
— | 4 | — | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common stock |
||||||||||||||||
Industrial and miscellaneous |
— | — | 3 | 3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total common stock |
— | — | 3 | 3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash equivalents and short-term investments |
||||||||||||||||
Money market mutual funds |
1,163 | — | — | 1,163 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total cash equivalents and short-term investments |
1,163 | — | — | 1,163 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivative assets |
— | 24 | — | 24 | ||||||||||||
Other long term |
— | 3 | — | 3 | ||||||||||||
Separate account assets |
17,728 | 313 | — | 18,041 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total assets |
$ | 18,891 | $ | 348 | $ | 3 | $ | 19,242 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | 1 | $ | 25 | $ | — | $ | 26 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total liabilities |
$ | 1 | $ | 25 | $ | — | $ | 26 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: |
||||||||||||||||
Bonds |
||||||||||||||||
Industrial and miscellaneous |
$ | — | $ | 3 | $ | — | $ | 3 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total bonds |
— | 3 | — | 3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stock |
||||||||||||||||
Industrial and miscellaneous |
— | 4 | — | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total preferred stock |
— | 4 | — | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common stock |
||||||||||||||||
Industrial and miscellaneous |
— | 3 | 3 | 6 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total common stock |
— | 3 | 3 | 6 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash equivalents and short-term investments |
||||||||||||||||
Money market mutual funds |
84 | 62 | — | 146 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total cash equivalents and short-term investments |
84 | 62 | — | 146 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Derivative assets |
1 | 187 | — | 188 | ||||||||||||
Other long term |
— | 4 | — | 4 | ||||||||||||
Separate account assets |
15,518 | 403 | — | 15,921 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total assets |
$ | 15,603 | $ | 666 | $ | 3 | $ | 16,272 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities: |
||||||||||||||||
Derivative liabilities |
$ | 1 | $ | 187 | $ | — | $ | 188 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total liabilities |
$ | 1 | $ | 187 | $ | — | $ | 188 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
27
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Bonds classified as Level 2 are valued using inputs from third party pricing services or broker quotes. Bonds classified as 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 as Level 2 are valued using inputs from third party pricing services or broker quotes.
Common stock classified as Level 2 are valued using inputs from third party pricing services or broker quotes. Common stock classified as Level 3 are comprised primarily of shares in the FHLB of New York, which are valued at par as a proxy for fair value as a result of restrictions that allow redemptions only by FHLB.
Money market mutual funds and other cash or cash equivalents classified as Level 2 are valued using inputs from third party pricing services.
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.
Other long-term classified as Level 2 are comprised of surplus debentures, which are valued using inputs from third party pricing services or broker quotes.
Separate account assets and liabilities are valued and classified in the same way as general account assets and liabilities (described above).
The following tables summarize the changes in assets classified as Level 3 for 2023 and 2022:
Beginning Balance at January 1, 2023 |
Transfers in (Level 3) |
Transfers out (Level 3) |
Total Gains (Losses) Included in Net income (a) |
Total Gains (Losses) Included in Surplus (b) | ||||||||||||||||
|
|
|||||||||||||||||||
Bonds |
||||||||||||||||||||
Other |
$ | — | $ | — | $ | — | $ | (1 | ) | $ | 1 | |||||||||
Common stock |
$ | 3 | $ | — | $ | — | $ | — | $ | — | ||||||||||
|
|
|||||||||||||||||||
Total |
$ | 3 | $ | — | $ | — | $ | (1 | ) | $ | 1 | |||||||||
|
|
|||||||||||||||||||
Purchases | Issuances | Sales | Settlements | Ending Balance at December 31, 2023 | ||||||||||||||||
|
|
|||||||||||||||||||
Bonds |
||||||||||||||||||||
Other |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Common stock |
$ | — | $ | — | $ | — | $ | — | $ | 3 | ||||||||||
|
|
|||||||||||||||||||
Total |
$ | — | $ | — | $ | — | $ | — | $ | 3 | ||||||||||
|
|
(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 |
28
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Beginning Balance at January 1, 2022 |
Transfers in (Level 3) |
Transfers out (Level 3) |
Total Gains (Losses) Included in Net income (a) |
Total Gains (Losses) Included in Surplus (b) | ||||||||||||||||
|
|
|||||||||||||||||||
Common stock |
$ | 7 | $ | — | $ | — | $ | (3) | $ | (1) | ||||||||||
|
|
|||||||||||||||||||
Total |
$ | 7 | $ | — | $ | — | $ | (3) | $ | (1) | ||||||||||
|
|
|||||||||||||||||||
Purchases | Issuances | Sales | Settlements | Ending Balance at December 31, 2022 | ||||||||||||||||
|
|
|||||||||||||||||||
Common stock |
$ | — | $ | — | $ | — | $ | — | $ | 3 | ||||||||||
|
|
|||||||||||||||||||
Total |
$ | — | $ | — | $ | — | $ | — | $ | 3 | ||||||||||
|
|
(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 |
Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.
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, 2023 |
||||||||||||||||
Bonds: |
||||||||||||||||
United States Government and agencies |
$ | 327 | $ | 7 | $ | 29 | $ | 305 | ||||||||
State, municipal and other government |
117 | 1 | 16 | 102 | ||||||||||||
Hybrid securities |
41 | — | 4 | 37 | ||||||||||||
Industrial and miscellaneous |
3,473 | 37 | 465 | 3,045 | ||||||||||||
Mortgage and other asset-backed securities |
995 | 19 | 108 | 906 | ||||||||||||
|
|
|||||||||||||||
Total unaffiliated bonds |
4,953 | 64 | 622 | 4,395 | ||||||||||||
Unaffiliated preferred stocks |
4 | — | — | 4 | ||||||||||||
|
|
|||||||||||||||
$ | 4,957 | $ | 64 | $ | 622 | $ | 4,399 | |||||||||
|
|
|||||||||||||||
Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value | |||||||||||||
|
|
|||||||||||||||
Unaffiliated common stocks |
$ | 3 | $ | — | $ | — | $ | 3 | ||||||||
|
|
29
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Book Adjusted Carrying Value |
Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value | |||||||||||||
|
|
|||||||||||||||
December 31, 2022 |
||||||||||||||||
Bonds: |
||||||||||||||||
United States Government and agencies |
$ | 367 | $ | 8 | $ | 25 | $ | 350 | ||||||||
State, municipal and other government |
130 | 1 | 20 | 111 | ||||||||||||
Hybrid securities |
51 | — | 6 | 45 | ||||||||||||
Industrial and miscellaneous |
3,629 | 22 | 597 | 3,054 | ||||||||||||
Mortgage and other asset-backed securities |
1,082 | 21 | 127 | 976 | ||||||||||||
|
|
|||||||||||||||
Total unaffiliated bonds |
5,259 | 52 | 775 | 4,536 | ||||||||||||
Unaffiliated preferred stocks |
4 | — | — | 4 | ||||||||||||
|
|
|||||||||||||||
$ | 5,263 | $ | 52 | $ | 775 | $ | 4,540 | |||||||||
|
|
|||||||||||||||
Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value | |||||||||||||
|
|
|||||||||||||||
Unaffiliated common stocks |
$ | 4 | $ | 2 | $ | — | $ | 6 | ||||||||
|
|
The carrying amount and estimated fair value of long and short-term bonds at December 31, 2023, 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.
2023 | ||||||||
|
|
|||||||
December 31: | Carrying Value | Fair Value | ||||||
|
|
|||||||
Due in one year or less |
$ | 100 | $ | 99 | ||||
Due after one year through five years |
586 | 567 | ||||||
Due after five years through ten years |
851 | 774 | ||||||
Due after ten years |
2,433 | 2,062 | ||||||
|
|
|||||||
Subtotal |
3,970 | 3,502 | ||||||
Mortgage and other asset-backed securities |
1,008 | 919 | ||||||
|
|
|||||||
Total |
$ | 4,978 | $ | 4,421 | ||||
|
|
30
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The estimated fair value of bonds, preferred stocks and common stocks with gross unrealized losses at December 31, 2023 and 2022 is as follows:
2023 | ||||||||||||||||
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 |
$ | 14 | $ | 4 | $ | 181 | $ | 25 | ||||||||
State, municipal and other government |
84 | 16 | — | — | ||||||||||||
Hybrid securities |
32 | 4 | — | — | ||||||||||||
Industrial and miscellaneous |
2,406 | 463 | 99 | 2 | ||||||||||||
Mortgage and other asset-backed securities |
718 | 107 | 56 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total bonds |
$ | 3,254 | $ | 594 | $ | 336 | $ | 28 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stocks-unaffiliated |
— | — | 4 | — | ||||||||||||
Common stocks-unaffiliated |
— | — | 3 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ | 3,254 | $ | 594 | $ | 343 | $ | 28 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
2022 | ||||||||||||||||
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 |
$ | — | $ | — | $ | 222 | $ | 25 | ||||||||
State, municipal and other government |
27 | 8 | 64 | 11 | ||||||||||||
Hybrid securities |
13 | 4 | 28 | 2 | ||||||||||||
Industrial and miscellaneous |
542 | 221 | 2,212 | 376 | ||||||||||||
Mortgage and other asset-backed securities |
240 | 48 | 642 | 80 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total bonds |
$ | 822 | $ | 281 | $ | 3,168 | $ | 494 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stocks-unaffiliated |
— | — | 4 | — | ||||||||||||
Common stocks-unaffiliated |
— | — | 3 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
$ | 822 | $ | 281 | $ | 3,175 | $ | 494 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
During 2023 and 2022, 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 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 2023, 2022 and 2021, the Company recognized OTTI of $6, $3 and $0, respectively.
31
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The following loan-backed and structured securities were held at December 31, 2023, 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 Where Reported |
||||||||||||||||||
|
||||||||||||||||||||||||
46642MAA6 |
$ | 11 | $ | 6 | $ | 5 | $ | 6 | $ | 3 | 12/31/2023 | |||||||||||||
05604LAE2 |
1 | — | 1 | — | — | 12/31/2023 | ||||||||||||||||||
|
|
|
||||||||||||||||||||||
$ | 6 | |||||||||||||||||||||||
|
|
|
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, 2023 and 2022 is as follows:
2023 | 2022 | |||||||||||||||
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 |
$ | 110 | $ | 1 | $ | 48 | $ | 80 | ||||||||
The aggregate related fair value of securities with unrealized losses | 718 | 70 | 240 | 648 |
At December 31, 2023 and 2022, 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 905 and 258 securities with a carrying amount of $3,848 and $1,103, and an unrealized loss of $594 and $281. Of this portfolio, at December 31, 2023 and 2022, 95.6% and 88.4% were investment grade with associated unrealized losses of $567 and $251, respectively.
At December 31, 2023 and 2022, respectively, for bonds and preferred stocks that have been in a continuous loss position for less than twelve months, the Company held 134 and 898 securities with a carrying amount of $367 and $3,666, and an unrealized loss of $28 and $494. Of this portfolio, at December 31, 2023 and 2022, 97.7% and 96.6% were investment grade with associated unrealized losses of $27 and $479, respectively.
At December 31, 2023 and 2022, there were no common stocks that have been in a continuous loss position for greater than or equal to twelve months.
At December 31, 2023 and 2022, respectively, for common stocks that have been in a continuous loss position for less than twelve months, the Company held 2 and 2 securities with a cost of $3 and $3 and no unrealized losses.
During the years ended December 31, 2023 and 2022, the Company held no 5GI securities.
32
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
During 2023 and 2022, respectively, the Company sold, redeemed or otherwise disposed of 3 and 17 securities as a result of a callable feature which generated investment income of $0 and $3 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, if applicable.
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Proceeds |
$ | 371 | $ | 695 | $ | 1,177 | ||||||
|
|
|||||||||||
Gross realized gains |
$ | 8 | $ | 11 | $ | 38 | ||||||
Gross realized losses |
(5) | (28) | (12) | |||||||||
|
|
|||||||||||
Net realized capital gains (losses) |
$ | 3 | $ | (17) | $ | 26 | ||||||
|
|
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, 2023, 2022 and 2021 of $5, $28 and $2, respectively.
At December 31, 2023 and 2022, the Company had no investments in restructured securities. There were no capital gains (losses) taken as a direct result of restructures in 2023, 2022 and 2021.
Mortgage Loans
The credit quality of mortgage loans by type of property for the years ended December 31, 2023 and 2022 were as follows:
December 31, 2023 | ||||||||||||
Farm | Commercial | Total | ||||||||||
|
|
|||||||||||
AAA - AA |
$ | — | $ | 934 | $ | 934 | ||||||
A |
14 | 822 | 836 | |||||||||
BBB |
— | 69 | 69 | |||||||||
B |
— | 2 | 2 | |||||||||
|
|
|||||||||||
$ | 14 | $ | 1,827 | $ | 1,841 | |||||||
|
|
33
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31, 2022 | ||||||||||||
Farm | Commercial | Total | ||||||||||
|
|
|||||||||||
AAA - AA |
$ | — | $ | 1,190 | $ | 1,190 | ||||||
A |
14 | 595 | 609 | |||||||||
BBB |
— | 52 | 52 | |||||||||
BB |
— | 2 | 2 | |||||||||
|
|
|||||||||||
$ | 14 | $ | 1,839 | $ | 1,853 | |||||||
|
|
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 2023, the Company issued mortgage loans with a maximum interest rate of 6.40% and a minimum interest rate of 5.50% for commercial loans. The maximum percentage of any one admitted loan to the value of the security (exclusive of insured or guaranteed or purchase money mortgages) originated or acquired during the year ending December 31, 2023 at the time of origination was 56%. During 2022, the Company issued mortgage loans with a maximum interest rate of 5.69% and a minimum interest rate of 2.81% for commercial loans. The maximum percentage of any one admitted loan to the value of the security (exclusive of insured or guaranteed or purchase money mortgages) originated or acquired during the year ending December 31, 2022 at the time of origination was 67%.
During 2023 and 2022, the Company issued no farm mortgage loans.
During 2023 and 2022, the Company did not reduce the interest rate on any outstanding mortgage loans.
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, 2023 and 2022:
Commercial | ||||||||||||
Farm | All Other | Total | ||||||||||
December 31, 2023 |
||||||||||||
Recorded Investment (All) |
||||||||||||
Current |
$ | 14 | $ | 1,827 | $ | 1,841 | ||||||
Participant or Co-lender in Mortgage Loan Agreement |
||||||||||||
Recorded Investment |
$ | 14 | $ | 575 | $ | 589 |
34
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Commercial | ||||||||||||
Farm | All Other | Total | ||||||||||
December 31, 2022 |
||||||||||||
Recorded Investment (All) |
||||||||||||
Current |
$ | 14 | $ | 1,839 | $ | 1,853 | ||||||
Participant or Co-lender in Mortgage Loan Agreement |
||||||||||||
Recorded Investment |
$ | 14 | $ | 586 | $ | 600 |
There were no impaired mortgage loans held without an allowance for credit losses as of December 31, 2023 and 2022, respectively, that were subject to participant or co-lender mortgage loan agreement for which the Company is restricted from unilaterally foreclosing on the mortgage loans.
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.
No mortgage loan foreclosures occurred during 2023, 2022 and 2021.
At December 31, 2023 and 2022, the Company held a mortgage loan loss reserve in the AVR of $18 and $18, respectively.
The Company’s mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:
Geographic Distribution | ||||||||
December 31 | ||||||||
2023 | 2022 | |||||||
Pacific |
31 | % | 30 | % | ||||
South Atlantic |
18 | 18 | ||||||
Middle Atlantic |
13 | 13 | ||||||
E. North Central |
16 | 16 | ||||||
Mountain |
10 | 11 | ||||||
W. North Central |
3 | 4 | ||||||
W. South Central |
4 | 4 | ||||||
E. South Central |
4 | 3 | ||||||
New England |
1 | 1 |
Property Type Distribution | ||||||||
December 31 | ||||||||
2023 | 2022 | |||||||
Apartment | 54 | % | 53 | % | ||||
Industrial | 22 | 23 | ||||||
Retail | 14 | 14 | ||||||
Office | 7 | 9 | ||||||
Medical | 2 | 0 | ||||||
Agricultural | 1 | 1 | ||||||
35
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Other Invested Assets
During 2023, 2022 and 2021, the Company recognized no impairment write downs for its investments in joint ventures and limited partnerships.
Tax Credits
At December 31, 2023, the Company had ownership interests in five LIHTC investments with a carrying value of $64. The remaining years of unexpired tax credits ranged from one to nine, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to eleven years. The amount of contingent equity commitments expected to be paid during the year 2024 is $1. Tax credits expenses recognized in 2023 were $15 and other tax benefits recognized in 2023 were $2. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.
At December 31, 2022, the Company had ownership interests in five LIHTC investments with a carrying value of $79. The remaining years of unexpired tax credits ranged from two to ten, and the properties were not subject to regulatory review. The length of time remaining for holding periods ranged from one to twelve years. The amount of contingent equity commitments expected to be paid during the year 2023 is $1. Tax credits expenses recognized in 2022 were $15 and other tax benefits recognized in 2022 were $2. There were no impairment losses, write-downs or reclassifications during the year related to any of these credits.
The Company has transferable state tax credits that are insignificant.
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, 2023 and 2022 was as follows:
2023 | 2022 | |||||||
|
|
|||||||
Fair value - positive |
$ | 49 | $ | 213 | ||||
Fair value - negative |
(56) | (224) |
36
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
At December 31, 2023, 2022 and 2021, the Company has recorded unrealized gains (losses) of $2, ($1) and $31, respectively, for the component of derivative instruments utilized for hedging purposes that did not qualify for hedge accounting. This has been recorded directly to unassigned surplus as an unrealized gain (loss). The Company did not recognize any unrealized gains or losses during 2023, 2022 and 2021 that represented the component of derivative instruments gain or loss that was excluded from the assessment of hedge effectiveness.
Summary of realized gains (losses) by derivative type for the years ended December 31, 2023, 2022 and 2021:
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Swaps: |
||||||||||||
Interest rate |
$ | (40) | $ | (167) | $ | (14) | ||||||
Total return |
(49) | 55 | (77) | |||||||||
|
|
|||||||||||
Total swaps |
$ | (89) | $ | (112) | $ | (91) | ||||||
|
|
|||||||||||
Futures - net positions |
(5) | (76) | (23) | |||||||||
|
|
|||||||||||
Total realized gains (losses) |
$ | (94) | $ | (188) | $ | (114) | ||||||
|
|
The average estimated fair value of derivatives held for other than hedging purposes is presented in the following table for the years ended December 31, 2023 and 2022:
Asset(1) | Liability(1) | |||||||||||||||
|
|
|
|
|||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
|
|
|
|
|||||||||||||
Derivative component of RSATs |
||||||||||||||||
Credit default swaps |
$ | 6 | $ | 3 | $ | — | $ | — |
(1) Asset and liability classification of derivatives is based on each derivative’s positive (asset) or negative (liability) book/adjusted carrying value.
The estimated fair value of derivatives held for other than hedging purposes is presented in the following table for the years ended December 31, 2023 and 2022:
Asset(1) | Liability(1) | |||||||||||||||
|
|
|
|
|||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
|
|
|
|
|||||||||||||
Derivative component of RSATs |
||||||||||||||||
Credit default swaps |
$ | 10 | $ | 4 | $ | — | $ | — |
(1) Asset and liability classification of derivatives is based on each derivative’s positive (asset) or negative (liability) book/adjusted carrying value.
The Company did not have net realized gains (losses) on derivatives held for other than hedging purposes for the years ended December 31, 2023, 2022 and 2021.
