TRANSAMERICA PREMIER LIFE INSURANCE COMPANY A+ STONEBRIDGE LIFE INSURANCE COMPANY A+ TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY A+

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1 TRANSAMERICA PREMIER LIFE INSURANCE COMPANY A+ STONEBRIDGE LIFE INSURANCE COMPANY A+ TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY A+ TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY A+ TRANSAMERICA LIFE INSURANCE COMPANY A+ TRANSAMERICA CASUALTY INSURANCE COMPANY A A+ A 2015 A.M. Best Company, Oldwick, NJ Printed July 15, Page 1 of 56

2 Ultimate Parent: Aegon N.V. TRANSAMERICA PREMIER LIFE INSURANCE COMPANY 4333 Edgewood Road N.E. Cedar Rapids, IA Web: Tel.: Fax: AMB#: NAIC#: Ultimate Parent#: FEIN#: BEST S CREDIT RATING Best s Financial Strength Rating: A+ Outlook: Stable Best s Financial Size Category: XV RECENT DEVELOPMENTS Effective July 31, 2014, the company changed its name from Monumental Life Insurance Company to Transamerica Premier Life Insurance Company. Effective October 1, 2014, Western Reserve Life Assurance Co. of Ohio merged with and into Transamerica Premier Life Insurance Company. The ratings of the life insurance companies of Aegon USA reflect the strong business profile, adequate risk-adjusted capitalization, strong enterprise risk management, and an underlying trend of statutory and IFRS profitability. The ratings also reflect A.M. Best s assessment of the financial strength and support of the parent, Aegon N.V. (Aegon). Partially offsetting these strengths is the increasing focus on sales of products that have unfavorable risk characteristics from a product creditworthiness standpoint, as well as the equity market sensitivity of its earnings and significant reliance on captive reinsurance. Aegon USA s business profile remains strong, with competitive market positions in the U.S. life and annuity arenas. The group s market positions are supported by a large and diversified distribution system that is made up of both independent and career agents, financial institutions, wirehouses and direct response channels. Aegon USA enjoys the efficiencies and competitive advantages of meaningful economies of scale, which have contributed favorably to its historical financial performance. Aegon USA s earnings profile is one of the more diversified in the industry. Product lines that contribute to overall earnings include traditional life, variable life, variable annuities, mutual funds, pensions and accident and health insurance. A.M. Best also notes the continued improvement in the risk profile of the company s investment portfolio. Lastly, the ratings reflect A.M. Best s assessment of the financial strength and support of the parent, Aegon. As a result, Aegon USA receives rating enhancement in consideration of Aegon s overall creditworthiness and the strategic and financial importance of the U.S. operations to Aegon. Recently, the company has pursued a strategic shift to focus on selling fee-based products, especially variable annuities (VAs), and has de-emphasized sales of its spread-based products, especially fixed annuities. In a stable equity market, the required capital on VAs is generally less than for fixed annuities and other spread-based products. However, from a product creditworthiness perspective, A.M. Best views VAs with living benefits as displaying some of the highest risk characteristics and being vulnerable to tail risks, which could lead to an increase in the required capital. The institutional spread-based business (primarily guaranteed interest contracts, funding agreements and funding agreement-backed securities) remains in run-off to reduce exposure to credit risk, lower required capital and to shift to a more balanced mix of business between spread- and fee-based products. The group has executed several fixed annuity coinsurance transactions, which have released capital and reduced its spread-based liabilities. A.M. Best also notes that over recent years, Aegon USA has come to rely heavily on captive reinsurance to fund reserves generated by term life and universal life RATING RATIONALE Rating Rationale: The published ratings of the Aegon USA companies reflect that they are integral to Aegon s strategy, fully integrated into the group s operations, a material part of the business profile, significant contributors to earnings and have received explicit financial support when insurance with secondary guarantees. needed. Transamerica Premier Life Insurance Company sells a full line of insurance products, including individual, credit, and group coverages under life, annuity and accident and health policies as well as various investment products. The company is licensed in 49 states, the District of Columbia, Guam and Puerto Rico. Sales of the company s products are primarily through agents, brokers, financial institutions and direct response methods. Aegon USA has also reduced its exposure to equity market risk by increasing the size of its macro equity hedge covering its variable annuity business. However, while the additional equity hedging will serve to reduce volatility in some financial metrics, the group s earnings via fee income remain somewhat correlated to equity market performance. A.M. Best believes that a positive rating action for Aegon USA is unlikely over the near term. Factors that could result in a negative rating action include a significant and sustained decline in consolidated risk-adjusted capitalization as measured by Best s Capital Adequacy Ratio (BCAR) model, net operating performance that does not meet A.M. Best s expectations, a decline in the creditworthiness of Aegon, or a change in A.M. Best s view of the strategic importance of Aegon USA to Aegon. FIVE YEAR RATING HISTORY Date Best s FSR Date Best s FSR 02/11/15 A+ 04/13/12 A+ 12/12/13 A+ 04/27/11 A+ 04/09/13 A+ 06/29/10 A A.M. Best Company, Oldwick, NJ Printed July 15, Page 2 of 56

3 KEY FINANCIAL INDICATORS ($000) Total Capital Capital Asset Net Net Surplus Valuation Premiums Invest Funds Reserve Written Income Net Income Year Assets ,349,058 1,685, ,894 1,872, , , ,530,492 1,256, ,362 1,871, , , ,658,008 1,130, ,031 1,984, , , ,280,035 1,345, ,614 2,124, , , ,248,242 1,774, ,773 6,292, , ,731 (*) Within several financial tables of this report, this company is compared against the Individual Accident & Health Composite. (*) Data reflected within all tables of this report has been compiled from the company-filed statutory statement. BUSINESS PROFILE Aegon USA is one of the leading life insurance organizations in the U.S. with more than twenty million customers and provides a wide range of life insurance, pensions, long-term savings and investment products. Aegon USA was founded 1989 when Aegon N.V. (Aegon) decided to bring all of its operating companies in the U.S. under a single financial services holding company. Business is conducted through six primary insurance subsidiaries and include Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company, Transamerica Advisors Life Insurance Company, Transamerica Premier Life Insurance Company, Stonebridge Life Insurance Company, and Transamerica Casualty Insurance Company. The Aegon USA group of companies is fully integrated and share senior and investment management along with support services. Aegon USA uses a variety of distribution channels, each of which conducts business through one or more of the Aegon USA life insurance companies. The channels are both owned and non-owned and include approximately 1,500 career agents as well as financial planners, banks, brokers and independent consultants. It is also prominent in the home service market and in the direct marketing of life and supplemental accidental death and dismemberment (AD&D) insurance. The Aegon USA companies are present in two primary business divisions: Life & Protection (L&P) and Investments & Retirement (I&R). The Institutional Markets Division is no longer considered core to the group, and the Life Reinsurance was sold to SCOR SE in Historically, the largest contributor to before-tax earnings was the Life & Protection (L&P) division; however, this has shifted over the years to the Investments & Retirement (I&R) division as the company s strategic focus is now concentrated more on the fee based products that are present in I&R. The Life & Protection (L&P) division includes the Agency Group selling individual life and supplemental health products to the middle income market. Also included in the L&P division are the Brokerage Group, Transamerica Employee Benefits, Long Term Care and the Affinity Group. The Brokerage Group markets life insurance in the retail high net worth market through independent general agents with approximately 400 general agencies and 116,000 contract producers. The Affinity Group specializes in marketing life insurance and supplemental health insurance products to consumers through direct channels such as telemarketing, direct mail, television advertising and the Internet. This group also markets credit life, mortgage life and other life insurance and supplemental health products. Transamerica Long Term Care offers products and services aimed at meeting the long-term care insurance needs of its customers. Policies are sold through independent brokerage and at the worksite to individuals and groups. Through Transamerica Employee Benefits, L&P offers voluntary payroll deduction life and supplemental health insurance to employees at their place of work which are designed to supplement employees existing benefit plans. The Investment & Retirement (I&R) division offers a wide range of savings and retirement products, including mutual funds, investment advice as well as fixed and variable annuities. Transamerica Capital Management (TCM) is the underwriting and wholesaling broker/dealer for variable annuities and mutual funds. TCM builds relationships with independent financial professionals, agents affiliated with regional broker/dealers or major wirehouse firms and representatives through a large bank network. TCM serves these distribution channels through company-owned and external wholesalers. In 2007, Aegon USA acquired Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York (renamed Transamerica Advisors Life Insurance Company and Transamerica Advisors Life Insurance Company of New York. Transamerica Advisors Life Insurance Company of New York was later merged with and into Transamerica Financial Life Insurance Company, effective 7/1/14) as part of a strategic distribution relationship with Merrill Lynch with respect to variable annuities. The acquisition of the Merrill Lynch insurance companies served to place Aegon USA in the top ten of variable annuity sellers in the wirehouse and broker/dealer channels. In late 2009, I&R reduced its sales of fixed annuities in response to lower market interest rates and lower investment returns available in the environment. Similar market conditions have continued over recent years and restricted sales of fixed annuities. As a result, I&R has de-emphasized the sale of fixed annuities and has executed several large fixed annuity coinsurance transactions in recent years. Incorporated within the I&R division is the former Employer Solutions and Pensions (ES&P) division. This business includes full-service retirement plan investments and services in addition to guaranteed savings and investment products directed at various segments of the pension industry. The group sells a full range of products and services to small and mid-size corporate, non-profit and government sponsored plans through brokers, agents, consultants, third-party administrators and accounting firms. Transamerica Retirement Solutions (TRS) serves almost 4,000 mid-sized to large companies and more than 15,500 small to mid-sized companies across the U.S. TRS offers a number of specialized services, including innovative plan design, a wide array of investment choices, extensive education programs and online investment education. In addition, ES&P provides synthetic guaranteed investment contracts primarily to various retirement plans. ES&P is also a leading provider of single premium group annuities (Terminal Funding), which are used by companies to decrease the liability of the defined benefit plans. BOLI/COLI products were distributed through a select number of niche brokers (including an affiliate, Clark Consulting); however, in December 2010, ES&P announced its plan to discontinue new sales in the executive non-qualified benefits market and related BOLI/COLI business A.M. Best Company, Oldwick, NJ Printed July 15, Page 3 of 56

4 The former Institutional Markets Division offered institutional spread products such as traditional fixed rate guarantee investment contracts (GICs), funding agreements (FAs), FA-backed notes as well as fee-based products such as synthetic GICs. In 2009, Aegon announced its plan to run-off its institutional spread based business to reduce capital requirements and credit risk. The institutional line of business also included structured product transactions, such as credit default swaps, synthetic collateralized debt obligations, affordable housing tax credit guarantees and hedge fund principal protection. Going forward, Aegon USA will only continue to offer affordable housing tax credit guarantees. TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS Reinsurance Period DPW Prem Assumed Ending ($000) (% Chg) ($000) (% Chg) ,383, , ,452, , ,530, , ,675, , ,895, ,061, Yr CAGR Reinsurance Period Prem Ceded NPW & Deposits Ending ($000) (% Chg) ($000) (% Chg) , ,955, , ,906, , ,022, , ,189, , ,330, Yr CAGR Territory: The company is licensed in the District of Columbia, Guam, Puerto Rico, AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI and WY. The company is also licensed on United States military installations in foreign countries BY-LINE BUSINESS ($000) Reinsurance Prem Assumed DPW Product Line ($000) (%) ($000) (%) Industrial life 1, Ordinary life 1,414, , Group life 50, , Credit life 7, , Individual annuities 641, , Group annuities 126, Individual A&H 100, ,962, Credit A&H 8, Group A&H 543, , Total 2,895, ,061, Reinsurance Prem Ceded NPW Product Line ($000) (%) ($000) (%) Industrial life 1, Ordinary life 524, , Group life 6, , Credit life 6, , Individual annuities 35, , Group annuities , Individual A&H ,063, Credit A&H 6, , Group A&H 83, , Total 664, ,292, BY-LINE RESERVES ($000) Product Line Industrial life 317, , , , ,716 Ordinary life 6,445,573 6,204,623 5,958,837 6,169,203 5,965,504 Group life 573, , , , ,035 Credit life 1,551 1,572 2,493 2,852 37,613 Supplementary contr 191, , ,323 85,577 79,491 Individual annuities 2,998,977 3,095,639 3,363,035 3,386,664 3,403,553 Group annuities 702, , ,246 1,014,341 1,160,669 Deposit type contracts 673, , , , ,459 Individual A&H 562, , , , ,987 Credit A&H 6,826 6,755 7,328 8,266 32,104 Group A&H 79,772 76,341 81,521 81,140 79,187 Total 12,553,191 12,583,633 12,719,845 13,194,173 13,250,317 LIFE POLICIES STATISTICS -Ordinary Policies- -Group Policies- -Group Certificates- Year Issued In Force Issued In Force Issued In Force ,391 3,365, ,439 15, , ,065 3,121,435 1,744 6,961 9, , ,828 3,084, ,750 11, , ,240 3,003, ,505 7, , ,608 2,916, ,295 13, , A.M. Best Company, Oldwick, NJ Printed July 15, Page 4 of 56