As stated in Note 2, the Company replicates investment grade corporate bonds and sovereign debt 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
37
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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, 2023 and 2022:
2023 | ||||||||||||||||
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) |
$ | 2 | $ | 101 | 3.4 | |||||||||||
Credit default swaps referencing indices |
— | 20 | 37.7 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Subtotal |
2 | 121 | 9.1 | |||||||||||||
|
|
|
|
|
|
|||||||||||
BBB |
2 | |||||||||||||||
Single name credit default swaps (3) |
5 | 214 | 3.0 | |||||||||||||
Credit default swaps referencing indices |
3 | 166 | 2.8 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Subtotal |
8 | 380 | 2.9 | |||||||||||||
|
|
|
|
|
|
|||||||||||
BB |
3 | |||||||||||||||
Single name credit default swaps (3) |
— | 10 | 2.5 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Subtotal |
— | 10 | 2.5 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
$ | 10 | $ | 511 | 4.1 | |||||||||||
|
|
|
|
|
|
(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. |
38
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
2022 | ||||||||||||||
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) |
$ | — | $ | 71 | 4.0 | |||||||||
Credit default swaps referencing indices |
— | 20 | 38.7 | |||||||||||
|
|
|
|
|
|
|||||||||
Subtotal |
— | 91 | 11.6 | |||||||||||
|
|
|
|
|
|
|||||||||
BBB |
2 | |||||||||||||
Single name credit default swaps (3) |
2 | 249 | 2.6 | |||||||||||
Credit default swaps referencing indices |
1 | 156 | 2.3 | |||||||||||
|
|
|
|
|
|
|||||||||
Subtotal |
3 | 405 | 2.5 | |||||||||||
|
|
|
|
|
|
|||||||||
BB |
3 | |||||||||||||
Single name credit default swaps (3) |
— | 10 | 3.5 | |||||||||||
|
|
|
|
|
|
|||||||||
Subtotal |
— | 10 | 3.5 | |||||||||||
|
|
|
|
|
|
|||||||||
B |
4 | |||||||||||||
Single name credit default swaps (3) |
— | 5 | 1.0 | |||||||||||
|
|
|
|
|
|
|||||||||
Subtotal |
— | 5 | 1.0 | |||||||||||
|
|
|
|
|
|
|||||||||
Total |
$ | 3 | $ | 511 | 4.1 | |||||||||
|
|
|
|
|
|
(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, 2023, there were not any potential future recoveries available to offset the $511 from the table above. At December 31, 2022, there were not any potential future recoveries available to offset the $511 from the table above.
39
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
At December 31, 2023 and 2022, the Company’s outstanding derivative instruments, shown in notional or contract amounts and fair value, are summarized as follows:
Contract or Notional Amount (1) | Fair Value | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
|
|
|
|
|||||||||||||
Derivative assets: |
||||||||||||||||
Credit default swaps |
$ | 476 | $ | 466 | $ | 10 | $ | 4 | ||||||||
Currency swaps |
131 | 138 | 9 | 20 | ||||||||||||
Equity futures |
— | — | — | 1 | ||||||||||||
Equity swaps |
— | 192 | — | 5 | ||||||||||||
Interest rate swaps |
407 | 2,097 | 26 | 181 | ||||||||||||
Options |
14 | — | — | — | ||||||||||||
Derivative liabilities: |
||||||||||||||||
Credit default swaps |
61 | 69 | 1 | — | ||||||||||||
Currency swaps |
23 | 16 | 1 | 1 | ||||||||||||
Equity futures |
— | — | — | 1 | ||||||||||||
Equity swaps |
302 | 101 | 23 | 7 | ||||||||||||
Interest rate futures |
— | — | 1 | — | ||||||||||||
Interest rate swaps |
90 | 2,182 | 27 | 212 | ||||||||||||
Options |
(43 | ) | — | 1 | — |
(1) Futures are presented in contract format. Swaps and options are presented in notional format.
Restricted Assets
The following tables show the pledged or restricted assets as of December 31, 2023 and 2022, respectively:
Gross Restricted (Admitted & Nonadmitted) 2023 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Restricted Asset Category | Total General Account (G/A) |
G/A Supporting Separate Account (S/A) Activity |
Total S/A Restricted Assets |
S/A Assets Supporting G/A Activity |
Total | |||||||||||||||
|
||||||||||||||||||||
Collateral held under security lending agreements |
$ | 321 | $ | — | $ | — | $ | — | $ | 321 | ||||||||||
Subject to dollar repurchase agreements |
20 | — | — | — | 20 | |||||||||||||||
FHLB capital stock |
3 | — | — | — | 3 | |||||||||||||||
On deposit with states |
3 | — | — | — | 3 | |||||||||||||||
Pledged as collateral not captured in other categories |
149 | — | — | — | 149 | |||||||||||||||
|
|
|||||||||||||||||||
Total restricted assets |
$ | 496 | $ | — | $ | — | $ | — | $ | 496 | ||||||||||
|
|
40
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Gross (Admitted & Nonadmitted) Restricted | Percentage | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Restricted Asset Category | Total From Prior Year (2022) |
Increase/ (Decrease) |
Total Nonadmitted Restricted |
Total Admitted Restricted |
Gross Restricted to Total Assets |
Admitted Restricted to Total Admitted Assets |
||||||||||||||||||
|
||||||||||||||||||||||||
Collateral held under security lending agreements |
$ | 412 | $ | (91 | ) | $ | — | $ | 321 | 1.17 | % | 1.17% | ||||||||||||
Subject to dollar repurchase agreements |
20 | — | — | 20 | 0.07 | 0.07 | ||||||||||||||||||
FHLB capital stock |
3 | — | — | 3 | 0.01 | 0.01 | ||||||||||||||||||
On deposit with states |
3 | — | — | 3 | 0.01 | 0.01 | ||||||||||||||||||
Pledged as collateral not captured in other categories |
148 | 1 | — | 149 | 0.54 | 0.54 | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total restricted assets |
$ | 586 | $ | (90 | ) | $ | — | $ | 496 | 1.80 | % | 1.80% | ||||||||||||
|
|
The following tables show the pledged or restricted assets in other categories as of December 31, 2023 and 2022, respectively:
Gross Restricted (Admitted & Nonadmitted) 2023 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Description of Assets | Total General Account (G/A) |
G/A Supporting Separate Account (S/A) Activity |
Total S/A Restricted Assets |
S/A Assets Supporting G/A Activity |
Total | |||||||||||||||
|
||||||||||||||||||||
Derivatives |
$ | 149 | $ | — | $ | — | $ | — | $ | 149 | ||||||||||
|
|
|||||||||||||||||||
Total |
$ | 149 | $ | — | $ | — | $ | — | $ | 149 | ||||||||||
|
|
Gross (Admitted & Nonadmitted) Restricted | Percentage | |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
Description of Assets | Total From Prior Year (2022) |
Increase/ (Decrease) |
Total Nonadmitted Restricted |
Total Admitted Restricted |
Gross Restricted to Total Assets |
Admitted Restricted to Total Admitted Assets |
||||||||||||||||||
|
||||||||||||||||||||||||
Derivatives |
$ | 148 | $ | 1 | $ | — | $ | 149 | 0.54 | % | 0.55% | |||||||||||||
|
|
|||||||||||||||||||||||
Total |
$ | 148 | $ | 1 | $ | — | $ | 149 | 0.54 | % | 0.55% | |||||||||||||
|
|
41
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The following tables show the collateral received and reflected as assets within the financial statements as of December 31, 2023 and 2022:
2023 | ||||||||||||||||
|
||||||||||||||||
Collateral Assets | Carrying Value | Fair Value | % of CV to Total Assets (Admitted and Nonadmitted) |
% of CV to Total Admitted Assets |
||||||||||||
|
||||||||||||||||
Cash |
$ | 58 | $ | 58 | 0.64 | % | 0.65 % | |||||||||
Securities lending collateral assets |
321 | 321 | 3.56 | 3.59 | ||||||||||||
|
|
|||||||||||||||
Total collateral assets |
$ | 379 | $ | 379 | 4.20 | % | 4.24 % | |||||||||
|
|
Amount | % of Liability to Total Liabilities |
|||||||||||
|
|
|||||||||||
Recognized obligation to return collateral asset |
$ | 379 | 4.72% |
2022 | ||||||||||||||||
|
||||||||||||||||
Collateral Assets | Carrying Value | Fair Value | % of CV to Total Assets (Admitted and Nonadmitted) |
% of CV to Total Admitted Assets |
||||||||||||
|
||||||||||||||||
Cash |
$ | 71 | $ | 68 | 0.83 | % | 0.84 % | |||||||||
Securities lending collateral assets |
412 | 412 | 4.81 | 4.86 | ||||||||||||
|
|
|||||||||||||||
Total collateral assets |
$ | 483 | $ | 480 | 5.64 | % | 5.70 % | |||||||||
|
|
Amount | % of Liability to Total Liabilities |
|||||||||||
|
|
|||||||||||
Recognized obligation to return collateral asset |
$ | 483 | 6.33 % |
42
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Net Investment Income
Detail of net investment income is presented below:
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Income: |
||||||||||||
Bonds |
$ | 212 | $ | 222 | $ | 249 | ||||||
Common stocks |
1 | — | 1 | |||||||||
Mortgage loans on real estate |
74 | 71 | 87 | |||||||||
Policy loans |
8 | 8 | 8 | |||||||||
Cash, cash equivalents and short-term investments |
7 | 4 | — | |||||||||
Derivatives |
25 | 20 | 16 | |||||||||
Other invested assets |
17 | 19 | (5) | |||||||||
|
|
|||||||||||
Gross investment income |
344 | 344 | 356 | |||||||||
Less: investment expenses |
17 | 17 | 20 | |||||||||
|
|
|||||||||||
Net investment income before amortization of IMR |
327 | 327 | 336 | |||||||||
Amortization of IMR |
3 | 6 | 6 | |||||||||
|
|
|||||||||||
Net investment income |
$ | 330 | $ | 333 | $ | 342 | ||||||
|
|
The gross, nonadmitted and admitted amounts for interest income due and accrued are presented in the following table:
2023 | 2022 | |||||||
|
|
|||||||
Gross |
$ | 58 | $ | 63 | ||||
Nonadmitted |
$ | — | $ | 1 | ||||
Admitted |
$ | 58 | $ | 62 |
At December 31, 2023, the Company had no cumulative amounts for paid-in-kind interest included in the principle balance. At December 31, 2022, the Company did not report a paid-in-kind interest balance.
43
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Realized Capital Gains (Losses)
Net realized capital gains (losses) on investments, including OTTI, are summarized below:
Realized | ||||||||||||
|
|
|||||||||||
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Bonds |
$ | (10 | ) | $ | (24 | ) | $ | 25 | ||||
Common stocks |
(1 | ) | 1 | 3 | ||||||||
Derivatives |
(94 | ) | (188 | ) | (114) | |||||||
Other invested assets |
1 | 18 | (1) | |||||||||
|
|
|||||||||||
Change in realized capital gains (losses), before taxes |
(104 | ) | (193 | ) | (87) | |||||||
Federal income tax effect |
(2 | ) | (2 | ) | (12) | |||||||
Transfer from (to) interest maintenance reserve |
6 | 16 | (16) | |||||||||
|
|
|||||||||||
Net realized capital gains (losses) on investments |
$ | (100 | ) | $ | (179 | ) | $ | (115) | ||||
|
|
44
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, 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 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Bonds |
$ | 2 | $ | 2 | $ | 2 | ||||||
Preferred stocks |
— | — | 1 | |||||||||
Common stocks |
(2 | ) | — | — | ||||||||
Affiliated entities |
— | 1 | — | |||||||||
Derivatives |
(1 | ) | (31 | ) | (2) | |||||||
Other invested assets |
19 | 11 | 15 | |||||||||
|
|
|||||||||||
Change in unrealized capital gains (losses), before taxes |
18 | (17 | ) | 16 | ||||||||
Taxes on unrealized capital gains (losses) |
(4 | ) | (6 | ) | (4) | |||||||
|
|
|||||||||||
Change in unrealized capital gains (losses), net of tax |
$ | 14 | $ | (23 | ) | $ | 12 | |||||
|
|
Admitted Disallowed IMR
The Company has admitted net negative (disallowed) IMR in accordance with the following criteria:
A. | Fixed income investments generating IMR losses comply with the reporting entity’s documented investment or liability management policies. |
B. | IMR losses for fixed income related derivatives are all in accordance with prudent and documented risk management procedures, in accordance with a reporting entity’s derivative use plans and reflect symmetry with historical treatment in which unrealized derivative gains were reversed to IMR and amortized in lieu of being recognized as realized gains upon derivative termination. |
C. | Any deviation to (a) was either because of a temporary and transitory timing issue or related to a specific event, such as a reinsurance transaction, that mechanically made the cause of IMR losses not reflective of reinvestment activities. |
D. | Asset sales that were generating admitted negative IMR were not compelled by liquidity pressures (e.g., to fund significant cash outflows including, but not limited to excess withdrawals and collateral calls). |
The aggregate net negative (disallowed) IMR allocation is presented in the following table for the year ended December 31, 2023:
Total | General Account |
Insulated Separate Account |
Non-Insulated Account |
|||||||||||||
|
|
|||||||||||||||
2023 |
$ | 18 | $ | — | $ | 18 | $ | — |
45
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The allocation of the admitted negative (disallowed) IMR is presented in the following table for the year ended December 31, 2023:
Total | General Account |
Insulated Separate Account |
Non-Insulated Separate Account |
|||||||||||||
|
|
|||||||||||||||
2023 |
$ | 13 | $ | — | $ | 13 | $ | — |
The calculation of adjusted capital and surplus with consideration of the negative (disallowed) IMR is presented in the following table for the year ended December 31, 2023:
2023 | ||||
|
|
|||
Prior period, as of September 30, 2023, the most recent statement filed with the NYDFS, general account capital and surplus | $ | 847 | ||
From prior period SAP financials: |
||||
Net positive goodwill (admitted) |
— | |||
EDP equipment & operating system software (admitted) |
— | |||
Net DTAs (admitted) |
23 | |||
Net negative (disallowed) IMR (admitted) |
— | |||
Adjusted capital and surplus |
$ | 824 | ||
|
|
The admitted net negative (disallowed) IMR represents 1.62% of adjusted capital and surplus for 2023.
The Company did not have gains/losses associated with derivatives sold allocated to IMR during 2023.
46
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
6. | Policy and Contract Attributes |
Insurance Liabilities
Policy reserves, deposit-type contracts and policy claims at December 31, 2023 and 2022 were as follows:
Year Ended December 31 | ||||||||
2023 | 2022 | |||||||
|
|
|||||||
Life insurance reserves |
$ | 1,569 | $ | 1,450 | ||||
Annuity reserves and supplementary contracts with life contingencies |
4,325 | 4,752 | ||||||
Accident and health reserves (including long term care) |
279 | 338 | ||||||
|
|
|||||||
Total policy reserves |
$ | 6,173 | $ | 6,540 | ||||
Deposit-type contracts |
30 | 31 | ||||||
Policy claims |
37 | 35 | ||||||
|
|
|||||||
Total policy reserves, deposit-type contracts and claim liabilities |
$ | 6,240 | $ | 6,606 | ||||
|
|
Life Insurance Reserves
The aggregate policy reserves for life insurance policies are based upon the 1941, 1958, 1980, 2001 and 2017 Commissioner’s Standard Ordinary Mortality Tables. The reserves are calculated using interest rates ranging from 2.00 to 7.25 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, reserves are determined by computing the regular reserve for the plan at the true age and holding, in addition, the unearned portion 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.
As of December 31, 2023 and 2022, the Company had insurance in force aggregating $4,383 and $5,812, respectively, in which the gross premiums are less than the net premiums required by the valuation standards established by the NYDFS. The Company established policy reserves of $471 and $717 to cover these deficiencies as of December 31, 2023 and 2022, respectively.
47
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The Company does not issue participating life insurance policies.
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 1.00 to 11.25 percent and mortality rates, where appropriate, from a variety of tables.
Annuity reserves also include GICs and funding agreements classified as life-type contracts as defined in SSAP No. 50, Classifications of Insurance or Managed Care Contracts. 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/or minimum guaranteed death benefits, the Company complies with Reg 213. Reg 213 specifies statutory reserve requirements for variable annuity contracts (VACARVM) with benefit guarantees and without benefit guarantees and related products. Examples of covered guaranteed benefits include return of premium death benefits, guaranteed minimum accumulation benefits, guaranteed minimum income benefits, guaranteed minimum withdrawal benefits and guaranteed payout annuity floors. The Reg 213 reserve calculations include standard scenario calculations from the prior Actuarial Guideline 43 (AG 43) as well as reserve requirements based on the NAIC Valuation Manual Section 21 (VM-21) Principles Based Reserving for Variable Annuities. The reserve for contracts falling within the scope of Reg 213 is split into pre and post January 1, 2020 contract issues and is calculated at a contract level with no aggregation. For pre 2020 business, the reserve is the greater of the VM-21 reserve or the modified AG 43 standard scenario reserve. For post 2020 business, the reserve is the greater of the VM-21 reserve and the New York Objective Floor; the New York Objective Floor is the maximum of two distinct modified AG 43 standard scenario reserves, the cash surrender value and the option value floor.
The VM-21 reserve is equal to the Conditional Tail Expectation (CTE) amount plus an additional standard projection amount if the Company’s non-economic assumptions differ enough from industry assumptions. To determine the CTE amount, the Company uses 1,000 of the pre-packaged scenarios developed by the American Academy of Actuaries (AAA) and the Society of Actuaries and prudent estimate assumptions based on Company experience. The Standard Projection Amount is determined using the same CTE calculations but replaces the Company’s own assumptions with prescribed assumptions and methods specified in VM-21.
48
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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.
At December 31, 2023 and 2022, the Company had no premium deficiency reserve related to accident and health policies.
Liabilities for losses and loss/claim adjustment expenses for accident and health contracts are estimated using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates meeting minimum regulatory requirements for other business. 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, 2023 |
||||||||||||||||
2023 |
$ | — | $ | 67 | $ | 38 | $ | 29 | ||||||||
2022 and prior |
40 | 2 | 30 | 12 | ||||||||||||
|
|
|||||||||||||||
40 | $ | 69 | $ | 68 | 41 | |||||||||||
|
|
|||||||||||||||
Active life reserve |
$ | 313 | $ | 252 | ||||||||||||
|
|
|
|
|||||||||||||
Total accident and health reserves |
$ | 353 | $ | 293 | ||||||||||||
|
|
|
|
Unpaid Claims Liability Beginning of Year |
Claims Incurred |
Claims Paid |
Unpaid Claims Liability End of Year |
|||||||||||||
|
|
|||||||||||||||
Year ended December 31, 2022 |
||||||||||||||||
2022 |
$ | — | $ | 61 | $ | 33 | $ | 28 | ||||||||
2021 and prior |
35 | 7 | 30 | 12 | ||||||||||||
|
|
|||||||||||||||
35 | $ | 68 | $ | 63 | 40 | |||||||||||
|
|
|||||||||||||||
Active life reserve |
$ | 301 | $ | 313 | ||||||||||||
|
|
|
|
|||||||||||||
Total accident and health reserves |
$ | 336 | $ | 353 | ||||||||||||
|
|
|
|
The change in the Company’s unpaid claims reserve was $2 and $7 for the years ended December 31, 2023 and 2022, respectively, for health claims that were incurred prior to those Balance Sheets date. The change in 2023 and 2022 resulted primarily from variances in the estimated frequency of claims and claim severity.
49
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Activity in the liability for unpaid claims adjustment expense is summarized as follows:
Liability Beginning of Year |
Incurred | Paid | Liability End of Year |
|||||||||||||
|
|
|||||||||||||||
Year ended December 31, 2023 |
||||||||||||||||
2023 |
$ | — | $ | 1 | $ | 1 | $ | — | ||||||||
2022 and prior |
— | — | — | — | ||||||||||||
|
|
|||||||||||||||
$ | — | $ | 1 | $ | 1 | $ | — | |||||||||
|
|
|||||||||||||||
Year ended December 31, 2022 |
||||||||||||||||
2022 |
$ | — | $ | 1 | $ | 1 | $ | — | ||||||||
2021 and prior |
— | — | — | — | ||||||||||||
|
|
|||||||||||||||
$ | — | $ | 1 | $ | 1 | $ | — | |||||||||
|
|
The Company increased the claim adjustment expense provision for insured events of prior years during 2023.
Premium and Annuity Considerations Deferred and Uncollected
Reserves on the Company’s traditional life insurance products are computed using mean and interpolated or mid-terminal reserving methodologies. The mean methodologies result in the establishment of assets for the amount of the net valuation premiums that are anticipated to be received between the policy’s paid-through date to the policy’s next anniversary date. The interpolated methodologies do not require the establishment of such assets, however, it is required to hold unearned premium liabilities. At December 31, 2023 and 2022, the gross premiums and net of loading amounts related to these assets (which are reported as premiums deferred and uncollected), are as follows:
2023 | 2022 | |||||||||||||||
Gross | Net of Loading | Gross | Net of Loading | |||||||||||||
Life and annuity: |
||||||||||||||||
Ordinary renewal business |
$ | 3 | $ | 3 | $ | 3 | $ | 3 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 3 | $ | 3 | $ | 3 | $ | 3 | |||||||||
|
|
|
|
|
|
|
|
Deposit-type Contracts
Tabular interest on funds not involving life contingencies has been determined primarily by formula.
50
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, 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, deposit fund and life products. There may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on annuity and deposit fund products, by withdrawal characteristics, is summarized as follows:
December 31 2023 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Individual Annuities: | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
|||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
With fair value adjustment |
$ | — | $ | 18 | $ | — | $ | 18 | — % | |||||||||||
At book value less surrender charge of 5% or more |
43 | — | — | 43 | 1 | |||||||||||||||
At fair value |
— | — | 4,123 | 4,123 | 83 | |||||||||||||||
|
|
|||||||||||||||||||
Total with adjustment or at fair value |
43 | 18 | 4,123 | 4,184 | 84 | |||||||||||||||
At book value without adjustment |
549 | — | — | 549 | 11 | |||||||||||||||
Not subject to discretionary withdrawal provision |
240 | — | 16 | 256 | 5 | |||||||||||||||
|
|
|||||||||||||||||||
Total individual annuity reserves |
832 | 18 | 4,139 | 4,989 | 100 % | |||||||||||||||
|
|
|||||||||||||||||||
Less reinsurance ceded |
135 | — | — | 135 | ||||||||||||||||
|
|
|||||||||||||||||||
Net individual annuities reserves |
$ | 697 | $ | 18 | $ | 4,139 | $ | 4,854 | ||||||||||||
|
|
|||||||||||||||||||
Amount included in book value less surrender charge above that will move to book value without adjustment in the year after the statement date |
$ | 9 | $ | — | $ | — | $ | 9 | ||||||||||||
|
|
51
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31 2023 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Group Annuities: | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
|||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
With fair value adjustment |
$ | 776 | $ | 1 | $ | — | $ | 777 | 4 % | |||||||||||
At book value less surrender charge of 5% or more |
492 | — | — | 492 | 3 | |||||||||||||||
At fair value |
— | 323 | 12,770 | 13,093 | 75 | |||||||||||||||
|
|
|||||||||||||||||||
Total with adjustment or at fair value |
1,268 | 324 | 12,770 | 14,362 | 82 | |||||||||||||||
At book value without adjustment |
1,892 | 49 | — | 1,941 | 11 | |||||||||||||||
Not subject to discretionary withdrawal provision |
467 | — | 801 | 1,268 | 7 | |||||||||||||||
|
|
|||||||||||||||||||
Total group annuities reserves |
3,627 | 373 | 13,571 | 17,571 | 100 % | |||||||||||||||
|
|
|||||||||||||||||||
|
|
|||||||||||||||||||
Net group annuities reserves |
$ | 3,627 | $ | 373 | $ | 13,571 | $ | 17,571 | ||||||||||||
|
|
December 31 2023 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Deposit-type contracts (no life contingencies): | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
|||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
At book value without adjustment |
$ | 1 | $ | — | $ | — | $ | 1 | 2 % | |||||||||||
Not subject to discretionary withdrawal provision |
44 | — | 1 | 45 | 98 | |||||||||||||||
|
|
|||||||||||||||||||
Total deposit-type contracts |
45 | — | 1 | 46 | 100 % | |||||||||||||||
|
|
|||||||||||||||||||
Less reinsurance ceded |
14 | — | — | 14 | ||||||||||||||||
|
|
|||||||||||||||||||
Net deposit-type contracts |
$ | 31 | $ | — | $ | 1 | $ | 32 | ||||||||||||
|
|
52
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Reconciliation to the Annual Statement: | Amount | |||
|
|
|||
Life & Accident & Health Annual Statement: |
||||
Exhibit 5, Annuities section, total (net) |
$ | 4,269 | ||
Exhibit 5, Supp contracts with life contingencies section, total (net) |
56 | |||
Exhibit 7, Deposit-type contracts, net balance at the end of the current year after reinsurance |
30 | |||
|
|
|||
Subtotal |
4,355 | |||
Separate Accounts Annual Statement: |
||||
Exhibit 3, Annuities section, total |
18,078 | |||
Exhibit 3, Supp contracts with life contingencies section, total |
23 | |||
Other contract deposit funds |
1 | |||
|
|
|||
Subtotal |
18,102 | |||
|
|
|||
Combined total |
$ | 22,457 | ||
|
|
December 31 2022 |
||||||||||||||||||||
|
|
|||||||||||||||||||
Individual Annuities: | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
|||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
With fair value adjustment |
$ | — | $ | 20 | $ | — | $ | 20 | — % | |||||||||||
At book value less surrender charge of 5% or more |
49 | — | — | 49 | 1 | |||||||||||||||
At fair value |
— | — | 3,916 | 3,916 | 80 | |||||||||||||||
|
|
|||||||||||||||||||
Total with adjustment or at fair value |
49 | 20 | 3,916 | 3,985 | 81 | |||||||||||||||
At book value without adjustment (minimal or no charge or adjustment) |
618 | — | — | 618 | 13 | |||||||||||||||
Not subject to discretionary withdrawal provision |
291 | — | 10 | 301 | 6 | |||||||||||||||
|
|
|||||||||||||||||||
Total individual annuity reserves |
958 | 20 | 3,926 | 4,904 | 100 % | |||||||||||||||
|
|
|||||||||||||||||||
Less reinsurance ceded |
136 | — | — | 136 | ||||||||||||||||
|
|
|||||||||||||||||||
Net individual annuity reserves |
$ | 822 | $ | 20 | $ | 3,926 | $ | 4,768 | ||||||||||||
|
|
|||||||||||||||||||
Amount included in book value less surrender charge above that will move to book value without adjustment in the year after the statement date |
$ | 12 | $ | — | $ | — | $ | 12 | ||||||||||||
|
|
53
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31 | ||||||||||||||||||||
2022 | ||||||||||||||||||||
Group Annuities: | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
| ||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
With fair value adjustment |
$ | 813 | $ | 26 | $ | — | $ | 839 | 5 | % | ||||||||||
At book value less surrender charge of 5% or more |
553 | — | — | 553 | 3 | |||||||||||||||
At fair value |
— | 389 | 10,845 | 11,234 | 70 | |||||||||||||||
|
|
| ||||||||||||||||||
Total with adjustment or at fair value |
1,366 | 415 | 10,845 | 12,626 | 78 | |||||||||||||||
At book value without adjustment (minimal or no charge or adjustment) |
2,048 | 56 | — | 2,104 | 13 | |||||||||||||||
Not subject to discretionary withdrawal provision |
493 | — | 843 | 1,336 | 9 | |||||||||||||||
|
|
| ||||||||||||||||||
Total group annuity reserves |
3,907 | 471 | 11,688 | 16,066 | 100 | % | ||||||||||||||
|
|
| ||||||||||||||||||
|
|
| ||||||||||||||||||
Net group annuity reserves |
$ | 3,907 | $ | 471 | $ | 11,688 | $ | 16,066 | ||||||||||||
|
|
|
||||||||||||||||||
|
|
|
December 31 | ||||||||||||||||||||
2022 | ||||||||||||||||||||
Deposit-type contracts (no life contingencies): | General Account |
Separate Account with Guarantees |
Separate Account Non- Guaranteed |
Total | Percent | |||||||||||||||
|
|
| ||||||||||||||||||
Subject to discretionary withdrawal with adjustment: |
||||||||||||||||||||
At book value without adjustment |
$ | 1 | $ | — | $ | — | $ | 1 | 2 | % | ||||||||||
Not subject to discretionary withdrawal provision |
45 | — | 2 | 47 | 98 | |||||||||||||||
|
|
| ||||||||||||||||||
Total deposit-type contracts |
46 | — | 2 | 48 | 100 | % | ||||||||||||||
|
|
| ||||||||||||||||||
Less reinsurance ceded |
15 | — | — | 15 | ||||||||||||||||
|
|
|
||||||||||||||||||
Net deposit-type contracts |
$ | 31 | $ | — | $ | 2 | $ | 33 | ||||||||||||
|
|
|
||||||||||||||||||
|
|
|
54
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Reconciliation to the Annual Statement: | Amount | |||
Life & Accident & Health Annual Statement: |
||||
Exhibit 5, Annuities section, total (net) |
$ | 4,673 | ||
Exhibit 5, Supp contracts with life contingencies section, total (net) |
56 | |||
Exhibit 7, Deposit-type contracts, net balance at the end of the current year after reinsurance |
31 | |||
|
|
| ||
Subtotal |
4,760 | |||
Separate Accounts Annual Statement: |
||||
Exhibit 3, Annuities section, total |
16,093 | |||
Exhibit 3, Supp contracts with life contingencies section, total |
12 | |||
Other contract deposit funds |
2 | |||
|
|
| ||
Subtotal |
16,107 | |||
|
|
| ||
Combined total |
$ | 20,867 | ||
|
|
|
55
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The amount of reserves on life products, by withdrawal characteristics, is summarized as follows:
December 31 | ||||||||||||
2023 | ||||||||||||
General Account | ||||||||||||
Account Value | Cash Value | Reserve | ||||||||||
|
|
|||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: |
||||||||||||
Term policies with cash value |
$ | — | $ | 1 | $ | 2 | ||||||
Universal life |
674 | 578 | 716 | |||||||||
Universal life with secondary guarantees |
24 | 25 | 94 | |||||||||
Indexed universal life with secondary guarantees |
525 | 433 | 476 | |||||||||
Other permanent cash value life insurance |
— | 66 | 83 | |||||||||
Variable universal life |
25 | 25 | 55 | |||||||||
Not subject to discretionary withdrawal or no cash values |
||||||||||||
Term policies without cash value |
— | — | 282 | |||||||||
Accidental death benefits |
— | — | 1 | |||||||||
Disability- active lives |
— | — | 1 | |||||||||
Disability- disabled lives |
— | — | 3 | |||||||||
Miscellaneous reserves |
— | — | 55 | |||||||||
|
|
|||||||||||
Total (gross) |
1,248 | 1,128 | 1,768 | |||||||||
Reinsurance ceded |
174 | 174 | 199 | |||||||||
|
|
|||||||||||
Total (net) |
$ | 1,074 | $ | 954 | $ | 1,569 | ||||||
|
|
As of December 31, 2023, the Company did not hold any life reserves for separate accounts with guarantees.
December 31 | ||||||||||||
2023 | ||||||||||||
Separate Account - Nonguaranteed | ||||||||||||
Account Value | Cash Value | Reserve | ||||||||||
|
|
|||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: |
||||||||||||
Variable universal life |
$ | 150 | $ | 150 | $ | 284 | ||||||
|
|
|||||||||||
Total (net) |
$ | 150 | $ | 150 | $ | 284 | ||||||
|
|
56
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Reconciliation to the Annual Statement: | Amount | |||
Life & Accident & Health Annual Statement: |
||||
Exhibit 5, Life insurance section, total (net) |
$ | 1,509 | ||
Exhibit 5, Accidental death benefits section total (net) |
1 | |||
Exhibit 5, Disability - active lives section, total (net) |
1 | |||
Exhibit 5, Disability - disabled lives section, total (net) |
3 | |||
Exhibit 5, Miscellaneous reserves section, total (net) |
55 | |||
|
|
|||
Subtotal |
1,569 | |||
Separate Accounts Annual Statement: |
||||
Exhibit 3, Life insurance section, total |
284 | |||
|
|
|||
Subtotal |
284 | |||
|
|
|||
Combined total |
$ | 1,853 | ||
|
|
December 31 | ||||||||||||
2022 | ||||||||||||
General Account | ||||||||||||
Account Value | Cash Value | Reserve | ||||||||||
|
|
| ||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: |
||||||||||||
Term policies with cash value |
$ | 1 | $ | 1 | $ | 2 | ||||||
Universal life |
667 | 565 | 697 | |||||||||
Universal life with secondary guarantees |
16 | 25 | 97 | |||||||||
Indexed universal life with secondary guarantees |
454 | 366 | 389 | |||||||||
Other permanent cash value life insurance |
66 | 66 | 83 | |||||||||
Variable universal life |
25 | 25 | 61 | |||||||||
Not subject to discretionary withdrawal or no cash values |
||||||||||||
Term policies without cash value |
— | — | 280 | |||||||||
Accidental death benefits |
— | — | 1 | |||||||||
Disability- active lives |
— | — | 1 | |||||||||
Disability- disabled lives |
— | — | 3 | |||||||||
Miscellaneous reserves |
— | — | 37 | |||||||||
|
|
| ||||||||||
Total (gross) |
1,229 | 1,048 | 1,651 | |||||||||
Reinsurance ceded |
171 | 171 | 200 | |||||||||
|
|
| ||||||||||
Total (net) |
$ | 1,058 | $ | 877 | $ | 1,451 | ||||||
|
|
|
As of December 31, 2022, the Company did not hold any life reserves for separate accounts with guarantees.
57
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31 | ||||||||||||
2022 | ||||||||||||
Separate Account - Nonguaranteed | ||||||||||||
Account Value | Cash Value | Reserve | ||||||||||
|
|
|||||||||||
Subject to discretionary withdrawal, surrender values, or policy loans: |
||||||||||||
Variable universal life |
$ | 126 | $ | 125 | $ | 247 | ||||||
|
|
|||||||||||
Total (net) |
$ | 126 | $ | 125 | $ | 247 | ||||||
|
|
Reconcililation to the Annual Statement: | Amount | |||
Life & Accident & Health Annual Statement: |
||||
Exhibit 5, Life insurance section, total (net) |
$ | 1,409 | ||
Exhibit 5, Accidental death benefits section total (net) |
1 | |||
Exhibit 5, Disability - active lives section, total (net) |
1 | |||
Exhibit 5, Disability - disabled lives section, total (net) |
3 | |||
|
|
|||
Exhibit 5, Miscellaneous reserves section, total (net) |
37 | |||
Subtotal |
1,451 | |||
Separate Accounts Annual Statement: |
||||
Exhibit 3, Life insurance section, total |
247 | |||
|
|
|||
Subtotal |
247 | |||
|
|
|||
Combined total |
$ | 1,698 | ||
|
|
58
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Separate Accounts
Separate account assets held by the Company represent contracts where the benefit is determined by the performance of the investments held in the separate account. Information regarding the separate accounts of the Company as of and for the years ended December 31, 2023, 2022 and 2021 is as follows:
Nonindexed | ||||||||||||
Guarantee | Nonguaranteed | |||||||||||
Less Than or | Separate | |||||||||||
Equal to 4% | Accounts | Total | ||||||||||
|
|
|||||||||||
Premiums, deposits and other considerations for the year ended December 31, 2023 |
$ | 48 | $ | 2,576 | $ | 2,624 | ||||||
|
|
|||||||||||
Reserves for separate accounts as of December 31, 2023 with assets at: |
||||||||||||
Fair value |
$ | — | $ | 17,995 | $ | 17,995 | ||||||
Amortized cost |
391 | — | 391 | |||||||||
|
|
|||||||||||
Total as of December 31, 2023 |
$ | 391 | $ | 17,995 | $ | 18,386 | ||||||
|
|
|||||||||||
Reserves for separate accounts by withdrawal characteristics as of December 31, 2023: |
||||||||||||
With fair value adjustment |
$ | 19 | $ | — | $ | 19 | ||||||
At fair value |
323 | 17,177 | 17,500 | |||||||||
At book value without fair value adjustment and with current surrender charge of less than 5% |
49 | — | 49 | |||||||||
|
|
|||||||||||
Subtotal |
391 | 17,177 | 17,568 | |||||||||
Not subject to discretionary withdrawal |
— | 818 | 818 | |||||||||
|
|
|||||||||||
Total separate account reserve liabilities at December 31, 2023 |
$ | 391 | $ | 17,995 | $ | 18,386 | ||||||
|
|
59
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Nonindexed | ||||||||||||
Guarantee | Nonguaranteed | |||||||||||
Less Than or | Separate | |||||||||||
Equal to 4% | Accounts | Total | ||||||||||
|
|
|||||||||||
Premiums, deposits and other considerations for the year ended December 31, 2022 |
$ | 91 | $ | 4,347 | $ | 4,438 | ||||||
|
|
|||||||||||
Reserves for separate accounts as of December 31, 2022 with assets at: |
||||||||||||
Fair value |
$ | — | $ | 15,863 | $ | 15,863 | ||||||
Amortized cost |
491 | — | 491 | |||||||||
|
|
|||||||||||
Total as of December 31, 2022 |
$ | 491 | $ | 15,863 | $ | 16,354 | ||||||
|
|
|||||||||||
Reserves for separate accounts by withdrawal characteristics as of December 31, 2022: |
||||||||||||
With fair value adjustment |
$ | 46 | $ | — | $ | 46 | ||||||
At fair value |
389 | 15,008 | 15,397 | |||||||||
At book value without fair value adjustment and with current surrender charge of less than 5% |
56 | — | 56 | |||||||||
|
|
|||||||||||
Subtotal |
491 | 15,008 | 15,499 | |||||||||
Not subject to discretionary withdrawal |
— | 855 | 855 | |||||||||
|
|
|||||||||||
Total separate account reserve liabilities at December 31, 2022 |
$ | 491 | $ | 15,863 | $ | 16,354 | ||||||
|
|
60
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Nonindexed | ||||||||||||
Guarantee | Nonguaranteed | |||||||||||
Less Than or | Separate | |||||||||||
Equal to 4% | Accounts | Total | ||||||||||
|
|
|||||||||||
Premiums, deposits and other considerations for the year ended December 31, 2021 |
$ | 96 | $ | 4,289 | $ | 4,385 | ||||||
|
|
|||||||||||
Reserves for separate accounts as of December 31, 2021 with assets at: |
||||||||||||
Fair value |
$ | — | $ | 26,023 | $ | 26,023 | ||||||
Amortized cost |
505 | — | 505 | |||||||||
|
|
|||||||||||
Total as of December 31, 2021 |
$ | 505 | $ | 26,023 | $ | 26,528 | ||||||
|
|
|||||||||||
Reserves for separate accounts by withdrawal characteristics as of December 31, 2021: |
||||||||||||
With fair value adjustment |
49 | — | 49 | |||||||||
At fair value |
395 | 24,949 | 25,344 | |||||||||
At book value without fair value adjustment and with current surrender charge of less than 5% |
61 | — | 61 | |||||||||
|
|
|||||||||||
Subtotal |
505 | 24,949 | 25,454 | |||||||||
Not subject to discretionary withdrawal |
— | 1,074 | 1,074 | |||||||||
|
|
|||||||||||
Total separate account reserve liabilities at December 31, 2021 |
$ | 505 | $ | 26,023 | $ | 26,528 | ||||||
|
|
A reconciliation of the amounts transferred to and from the Company’s separate accounts is presented below:
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
| ||||||||||
Transfer as reported in the Summary of |
||||||||||||
Operations of the separate accounts statement: |
||||||||||||
Transfers to separate accounts |
$ | 2,635 | $ | 4,443 | $ | 4,389 | ||||||
Transfers from separate accounts |
(3,006 | ) | (10,067 | ) | (4,779 | ) | ||||||
|
|
| ||||||||||
Net transfers from separate accounts |
(371 | ) | (5,624 | ) | (390 | ) | ||||||
Miscellaneous reconciling adjustments |
6 | 7 | 3 | |||||||||
|
|
| ||||||||||
Net transfers as reported in the Summary of Operations of the life, accident and health annual statement |
$ | (365 | ) | $ | (5,617 | ) | $ | (387 | ) | |||
|
|
|
61
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, 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. The assets legally insulated from general account claims at December 31, 2023 and 2022 are attributed to the following products:
2023 | 2022 | |||||||
|
|
|||||||
Variable life |
$ | 136 | $ | 125 | ||||
Variable universal life |
150 | 126 | ||||||
Variable annuities |
4,425 | 4,205 | ||||||
Group annuities |
11,683 | 9,859 | ||||||
Registered market value separate accounts |
612 | 554 | ||||||
Non-registered market value separate accounts |
64 | 64 | ||||||
Par annuities |
970 | 984 | ||||||
Registered market value annuity product - SPL |
2 | 3 | ||||||
Book value separate accounts |
386 | 471 | ||||||
|
|
|||||||
Total separate account assets |
$ | 18,428 | $ | 16,391 | ||||
|
|
At December 31, 2023 and 2022, the Company held separate account assets not legally insulated from the general account in the amount of $19 and $21, respectively.