5 Whole Life Endow. & LIFE INSURANCE IN FORCE ($000) Total Insurance In Force Year Adds Term Credit Group Industrial ,443,234 72,193,942 7,197,140 7,245, , ,836, ,117,633 57,795,764 2,139,276 7,231, , ,010, ,785,949 57,032,652 1,775,979 6,899, , ,191, ,577,179 54,609,020 1,377,379 6,548, , ,781, ,023,692 53,674,900 1,320,702 5,888, , ,543,777 NEW LIFE BUSINESS ISSUED ($000) Year Whole Life & Endow. Term Credit Group Industrial Total Insurance Issued Non- Par (%) Par (%) ,411,824 7,328, , ,967 18,233, ,059,051 5,937,654 1,678,479 1,009,545 20,684, ,330,228 5,125, , ,220 18,754, ,631,762 2,865, , ,243 18,428, ,956,933 3,681, , ,863 23,496, ORDINARY LIFE STATISTICS Ord. Renew Average 1st Yr 1st Yr Gen. Lapse Premium Ord. Policy Avg Prem / Comm / Exp. / Ratio Persist (in dollars) Prem Total 1st Yr Policies Year % % Issued In Force ($/M) Prem Prem In Force ,577 59, ,192 54, ,017 56, ,494 57, ,043 62, First Year Gen l Exp/ Return on Number of Policies Premium Reserves Reserves Year Issued In Force (000) (%) (%) ,391 3,365, , ,065 3,121, , ,828 3,084, , ,240 3,003, , ,608 2,916, , INDIVIDUAL ANNUITY STATISTICS Comm & Exp to Res Exp to NPW (000) Res(%) (%) Benefits & Wdrwls to NPW (%) Benefits & Wdrwls to Res (%) NPW Year (000) ,341 3,483, ,592 3,472, ,232 3,468, ,703 3,270, ,532 3,190, GROUP ANNUITY STATISTICS Comm & Exp to Res Exp to NPW (000) Res (%) (%) Benefits & Wdrwls to NPW (%) Benefits & Wdrwls to Res (%) NPW Year (000) ,687 1,160, ,131 1,014, , , , , , , TOTAL ANNUITY ACTUARIAL RESERVES BY WITHDRAWAL CHARACTERISTICS With Min or No Surrender Surrender Charge 5% With Charge (%) or more (%) MVA (%) No Surrender Allowed (%) Total Annuity Year Res (000) ,643, ,486, ,337, ,031, ,892, A.M. Best Company, Oldwick, NJ Printed July 15, Page 5 of 56

6 SEPARATE ACCOUNT DATA Sep Acct Assets 22,071,958 21,495,480 19,146,751 17,989,634 18,913,802 % Growth S/A Assets/Adm Assets Sep Acct Reserves 21,889,351 21,227,957 18,841,272 17,587,589 18,376,871 % Ordinary Life % Individual Annuities % Group Annuities % Group Life Deposit Type Liabilities Other Liabilities 182, , , , ,884 S/A Prems & Deposits 888, , , , ,524 % Ordinary Life % Individual Annuities % Group Annuities % Group Life Sep Acct Fees & Charges 350, , , , ,784 % Ordinary Life % Individual Annuities % Group Annuities % Group Life Fees & Chgs to Assets% Sep Acct Ben & Wdrwls 1,284,825 1,505,935 1,286,646 1,199,731 1,242,582 % Ordinary Life % Individual Annuities % Group Annuities % Group Life Ben & Wdrwl to Assets% GEOGRAPHIC BREAKDOWN BY DIRECT PREMIUM WRITINGS ($000) California 451, , , , ,500 Texas 205, , , , ,754 Florida 190, , , , ,809 New Jersey 139, , , , ,481 Illinois 129, , , , ,683 Pennsylvania 129, , , , ,753 Kentucky 118, , , , ,492 Virginia 112, , , , ,614 Maryland 107, , ,659 94,355 96,984 North Carolina 99,964 93,228 85,768 84,424 78,090 All Other 1,190,073 1,107,866 1,055,883 1,024, ,957 Total 2,874,688 2,682,089 2,529,524 2,456,626 2,374,119 RISK MANAGEMENT Aegon USA has a fully integrated enterprise risk management (ERM) structure/program in place to assess current and emerging risk, as well govern future decisions. The company s risk management framework is represented across all levels of the organization. This ensures a coherent and integrated approach to risk management throughout the company. Within this program, objectives and risk tolerances are set and roles and responsibilities are clearly defined across all levels of the organization. Aegon USA s ERM program is overseen by a governance structure that has three basic layers: A Supervisory Board Risk Committee, the Executive Board and an ERM & Group Risk & Capital Committee. A.M. Best views Aegon USA s ERM capabilities to be strong for its size and business profile. Country Risk: Aegon USA has a limited amount of country risk exposure as the company s operations are based in the U.S. However, Aegon Americas which includes all of the North American and Latin American operations of Aegon has a modest amount of country risk exposure with its life insurance operations in Canada (through Canadian Premier Life and Transamerica Life Canada) and Latin America with Mexico and Brazil. In 2006, Aegon acquired a 49% interest in Seguros Argos, a Mexican life insurance company. As part of the joint venture Aegon and Seguros Argos set up a jointly owned pension fund company, Afore Argos. In 2009, Aegon acquired a 50% interest in Mongeral S.A. Seguros e Previdencia, Brazil s 6th largest independent life insurer. The U.S. and Canada are considered Tier 1" by A.M. Best s Country Risk Group with Mexico and Brazil both considered Tier 3". OPERATING PERFORMANCE Operating Results: Aegon USA has one of the more diversified earnings profiles in the industry with earnings being generated from life insurance products and increasingly from fee-based income from variable and investment-type products. The company s earnings have benefited from the recovery in equity markets, which has increased fee income and driven inflows into the variable annuity products. Aegon USA reported a pre-tax statutory operating gain of approximately $2.3 billion in 2013 as compared to a 2012 pre-tax statutory operating gain of approximately $2.3 billion and a ($2.9) billion loss for 2011, which was negatively impacted by the accounting treatment related to the structure of its sale of TARe (life reinsurance business) to SCOR S.E s results were supported by good top-line growth, driven by strong sales of variable annuities, as the company capitalized on competitors pulling back from the market. In 2014, the company reported a pre-tax statutory operating gain of approximately $1.1 billion, down about $1.2 billion or 53% from The year-over-year decrease has been driven by a significant amount of reinsurance transaction in which the company recaptured a number of contracts. Also impacting the decline was an increase in surrender benefits and withdrawals for life contracts, as well as difficult year-over-year comps of the release in AG 43 reserves. This was caused by relatively better performing equity markets and higher interest rates in 2013 vs IFRS results have been volatile of late. However, Aegon USA continues to be profitable on this basis as well. The Aegon Americas segment (which is largely made up of Aegon USA but also includes operations in Canada and 2015 A.M. Best Company, Oldwick, NJ Printed July 15, Page 6 of 56