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 $49, $51, $53, $52 and $51, to the general account in 2023, 2022, 2021, 2020 and 2019, respectively. During the years ended December 31, 2023 and 2022, the general account of the Company had paid $2 toward separate account guarantees and during the year ended December 31, 2021, the general account of the Company had paid an insignificant amount toward separate account guarantees. During the years 2020 and 2019, the general account of the Company had paid $1 each year toward separate account guarantees.
At December 31, 2023 and 2022, the Company reported guaranteed separate account assets at amortized cost in the amount of $366 and $470, respectively, based upon the prescribed practice granted by the State of New York as described in Note 2. These assets had a fair value of $356 and $442 at December 31, 2023 and 2022, respectively, which would have resulted in an unrealized gain/(loss) of $(10) and ($27), respectively, had these assets been reported at fair value.
The Company does not participate in securities lending transactions within the separate account.
62
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
7. | Reinsurance |
Certain premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The Company reinsures portions of the risk on certain insurance policies which exceed its established limits, thereby providing a greater diversification of risk and minimizing exposure on larger risks. The Company remains contingently liable with respect to any insurance ceded, and this would become an actual liability in the event that the assuming insurance company became unable to meet its obligation under the reinsurance treaty.
Premiums and annuity considerations include the following reinsurance amounts:
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
| ||||||||||
Direct premiums |
$ | 3,527 | $ | 5,196 | $ | 5,234 | ||||||
Reinsurance assumed - non affiliates |
189 | 209 | 286 | |||||||||
Reinsurance assumed - affiliates |
— | — | — | |||||||||
Reinsurance ceded - non affiliates |
(125 | ) | (143 | ) | (180 | ) | ||||||
Reinsurance ceded - affiliates |
(74 | ) | (77 | ) | (118 | ) | ||||||
|
|
| ||||||||||
Net premiums earned |
$ | 3,517 | $ | 5,185 | $ | 5,222 | ||||||
|
|
|
The Company received reinsurance recoveries in the amount of $238, $253 and $343 during 2023, 2022 and 2021, respectively. At December 31, 2023 and 2022, estimated amounts recoverable from reinsurers that have been deducted from policy and contract claim reserves totaled $85 and $95, respectively. The aggregate reserves for policies and contracts were reduced for reserve credits for reinsurance ceded at December 31, 2023 and 2022 of $1,644 and $2,043, respectively, of which $898 and $956 were ceded to affiliates, respectively.
Effective July 1, 2022, the Company recaptured business previously ceded to Transamerica International Re (Bermuda), an affiliate. Subsequently, the Company novated the business to a third party. The reserves were initially recorded and then removed from the financials when novated in the amount of $128. Consideration of $9 was paid and subsequently received from the third party. As a result, there was no net financial statement impact.
Effective April 1, 2022, the Company recaptured business previously ceded to Transamerica International Re (Bermuda), an affiliate. Subsequently, the Company novated the business to a third party. The reserves were initially recorded and then removed from the financials when novated in the amount of $121. Consideration of $23 was received and subsequently paid to the third party. As a result, there was no net financial statement impact.
Effective December 1, 2021, the Company recaptured business previously ceded to Transamerica International Re (Bermuda), an affiliate. Subsequently, the Company novated the business to a third party. The reserves were initially recorded and then removed from the financials when novated in the amount of $282. Consideration of $17 was received and subsequently paid to the third party. As a result, there was no net financial statement impact.
63
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
8. | Income Taxes |
The net deferred income tax asset at December 31, 2023 and 2022 and the change from the prior year are comprised of the following components:
December 31, 2023 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
| ||||||||||
Gross Deferred Tax Assets |
$ | 105 | $ | 10 | $ | 115 | ||||||
Statutory Valuation Allowance Adjustment |
— | — | — | |||||||||
|
|
| ||||||||||
Adjusted Gross Deferred Tax Assets |
105 | 10 | 115 | |||||||||
Deferred Tax Assets Nonadmitted |
52 | — | 52 | |||||||||
|
|
| ||||||||||
Subtotal (Net Deferred Tax Assets) |
53 | 10 | 63 | |||||||||
Deferred Tax Liabilities |
20 | 19 | 39 | |||||||||
|
|
| ||||||||||
Net Admitted Deferred Tax Assets (Liabilities) |
$ | 33 | $ | (9 | ) | $ | 24 | |||||
|
|
|
December 31, 2022 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
| ||||||||||
Gross Deferred Tax Assets |
$ | 115 | $ | 9 | $ | 124 | ||||||
Statutory Valuation Allowance Adjustment |
— | — | — | |||||||||
|
|
| ||||||||||
Adjusted Gross Deferred Tax Assets |
115 | 9 | 124 | |||||||||
Deferred Tax Assets Nonadmitted |
49 | — | 49 | |||||||||
|
|
| ||||||||||
Subtotal (Net Deferred Tax Assets) |
66 | 9 | 75 | |||||||||
Deferred Tax Liabilities |
27 | 18 | 45 | |||||||||
|
|
| ||||||||||
Net Admitted Deferred Tax Assets (Liabilities) |
$ | 39 | $ | (9 | ) | $ | 30 | |||||
|
|
|
Change | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
| ||||||||||
Gross Deferred Tax Assets |
$ | (10 | ) | $ | 1 | $ | (9 | ) | ||||
Statutory Valuation Allowance Adjustment |
— | — | — | |||||||||
|
|
| ||||||||||
Adjusted Gross Deferred Tax Assets |
(10 | ) | 1 | (9 | ) | |||||||
Deferred Tax Assets Nonadmitted |
3 | — | 3 | |||||||||
|
|
| ||||||||||
Subtotal (Net Deferred Tax Assets) |
(13 | ) | 1 | (12 | ) | |||||||
Deferred Tax Liabilities |
(7 | ) | 1 | (6 | ) | |||||||
|
|
| ||||||||||
Net Admitted Deferred Tax Assets (Liabilities) |
$ | (6 | ) | $ | — | $ | (6 | ) | ||||
|
|
|
64
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The main components of deferred income tax amounts are as follows:
Year Ended December 31 | ||||||||||||
2023 | 2022 | Change | ||||||||||
|
|
| ||||||||||
Deferred Tax Assets: |
||||||||||||
Ordinary |
||||||||||||
Policyholder reserves |
$ | 67 | $ | 77 | $ | (10 | ) | |||||
Investments |
1 | 2 | (1 | ) | ||||||||
Deferred acquisition costs |
29 | 27 | 2 | |||||||||
Compensation and benefits accrual |
1 | 1 | — | |||||||||
Receivables - nonadmitted |
5 | 7 | (2 | ) | ||||||||
Other |
2 | 1 | 1 | |||||||||
|
|
| ||||||||||
Subtotal |
105 | 115 | (10 | ) | ||||||||
Statutory valuation allowance adjustment |
— | — | — | |||||||||
Nonadmitted |
52 | 49 | 3 | |||||||||
|
|
| ||||||||||
Admitted ordinary deferred tax assets |
53 | 66 | (13 | ) | ||||||||
Capital |
||||||||||||
Investments |
10 | 9 | 1 | |||||||||
Other |
— | |||||||||||
|
|
| ||||||||||
Subtotal |
10 | 9 | 1 | |||||||||
Statutory valuation allowance adjustment |
— | — | ||||||||||
Nonadmitted |
— | — | — | |||||||||
|
|
| ||||||||||
Admitted capital deferred tax assets |
10 | 9 | 1 | |||||||||
|
|
| ||||||||||
Admitted deferred tax assets |
$ | 63 | $ | 75 | $ | (12 | ) | |||||
|
|
|
Year Ended December 31 | ||||||||||||
2023 | 2022 | Change | ||||||||||
|
|
| ||||||||||
Deferred Tax Liabilities: |
||||||||||||
Ordinary |
||||||||||||
Investments |
$ | — | $ | 2 | $ | (2 | ) | |||||
Policyholder reserves |
19 | 23 | (4 | ) | ||||||||
Capitalized ceding commissions |
— | — | ||||||||||
Other |
1 | 2 | (1 | ) | ||||||||
|
|
| ||||||||||
Subtotal |
20 | 27 | (7 | ) | ||||||||
Capital |
||||||||||||
Investments |
19 | 18 | 1 | |||||||||
Other |
— | — | — | |||||||||
|
|
| ||||||||||
Subtotal |
19 | 18 | 1 | |||||||||
|
|
| ||||||||||
Deferred tax liabilities |
39 | 45 | (6 | ) | ||||||||
|
|
| ||||||||||
Net admitted deferred tax assets (liabilities) |
$ | 24 | $ | 30 | $ | (6 | ) | |||||
|
|
|
65
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
As a result of the 2017 Tax Cuts and Jobs Act (TCJA), the Company’s tax reserve deductible temporary difference increased by $18. This change results in an offsetting $(18) taxable temporary difference that will be amortized into taxable income evenly over the eight years subsequent to 2017. The remaining amortizable balance is included within the Policyholder Reserves line items above.
The Inflation Reduction Act was enacted during the third quarter 2022 reporting period on August 16, 2022. The act included a provision which subjects high earning corporate taxpayers to the Corporate Alternative Minimum Tax (CAMT). The Company is part of an affiliated group that has determined it is a nonapplicable reporting entity for CAMT in 2023 and has not included any impacts of the CAMT in the financial statements as of December 31, 2023.
As discussed in Note 2, for the years ended December 31, 2023 and 2022, 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, 2023 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
|||||||||||
Admission Calculation Components SSAP No. 101 |
||||||||||||
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks |
$ | 1 | $ | 1 | $ | 2 | ||||||
2(b) Adjusted Gross Deferred Tax Assets Expected to be Realized (Excluding The Amount of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation (the Lesser of 2(b)1 and 2(b)2 below) |
20 | 2 | 22 | |||||||||
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date |
20 | 2 | 22 | |||||||||
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold |
XXX | XXX | 133 | |||||||||
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 |
32 | 7 | 39 | |||||||||
|
|
|||||||||||
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c)) |
$ | 53 | $ | 10 | $ | 63 | ||||||
|
|
66
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31, 2022 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
|||||||||||
Admission Calculation Components SSAP No. 101 |
||||||||||||
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks |
$ | — | $ | 2 | $ | 2 | ||||||
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) |
27 | 1 | 28 | |||||||||
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date |
27 | 1 | 28 | |||||||||
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold |
XXX | XXX | 123 | |||||||||
2(c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities |
39 | 6 | 45 | |||||||||
|
|
|||||||||||
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c)) |
$ | 66 | $ | 9 | $ | 75 | ||||||
|
|
Change | ||||||||||||
Ordinary | Capital | Total | ||||||||||
|
|
| ||||||||||
Admission Calculation Components SSAP No. 101 |
||||||||||||
2(a) Federal Income Taxes Paid in Prior Years Recoverable Through Loss Carrybacks |
$ | 1 | $ | (1 | ) | $ | — | |||||
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) |
(7 | ) | 1 | (6 | ) | |||||||
1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date |
(7 | ) | 1 | (6 | ) | |||||||
2. Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold |
XXX | XXX | 10 | |||||||||
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 |
(7 | ) | 1 | (6 | ) | |||||||
|
|
| ||||||||||
2(d) Deferred Tax Assets Admitted as the result of application of SSAP No. 101, Total (2(a) + 2(b) + 2(c)) |
$ | (13 | ) | $ | 1 | $ | (12 | ) | ||||
|
|
|
67
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31 | ||||||||||||
2023 | 2022 | Change | ||||||||||
|
|
| ||||||||||
Ratio Percentage Used To Determine Recovery Period and Threshold Limitation Amount |
1187 | % | 1017 | % | 170 | % | ||||||
|
|
| ||||||||||
Amount of Adjusted Capital and Surplus Used To Determine Recovery Period and Threshold Limitation in 2(b)2 |
||||||||||||
|
|
| ||||||||||
$ | 887 | $ | 818 | $ | 69 | |||||||
|
|
|
The impact of tax planning strategies at December 31, 2023 and 2022 was as follows:
December 31, 2023 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
Percent | Percent | Percent | ||||||||||
|
|
| ||||||||||
Impact of Tax Planning Strategies: |
||||||||||||
(% of Total Adjusted Gross DTAs) |
0 | % | 0 | % | 0 | % | ||||||
|
|
| ||||||||||
(% of Total Net Admitted Adjusted Gross DTAs) |
6 | % | 0 | % | 6 | % | ||||||
|
|
|
December 31, 2022 | ||||||||||||
Ordinary | Capital | Total | ||||||||||
Percent | Percent | Percent | ||||||||||
|
|
| ||||||||||
Impact of Tax Planning Strategies: |
||||||||||||
(% of Total Adjusted Gross DTAs) |
0 | % | 0 | % | 0 | % | ||||||
|
|
| ||||||||||
(% of Total Net Admitted Adjusted Gross DTAs) |
4 | % | 0 | % | 4 | % | ||||||
|
|
|
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 | ||||||||||||
2023 | 2022 | Change | ||||||||||
|
|
|||||||||||
Current Income Tax |
||||||||||||
Federal |
$ | 24 | $ | 1 | $ | 23 | ||||||
|
|
|||||||||||
Subtotal |
24 | 1 | 23 | |||||||||
Federal income tax on net capital gains |
2 | 2 | — | |||||||||
|
|
|||||||||||
Federal and foreign income taxes incurred |
$ | 26 | $ | 3 | $ | 23 | ||||||
|
|
68
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
Year Ended December 31 | ||||||||||||
2022 | 2021 | Change | ||||||||||
|
|
|||||||||||
Current Income Tax |
||||||||||||
Federal |
$ | 1 | $ | 17 | $ | (16) | ||||||
|
|
|||||||||||
Subtotal |
1 | 17 | (16) | |||||||||
Federal income tax on net capital gains |
2 | 12 | (10) | |||||||||
|
|
|||||||||||
Federal and foreign income taxes incurred |
$ | 3 | $ | 29 | $ | (26) | ||||||
|
|
The Company’s current income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate to income before tax as follows:
Year Ended December 31 | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
|
|
|||||||||||
Current income taxes incurred |
$ | 26 | $ | 3 | $ | 29 | ||||||
Change in deferred income taxes (without tax on unrealized gains and losses) |
(1) | (12) | (7) | |||||||||
|
|
|||||||||||
Total income tax reported |
$ | 25 | $ | (9) | $ | 22 | ||||||
|
|
|||||||||||
Income before taxes |
$ | 210 | $ | 55 | $ | 234 | ||||||
Federal statutory tax rate |
21.00 | % | 21.00 | % | 21.00% | |||||||
|
|
|||||||||||
Expected income tax expense (benefit) at statutory rate |
$ | 44 | $ | 12 | $ | 49 | ||||||
Increase (decrease) in actual tax reported resulting from: |
||||||||||||
Pre-tax income of disregarded subsidiaries |
$ | — | $ | — | $ | 1 | ||||||
Dividends received deduction |
(3) | (2) | (4) | |||||||||
Pre-tax items reported net of tax |
(2) | (3) | (2) | |||||||||
Tax credits |
(15) | (15) | (19) | |||||||||
Prior period tax return adjustment |
(1) | 6 | — | |||||||||
Deferred tax change on other items in surplus |
2 | (7) | (2) | |||||||||
Other |
— | — | (1) | |||||||||
|
|
|||||||||||
Total income tax reported |
$ | 25 | $ | (9) | $ | 22 | ||||||
|
|
The Company’s federal income tax return is consolidated with other includible affiliated companies. Please see the listing of companies in 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 separately computed income tax liability or the consolidated group’s income tax liability in any carryback or carryforward year when so applied. Intercompany income
69
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
tax balances are settled within thirty days of payment to or filing with the Internal Revenue Service (IRS). A tax return has not been filed for 2023.
The following is income tax expense for current year and preceding years that is available for recoupment in the event of future losses:
Total | ||||
|
|
|||
2021 |
$ | 14 | ||
2022 |
2 | |||
2023 |
— |
The total amount of the unrecognized tax benefits that if recognized would affect the effective income tax rate:
Unrecognized Tax Benefits |
||||
|
|
|||
Balance at January 1, 2022 |
$ | 2 | ||
Tax positions taken during prior period |
— | |||
Tax positions taken during current period |
— | |||
Settlements with taxing authorities |
— | |||
Lapse of applicable statute of limitations |
— | |||
|
|
|||
Balance at December 31, 2022 |
$ | 2 | ||
Tax positions taken during prior period |
— | |||
Tax positions taken during current period |
— | |||
Settlements with taxing authorities |
— | |||
Lapse of applicable statute of limitations |
— | |||
|
|
|||
Balance at December 31, 2023 |
$ | 2 | ||
|
|
The IRS completed its examination for 2009 through 2013 for which is currently at appeals with a refund pending Joint Committee on Taxation approval. The IRS opened an exam for the 2014 through 2018 amended tax returns. Federal income tax returns filed in 2019 through 2022 remain open, subject to potential future examination. The Company believes there are adequate defenses against, or sufficient provisions established related to any open or contested tax positions.
The Company classifies interest and penalties related to income taxes as income tax expense. The Company’s interest expense/(benefit) related to income taxes:
Interest | Penalties | Total payable (receivable) |
||||||||||
|
|
|||||||||||
Balance at January 1, 2021 |
$ | (2 | ) | $ | — | $ | (2) | |||||
Cash received (paid) |
2 | — | 2 | |||||||||
|
|
|||||||||||
Balance at December 31, 2021 |
$ | — | $ | — | $ | — | ||||||
Interest expense (benefit) |
1 | — | 1 | |||||||||
|
|
|||||||||||
Balance at December 31, 2022 |
$ | 1 | $ | — | $ | 1 | ||||||
|
|
|||||||||||
Balance at December 31, 2023 |
$ | 1 | $ | — | $ | 1 | ||||||
|
|
70
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
9. Capital and Surplus
The Company has authorized 24,000 common stock shares at $125 per share par value of which 15,067 shares were issued and outstanding at December 31, 2023 and 2022.
The Company is subject to limitations, imposed by the State of New York, on the payment of dividends to its stockholders. Generally, dividends during any twelve-month period may not be paid, without prior regulatory approval, in excess of the greater of (a) 10 percent of 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, not to exceed earned surplus as of the preceding December 31. Subject to the availability of unassigned surplus at the time of such dividend, the maximum payment which may be made in 2024, without the prior approval of insurance regulatory authorities, is $201.
On September 28, 2023, the Company paid an ordinary common stock dividend of $95 to TA Corp.
On March 30, 2023, the Company paid an ordinary common stock dividend of $75 to TA Corp.
On September 29, 2022, the Company paid an ordinary common stock dividend of $150 to TA Corp.
On March 29, 2022, the Company paid an ordinary common stock dividend of $150 to TA Corp.
On September 30, 2021, the Company paid an extraordinary dividend of $100 to TA Corp.
On March 25, 2021, the Company paid an ordinary common stock dividend of $100 to TA Corp.
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 various risk factors. At December 31, 2023 and 2022, the Company met the minimum RBC requirements.
The Company held special surplus funds in the amount of $12 and $7, as of December 31, 2023 and 2022, respectively, for annuitant mortality fluctuations as required under New York Regulation 47, Separate Account and Separate Account Annuities.
10. Securities Lending
The Company participates in an agent-managed securities lending program in which the Company primarily loans out US Treasuries and other bonds. The Company receives collateral equal to 102% of the fair value of the loaned government or other domestic securities as of the transaction date. If the fair value of the collateral is at any time less than 102% of the fair value of the loaned securities, the counterparty is mandated to deliver additional collateral, the fair value of which, together with the collateral already held in connection with the lending transaction, is at least equal to 102% of the fair value of the loaned government or other domestic securities. In the event the Company loans a foreign security and the denomination of the currency of the collateral
71
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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, 2023 and 2022, respectively, securities with a fair value of $296 and $386 were on loan under securities lending agreements. At December 31, 2023 and 2022, 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 $321 and $412 at December 31, 2023 and 2022, respectively.