7 Mexico) has recorded 2014 IFRS underlying earnings before tax of approximately $1.5 billion compared with $1.7 billion in 2013 and approximately $1.7 billion results were helped by improved new business margins, as well as good equity markets combined with strong growth in net deposits for its variable annuity products. The year-over-year decrease 2014 s IFRS underlying earnings before tax was driven mostly by charges related to revisions to life mortality assumptions for the older age cohorts. Going forward, we look for Aegon USA to maintain an underlying trend of profitability on both a Statutory and IFRS basis. However, margins may be challenged by the low interest rate environment. PROFITABILITY ANALYSIS ($000) Company Pre-tax Net Period Net Oper Operating Net Total Ending Income Gain Income Return , , , , , , , , , , , , , , , , , , , ,475 5-Yr Total 2,154,818 1,613,627 1,543,320 1,544,548 Company Industry Composite Period Operating Operating Operating Operating Ending ROR (%) ROE (%) ROR (%) ROE (%) Yr Avg PROFITABILITY TESTS Comm & Pre-tax Ben Paid Exp to NOG Operating Invest to NPW NPW to Tot NOG to Return on Net Total Year & Dep & Dep Assets Tot Rev Equity Yield Return Year Avg (*) Pre-Tax Invest Total Return quarterly calculation based on more limited quarterly data - see Calculation Specifications. NET OPERATING GAIN ($000) Product Line Industrial life -3,299-7,167 32,081-1,041 1,183 Ordinary life 38,047 27,424 91, ,076 73,895 Group life 2,292-2,090-2,904-2,792 8,953 Credit life -2, ,006 8,446 Supplementary contr -9,166-13,248-14,320-18, Individual annuities 48, ,536 47,722-86,802-59,809 Group annuities 59, ,163 73, ,059 78,229 Individual A&H 174,431-91,011 19,886 33,052 13,722 Credit A&H -1, ,263 7,245 3,986 Group A&H 28,858 54,341 35,339 38,366 25,792 Total 335, , , , ,582 ACCIDENT & HEALTH STATISTICS ($000) Net Premiums Net Premiums Loss Exp. Underwriting Year Written Earned Ratio Ratio Results , , , , , , , , , , , , ,585,713 4,583, ,706 Current Year Experience: Group 519, , ,757 Credit 2,346 1, ,760 Coll renew Non-can. 29,267 29, Guarant renew 4,027,293 4,028, ,274 Non-renew, S.R Other accident 5,820 5, ,511 Other INVESTMENT GAINS ($000) Company Net Realized Unrealized Inv Capital Capital Year Income Gains Gains ,687-31,980 34, ,073-41,273-16, ,043-12,467-34, , , ,970 15,663-83,256 5-Year Total 4,448,593-70,306 1, A.M. Best Company, Oldwick, NJ Printed July 15, Page 7 of 56

8 Company -Industry Composite- Pre-tax Invest Inv Inc Inv Return on Total Inv Inc Inv Growth Yield Inv Assets Return Growth Yield Year (%) (%) (%) (%) (%) (%) Yr Avg (*) Pre-Tax Invest Total Return quarterly calculation based on more limited quarterly data - see Calculation Specifications. BALANCE SHEET STRENGTH Capitalization: Aegon USA s overall risk-based capitalization is adequate to support its current insurance and investment risks. A.M. Best believes that Aegon USA has good statutory earnings capacity to support its capital position going forward. A.M. Best also notes that over recent years, Aegon USA has come to rely heavily on captive reinsurance to fund its reserves associated with term life insurance and universal life with secondary guarantees. Financing provided to these captives include, but are not limited to, surplus notes, letters of credit and parental guarantees. As part of our assessment of a rating unit s balance sheet strength, A.M. Best considers not only the capital adequacy ratios, but also the quality of capital supporting such ratios. A.M. Best believes that the quality of capital for an operating company that has ceded XXX and/or AXXX reserves to a domestic or offshore captive as not as strong as for an operating company with similar risk-adjusted capital ratios that self-funds its XXX and AXXX reserves. Finally, Aegon USA has received capital contributions in the past from its ultimate parent, Aegon N.V. Given that Aegon USA is such an integral part of Aegon N.V., A.M. Best believes that they would likely provide additional capital if needed in the future. Current BCAR: 197 CAPITAL GENERATION ANALYSIS ($000) Source of Surplus Growth Pre-Tax Net Realized Unrealized Adjusted Capital Income Capital Year Gain Gains Taxes Gains ,370-31, ,788 34, ,994-41,273 40,959-16, ,081-12, ,072-34, , , , ,209 15, ,140-83,256 5-Yr Total 2,154,818-70, ,191 1,228 Source of Surplus Growth Change Change % Chg in Other in in Year AVR Changes C&S C&S , , , , , , , , , , , , , , , Yr Total -166,937-1,433,394-55, QUALITY OF SURPLUS ($000) Surplus Other Contributed Unassigned Year Notes Debt Capital Surplus , , , , , , , , , , , , , , ,523 Year-End Asset Valuation Adjusted Year C&S Reserve C&S ,685, ,894 1,846, ,256, ,362 1,447, ,130, ,031 1,334, ,345, ,614 1,607, ,774, ,773 2,022,478 LEVERAGE ANALYSIS Company -Industry Composite- C&S NPW & Dep Change C&S to Surplus to Total in NPW to Surplus Year Liab(%) Relief(%) Capital & Dep(%) Liab(%) Relief(%) CEDED REINSURANCE ANALYSIS Company -Industry Composite- Face Affil Unaffil Total Total Amount Reins Reins Reins Surplus Reins Reins Reins Year Reins Ceded Rec/C&S Rec/C&S Rec/C&S Relief Leverage Rec/C&S Leverage ,434, ,704, ,286, ,104, ,926, Loss Reserves: Aegon USA s reserve profile is displaying increasingly unfavorable risk characteristics as the company focuses on selling fee-based 2015 A.M. Best Company, Oldwick, NJ Printed July 15, Page 8 of 56