The contractual maturities of the securities lending collateral positions are as follows:
Fair Value | ||||||||
|
|
|||||||
2023 | 2022 | |||||||
|
|
|||||||
Open |
$ | 321 | $ | 412 | ||||
Securities received |
— | — | ||||||
|
|
|||||||
Total collateral received |
$ | 321 | $ | 412 | ||||
|
|
The Company receives primarily cash collateral in an amount in excess of the fair value of the securities lent. The Company reinvests the cash collateral into higher yielding securities than the securities which the Company has lent to other entities under the arrangement.
The maturity dates of the reinvested securities lending collateral are as follows:
2023 | 2022 | |||||||||||||||
|
|
|
|
|||||||||||||
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
|||||||||||||
|
|
|
|
|||||||||||||
Open |
$ | 20 | $ | 20 | $ | 53 | $ | 53 | ||||||||
30 days or less |
126 | 126 | 148 | 148 | ||||||||||||
31 to 60 days |
53 | 53 | 63 | 63 | ||||||||||||
61 to 90 days |
27 | 27 | 38 | 38 | ||||||||||||
91 to 120 days |
51 | 51 | 29 | 29 | ||||||||||||
121 to 180 days |
44 | 44 | 81 | 81 | ||||||||||||
|
|
|
|
|||||||||||||
Total |
321 | 321 | 412 | 412 | ||||||||||||
Securities received |
— | — | — | — | ||||||||||||
|
|
|
|
|||||||||||||
Total collateral reinvested |
$ | 321 | $ | 321 | $ | 412 | $ | 412 | ||||||||
|
|
|
|
The Company did not have collateral for securities lending transactions that extended beyond one year from the report date for the years ended December 31, 2023 and 2022.
For securities lending, the Company’s source of cash used to return the cash collateral is dependent upon the liquidity of the current market conditions. Under current conditions, the Company has securities with a par value of $323 (fair value of $321) that are currently tradable securities that could be sold and used to pay for the $321 in collateral calls that could come due under a worst-case scenario.
72
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
11. Retirement and Compensation Plans
Defined Contribution Plans
The Company’s employees participate in a contributory defined contribution plan sponsored by 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 contribute an amount up to four percent of the participant’s eligible earnings per the plan’s matching formula. 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 (ERISA), as amended. Benefits expense allocated to the Company for the years ended December 31, 2023, 2022 and 2021 was insignificant.
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 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 the employee’s eligible compensation. The plan provides benefits based on a cash balance formula. The plan is subject to the reporting and disclosure requirements of the ERISA.
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. The benefits are based on the employee’s eligible compensation. The plans provide benefits based on a cash balance formula. The plans are unfunded and nonqualified under the Internal Revenue Code.
The Company recognizes pension expense equal to its allocation from TA Corp. The pension expense related to both the qualified 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 No. 102, Pensions. Pension expenses were $1, $1 and $2 for the years ended December 31, 2023, 2022 and 2021, 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 No. 92, Postretirement Benefits Other Than Pensions. The Company’s allocation of postretirement expenses for the years ended December 31, 2023, 2022 and 2021 was insignificant.
73
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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, 2023, 2022 and 2021 was insignificant.
12. Related Party Transactions
The Company shares certain officers, employees and general expenses with affiliated companies.
In accordance with an agreement between TA Corp and the Company, TA Corp will ensure the maintenance of certain minimum tangible net worth, operating leverage and liquidity levels of the Company, as defined in the agreement, through the contribution of additional capital by TA Corp as needed.
Effective August 1, 2020, the Company, and an affiliate, Transamerica Life Insurance Company, amended and finalized a Shared Services and Cost Sharing Agreement for both parties to provide accounting, administrative, and other advisory services in accordance with the agreement. The agreement, filed and approved by the NYDFS, replaces prior agreements between the entities. The amount received by the Company as a result of being a party to these agreements was $102, $100 and $80 during 2023, 2022 and 2021, respectively. The amount paid as a result of being a party to these agreements was $38, $40 and $45 during 2023, 2022 and 2021, respectively. Fees charged between affiliates approximate their cost.
The Company is party to a Management and Administrative and Advisory agreement with AEGON USA Realty Advisors (AURA), LLC whereby AURA serves as the administrator and advisor for the Company’s mortgage loan operations. The Company paid $6, $6 and $5 for these services during 2023, 2022 and 2021, respectively.
The Company is party to an Investment Management Agreement with AEGON USA Investment Management (AUIM), LLC whereby AUIM acts as a discretionary investment manager for the Company. The Company paid $11, $11 and $11 for these services during 2023, 2022 and 2021, respectively.
The Company has an administration service agreement with Transamerica Asset Management (TAM) to provide administrative services to the Transamerica Series Trust. The Company received $7, $8 and $10 for these services during 2023, 2022 and 2021, respectively.
Transamerica Capital, Inc. provides wholesaling distribution services for the Company under a distribution agreement. The Company incurred an insignificant amount of expenses under this agreement for the years ended December 31, 2023 and 2022. The Company incurred expenses under this agreement of $1 for the year ended December 31, 2021.
Receivables from (payables to) affiliates and intercompany borrowings bear interest at the thirty-day commercial paper rate. During 2023, 2022 and 2021, the Company received (paid) an insignificant amount of net interest from (to) affiliates. At December 31, 2023 and 2022, respectively, the Company reported net receivables (payables) from (to) affiliates of $3 and ($17),
74
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
respectively. Terms of settlement require that these amounts are settled within 90 days of quarter-end per the requirements of SSAP No. 25, Affiliates and Other Related Parties.
In accordance with SSAP No. 25, the Company reports short-term intercompany notes receivable as short-term investments. At December 31, 2023 and 2022, the Company had no short-term intercompany notes receivable.
The Company utilizes the look-through approach in valuing its investment in the following entities.
Book Adjusted Carrying Value | ||||
|
|
| ||
Real Estate Alternatives Portfolio 4 HR, LLC |
$ | 8 | ||
Aegon Workforce Housing Fund 2, L.P. |
50 | |||
Aegon Workforce Housing Fund 3, L.P. |
2 | |||
Natural Resources Alternatives Portfolio I, LLC |
14 | |||
Natural Resources Alternatives Portfolio II, LLC |
7 | |||
Natural Resources Alternatives Portfolio 3, LLC |
28 | |||
Zero Beta Fund, LLC |
1 | |||
TA-APOP I-A, LLC |
3 | |||
|
|
| ||
$ | 113 | |||
|
|
|
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.
75
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The following tables show the disclosures for all SCA investments, except 8bi entities, Balance Sheets value (admitted and nonadmitted) and the NAIC responses for the SCA filings as of December 31, 2023 and 2022:
December 31, 2023 | ||||||||||||||||
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 Alternatives Portfolio 3A, Inc. |
9 | % | $ | — | $ | — | $ | — | ||||||||
Total SSAP No. 97 8b(iii) Entities |
XXX | $ | — | $ | — | $ | — | |||||||||
SSAP No. 97 8b(iv) Entities |
||||||||||||||||
None |
— | % | $ | — | $ | — | $ | — | ||||||||
Total SSAP No. 97 8b(iv) Entities |
XXX | $ | — | $ | — | $ | — | |||||||||
Total SSAP No. 97 8b Entities (except 8bi entities) |
XXX | $ | — | $ | — | $ | — | |||||||||
Aggregate Total |
XXX | $ | — | $ | — | $ | — | |||||||||
December 31, 2022 | ||||||||||||||||
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 Alternatives Portfolio 3A, Inc. |
9 | % | $ | — | $ | — | $ | — | ||||||||
Total SSAP No. 97 8b(iii) Entities |
XXX | $ | — | $ | — | $ | — | |||||||||
SSAP No. 97 8b(iv) Entities |
||||||||||||||||
None |
— | % | $ | — | $ | — | $ | — | ||||||||
Total SSAP No. 97 8b(iv) Entities |
XXX | $ | — | $ | — | $ | — | |||||||||
Total SSAP No. 97 8b Entities (except 8bi entities) |
XXX | $ | — | $ | — | $ | — | |||||||||
Aggregate Total |
XXX | $ | — | $ | — | $ | — | |||||||||
76
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
The following table shows the NAIC responses for the SCA filings (except 8bi entities):
December 31, 2023 | ||||||||||||||||||||||||
SCA Entity | Type of NAIC Filing* |
Date of Filing to the NAIC |
NAIC (1) |
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 Alternatives Portfolio 3A, Inc. |
NA | $ | — | — | — | I | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b(iii) Entities |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
SSAP No. 97 8b(iv) Entities |
||||||||||||||||||||||||
None |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b(iv) Entities |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b Entities (except 8bi entities) | — | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
Aggregate Total |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
* 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
77
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
December 31, 2022 | ||||||||||||||||||||||||
SCA Entity | Type of NAIC Filing* |
Date of Filing to the NAIC |
NAIC Valuation Amount (1) |
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 Alternatives Portfolio 3A, Inc. |
NA | $ | — | — | — | I | ||||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b(iii) Entities |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
SSAP No. 97 8b(iv) Entities |
||||||||||||||||||||||||
None |
$ | — | — | — | — | |||||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b(iv) Entities |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
Total SSAP No. 97 8b Entities (except 8bi entities) | — | — | $ | — | — | — | — | |||||||||||||||||
|
|
|||||||||||||||||||||||
Aggregate Total |
— | — | $ | — | — | — | — | |||||||||||||||||
|
|
* 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
Information regarding the Company’s affiliated reinsurance transactions is available in Note 7.
13. Managing General Agents and Third-Party Administrators
The Company utilizes managing general agents (MGA) and third-party administrators (TPA) in its operation. There were no MGA’s/TPA’s that wrote premiums in excess of 5% of the Company’s surplus.
14. Commitments and Contingencies
At December 31, 2023 and 2022, the Company has mortgage loan commitments of $9 and $70, respectively.
The Company has contingent commitments of $44 and $47, as of December 31, 2023 and 2022, respectively, to provide additional funding for joint ventures, partnerships and limited liability companies, which includes LIHTC commitments of $1 and $1, respectively.
At December 31, 2023 and 2022, there were no private placement commitments outstanding.
The Company may pledge cash as collateral for derivative transactions. When cash is pledged as collateral, it is derecognized and a receivable is recorded to reflect the eventual return of that cash
78
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
by the counterparty. The amount of cash collateral pledged by the Company as of December 31, 2023 and 2022, respectively, was $0 and $7.
Cash collateral received from derivative counterparties as well as the obligation to return the collateral is recorded on the Company’s Balance Sheets. The amount of cash collateral received as of December 31, 2023 and 2022, respectively, was $38 and $51.
At December 31, 2023 and 2022, securities in the amount of $6 and $5, respectively, were posted to the Company as collateral from derivative counterparties. The securities were not included on the Company’s Balance Sheets as the Company does not have the ability to sell or repledge the collateral.
The Company is a member of the FHLB of New York. Through its membership, the Company establishes the option to access funds through secured borrowing arrangements with the FHLB. The Company is not in an active borrowing position; therefore, collateral pledged and borrowings are not applicable for this Company.
At December 31, 2023 and 2022, the Company purchased/owned the following FHLB stock as part of the agreement:
Year Ended December 31 | ||||||||
2023 | 2022 | |||||||
|
|
|||||||
Membership Stock: |
||||||||
Class B |
$ | 3 | $ | 3 | ||||
|
|
|
|
|||||
Total |
$ | 3 | $ | 3 | ||||
|
|
At December 31, 2023 and 2022, 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, 2023 |
||||||||||||||||
Membership Stock |
||||||||||||||||
Class B |
$ | — | $ | — | $ | — | $ | 3 | ||||||||
|
|
|||||||||||||||
Total |
$ | — | $ | — | $ | — | $ | 3 | ||||||||
|
|
|||||||||||||||
Less Than 6 Months |
6 Months to Less Than 1 Year |
1 to Less Than 3 Years |
3 to 5 Years | |||||||||||||
|
|
|||||||||||||||
December 31, 2022 |
||||||||||||||||
Membership Stock |
||||||||||||||||
Class B |
$ | — | $ | — | $ | — | $ | 3 | ||||||||
|
|
|||||||||||||||
Total |
$ | — | $ | — | $ | — | $ | 3 | ||||||||
|
|
The Company is party to legal proceedings involving a variety of issues incidental to its business. Lawsuits may be brought in any federal or state court in the United States or in an arbitral forum.
79
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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 their complexity and scope, outcomes cannot be predicted with certainty. Although legal proceedings sometimes include substantial demands for compensatory and punitive damages, and injunctive relief, damages arising from such demands are typically not 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 Sheets. 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 and an offsetting premium tax benefit at December 31, 2023 and 2022 for its estimated share of future guaranty fund assessments related to several major insurer insolvencies. These amounts were not material to the Company’s financial position. The guaranty fund (benefit) expense was insignificant for the years ended December 31, 2023, 2022 and 2021.
15. Sales, Transfer, and Servicing of Financial Assets and Extinguishments of Liabilities
The Company enters into dollar repurchase agreements in which residential mortgage backed securities are delivered to the counterparty once adequate collateral has been received. At December 31, 2023 and 2022, the Company had dollar repurchase agreements outstanding in the amount of $20 and $20, respectively, which is included in borrowed money on the Balance Sheets. Those amounts include an insignificant amount of accrued interest at both December 31, 2023 and 2022. At December 31, 2023, securities with a book value of $20 and a fair value of $17 were subject to dollar repurchase agreements. At December 31, 2022, securities with a book value of $20 and a fair value of $20 were subject to dollar repurchase agreements. These securities have maturity dates that range from August 1, 2051 to April 1, 2052 for years ended December 31, 2023 and 2022. The Company does not have the legal right to recall or substitute the underlying assets prior to the transaction’s scheduled termination. Upon scheduled termination, the counterparty is obligated to return substantially similar assets.
The contractual maturities of the dollar repurchase agreement positions are as follows:
Fair Value | ||||||||
|
|
|||||||
2023 | 2022 | |||||||
|
|
|||||||
Open |
$ | 20 | $ | 20 | ||||
Securities received |
— | — | ||||||
|
|
|||||||
Total collateral received |
$ | 20 | $ | 20 | ||||
|
|
80
Transamerica Financial Life Insurance Company
Notes to Financial Statements – Statutory Basis
(Dollars in Millions, Except per Share amounts)
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. During 2023 and 2022, there were no securities sold and reacquired within 30 days of the sale date.
16. Subsequent Events
The financial statements are adjusted to reflect events that occurred between the Balance Sheets date and the date when the financial statements are available to be issued, provided they give evidence of conditions that existed at the Balance Sheets date (Type I). The Company has not identified any Type 1 subsequent events for the year ended December 31, 2023 through April 11, 2024.
Events that are indicative of conditions that arose after the Balance Sheets 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, 2023. On March 28, 2024, the Company paid an ordinary common stock dividend of $75 to TA Corp.
81
Transamerica Financial Life Insurance Company
Appendix A – Listing of Affiliated Companies
Transamerica Corporation |
||||
EIN: 42-1484983 |
||||
AFFILIATIONS SCHEDULE |
||||
YEAR ENDED DECEMBER 31, 2023 |
||||
Entity Name | FEIN | |||
Transamerica Corporation |
42-1484983 | |||
AEGON Asset Management Services Inc |
39-1884868 | |||
AEGON Direct Marketing Services Inc |
42-1470697 | |||
AEGON Financial Services Group Inc |
41-1479568 | |||
AEGON Institutional Markets Inc |
61-1085329 | |||
AEGON Management Company |
35-1113520 | |||
AEGON USA Real Estate Services Inc |
61-1098396 | |||
AEGON USA Realty Advisors of CA |
20-5023693 | |||
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 | |||
Garnet Assurance Corporation |
11-3674132 | |||
Garnet Assurance Corporation II |
14-1893533 | |||
Garnet Assurance Corporation III |
01-0947856 | |||
Ironwood Re Corp |
47-1703149 | |||
LIICA RE II |
20-5927773 | |||
Money Services Inc |
42-1079580 | |||
Monumental General Administrators Inc |
52-1243288 | |||
Pearl Holdings Inc I |
20-1063558 | |||
Pearl Holdings Inc II |
20-1063571 | |||
Real Estate Alternatives Portfolio 3A Inc |
20-1627078 | |||
River Ridge Insurance Company |
20-0877184 | |||
Stonebridge Benefit Services Inc |
75-2548428 | |||
TLIC Oakbrook Reinsurance Inc. |
47-1026613 | |||
TLIC Watertree Reinsurance, Inc. |
81-3715574 | |||
Transamerica Affordable Housing Inc |
94-3252196 | |||
Transamerica Asset Management |
59-3403585 | |||
Transamerica Bermuda Re, Ltd |
98-1701849 | |||
Transamerica Capital Inc |
95-3141953 | |||
Transamerica Casualty Insurance Company |
31-4423946 | |||
Transamerica Corporation (OREGON) |
98-6021219 |
82
Transamerica Financial Life Insurance Company
Appendix A – Listing of Affiliated Companies
Transamerica Corporation |
||||
EIN: 42-1484983 |
||||
AFFILIATIONS SCHEDULE |
||||
YEAR ENDED DECEMBER 31, 2023 |
||||
Entity Name | FEIN | |||
Transamerica Finance Corporation |
95-1077235 | |||
Transamerica Financial Advisors |
59-2476008 | |||
Transamerica Financial Life Insurance Company |
36-6071399 | |||
Transamerica Fund Services Inc |
59-3403587 | |||
Transamerica International Re (Bermuda) Ltd |
98-0199561 | |||
Transamerica Investors Securities Corp |
13-3696753 | |||
Transamerica Life Insurance Company |
39-0989781 | |||
Transamerica Pacific Re, Inc. |
85-1028131 | |||
Transamerica Resources Inc |
52-1525601 | |||
Transamerica Stable Value Solutions Inc |
27-0648897 | |||
Transamerica Trust Company |
42-0947998 | |||
United Financial Services Inc |
52-1263786 | |||
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 | |||
Zahorik Company Inc |
95-2775959 | |||
Zero Beta Fund LLC |
26-1298094 |
83
Statutory-Basis Financial
Statement Schedules
84
Transamerica Financial Life Insurance Company
Summary of Investments – Other Than
Investments in Related Parties
(Dollars in Millions)
December 31, 2023
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 |
$ | 295 | $ | 306 | $ | 327 | ||||||
States, municipalities and political subdivisions |
39 | 35 | 39 | |||||||||
Foreign governments |
102 | 87 | 102 | |||||||||
Hybrid securities |
41 | 38 | 41 | |||||||||
All other corporate bonds |
4,452 | 3,929 | 4,443 | |||||||||
Preferred stocks |
3 | 4 | 4 | |||||||||
|
|
| ||||||||||
Total fixed maturities |
4,932 | 4,399 | 4,956 | |||||||||
Equity securities |
||||||||||||
Common stocks: |
||||||||||||
Industrial, miscellaneous and all other |
3 | 3 | 3 | |||||||||
|
|
| ||||||||||
Total equity securities |
3 | 3 | 3 | |||||||||
Mortgage loans on real estate |
1,841 | 1,841 | ||||||||||
Policy loans |
151 | 151 | ||||||||||
Other long-term investments |
57 | 57 | ||||||||||
Receivable for securities |
9 | 9 | ||||||||||
Securities lending |
321 | 321 | ||||||||||
Cash, cash equivalents and short-term investments |
1,247 | 1,247 | ||||||||||
|
|
|
|
|
| |||||||
Total investments |
$ | 8,561 | $ | 8,585 | ||||||||
|
|
|
|
|
|
(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) | Bonds of $4 are held at fair value rather than amortized cost. Preferred stocks of $4 are held at fair value. |
85
Transamerica Financial Life Insurance Company
Supplementary Insurance Information
(Dollars in Millions)
SCHEDULE III
Future Policy Benefits and |
Unearned Premiums |
Policy and Contract Liabilities |
Premium Revenue |
Net Investment Income* |
Benefits, Claims Losses and Settlement Expenses |
Other Operating Expenses* |
||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Year ended December 31, 2023 |
||||||||||||||||||||||||||||
Individual life |
$ | 1,477 | $ | — | $ | 20 | $ | 174 | $ | 73 | $ | 234 | $ | 44 | ||||||||||||||
Individual health |
189 | 4 | 14 | 74 | 9 | 57 | 24 | |||||||||||||||||||||
Group life and health |
176 | 2 | 2 | 54 | 8 | (36 | ) | 15 | ||||||||||||||||||||
Annuity |
4,325 | — | 1 | 3,215 | 240 | 3,639 | (206) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
$ | 6,167 | $ | 6 | $ | 37 | $ | 3,517 | $ | 330 | $ | 3,894 | $ | (123) | |||||||||||||||
|
|
|||||||||||||||||||||||||||
Year ended December 31, 2022 |
||||||||||||||||||||||||||||
Individual life |
$ | 1,359 | $ | — | $ | 19 | $ | 171 | $ | 67 | $ | 114 | $ | 46 | ||||||||||||||
Individual health |
174 | 4 | 10 | 69 | 9 | 52 | 24 | |||||||||||||||||||||
Group life and health |
249 | 2 | 5 | 52 | 9 | 43 | 15 | |||||||||||||||||||||
Annuity |
4,752 | — | 1 | 4,893 | 248 | 10,697 | (5,471) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
$ | 6,534 | $ | 6 | $ | 35 | $ | 5,185 | $ | 333 | $ | 10,906 | $ | (5,386) | |||||||||||||||
|
|
|||||||||||||||||||||||||||
Year ended December 31, 2021 |
||||||||||||||||||||||||||||
Individual life |
$ | 1,404 | $ | — | $ | 23 | $ | 172 | $ | 72 | $ | 194 | $ | 48 | ||||||||||||||
Individual health |
159 | 4 | 15 | 68 | 9 | 56 | 22 | |||||||||||||||||||||
Group life and health |
236 | 2 | 6 | 49 | 9 | 36 | 14 | |||||||||||||||||||||
Annuity |
4,948 | — | — | 4,933 | 252 | 5,412 | (247) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
$ | 6,747 | $ | 6 | $ | 44 | $ | 5,222 | $ | 342 | $ | 5,698 | $ | (163) | |||||||||||||||
|
|
*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.