9 products, especially variable annuities with living benefit riders, while de-emphasizing spread-based products, especially fixed annuities. An additional consequence of this shift is that mortality reserves also are playing a less dominant role than in the past. In 2014, life reserves accounted for 13.7% of total statutory reserves, while annuities accounted for 75.6%. This compares to life at 14.5%, 15.7% and 18.0% in 2013, 2012 and 2009, respectively, while annuities were at 73.8%, 71.0% and 63.6% in 2013, 2012 and 2009, respectively. On a statutory basis, general account annuity reserves, which include mostly spread-based products, accounted for 15.0% of total reserves for 2014 vs. 15.3% in 2013 and 18.2% and 22.5% in 2012 and 2009, respectively. Separate account annuity reserves, which include mostly variable annuity products, accounted for 60.6% of total reserves for 2014 vs. 58.5% in 2013 and 52.8% and 41.1% in 2012 and 2009, respectively. While the broad shift in Aegon USA s reserve profile has been unfavorable, there have been some positive trends as it relates to the improved risk profile of the company s legacy block of variable annuities with living benefit riders. Strong equity market returns along with management actions, such as buyouts of variable annuities that are in the money, has caused the related net amount at risk, before hedging and reinsurance, as a percent of account value and surplus to decline significantly over the past three years. Liquidity: Aegon USA has adequate cash and liquid assets to protect against adverse liquidity scenarios. The company manages so that liquidity requirements could be met in stress scenarios which factor in a combination of events, including, but not limited to, a 6 month freeze in the capital markets. Aegon USA s liquidity is also supported by $1.5 billion in committed bank lines through Aegon N.V., with whom it has a standing line of credit, as well the ability to access the FHLB. LIQUIDITY ANALYSIS Company Operating Non-Inv Delnq & Cash Quick Current Grade Bonds Foreclsd Year Flow ($000) Liquidity Liquidity to Capital Mtg to Capital , , , , , Company Industry Composite Mtg & Cred Affil Ten Lns Invest Quick Current Year & RE to Cap to Capital Liquidity Liquidity Investments: Aegon USA employs an Asset Liability Management focused investment strategy utilizing fixed income securities for a majority of its invested general account assets. However, a small portion of the investments are managed on a total return basis utilizing hedge funds for the most part. Almost the entire investment portfolio is managed in-house, by Aegon Asset Management. As of year-end 2014, bonds represent 70.3% of Aegon USA s investment portfolio and 93.5% are of investment grade quality. Common stock accounts for about 2.5% of the portfolio, of which a large portion is affiliated. Direct commercial mortgage loans comprise approximately 10% of invested assets and are backed principally by office, retail, industrial and apartment properties. The commercial loan portfolio is performing well, with the vast majority of loans in good standing. Aegon USA s exposure to alternative assets, which consists of investments in higher risk and less liquid assets, such as hedge funds, private equity, mezzanine debt and real estate. A.M. Best notes that the alternative asset exposure is currently less than 4% of the investment portfolio. Over recent years, Aegon has taken steps to improve the risk profile of its investment portfolio with below investment grade (BIG) bonds and what A.M. Best deems as high risk assets playing less of a role. BIGs as a percent of capital declined to about 38% as of year-end 2014, compared to 51% in 2013 and 60% in High Risk Assets as a percent of capital continued to decline to 53% as of year-end 2014, compared to 63% in 2013 and 75% in INVESTMENT YIELDS Cash & Invest. Net Short- Real Estate Exp. Year Yield Bonds Stocks Mortgages Term Gross Net Ratio INVESTMENTS - SECURITIES Current Year Distribution of Bonds By Maturity Years Yrs-Avg Maturity Government Gov t Agencies & Muni Industrial & Misc Hybrid Securities Total A.M. Best Company, Oldwick, NJ Printed July 15, Page 9 of 56

10 Bonds (000) 14,275,747 13,830,053 13,565,102 14,814,606 15,665,355 US Government Foreign Government Foreign - All Other State/Special Revenue - US Industrial & Misc - US Hybrid Securities Credit Tenant Lns - US 0.2 Affiliated Private Issues Public Issues Bond Quality (%) Class Class Class Class Class Class INVESTMENTS - EQUITIES Stocks (000) 132, , , , ,337 Unaffiliated Common Affiliated Common Unaffiliated Preferred INVESTMENTS - MORTGAGE LOANS & REAL ESTATE Mortgages (000) 1,903,557 1,770,664 1,915,565 2,180,770 2,333,914 Commercial Residential Farm Mortgage Quality (%) 90 Days Delinquent In Process of Foreclosure Total Delinquencies Real Estate (000) 38,795 40,926 40,412 43,447 43,748 Property Occupied by Co Property Held for Inc Property Held for Sale Investments - Other Invested Assets: Aegon uses derivatives, such as swaps, options, futures and forward contracts to hedge some of the exposures related to both investments backing insurance products and company borrowings. A.M. Best notes as a positive Aegon s increasing use of equity futures contracts to hedge liability risk with the equity sensitive products, such as variable annuities. While this strategy may help mitigate some of the tail risk associated with these liabilities, there is still the presence of policyholder behavior risk, which cannot be hedged. As a result, there is the possibility of hedge breakage in a stressed market environment. INVESTMENTS - OTHER INVESTED ASSETS Other Inv Assets (000) 2,882,832 2,988,055 3,862,452 3,133,002 4,135,611 Cash Short-Term Schedule BA Assets All Other HISTORY Date Incorporated: 03/05/1858 Date Commenced: 05/22/1860 Domicile: IA Originally incorporated as a mutual company under the title Maryland Mutual Life and Fire Insurance Company, the title was changed in 1870 to Mutual Life Insurance Company of Baltimore. In 1928, the company was converted to the stock basis. During 1935 the title was changed to Monumental Life Insurance Company. The company redomesticated from Maryland to Iowa during During 2014, the present title was adopted. Mergers: Capital Security Life Insurance Company, North Carolina, 1998; Commonwealth Life Insurance Company, Kentucky, 1998; Peoples Security Life Insurance Company, North Carolina, 1998; Pension Life Insurance Company of America, New Jersey, 2004; Peoples Benefit Life Insurance Company, Iowa, 2007; Western Reserve Life Assurance Company of Ohio, MANAGEMENT Officers: Chairman of the Board, President and Chief Executive Officer, Brenda K. Clancy; Chief Investment Officer, Joel L. Coleman; Senior Vice President, Secretary and General Counsel, Jay Orlandi; Senior Vice President and Controller, Eric J. Martin (Corporate); Treasurer and Chief Financial Officer, C. Michiel van Katwijk. Directors: Brenda K. Clancy, Scott W. Ham, Robert J. Kontz, Mark W. Mullin, Jay Orlandi, Arthur C. Schneider, C. Michiel van Katwijk. REGULATORY An examination of the financial condition is being made as of July 31, 2014, by the insurance departments of Iowa, Maryland, Ohio and Vermont. The 2014 annual independent audit of the company was conducted by Ernst & Young, LLP. The annual statement of actuarial opinion is provided by Donald Krouse. Reserve basis: (Current ordinary business): 1980 CSO 4%, 4 1/2% and 5%; CRVM and Net Level valuation. (Current annuity business): 5.50% and 5.75% CARVM deferred; 83a 6%, 6.25% and 6.50% CARVM immediate; A % both, 5.50% and 5.75% deferred; Greater of AV or CARVM A.M. Best Company, Oldwick, NJ Printed July 15, Page 10 of 56

11 FINANCIAL INFORMATION BALANCE SHEET ($000) - December 31, 2014 Assets Liabilities Total bonds 14,275,747 +Net policy reserves 11,879,909 Total preferred stocks 39,691 Policy claims 274,495 Total common stocks 93,213 Deposit type contracts 673,282 Mortgage loans 1,903,557 Interest maint reserve 310,919 Real estate 38,795 Comm taxes expenses 218,340 Contract loans 922,969 Asset val reserve 247,773 Cash & short-term inv 749,886 Funds held reinsurance 3,862,985 Other invested assets 859,769 Other liabilities 933,877 Prems and consids due 198,937 Accrued invest income 182,681 Tot liab w/o sep accts 18,401,579 Other assets 911,039 Separate account bus 22,071,958 Tot assets w/o sep accts 20,176,284 Total liabilities 40,473,538 Separate account bus 22,071,958 Common stock 10,137 Surplus notes 160,000 Paid in & contrib surpl 910,045 Unassigned surplus 691,950 Other surplus 2,573 Assets 42,248,242 Total 42,248,242 +Analysis of reserves; Life $7,028,871; annuities $3,660,269; supplementary contracts with life contingencies $232,728; accidental death benefits $19,459; disability active lives $23,295; disability disabled lives $115,171; miscellaneous reserves $151,491; accident & health $648,625. SUMMARY OF OPERATIONS ($000) Premiums: Death benefits 294,262 Ordinary life 900,514 Matured endowments 8,757 Individual annuities 628,532 Annuity benefits 327,262 Credit life 4,761 Surrender benefits 1,233,336 Group life 48,229 Acc & health benefits 307,628 Group annuities 126,632 Int on policy funds 44,106 Acc & health group 518,095 Supplementary contracts 43,169 Acc & health credit 2,346 Incr life reserves 51,181 Acc & health other 4,063,365 Incr a & h reserves -68,891 Industrial 6 Res adj reins assumed 3,914,522 Total premiums 6,292,481 Commissions 549,357 Supplementary contracts 44,846 Comm exp reins assumed -82,069 Net investment income 825,970 Interest expenses 9,627 Amort interest maint res 24,763 Insur taxes lic & fees 59,097 Comm & exp reins ceded 46,416 General ins expenses 288,909 Res adj on reins ceded -272,265 Net transf to sep acct -296,321 Reinsurance income 54,150 Other expenses -15 Other income 371,513 Misc operating expense -1 Mgt and/or service fee 3,932 Other disbursements 175,424 Total 7,391,804 Total 6,859,340 Gain from operations before FIT & div to policyholders ,464 Dividends to policyholders: life... 1,255 Gains from operations after dividends to policyholders ,209 Federal income taxes incurred ,140 Net gain from operations after FIT and dividends ,069 CASH FLOW ANALYSIS ($000) Funds Provided Funds Applied Gross cash from oper 7,437,306 Benefits paid 2,291,355 Transf from sep account 360,633 Comm, taxes, expenses 4,458,850 Long-term bond proceeds 1,992,267 Long-term bonds acquired 2,468,084 Other invest proceeds 502,834 Other cash applied 1,353,083 Other cash provided 358,750 Incr cash & short-term 80,416 Total 10,651,789 Total 10,651, A.M. Best Company, Oldwick, NJ Printed July 15, Page 11 of 56

12 Ultimate Parent: Aegon N.V. STONEBRIDGE LIFE INSURANCE COMPANY 187 West Street Rutland, VT Exec. Office: 4333 Edgewood Road N.E., Cedar Rapids, IA Web: Tel.: Fax: AMB#: NAIC#: Ultimate Parent#: FEIN#: BEST S CREDIT RATING Best s Financial Strength Rating: A+ Outlook: Stable Best s Financial Size Category: XV RATING RATIONALE Rating Rationale: The published ratings of the Aegon USA companies reflect that they are integral to Aegon s strategy, fully integrated into the group s operations, a material part of the business profile, significant contributors to earnings and have received explicit financial support when needed. Stonebridge Life Insurance Company provides traditional ordinary life, credit, and accident and health insurance through credit card issuers. The ratings of the life insurance companies of Aegon USA reflect the strong business profile, adequate risk-adjusted capitalization, strong enterprise risk management, and an underlying trend of statutory and IFRS profitability. The ratings also reflect A.M. Best s assessment of the financial strength and support of the parent, Aegon N.V. (Aegon). Partially offsetting these strengths is the increasing focus on sales of products that have unfavorable risk characteristics from a product creditworthiness standpoint, as well as the equity market sensitivity of its earnings and significant reliance on captive reinsurance. Aegon USA s business profile remains strong, with competitive market positions in the U.S. life and annuity arenas. The group s market positions are supported by a large and diversified distribution system that is made up of both independent and career agents, financial institutions, wirehouses and direct response channels. Aegon USA enjoys the efficiencies and competitive advantages of meaningful economies of scale, which have contributed favorably to its historical financial performance. Aegon USA s earnings profile is one of the more diversified in the industry. Product lines that contribute to overall earnings include traditional life, variable life, variable annuities, mutual funds, pensions and accident and health insurance. A.M. Best also notes the continued improvement in the risk profile of the company s investment portfolio. Lastly, the ratings reflect A.M. Best s assessment of the financial strength and support of the parent, Aegon. As a result, Aegon USA receives rating enhancement in consideration of Aegon s overall creditworthiness and the strategic and financial importance of the U.S. operations to Aegon. Recently, the company has pursued a strategic shift to focus on selling fee-based products, especially variable annuities (VAs), and has de-emphasized sales of its spread-based products, especially fixed annuities. In a stable equity market, the required capital on VAs is generally less than for fixed annuities and other spread-based products. However, from a product creditworthiness perspective, A.M. Best views VAs with living benefits as displaying some of the highest risk characteristics and being vulnerable to tail risks, which could lead to an increase in the required capital. The institutional spread-based business (primarily guaranteed interest contracts, funding agreements and funding agreement-backed securities) remains in run-off to reduce exposure to credit risk, lower required capital and to shift to a more balanced mix of business between spread- and fee-based products. The group has executed several fixed annuity coinsurance transactions, which have released capital and reduced its spread-based liabilities. A.M. Best also notes that over recent years, Aegon USA has come to rely heavily on captive reinsurance to fund reserves generated by term life and universal life insurance with secondary guarantees. Aegon USA has also reduced its exposure to equity market risk by increasing the size of its macro equity hedge covering its variable annuity business. However, while the additional equity hedging will serve to reduce volatility in some financial metrics, the group s earnings via fee income remain somewhat correlated to equity market performance. A.M. Best believes that a positive rating action for Aegon USA is unlikely over the near term. Factors that could result in a negative rating action include a significant and sustained decline in consolidated risk-adjusted capitalization as measured by Best s Capital Adequacy Ratio (BCAR) model, net operating performance that does not meet A.M. Best s expectations, a decline in the creditworthiness of Aegon, or a change in A.M. Best s view of the strategic importance of Aegon USA to Aegon. FIVE YEAR RATING HISTORY Date Best s FSR Date Best s FSR 02/11/15 A+ 04/13/12 A+ 12/12/13 A+ 04/27/11 A+ 04/09/13 A+ 06/29/10 A A.M. Best Company, Oldwick, NJ Printed July 15, Page 12 of 56