86
Transamerica Financial Life Insurance Company
Reinsurance
(Dollars in Millions)
SCHEDULE IV
Gross Amount |
Ceded to Other Companies |
Assumed From Other Companies |
Net Amount |
Percentage of Amount Assumed to Net |
||||||||||||||||
|
|
|||||||||||||||||||
Year ended December 31, 2023 |
||||||||||||||||||||
Life insurance in force |
$ | 26,006 | $ | 55,692 | $ | 53,925 | $ | 24,239 | 222% | |||||||||||
|
|
|||||||||||||||||||
Premiums: |
||||||||||||||||||||
Individual life |
$ | 187 | $ | 199 | $ | 184 | $ | 174 | 106% | |||||||||||
Individual health |
74 | — | — | 74 | 0% | |||||||||||||||
Group life and health |
54 | — | 1 | 54 | 1% | |||||||||||||||
Annuity |
3,212 | — | 4 | 3,215 | 0% | |||||||||||||||
|
|
|||||||||||||||||||
$ | 3,527 | $ | 199 | $ | 189 | $ | 3,517 | 5% | ||||||||||||
|
|
|||||||||||||||||||
Year ended December 31, 2022 |
||||||||||||||||||||
Life insurance in force |
$ | 25,777 | $ | 62,724 | $ | 60,695 | $ | 23,748 | 256% | |||||||||||
|
|
|||||||||||||||||||
Premiums: |
||||||||||||||||||||
Individual life |
$ | 187 | $ | 220 | $ | 204 | $ | 171 | 119% | |||||||||||
Individual health |
69 | — | — | 69 | 0% | |||||||||||||||
Group life and health |
51 | — | 1 | 52 | 1% | |||||||||||||||
Annuity |
4,889 | — | 4 | 4,893 | 0% | |||||||||||||||
|
|
|||||||||||||||||||
$ | 5,196 | $ | 220 | $ | 209 | $ | 5,185 | 4% | ||||||||||||
|
|
|||||||||||||||||||
Year ended December 31, 2021 |
||||||||||||||||||||
Life insurance in force |
$ | 25,773 | $ | 87,333 | $ | 85,219 | $ | 23,659 | 360% | |||||||||||
|
|
|||||||||||||||||||
Premiums: |
||||||||||||||||||||
Individual life |
$ | 190 | $ | 298 | $ | 280 | $ | 172 | 163% | |||||||||||
Individual health |
68 | — | — | 68 | 0% | |||||||||||||||
Group life and health |
48 | — | 1 | 49 | 2% | |||||||||||||||
Annuity |
4,928 | — | 5 | 4,933 | 0% | |||||||||||||||
|
|
|||||||||||||||||||
$ | 5,234 | $ | 298 | $ | 286 | $ | 5,222 | 5% | ||||||||||||
|
|
87
PART C
OTHER INFORMATION
Item 27. Exhibits
Exhibit No: | Description | |||
(a) | Board of Directors Resolution | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(b) | Custodian Agreements. Not applicable | |||
(c) | Underwriting Contracts | |||
(c) | (i) | Underwriting Agreement with Transamerica Capital, Inc. (1) | ||
(d) | Contracts | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(e) | Applications | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(f) | Depositor’s Certificate of Incorporation and By-laws | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(g) | Reinsurance Contracts. Not applicable | |||
(h) | Participation Agreements | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(i) | Administrative Contracts. | |||
(i) | Any form of Form N-4 exhibits previously filed with the Commission as part of Pre-Effective Amendment No. 1 dated July 7, 1994 to the Registrant’s N-4 Registration Statement, Registration No. 33-73734 under the Securities Act of 1933, are incorporated herein by reference. (P) | |||
(j) | Other Material Contracts. Not applicable. | |||
(k) | Legal Opinion | |||
(i) | Opinion and Consent of Counsel. Filed herewith. | |||
(l) | Other Opinions | |||
(i) | Consent of Independent Registered Public Accounting Firm. Filed herewith. | |||
(ii) | Consent of Independent Auditors. Filed herewith. | |||
(m) | Omitted Financial Statements. Not applicable | |||
(n) | Initial Capital Agreements. Not applicable | |||
(o) | Form of Initial Summary Prospectuses. Not applicable. |
(p) | Powers of Attorney. Filed Herewith | |||
Note | ||||
(1) | Incorporated herein by reference to the Post-Effective Amendment No. 30 to Form N-4 (File No. 33-73734) filed on February 28, 2008. | |||
Item 28. Directors and Officers of the Depositor (Transamerica Financial Life Insurance Company)
Name and Business Address | Principal Positions and Offices with Depositor | |
Jamie Ohl 1801 California St. Suite 5200 Denver, CO 80202 |
Director and President and Chief Executive Officer, Individual Solutions Division | |
Bonnie T. Gerst 6400 C Street SW Cedar Rapids, IA 52499 |
Director, and Chairman of the Board and President, Financial Assets | |
Christopher S. Fleming 100 Light Street Baltimore, MD 21202 |
Director and Chief Operating Officer, Individual Solutions Division | |
Andrew S. Williams 100 Light Street Baltimore, MD 21202 |
Director, Assistant Secretary, General Counsel and Senior Vice President | |
Matt Kepler 100 Light Street Baltimore, MD 21202 |
Chief Financial Officer, Executive Vice President and Treasurer | |
Zachary Harris 6400 C Street SW Cedar Rapids, IA 52499 |
Director, Chief Operating Officer, Workplace Solutions Division | |
Wendy E. Cooper 245 East 93 Street New York, NY 10128 |
Director | |
Anne C. Kronenberg 187 Guard Hill Road Bedford Corner, NY 10549 |
Director | |
June Yuson 245 East 93rd Street New York, NY 10128 |
Director |
ITEM 29 LISTING
Item 29. Persons Controlled by or under Common Control with the Depositor or Registrant. | ||||||
As of December 31, 2023, 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 owner ship 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 |
Yarra Rapids, LLC, Sole Member (100%)
|
Real estate investments | |||
239 West 20th Street, LLC | Delaware |
Yarra Rapids, LLC, Sole Member (100%)
|
Real estate investments | |||
313 East 95th Street, LLC | Delaware |
Yarra Rapids, LLC, Sole Member (100%)
|
Real estate investments | |||
319 East 95th Street, LLC | Delaware |
Yarra Rapids, LLC, Sole Member (100%)
|
Real estate investments | |||
Administrative Group, LLC | Tennessee |
AUSA Holding, LLC, Sole Member (100%)
|
Retirement services | |||
AEGON Affordable Housing Debt Fund I, LLC | Delaware |
AHDF Manager I, LLC, Member (0.01%); Transamerica Life Insurance Company, Managing Member (5%); Dominium Taxable Fund I, LLC, non- AEGON affiliates, Member (94.99%)
|
Affordable housing loans | |||
AEGON AM Funds, LLC | Delaware |
AEGON USA Investment Management, LLC, Sole LLC Member (100%) ***Company 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 flexibility to accommodate other similarly situated clients. | |||
AEGON AM Private Equity Partners I, LLC | Delaware |
AEGON USA Investment Management, LLC, Sole Member (100%)
|
Investments | |||
AEGON AM Private Equity Partners II, LLC | Delaware |
AEGON USA Investment Management, LLC, Sole Member (100%)
|
General Partner to FSBA AAM Strategic Fund II, LP | |||
AEGON Asset Management Services, Inc. | Delaware |
AUSA Holding, LLC, Sole Shareholder (100%)
|
Registered investment advisor | |||
Aegon Community Investments 50, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 51, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 52, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 53, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 54, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 55, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 56, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 57, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 58, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 59, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 60, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
ITEM 29 LISTING
Aegon Community Investments 61, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 62, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 63, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 64, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 65, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 66, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Aegon Community Investments 67, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
AEGON Direct Marketing Services, Inc. | Maryland |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Marketing company | |||
AEGON Direct Marketing Services International, LLC | Maryland | AUSA Holding, LLC, Sole Shareholder (100%) | Marketing arm for sale of mass marketed insurance coverage | |||
AEGON Direct Marketing Services Mexico, S.A. de C.V. |
Mexico | AEGON Mexico Holding B.V., Managing Member (92.96%); AEGON DMS Holding B.V., Member (5.82%) |
Provide management advisory and technical consultancy services. | |||
AEGON Direct Marketing Services Mexico Servicios, S.A. de C.V. | Mexico | AEGON Mexico Holding B.V., Sole Member (100%) |
Provide marketing, trading, telemarketing and advertising services in favor of any third party, particularly in favor of insurance and reinsurance companies.
| |||
AEGON Energy Management, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
AEGON Financial Services Group, Inc. | Minnesota |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Marketing | |||
AEGON Funding Company, LLC | Delaware |
Transamerica Corporation, Sole Member (100%)
|
Issue debt securities-net proceeds used to make loans to affiliates | |||
Aegon Global Services, LLC | Iowa | Commonwealth General Corporation, Sole Member (100%) | Holding company | |||
AEGON Institutional Markets, Inc. | Delaware | Commonwealth General Corporation, Sole Shareholder (100%) |
Provider of investment, marketing and administrative services to insurance companies
| |||
Aegon LIHTC Fund 50, LLC | Delaware | Aegon LIHTC Fund 63, LLC, Managing Member (51.01%); Citibank, N.A., non-affiliate of AEGON, Member (48.99%) |
Investments | |||
Aegon LIHTC Fund 51, LLC | Delaware | Aegon Community Investments 51, LLC, Managing Member (.01%); Citibank, N.A., non-affiliate of AEGON, Member (99.99%) |
Investments | |||
|
ITEM 29 LISTING
Aegon LIHTC Fund 52, LLC | Delaware |
Aegon Community Investments 52, LLC, Member (0.01%); Transamerica Financial Life Insurance Company, Member (10.18%); Transamerica Life Insurance Company, Member (1%); Ally Bank, non-affiliates of AEGON, Member (11.35%); Bank of the West, non-affiliates of AEGON, Member (7.46%); California Bank & Trust, non-affiliates of AEGON, Member (5.21%); Citibank, N.A., non-affiliates of AEGON, Managing Member (49%); Pacific West Bank, non-affiliates of AEGON, Member (7.58%); US Bank, non-affiliates of AEGON, Member (7.58%)
|
Investments | |||
Aegon LIHTC Fund 54, LLC | Delaware |
Aegon Community Investments 54, LLC, Non-Member Manager (0%); FNBC Leasing Corporation, non-affiliate of Aegon, Sole Member (100%)
|
Investments | |||
Aegon LIHTC Fund 55, LLC | Delaware |
Aegon Community Investments 55, LLC Managing Member (0.01%) Transamerica Life Insurance Company, Member (2.82%); Ally Bank, non-affiliates of AEGON, Member (8.21%); Bank of Hope, non-affiliates of AEGON, Member (14.27%); Citibank, N.A., non-affiliates of AEGON, Member (21.69%); CMFG Life Insurance Company, non-affiliates of AEGON, Member (9.72%); Lake City Bank, non-affiliates of AEGON, Member (1.47%); Minnesota Life Insurance Company, non-affiliates of AEGON, Member (7.46%); The Guardian Life Insurance Company of America, non-affiliates of AEGON, Member (10.44%); U.S. Bancorp Community Development Corporation, non-affiliates of AEGON, Member (22.10%); ZB National Association, non-affiliates of AEGON, Member (1.81%)
|
Investments | |||
Aegon LIHTC Fund 57, LLC | Delaware |
Aegon Community Investments 57, LLC, Managing Member (.01%); Bank of America, N.A., non-affiliate of AEGON, Investor Member (99.99%)
|
Investments | |||
|
ITEM 29 LISTING
Aegon LIHTC Fund 58, LLC | Delaware |
Aegon Community Investments 58, LLC, Managing Member (0.01%); Transamerica Life Insurance Company, Member (2.92%); Allstate Insurance Company, non-affiliates of AEGON, Member (23.89%); Ally Bank, non-affiliates of AEGON, Member (17.31%); CMFG Life Insurance Company, non-affiliates of AEGON, Member (8.20%); Santander Bank, N.A., non-affiliates of AEGON, Member (21.37%); U.S. Bancorp Community Development Corporation, non-affiliates of AEGON, Member (19.83%); Zions Bancorporation, N.A., non-affiliates of AEGON, Member (6.47%)
|
Investments | |||
Aegon LIHTC Fund 60, LLC | Delaware |
Aegon Community Investments 60, LLC, Non-Member Manager (0%); FNBC Leasing Corporation, non-affiliate of Aegon, Sole Member (100%)
|
Investments | |||
Aegon LIHTC Fund 61, LLC | Delaware | Aegon Community Investments 61, LLC, Non-Member Manager (0%); HSBC Bank, N.A., non-affiliate of Aegon, Sole Member (100%) |
Investments | |||
Aegon LIHTC Fund 62, LLC | Delaware |
Aegon Community Investments 62, LLC, Managing Member? (0.01%); Allstate Insurance Company, non-affiliates of AEGON, Member (20.48%); Ally Bank, non-affiliates of AEGON, Member (10.11%); Bank of the West, non-affiliates of AEGON, Member (6.57%); Farm Bureau Property & Casualty, non-affiliates of AEGON, Member (6.74%); Minnesota Life Insurance Company, non-affiliates of AEGON, Member (6.74%); Santander Bank, N.A., non-affiliates of AEGON, Member (5.39%); State Street Bank and Trust Company, non-affiliates of AEGON, Member (34.22%); U.S. Bancorp Community Development Corporation, non-affiliates of AEGON, Member (6.57%); Zions Bancorporation, N.A., non-affiliates of AEGON, non-affiliates of AEGON, Member (3.17%)
|
Investments | |||
|
ITEM 29 LISTING
Aegon LIHTC Fund 63, LLC |
Delaware |
Aegon Community Investments 63, LLC, non-Member Manager (0%); FNBC Leasing Corporation, non-affiliate of Aegon, Sole Member (100%)
|
Investments | |||
Aegon LIHTC Fund 64, LLC |
Delaware |
Aegon Community Investments 64, LLC, non-Member Manager (0%); Bank of America, N.A., non-affiliate of AEGON, Investor Member (99.99%) KCIC Fund 5A, LLC (0.01%)
|
Investments | |||
Aegon LIHTC Fund 65, LLC |
Delaware |
Aegon Community Investments 65, LLC, Managing Member (.01%); Bank of America, N.A., non-affiliate of AEGON, Investor Member (99.99%)
|
Investments | |||
Aegon LIHTC Fund 66, LLC |
Delaware |
Aegon Community Investments 66, LLC, Managing Member? (0.01%); Bank of the West, non-affiliates of AEGON, Member (49.99%); Cedar Rapids Bank & Trust, non-affiliates of AEGON, Member (49.99%);
|
Investments | |||
Aegon LIHTC Fund 67, LLC |
Delaware |
Aegon Community Investments 67, LLC, Non-Member Manager (0%); FNBC Leasing Corporation, non-affiliate of Aegon, Sole Member (100%)
|
Investments | |||
AEGON Managed Enhanced Cash, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (79.20%); Transamerica Life Insurance Company, Sole Member (20.80%) |
Investment vehicle for securities lending cash collateral | |||
AEGON Management Company |
Indiana | Transamerica Corporation, Sole Shareholder (100%) | Holding company | |||
Aegon Multi-Family Equity Fund, LLC |
Delaware |
Transamerica Financial Life Insurance Company, Member (5%); Transamerica Life Insurance Company, Member (20%); Landmark Real Estate Partners VIII, L.P., non-affiliate of AEGON, Member (72.16%); NCL Investments II, L.P. - RE Series, non-affiliates of AEGON, Member (2.84%)
|
Investments | |||
Aegon Opportunity Zone Fund Joint Venture 1, LP |
Delaware | Aegon OZF Investments 1, LLC, Member (0.25%); United Insurance Company of America, Member (99.75%) |
Investments | |||
Aegon OZF Investments 1, LLC |
Delaware | AEGON USA Realty Advisors, LLC, Sole Member 100% | Investments | |||
Aegon Upstream Energy Fund, LLC |
Delaware | AEGON Energy Management, LLC, Sole Member 100% | Investments | |||
AEGON USA Asset Management Holding, LLC |
Iowa | AUSA Holding, LLC, Sole Member 100% | Holding company | |||
AEGON USA Investment Management, LLC |
Iowa | AEGON USA Asset Management Holding, LLC, Sole Member 100% | Investment advisor | |||
AEGON USA Real Estate Services, Inc. |
Delaware | AEGON USA Realty Advisors, LLC, Sole Shareholder (100%) | Real estate and mortgage holding company | |||
AEGON USA Realty Advisors, LLC |
Iowa | AEGON USA Asset Management Holding, LLC, Sole Member (100%) | Administrative and investment services | |||
|
ITEM 29 LISTING
AEGON USA Realty Advisors of California, Inc. | Iowa | AEGON USA Realty Advisors, Inc., Sole Shareholder (100%) | Investments | |||
Aegon Workforce Housing Boynton Place REIT, LLC | Delaware |
Aegon Workforce Housing Separate Account 1, LLC, Sole Member (100%)
|
Multifamily private equity structure with third-party Investor | |||
Aegon Workforce Housing Fund 2 Holding Company, LLC | Delaware | Aegon Workforce Housing Fund 2, LP, Sole Member (100%) | Holding company | |||
Aegon Workforce Housing Fund 2 Holding Company B, LLC | Delaware | Aegon Workforce Housing Fund 2, LP, Sole Member (100%) | Holding company | |||
Aegon Workforce Housing Fund 2 Holding Company C, LLC | Delaware | Aegon Workforce Housing Fund 2, LP, Sole Member (100%) | Holding Company | |||
Aegon Workforce Housing Fund 2, L.P | Delaware |
AWHF2 General Partner, LLC, General Partner (0%); Transamerica Financial Life Insurance Company, Fund Partners, Member (20%); Transamerica Life Insurance Company, Fund Partners, Member (80%)
|
Investments | |||
Aegon Workforce Housing Fund 3 Holding Company, LLC | Delaware | Aegon Workforce Housing Fund 3, LP, Sole Member (100%) | Holding company | |||
Aegon Workforce Housing Fund 3, L.P | Delaware |
Transamerica Financial Life Insurance Company, Limited Partners: (10%); Transamerica Life Insurance Company, Limited Partners (60%); Transamerica Life Insurance Company, Limited Partners (30%)
|
Investments | |||
Aegon Workforce Housing JV 4A, LLC | Delaware |
Aegon Workforce Housing Fund 2 Holding Company, LLC, Member (44.5%); Landmark Real Estate Partners VIII, L.P., non-affiliates of AEGON, Member (26.7%); NCL Investments II, L.P. – RE Series, non-affiliates of AEGON, Member (1.05%); Strategic Partners Real Estate VII Investments, L.P., non-affiliates of AEGON, Member (27.75%)
|
Investments | |||
Aegon Workforce Housing JV 4B, LLC | Delaware |
Aegon Workforce Housing Fund 2 Holding Company, LLC, Member (25%); Landmark Real Estate Partners VIII, L.P., non-affiliates of AEGON, Member (36.08%); NCL Investments II, L.P. – RE Series, non-affiliates of AEGON, Member (1.42%); Strategic Partners Real Estate VII Investments, L.P., non-affiliates of AEGON, Member (37.50%)
|
Investments | |||
|
ITEM 29 LISTING
Aegon Workforce Housing JV 4C, LLC | Delaware |
Aegon Workforce Housing Fund 2 Holding Company, LLC, Member (10%); Landmark Real Estate Partners VIII, L.P., non-affiliates of AEGON, Member (43.30%); NCL Investments II, L.P., non-affiliates of AEGON, Member (1.70%); Strategic Partners Real Estate VII Investments, L.P., non-affiliates of AEGON, Member (45%)
|
Investments | |||
Aegon Workforce Housing Park at Via Rosa REIT, LLC | Delaware |
Aegon Workforce Housing Separate Account 1, LLC, Sole Member (100%)
|
Multifamily private equity structure with third-party Investor | |||
Aegon Workforce Housing Separate Account 1, LLC | Delaware |
Transamerica Financial Life Insurance Company (4.17%); Transamerica Life Insurance Company, Member (15.83%); Transamerica Life Insurance Company, Member (4.25%) AWHSA Manager 1, LLC, non-affiliates of AEGON, Member Manager (0%); Lake Tahoe IV, L.P., non-affiliates of AEGON, non-affiliates of AEGON, Member (23.86%); Townsend RE Global Special Solutions, L.P., non-affiliates of AEGON, Member (10.23%); Townsend Real Estate Alpha Fund III, L.P., non-affiliates of AEGON, Member (40.91%)
|
Multifamily private equity structure with third-party Investor | |||
AHDF Manager I, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