13 KEY FINANCIAL INDICATORS ($000) Total Capital Capital Asset Net Net Surplus Valuation Premiums Invest Funds Reserve Written Income Net Income Year Assets ,157, ,533 15, ,210 96, , ,749, ,091 15, , , , ,676, ,746 16, , , , ,739, ,451 17, ,529 72,463 83, ,711, ,447 22, ,459 72, ,869 (*) Within several financial tables of this report, this company is compared against the Group Accident & Health Composite. (*) Data reflected within all tables of this report has been compiled from the company-filed statutory statement. BUSINESS PROFILE Aegon USA is one of the leading life insurance organizations in the U.S. with more than twenty million customers and provides a wide range of life insurance, pensions, long-term savings and investment products. Aegon USA was founded 1989 when Aegon N.V. (Aegon) decided to bring all of its operating companies in the U.S. under a single financial services holding company. Business is conducted through six primary insurance subsidiaries and include Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company, Transamerica Advisors Life Insurance Company, Transamerica Premier Life Insurance Company, Stonebridge Life Insurance Company, and Transamerica Casualty Insurance Company. The Aegon USA group of companies is fully integrated and share senior and investment management along with support services. Aegon USA uses a variety of distribution channels, each of which conducts business through one or more of the Aegon USA life insurance companies. The channels are both owned and non-owned and include approximately 1,500 career agents as well as financial planners, banks, brokers and independent consultants. It is also prominent in the home service market and in the direct marketing of life and supplemental accidental death and dismemberment (AD&D) insurance. The Aegon USA companies are present in two primary business divisions: Life & Protection (L&P) and Investments & Retirement (I&R). The Institutional Markets Division is no longer considered core to the group, and the Life Reinsurance was sold to SCOR SE in Historically, the largest contributor to before-tax earnings was the Life & Protection (L&P) division; however, this has shifted over the years to the Investments & Retirement (I&R) division as the company s strategic focus is now concentrated more on the fee based products that are present in I&R. The Life & Protection (L&P) division includes the Agency Group selling individual life and supplemental health products to the middle income market. Also included in the L&P division are the Brokerage Group, Transamerica Employee Benefits, Long Term Care and the Affinity Group. The Brokerage Group markets life insurance in the retail high net worth market through independent general agents with approximately 400 general agencies and 116,000 contract producers. The Affinity Group specializes in marketing life insurance and supplemental health insurance products to consumers through direct channels such as telemarketing, direct mail, television advertising and the Internet. This group also markets credit life, mortgage life and other life insurance and supplemental health products. Transamerica Long Term Care offers products and services aimed at meeting the long-term care insurance needs of its customers. Policies are sold through independent brokerage and at the worksite to individuals and groups. Through Transamerica Employee Benefits, L&P offers voluntary payroll deduction life and supplemental health insurance to employees at their place of work which are designed to supplement employees existing benefit plans. The Investment & Retirement (I&R) division offers a wide range of savings and retirement products, including mutual funds, investment advice as well as fixed and variable annuities. Transamerica Capital Management (TCM) is the underwriting and wholesaling broker/dealer for variable annuities and mutual funds. TCM builds relationships with independent financial professionals, agents affiliated with regional broker/dealers or major wirehouse firms and representatives through a large bank network. TCM serves these distribution channels through company-owned and external wholesalers. In 2007, Aegon USA acquired Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York (renamed Transamerica Advisors Life Insurance Company and Transamerica Advisors Life Insurance Company of New York. Transamerica Advisors Life Insurance Company of New York was later merged with and into Transamerica Financial Life Insurance Company, effective 7/1/14) as part of a strategic distribution relationship with Merrill Lynch with respect to variable annuities. The acquisition of the Merrill Lynch insurance companies served to place Aegon USA in the top ten of variable annuity sellers in the wirehouse and broker/dealer channels. In late 2009, I&R reduced its sales of fixed annuities in response to lower market interest rates and lower investment returns available in the environment. Similar market conditions have continued over recent years and restricted sales of fixed annuities. As a result, I&R has de-emphasized the sale of fixed annuities and has executed several large fixed annuity coinsurance transactions in recent years. Incorporated within the I&R division is the former Employer Solutions and Pensions (ES&P) division. This business includes full-service retirement plan investments and services in addition to guaranteed savings and investment products directed at various segments of the pension industry. The group sells a full range of products and services to small and mid-size corporate, non-profit and government sponsored plans through brokers, agents, consultants, third-party administrators and accounting firms. Transamerica Retirement Solutions (TRS) serves almost 4,000 mid-sized to large companies and more than 15,500 small to mid-sized companies across the U.S. TRS offers a number of specialized services, including innovative plan design, a wide array of investment choices, extensive education programs and online investment education. In addition, ES&P provides synthetic guaranteed investment contracts primarily to various retirement plans. ES&P is also a leading provider of single premium group annuities (Terminal Funding), which are used by companies to decrease the liability of the defined benefit plans. BOLI/COLI products were distributed through a select number of niche brokers (including an affiliate, Clark Consulting); however, in December 2010, ES&P announced its plan to discontinue new sales in the executive non-qualified benefits market and related BOLI/COLI business A.M. Best Company, Oldwick, NJ Printed July 15, Page 13 of 56