ALH Properties Eight LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Eleven LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Four LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Nine LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Seven LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Seventeen LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Sixteen LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Ten LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Twelve LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
ALH Properties Two LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
AMFETF Manager, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
AMTAX HOLDINGS 308, LLC | Ohio | TAHP Fund II, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%) |
Affordable housing | |||
|
ITEM 29 LISTING
AMTAX HOLDINGS 388, LLC | Ohio | TAHP Fund II, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%) |
Affordable housing | |||
AMTAX HOLDINGS 483, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 559, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 561, LLC | Ohio |
TAHP Fund VII, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 588, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 613, LLC | Ohio | Cupples State LIHTC Investors, LLC, Member (1%); Garnet LIHTC Fund VII, LLC, Member (99%); TAH Pentagon Funds LLC, non-owner Manager (0%) |
Affordable housing | |||
AMTAX HOLDINGS 639, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 649, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 672, LLC | Ohio |
TAHP Fund I, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%)
|
Affordable housing | |||
AMTAX HOLDINGS 713, LLC | Ohio | TAHP Fund II, LLC, Sole Member (100%); TAH Pentagon Funds LLC, non-owner Manager (0%) |
Affordable housing | |||
Apollo Housing Capital Arrowhead Gardens, LLC |
Delaware |
Garnet LIHTC Fund XXXV, LLC, Sole Member (100%)
|
Affordable housing | |||
APOP III, LLC | Delaware |
Transamerica Life Insurance Company, Limited Partner (88.59%); Transamerica Financial Life Insurance Company, Limited Partner (9.84%)
|
Investments | |||
AUSA Holding, LLC | Maryland | Transamerica Corporation, Sole Member (100%) | Holding company | |||
AUSA Properties, Inc. | Iowa | AEGON USA Realty Advisors, LLC, Sole Shareholder (100%) | Own, operate and manage real estate | |||
AWHF2 General Partner, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
AWHF2 Subsidiary Holding Company C, LLC | Delaware | Aegon Workforce Housing Fund 2 Holding Company C, LLC, Sole Member (100%) | Holding Company | |||
|
ITEM 29 LISTING
AWHF3 General Partner, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
AWHJV4 Manager, LLC | Delaware | AEGON USA Realty Advisors, LLC, Sole Member (100%) | Investments | |||
AWHSA Manager 1, LLC | Delaware |
AEGON USA Realty Advisors, LLC, Sole Member (100%)
|
Multifamily private equity structure with third-party Investor | |||
Barfield Ranch Associates, LLC | Florida |
Mitigation Manager, LLC, Member (50%); OBPFL-Barfield, LLC, non-affiliate of AEGON, Member (50%)
|
Investments | |||
Bay State Community Investments II, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments in low income housing tax credit properties | |||
Carle Place Leasehold SPE, LLC | Delaware |
Transamerica Financial Life Insurance Company, Sole Member (100%)
|
Lease holder | |||
Commonwealth General Corporation | Delaware | Transamerica Corporation, Sole Shareholder (100%) | Holding company | |||
Creditor Resources, Inc. | Michigan | AUSA Holding, LLC, Sole Shareholder (100%) | Credit insurance | |||
CRI Solutions, Inc. | Maryland | Creditor Resources, Inc., Sole Member (100%) | Sales of reinsurance and credit insurance | |||
Cupples State LIHTC Investors, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (22%); Transamerica Life Insurance Company, Sole Member (63%); Transamerica Life Insurance Company, Sole Member (15%) |
Investments | |||
Equitable AgriFinance, LLC | Delaware |
AEGON USA Realty Advisors, LLC, Member (50%); Equitable Financial Insurance Company, non-affiliate of AEGON, Member (50%)
|
Agriculturally-based real estate advisory services | |||
FD TLIC Limited Liability Company | New York | Transamerica Life Insurance Company, Sole Member (100%) | Broadway production | |||
FGH Realty Credit LLC | Delaware | FGH USA, LLC, Sole Member (100%) | Real estate | |||
FGH USA LLC | Delaware | RCC North America LLC, Sole Member (100%) | Real estate | |||
Fifth FGP LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
Financial Planning Services, Inc. | District of Columbia | Commonwealth General Corporation, Sole Shareholder(100%) | Management services | |||
First FGP LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
Fourth FGP LLC | Delaware |
FGH USA LLC, Sole Member (100%)
|
Real estate | |||
FSBA AAM Strategic Fund I, LP | Delaware | Aegon AM Private Equity Partners I, LLC, Sole Member (100%) | Investments | |||
FSBA AAM Strategic Fund II, LP | Delaware |
APOP III, LLC, Member (2.5%) State Board of Administration of Florida acting on behalf of the Florida Retirement System Trust Fund, Member (97.50%)
|
AUIM Sponsored Private Equity vehicle | |||
Garnet Assurance Corporation | Kentucky |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Investments | |||
Garnet Assurance Corporation II | Iowa | Commonwealth General Corporation, Sole Member (100%) | Business investments | |||
|
ITEM 29 LISTING
Garnet Assurance Corporation III |
Iowa |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Business investments | |||
Garnet Community Investments, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments IV, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments V, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments VI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments VII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments VIII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments IX, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments X, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XVIII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XX, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXIV, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXV, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXVI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXVII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investment XXVIII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXIX, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXIII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXIV, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXV, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXVI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXVII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXVIII, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XXXIX, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XL, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
Garnet Community Investments XLI, LLC |
Delaware | Transamerica Life Insurance Company, Sole Member (100%) | Investments | |||
|
ITEM 29 LISTING
Garnet Community Investments XLII, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLIII, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLIV, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLVI, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLVII, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLVIII, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet Community Investments XLIX, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments | |||
Garnet LIHTC Fund IV, LLC | Delaware | Garnet Community Investments IV, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund V, LLC | Delaware | Garnet Community Investments V, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund VI, LLC | Delaware | Garnet Community Investments VI, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund VII, LLC | Delaware | Members: Investments VII, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund VIII, LLC | Delaware | Garnet Community Investments VIII, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund IX, LLC | Delaware | Garnet Community Investments IX, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund X, LLC | Delaware |
Garnet Community Investments X, LLC, Member (0.01%); Goldenrod Asset Management, a non-AEGON affiliate, Member (99.99%)
|
Investments | |||
Garnet LIHTC Fund XI, LLC | Delaware | Garnet Community Investments XI, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund XII, LLC | Delaware | Garnet Community Investments XII, LLC, Member (0.01%); Garnet LIHTC Fund XII-A, LLC, Member (73.39%); Garnet LIHTC Fund XII-B, LLC, Member (13.30%); Garnet LIHTC Fund XII-C, LLC, Member (13.30%) |
Investments | |||
Garnet LIHTC Fund XII-A, LLC | Delaware | Garnet Community Investments XII, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
|
ITEM 29 LISTING
Garnet LIHTC Fund XII-B, LLC | Delaware | Garnet Community Investments XII, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund XII-C, LLC | Delaware | Garnet Community Investments XII, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund XIII, LLC | Delaware | Garnet Community Investments, LLC, Member (.01%); Garnet LIHTC Fund XIII-A, LLC, Member (68.10%); Garnet LIHTC Fund XIII-B, LLC, Member (31.89%) |
Investments | |||
Garnet LIHTC Fund XIII-A, LLC | Delaware |
Garnet Community Investments, LLC, Managing Member? (99.99%); Transamerica Life Insurance Company, Member (.01%)
|
Investments | |||
Garnet LIHTC Fund XIII-B, LLC | Delaware | Garnet Community Investments, LLC, Managing Member (99.99%); Transamerica Life Insurance Company, Member (.01%) |
Investments | |||
Garnet LIHTC Fund XIV, LLC | Delaware | Garnet Community Investments, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund XV, LLC | Delaware | Garnet Community Investments, LLC (0.01%); Transamerica Life Insurance Company (99.99%) |
Investments | |||
Garnet LIHTC Fund XVI, LLC | Delaware |
Garnet Community Investments, LLC, Member (0.01%); FNBC Leasing Corporation, non-affiliates of AEGON, Member (99.99%)
|
Investments | |||
Garnet LIHTC Fund XVII, LLC | Delaware | Garnet Community Investments, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund XVIII, LLC | Delaware |
Garnet Community Investments XVIII, LLC, Member (0.01%); Verizon Capital Corp., non-affiliates of AEGON, Member (99.99%)
|
Investments | |||
Garnet LIHTC Fund XIX, LLC | Delaware | Garnet Community Investments, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund XX, LLC | Delaware | Garnet Community Investments, LLC, Member (100%); |
Investments | |||
Garnet LIHTC Fund XXII, LLC | Delaware | Garnet Community Investments, LLC, Member (0.01%); NorLease, Inc., non-affiliates of AEGON, Member (99.99%) |
Investments | |||
|
ITEM 29 LISTING
Garnet LIHTC Fund XXIII, LLC | Delaware |
Garnet Community Investments, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%)
|
Investments | |||
Garnet LIHTC Fund XXIV, LLC | Delaware |
Garnet Community Investments XXIV, LLC, Managing Member (0.01%); Transamerica Life Insurance Company (21.26%); New York Life Insurance and Annuity Corporation, non-affiliates of AEGON, Member (21.73%); New York Life Insurance Company, non-affiliates of AEGON, Member (25.51%); Principal Life Insurance Company, non-affiliates of AEGON, Member (31.49%)
|
Investments | |||
Garnet LIHTC Fund XXV, LLC | Delaware |
Garnet Community Investment XXV, LLC, Member (0.01%); Garnet LIHTC Fund XXVIII, LLC, Member (1%); Mt. Hamilton Fund, LLC, non-affiliates of AEGON, Member (97.99); Google Affordable housing I LLC, non-affiliates of AEGON, Member (1%)
|
Investments | |||
Garnet LIHTC Fund XXVI, LLC | Delaware | Garnet Community Investments XXVI, LLC, Member (0.01%); American Income Life Insurance Company, non-affiliate of AEGON, Member (99.99%) |
Investments | |||
Garnet LIHTC Fund XXVII, LLC | Delaware |
Garnet Community Investments XXVII, LLC, Member (0.01%); Transamerica Life Insurance Company, Member (16.71%); AETNA Life Insurance Company, non-affiliates of AEGON, Member (30.29%); New York Life Insurance Company, non-affiliates of AEGON, Member (22.71%); ProAssurance Casualty Company, non-affiliates of AEGON, Member (3.63%); ProAssurance Indemnity Company, non-affiliates of AEGON, Member (8.48%); State Street Bank and Trust Company, non-affiliates of AEGON, Member (18.17%)
|
Investments | |||
|
ITEM 29 LISTING
Garnet LIHTC Fund XXVIII, LLC | Delaware | Garnet Community Investments XXVIII LLC, Member (0.01%); United Services Automobile Association, non-affiliates of AEGON, Member (57.99%); |
Investments | |||
Garnet LIHTC Fund XXIX, LLC | Delaware |
Garnet Community Investments XXIX, LLC, Member (.01%); Bank of America, N.A., non-affiliates of AEGON, Member (99.99%)
|
Investments | |||
Garnet LIHTC Fund XXXI, LLC | Delaware |
Garnet Community Investments XXXI, LLC, Member (0.1%); Thunderbolt Peak Fund, LLC, non-affiliates of AEGON, Member (98.99%); Google Affordable Housing I, LLC, non-affiliates of AEGON, Member (1%)
|
Investments | |||
Garnet LIHTC Fund XXXII, LLC | Delaware |
Garnet Community Investments XXXIII (0.01%); New York Life Insurance and Annuity Corporation, non-affiliates of AEGON, Member (49.61%); New York Life Insurance Company, non-affiliates of AEGON, Member (50.38%)
|
Investments | |||
Garnet LIHTC Fund XXXIII, LLC | Delaware | Members: Garnet Community Investment XXXIII, LLC, Member (0.01%); NorLease, Inc., non-affiliates of AEGON, Member (99.99%) |
Investments | |||
Garnet LIHTC Fund XXXIV, LLC | Delaware | Garnet Community Investments XXXIV, LLC, Member (99.99%); Transamerica Life Insurance Company, Member (0.01%) |
Investments | |||
Garnet LIHTC Fund XXXV, LLC | Delaware |
Garnet Community Investment XXXV, LLC, Member (0.01%); AEGON, Microsoft Corporation, non-affiliates of AEGON, Member (99.99%)
|
Investments | |||
Garnet LIHTC Fund XXXVI, LLC | Delaware |
Garnet Community Investments XXXVI, LLC, Managing Member (1%); FNBC Leasing Corporation, non-affiliates of AEGON, Investor Member (99%)
|
Investments | |||
Garnet LIHTC Fund XXXVII, LLC | Delaware | Garnet Community Investments XXXVII, LLC, Member (0.01%); Transamerica Life Insurance Company, Member (99.99%) |
Investments | |||
Garnet LIHTC Fund XXXVIII, LLC | Delaware |
Garnet Community Investments XXXVIII, LLC, non-Member Manager (0%); Norlease, Inc., non-affiliates of AEGON, Member (100%)
|
Investments | |||
Garnet LIHTC Fund XXXIX, LLC | Delaware |
Garnet Community Investments XXXIX, LLC, Managing Member (1%); FNBC Leasing Corporation, non-affiliates of AEGON, Investor Member (99%)
|
Investments | |||
|
ITEM 29 LISTING
Garnet LIHTC Fund XL, LLC | Delaware | Garnet Community Investments XL, LLC, Member (.01%); Partner Reinsurance Company of the U.S., non-AEGON affiliate, Member (99.99%) |
Investments | |||
Garnet LIHTC Fund XLI, LLC | Delaware |
Garnet Community Investments XLI, LLC, Managing Member (.01%); Transamerica Life Insurance Company, Member (10%); BBCN Bank, non-AEGON affiliates, Member (1.25%); East West Bank, non-AEGON affiliates, Member (12.50%),; Mutual of Omaha, non-AEGON affiliates, Member (12.50%); Pacific Premier Bank, non-AEGON affiliates, Member (12.50%); Pacific Western Bank, non-AEGON affiliates, Member (7.50%); Principal Life Insurance Company, non-AEGON affiliates, Member (18.75%); Standard Insurance Company, non-AEGON affiliates, Member (25%)
|
Investments | |||
Garnet LIHTC Fund XLII, LLC | Delaware |
Garnet Community Investments XLII, LLC, Managing Member (.01%); Origin Bank, non-affiliates of AEGON, Investor Member (83.33%) Renasant Bank, non-affiliates of AEGON, Investor Member (16.66%)
|
Investments | |||
Garnet LIHTC Fund XLIV-A, LLC | Delaware |
ING Capital, LLC, Sole Member (100%); Garnet Community Investments XLIV, LLC, Asset Manager (0%)
|
Investments | |||
Garnet LIHTC Fund XLIV-B, LLC | Delaware | Lion Capital Delaware Inc, Sole Member (100%); Garnet Community Investments XLIV, LLC, Asset Manager (0%) |
Investments | |||
Garnet LIHTC Fund XLVI, LLC | Delaware | Garnet Community Investments XLVI, LLC, Member (0.01%); Standard Life Insurance Company, non-affiliate of AEGON, Managing & Investor Member (99.99%) |
Investments | |||
|
ITEM 29 LISTING
Garnet LIHTC Fund XLVII, LLC | Delaware |
Garnet Community Investments XLVII, LLC, Managing Member (0.01%) & Investor Member (1.00%); Transamerica Life Insurance Company, Investor Member (13.999%); Citibank, N.A., non-affiliate of AEGON, Investor Member (48.995%); New York Life Insurance and Annuity Corporation, non-affiliate of AEGON, Investor Member (15.478%); New York Life Insurance Company, non-affiliate of AEGON, Investor Member (20.518%)
|
Investments | |||
Garnet LIHTC Fund XLVIII, LLC | Delaware |
Garnet Community Investments XXXLVIII, LLC, Member (.01%); Transamerica Financial Life Insurance Company, Member (75.18%); American Republic Insurance Company, non-affiliates of AEGON, Member (2.84%); Bank of Hope, non-affiliates of AEGON, Member (.93%); U.S. Bancorp Community Development Corporation, non-affiliates of AEGON, Member (21.04%)
|
Investments | |||
Horizons Acquisition 5, LLC | Florida | PSL Acquisitions Operating, LLC, Sole Member (100%) |
Development company | |||
Horizons St. Lucie Development, LLC | Florida | PSL Acquisitions Operating, LLC, Sole Member (100%) |
Development company | |||
Imani FE, L.P. | California |
ABS Imani Fe, Partner (0.00%); Garnet LIHTC Fund XIV, LLC, Partner (99.99%); Grant Housing and Economic Development Corporation, Partner (0.00%); TAH Imani Fe GP, LLC, Partner (0.00%)
|
Affordable housing | |||
Investors Warranty of America, LLC | Iowa | RCC North America LLC, Sole Member (100%) |
Leases business equipment | |||
Ironwood Re Corp. | Hawaii | Commonwealth General Corporation, Sole Member (100%) |
Captive insurance company | |||
LCS Associates, LLC | Delaware | RCC North America LLC, Sole Member (100%) |
Investments | |||
Life Investors Alliance LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Purchase, own, and hold the equity interest of other entities | |||
LIHTC Fund 53, LLC | Delaware |
AEGON Community Investments 53, LLC, non-Member Manager (0%); Bank of America, N.A., non-affiliates of AEGON, Member (98%); US Bank, N.A., non-affiliates of AEGON, Member (2%)
|
Investments | |||
ITEM 29 LISTING
LIHTC Fund 56, LLC | Delaware |
AEGON Community Investments 56, LLC, non-Member Manager (0%); Bank of America, N.A., non-affiliates of AEGON, Member (90%); US Bank, N.A., non-affiliates of AEGON, Member (10%)
|
Investments | |||
LIHTC Fund 59, LLC | Delaware |
AEGON Community Investments 59, LLC, non-Member Manager (0%); Bank of America, National Association, non-affiliates of AEGON, Member (99.99%); Dominium Taxable Fund II, LLC, non-affiliates of AEGON, Member (0.01%)
|
Investments | |||
LIHTC Fund XLV, LLC | Delaware |
Garnet Community Investments XLIX, LLC, non-Member Manager (0.00%); Bank of America, National Association, non-affiliates of AEGON, Sole Member (100%)
|
Investments | |||
LIHTC Fund XLIX, LLC | Delaware |
Garnet Community Investments XLIX, LLC, non-Member Manager (0.00%); Bank of America, National Association, non-affiliates of AEGON, Sole Member (100%)
|
Investments | |||
LIICA Re II, Inc. | Vermont |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Captive insurance company | |||
Mitigation Manager LLC | Delaware | RCC North America LLC, Sole Member (100%) |
Investments | |||
Money Services, Inc. | Delaware | AUSA Holding, LLC, Sole Shareholder (100%) |
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 General Administrators, Inc. | Maryland |
AUSA Holding, LLC, Sole Shareholder (100%)
|
Provides management services to unaffiliated third party administrator | |||
Natural Resources Alternatives Portfolio I, LLC | Delaware |
Transamerica Financial Life Insurance Company, Member (4%); Transamerica Life Insurance Company, Member (64%); Transamerica Life Insurance Company, Member (32%)
|
Investment vehicle - to invest in Natural Resources | |||
ITEM 29 LISTING
Natural Resources Alternatives Portfolio II, LLC | Delaware |
Transamerica Financial Life Insurance Company, Member (5%); Transamerica Life Insurance Company, Member (35%); Transamerica Life Insurance Company, Member (60%)
|
Investment vehicle | |||
Natural Resources Alternatives Portfolio 3, LLC | Delaware |
Transamerica Financial Life Insurance Company, Member (10%); Transamerica Life Insurance Company, Member (55%); Transamerica Life Insurance Company, Member (35%)
|
Investment vehicle | |||
Nomagon Title Grandparent, LLC | Delaware |
AEGON USA Asset Management Holding, LLC, Sole Member (100%); AEGON USA Realty Advisors, LLC, non- manager member (0%)
|
Investment vehicle | |||
Nomagon Title Holding 1, LLC | Delaware |
Nomagon Title Parent, LLC, Sole Member (100%); AEGON USA Realty Advisors, LLC, non- manager member (0%)
|
Investment vehicle | |||
Nomagon Title Parent, LLC | Delaware | Nomagon Title Grandparent, LLC, Sole Member (100%); AEGON USA Realty Advisors, LLC, non- manager member (0%) |
Investment vehicle | |||
Osceola Mitigation Partners, LLC | Florida |
Mitigation Manager, LLC, Member (50%); OBPFL-MITBK, LLC, non-affiliate of AEGON, Member (50%)
|
Investments | |||
Pearl Holdings, Inc. I | Delaware | AEGON USA Asset Management Holding, LLC, Sole Member (100%) |
Holding company | |||
Pearl Holdings, Inc. II | Delaware |
AEGON USA Asset Management Holding, LLC, Sole Shareholder (100%)
|
Holding company | |||
Peoples Benefit Services, LLC | Pennsylvania | Transamerica Life Insurance Company, Sole Member (100%) |
Marketing non-insurance products | |||
Placer 400 Investors, LLC | California |
RCC North America LLC, Member (50%); AKT Placer 400 Investors, LLC, non- affiliate of AEGON, Member (50%)
|
Investments | |||
Primus Guaranty Ltd. | Bermuda |
Transamerica Life Insurance Company, Member (20%) Public Interest Holders, non-affiliates of AEGON, Member (80%)
|
Provides protection from default risk of investment grade corporate and sovereign issues of financial obligations. | |||
PSL Acquisitions Operating, LLC | Iowa | RCC North America LLC, Sole Member (100%) |
Owner of Core subsidiary entities | |||
RCC North America LLC | Delaware | Transamerica Corporation, Sole Member (100%) |
Real estate | |||
ITEM 29 LISTING
Real Estate Alternatives Portfolio 2, L.L.C. | Delaware |
Transamerica Financial Life Insurance Company, Member (7.50%); Transamerica Life Insurance Company, Member (37.25%); Transamerica Life Insurance Company, Member (22.25%); Transamerica Life Insurance Company, Member (30.75%); Transamerica Life Insurance Company, Member (2.25%); AEGON USA Realty Advisors, Inc., Manager (0%)
|
Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 3, L.L.C. | Delaware |
Transamerica Life Insurance Company, Member (73.40%); Transamerica Life Insurance Company, Member (1.00%); Transamerica Life Insurance Company, Member (25.60%); AEGON USA Realty Advisors, Inc., Manager (0%)
|
Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 3A, Inc. | Delaware |
Transamerica Financial Life Insurance Company, Shareholder (9.4%); Transamerica Life Insurance Company, Shareholder (90.6%)
|
Real estate alternatives investment | |||
Real Estate Alternatives Portfolio 4 HR, LLC | Delaware |
Transamerica Financial Life Insurance Company, Member (4%); Transamerica Life Insurance Company, Member (64%); Transamerica Life Insurance Company, Member (32%); AEGON USA Realty Advisors, Inc., Manager (0%)
|
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 |
Transamerica Financial Life Insurance Company, Member (4%); Transamerica Life Insurance Company, Member (64%); Transamerica Life Insurance Company, Member (32%); AEGON USA Realty Advisors, Inc., Manager (0%)
|
Investment vehicle for alternative real estate investments that are established annually for our affiliated companies common investment | |||
River Ridge Insurance Company | Vermont | AEGON Management Company, Sole Shareholder (100%) |
Captive insurance company | |||
Second FGP LLC | Delaware | FGH USA LLC, Sole Member (100%) |
Real estate | |||
Seventh FGP LLC | Delaware | FGH USA LLC, Sole Member (100%) |
Real estate | |||
St. Lucie West Development Company, LLC | Florida | PSL Acquisitions Operating, LLC, Sole Member (100%) |
Development company | |||
Stonebridge Benefit Services, Inc. | Delaware | Commonwealth General Corporation, Sole Shareholder (100%) |
Health discount plan | |||
TA Private Equity Assets, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Investments (private equity) | |||
TA-APOP I, LLC | Delaware | Transamerica Life Insurance Company, Sole Member (100%) |
Private equity vehicle | |||
|
ITEM 29 LISTING
TA-APOP I-A, LLC | Delaware |
Transamerica Financial Life Insurance Company, Member (10%); Transamerica Life Insurance Company, Member (90%);
|
Investments (private equity) | |||
TA-APOP II, LLC | Delaware |
Transamerica Life Insurance Company, Limited Partner (73.19%); Transamerica Financial Life Insurance Company, Limited Partner (24.40%)
|
Private equity vehicle | |||
TABR Realty Services, LLC | Delaware | AUSA Holding, LLC, Sole Member (100%) |
Real estate investments | |||
TAH-MCD IV, LLC | Iowa | Transamerica Affordable Housing, Inc., Sole Member (100%) |
Serve as the general partner for McDonald Corporate Tax Credit Fund IV Limited Partnership.
| |||
TAH Pentagon Funds, LLC | Iowa | Transamerica Affordable Housing, Inc., Sole Member (100%) |
Serve as a general partner in a lower-tier tax credit entity | |||
TAHP Fund 1, LLC | Delaware | Garnet LIHTC Fund IX, LLC, Sole Member (100%) |
Real estate investments | |||
TAHP Fund 2, LLC | Delaware | Garnet LIHTC Fund VIII, LLC, Sole Member (100%) |
Low incoming housing tax credit | |||
TAHP Fund VII, LLC | Delaware | Garnet LIHTC Fund XIX, LLC, Investor Member (100%) |
Real estate investments | |||
THH Acquisitions, LLC | Iowa | Transamerica Life Insurance Company, Sole Member (100%) |
Acquirer of Core South Carolina mortgage loans from Investors Warranty of America, LLC and holder of foreclosed real estate.
| |||
TLIC Oakbrook Reinsurance Inc. | Iowa |
Transamerica Life Insurance Company, Sole Member (100%)
|
Limited purpose subsidiary life insurance company | |||
TLIC Watertree Reinsurance Inc. | Iowa |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Limited purpose subsidiary life insurance company | |||
Tradition Development Company, LLC | Florida | PSL Acquisitions Operating, Sole Member (100%) |
Development company | |||
Tradition Land Company, LLC | Iowa | RCC North America LLC, Sole Member (100%) |
Acquirer of Core Florida mortgage loans from Investors Warranty and holder of foreclosed real estate.
| |||
Transamerica Affordable Housing, Inc. | California | TABR Realty Services, LLC, Sole Shareholder (100%) |
General partner LHTC Partnership | |||
Transamerica Agency Network, LLC | Iowa | AUSA Holding, LLC, Sole Member (100%) |
Special purpose subsidiary | |||
Transamerica Asset Management, Inc. | Florida |
Transamerica Life Insurance Company, Member (77%); AUSA Holding, LLC, Shareholder (23%)
|
Fund advisor | |||
Transamerica Bermuda Re, Ltd. | Bermuda | Transamerica Life Insurance Company, Sole Member (100%) |
General | |||
Transamerica Capital, Inc. | California | AUSA Holding, LLC, Sole Shareholder (100%) |
Broker/Dealer | |||
Transamerica Casualty Insurance Company | Iowa | Transamerica Corporation, Sole Shareholder (100%) |
Insurance company | |||
Transamerica Corporation (DE) | Delaware | AEGON International B.V., Sole Shareholder (100%) |
Major interest in insurance and finance | |||
Transamerica Corporation (OR) | Oregon | Transamerica Corporation, Sole Shareholder (100%) |
Holding company | |||
|
ITEM 29 LISTING
Transamerica Finance Corporation | Delaware | Transamerica Corporation, Sole Shareholder (100%) | Commercial & Consumer Lending & equipment leasing | |||
Transamerica Financial Advisors, Inc. | Delaware |
AUSA Holding, LLC, Shareholder (51.60%) (1,000 Shares); AEGON Asset Management Services, Inc., Shareholder (37.62%) (729 Shares); Commonwealth General Corporation, Shareholder (10.78%) (209 Shares)
|
Broker/Dealer | |||
Transamerica Financial Life Insurance Company | New York | Transamerica Corporation, Sole Shareholder (100%) | Insurance | |||
Transamerica Fund Services, Inc. | Florida | Transamerica Life Insurance Company, Shareholder (44.13%); AUSA Holding, LLC, Shareholder (55.87%) |
Mutual fund | |||
Transamerica Health Savings Solutions, LLC | Iowa |
Transamerica Retirement Solutions, LLC, Sole Member (100%)
|
Health Savings Solutions | |||
Transamerica International Direct Marketing Consultants, LLC | Maryland |
AEGON Direct Marketing Services, Inc., Member (49%); Curtis Sherwin Chen, Member (51%)
|
Provide consulting services ancillary to the marketing of insurance products overseas. | |||
Transamerica International RE (Bermuda) Ltd. | Bermuda | Transamerica Corporation, Sole Member (100%) | Reinsurance | |||
Transamerica Investors Securities Corporation | Delaware |
Transamerica Retirement Solutions, LLC, Sole Shareholder (100%)
|
Broker/Dealer | |||
Transamerica Life Insurance Company | Iowa |
Commonwealth General Corporation, Sole Shareholder (100%)
|
Insurance | |||
Transamerica Life (Bermuda) Ltd. | Bermuda | Transamerica Life Insurance Company, Sole Member (100%) |
Long-term life insurer in Bermuda — - will primarily write fixed universal life and term insurance
| |||
Transamerica Pacific Re, Inc. | Vermont |
Transamerica Life Insurance Company, Sole Shareholder (100%)
|
Captive insurance company | |||
Transamerica Realty Investment Properties LLC | Delaware |
Transamerica Life Insurance Company, Sole Member (100%)
|
Realty limited liability company | |||
Transamerica Resources, Inc. | Maryland | Monumental General Administrators, Inc., Sole Shareholder (100%) |
Provides education and information regarding retirement and economic issues.
| |||
Transamerica Retirement Advisors, LLC | Delaware |
Transamerica Retirement Solutions, LLC, Sole Member (100%)
|
Investment advisor | |||
Transamerica Retirement Insurance Agency, LLC | Delaware |
Transamerica Retirement Solutions, LLC, Sole Member (100%)
|
Conduct business as an insurance agency. | |||
Transamerica Retirement Solutions, LLC | Delaware | AUSA Holding, LLC, Sole Member (100%) | Retirement plan services. | |||
Transamerica Stable Value Solutions Inc. | Delaware | Commonwealth General Corporation, Sole Shareholder (100%) |
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 | Money Services, Inc., Sole Member (100%) | Travel and conference services | |||
Transamerica Trust Company | Iowa | AUSA Holding, LLC, Sole Shareholder (100%) | Trust company | |||
ITEM 29 LISTING
Transamerica Ventures Fund II, LLC | Delaware | AUSA Holding, LLC, Sole Member (100%) |
Investments | |||
ULI Funding, LLC | Iowa | AUSA Holding, LLC, Sole Member (100%) |
Holding Company | |||
United Financial Services, Inc. | Maryland | Transamerica Corporation, Sole Shareholder (100%) |
General agency | |||
WFG Insurance Agency of Puerto Rico, Inc. | Puerto Rico |
World Financial Group Insurance Agency, LLC, Sole Shareholder (100%)
|
Insurance agency | |||
WFG Properties Holdings, LLC | Georgia | World Financial Group, Inc., Sole Member (100%) |
Marketing | |||
WFG Securities Inc. | Canada | World Financial Group Holding Company of Canada, Inc., Sole Shareholder (100%) |
Mutual fund dealer | |||
World Financial Group Holding Company of Canada Inc. | Canada | Commonwealth General Corporation, Sole Shareholder (100%) |
Holding company | |||
World Financial Group, Inc. | Delaware |
AEGON Asset Management Services, Inc., Sole Shareholder (100%)
|
Marketing | |||
World Financial Group Insurance Agency of Canada Inc. | Ontario | World Financial Group Holding Company of Canada Inc., Sole Shareholder (100.00%) |
Insurance agency | |||
World Financial Group Insurance Agency of Hawaii, Inc. | Hawaii | World Financial Group Insurance Agency, LLC, Sole Shareholder (100.00%) |
Insurance agency | |||
World Financial Group Insurance Agency of Massachusetts, Inc. | Massachusetts | World Financial Group Insurance Agency, LLC, Sole Shareholder (100.00%) |
Insurance agency | |||
World Financial Group Insurance Agency of Wyoming, Inc. | Wyoming | World Financial Group Insurance Agency, LLC, Sole Shareholder (100.00%) |
Insurance agency | |||
World Financial Group Insurance Agency, LLC | Iowa | AUSA Holding, LLC, Sole Member (100%) |
Insurance agency | |||
Yarra Rapids, LLC | Delaware | Real Estate Alternatives Portfolio 4MR, LLC, Member (49%) New York Investment Trust, non-AEGON affiliate, Member (51%) |
Real estate investments | |||
Zahorik Company, Inc. | California | AUSA Holding, LLC, Sole Shareholder (100%) |
Inactive | |||
Zero Beta Fund, LLC | Delaware | Transamerica Financial Life Insurance Company (16.58%); Transamerica Life Insurance Company, Member (50.14%); Transamerica Life Insurance Company, Member (33.28%) |
Aggregating vehicle formed to hold various fund investments. | |||
|
Item 30. Indemnification
Any person made a party to any action, suit, or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer, or employee of the Company or of any Company which he served as such at the request of the Company, shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, Director, or employee is liable for negligence or misconduct in the performance of his duties. The Company may also reimburse to any Director, officer, or employee the reasonable costs of settlement of any such action, suit, or proceeding, if it shall be found by a majority of a committee composed of the Directors not involved in the matter in controversy (whether or not a quorum) that it was in the interest of the Company that such settlement be made and that such Director, officer or employee was not guilty of negligence or misconduct. The amount to be paid by way of indemnity shall be determined and paid, in each instance, pursuant to action of the Board of Directors, and the stockholders shall be given notice thereof in accordance with applicable provisions of law. Such right of indemnification shall not be deemed exclusive of any other rights to which such Director, officer, or employee may be entitled.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant 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 registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 31 | Principal Underwriters |
(a) | Transamerica Capital, Inc. serves as the principal underwriter for: |
Transamerica Capital, Inc. serves as the principal underwriter for the 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 Variable Life Separate Account II, Retirement Builder Variable Annuity Account, Separate Account Fund B, Separate Account Fund C, Separate Account VA AA, Separate Account VA B, Separate Account VA BB, Separate Account VA CC, Separate Account VA DD, Separate Account VA FF, Separate Account VA HH, Separate Account VA Q, Separate Account VA U, Separate Account VA V, 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 VL, Separate Account VL E, Separate Account VUL-A, Separate Account VUL-1; Separate Account VUL-2, Separate Account VUL-3, Separate Account VUL-4, Separate Account VUL-5, Separate Account VUL-6, Transamerica Corporate Separate Account Sixteen, Transamerica Separate Account R3, Variable Life Account A, WRL Series Annuity Account, WRL Series Annuity Account B, WRL Series Life Account, WRL Series Life Account G, and WRL Series Life Corporate Account. These accounts are separate accounts of Transamerica Life Insurance Company.
Transamerica Capital, Inc. serves as principal underwriter for 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, ML of New York Variable Life Separate Account II, Separate Account VA BNY, Separate Account VA QNY, Separate Account VA-2LNY, Separate Account VA-5NLNY, Separate Account VA-6NY, TFLIC Separate Account B, TFLIC Separate Account C, TFLIC Separate Account VNY, TFLIC Pooled Account No. 44, TFLIC Series Annuity Account, TFLIC Series Life Account, and Transamerica Variable Funds. These accounts are separate accounts of Transamerica Financial Life Insurance Company.
Transamerica Capital, Inc. also serves as principal underwriter for Transamerica Series Trust and Transamerica Funds.
(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
| ||
David Curry |
(3) | Director, Chairman of the Board, Chief Executive Officer and President | ||
Doug Hellerman |
(3) | Chief Compliance Officer and Vice President | ||
Timothy Ackerman |
(3) | Director and Vice President | ||
Mark Halloran |
(3) | Director, President, Chief Executive Officer and Chairman of the Board | ||
Jennifer Pearce |
(3) | Vice President | ||
Gregory E. Miller-Breetz |
(1) | 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 |
(c) Compensation to Principal Underwriter:
Name of Principal Underwriter |
Net Underwriting Discounts and |
Compensation on Redemption |
Brokerage |
Compensation | ||||
Transamerica Capital, Inc. |
$ 0 | 0 | 0 | 0 |
(1) Fiscal Year 2020
Item 32. Location of Accounts and Records
Accounts, books, and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are primarily maintained by (a) Transamerica Financial Life Insurance Company, in whole or in part, at its principal offices at 440 Mamaroneck Avenue, Harrison, NY 10528, (b) by State Street Bank & Trust Company, in whole or in part, at its principal offices at 200 Clarendon Street, Boston, MA 02116, and (c) by Transamerica Asset Management, Inc., in whole or in part, at its principal offices at 1801 California Street, Suite 5200, Denver, CO 80202
Item 33. Management Services
Not Applicable
Item 34. Fee Representation
The Depositor hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Depositor.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Denver and State of Colorado, on April 29, 2024.
TRANSAMERICA VARIABLE FUNDS Registrant | ||
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY Depositor | ||
Jaime Ohl * President and Chief Executive Officer, Individual Solutions Division |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 29, 2024.
Signatures |
Title | |||
* Jamie Ohl |
President and Chief Executive Officer, Individual Solutions Division (principal executive officer) | |||
* Bonnie T. Gerst |
Director, President, Financial Assets and Chairman of the Board (principal accounting officer) | |||
* Christopher S. Fleming |
Director and Chief Operating Officer, Individual Solutions Division | |||
* Andrew S. Williams |
Director, Assistant Secretary, General Counsel and Senior Vice President | |||
* Matt Kepler |
Chief Financial Officer, Executive Vice President and Treasurer (principal financial officer) | |||
* Zachary Harris |
Director, Chief Operating Officer, Workplace Solutions Division | |||
* Wendy E. Cooper* |
Director | |||
* Anne C. Kronenberg* |
Director | |||
* June Yuson* |
Director | |||
/s/Brian Stallworth Brian Stallworth |
Assistant Secretary |
*By: Brian Stallworth – Attorney-in-Fact pursuant to Powers of Attorney filed previously and/or herewith.