14 The former Institutional Markets Division offered institutional spread products such as traditional fixed rate guarantee investment contracts (GICs), funding agreements (FAs), FA-backed notes as well as fee-based products such as synthetic GICs. In 2009, Aegon announced its plan to run-off its institutional spread based business to reduce capital requirements and credit risk. The institutional line of business also included structured product transactions, such as credit default swaps, synthetic collateralized debt obligations, affordable housing tax credit guarantees and hedge fund principal protection. Going forward, Aegon USA will only continue to offer affordable housing tax credit guarantees. TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS Reinsurance Period DPW Prem Assumed Ending ($000) (% Chg) ($000) (% Chg) , , , , , , , , , , Yr CAGR Reinsurance Period Prem Ceded NPW & Deposits Ending ($000) (% Chg) ($000) (% Chg) , , , , , , , , , , Yr CAGR Territory: The company is licensed in the District of Columbia, AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI and WY. The company is also licensed in Canada BY-LINE BUSINESS ($000) Reinsurance DPW Prem Assumed Product Line ($000) (%) ($000) (%) Ordinary life 77, Group life 106, Credit life Individual A&H 115, Credit A&H Group A&H 223, , Total 524, , Reinsurance Prem Ceded NPW Product Line ($000) (%) ($000) (%) Ordinary life 33, , Group life 68, , Credit life Individual A&H 22, , Credit A&H Group A&H 29, , Total 153, , BY-LINE RESERVES ($000) Product Line Ordinary life 117, , , , ,618 Group life 87,542 83,729 80,075 77,698 77,033 Supplementary contr Individual annuities 7 Group annuities Deposit type contracts 11,556 13,783 16,292 19,789 24,425 Individual A&H 67,591 63,020 59,878 59,004 58,417 Credit A&H Group A&H 493, , , , ,794 Total 777, , , , ,742 LIFE POLICIES STATISTICS -Ordinary Policies- -Group Policies- -Group Certificates- Year Issued In Force Issued In Force Issued In Force , , , , , , , , , , , , , , , , , , , ,379 Whole Life Endow. & LIFE INSURANCE IN FORCE ($000) Total Insurance In Force Year Adds Term Credit Group Industrial ,443,876 3,009, ,911 6,176,387 10,839, ,451,339 3,063, ,724 5,858,295 10,565, ,413,395 2,829,890 80,825 5,539,389 9,863, ,542,802 2,436,208 64,477 5,230,246 9,273, ,532,496 2,227,707 61,796 4,842,613 8,664,612 NEW LIFE BUSINESS ISSUED ($000) Year Whole Life & Endow. Term Credit Group Industrial Total Insurance Issued Non- Par (%) Par (%) , ,093 2, ,451 1,527, , ,252 1, ,575 1,284, , ,624 1, , , ,087 71,842 1, , , ,409 62,188 9, , , A.M. Best Company, Oldwick, NJ Printed July 15, Page 14 of 56

15 ORDINARY LIFE STATISTICS Ord. Renew Average 1st Yr 1st Yr Gen. Lapse Premium Ord. Policy Avg Prem / Comm / Exp. / Ratio Persist (in dollars) Prem Total 1st Yr Policies Year % % Issued In Force ($/M) Prem Prem In Force ,759 15, ,176 15, ,119 14, ,948 14, ,985 14, First Year Gen l Exp/ Return on Number of Policies Premium Reserves Reserves Year Issued In Force (000) (%) (%) , ,910 11, , ,396 11, , ,081 9, , ,368 7, , ,393 7, INDIVIDUAL ANNUITY STATISTICS Comm & Exp to Res Exp to NPW (000) Res(%) (%) Benefits & Wdrwls to NPW (%) Benefits & Wdrwls to Res (%) NPW Year (000) GROUP ANNUITY STATISTICS Comm & Exp to Res Exp to NPW (000) Res (%) (%) Benefits & Wdrwls to NPW (%) Benefits & Wdrwls to Res (%) NPW Year (000) TOTAL ANNUITY ACTUARIAL RESERVES BY WITHDRAWAL CHARACTERISTICS With Min or No Surrender Surrender Charge 5% With Charge (%) or more (%) MVA (%) No Surrender Allowed (%) Total Annuity Year Res (000) GEOGRAPHIC BREAKDOWN BY DIRECT PREMIUM WRITINGS ($000) California 53,587 52,284 54,845 56,655 59,901 Texas 50,866 51,694 53,325 53,999 55,331 Missouri 41,745 18,373 14,095 14,537 14,567 Florida 30,833 28,454 27,634 27,556 28,133 Pennsylvania 24,182 23,912 24,438 25,180 26,112 Oregon 22,577 5,094 3,065 3,214 3,500 Illinois 20,940 21,721 21,459 21,845 22,538 Michigan 20,433 18,049 14,541 14,769 15,209 Ohio 20,419 20,987 21,848 22,245 23,213 North Carolina 17,016 16,725 13,991 13,261 14,213 All Other 226, , , , ,345 Total 529, , , , ,061 RISK MANAGEMENT Aegon USA has a fully integrated enterprise risk management (ERM) structure/program in place to assess current and emerging risk, as well govern future decisions. The company s risk management framework is represented across all levels of the organization. This ensures a coherent and integrated approach to risk management throughout the company. Within this program, objectives and risk tolerances are set and roles and responsibilities are clearly defined across all levels of the organization. Aegon USA s ERM program is overseen by a governance structure that has three basic layers: A Supervisory Board Risk Committee, the Executive Board and an ERM & Group Risk & Capital Committee. A.M. Best views Aegon USA s ERM capabilities to be strong for its size and business profile. Country Risk: Aegon USA has a limited amount of country risk exposure as the company s operations are based in the U.S. However, Aegon Americas which includes all of the North American and Latin American operations of Aegon has a modest amount of country risk exposure with its life insurance operations in Canada (through Canadian Premier Life and Transamerica Life Canada) and Latin America with Mexico and Brazil. In 2006, Aegon acquired a 49% interest in Seguros Argos, a Mexican life insurance company. As part of the joint venture Aegon and Seguros Argos set up a jointly owned pension fund company, Afore Argos. In 2009, Aegon acquired a 50% interest in Mongeral S.A. Seguros e Previdencia, Brazil s 6th largest independent life insurer. The U.S. and Canada are considered Tier 1" by A.M. Best s Country Risk Group with Mexico and Brazil both considered Tier 3". OPERATING PERFORMANCE Operating Results: Aegon USA has one of the more diversified earnings profiles in the industry with earnings being generated from life insurance products and increasingly from fee-based income from variable and investment-type products. The company s earnings have benefited from the 2015 A.M. Best Company, Oldwick, NJ Printed July 15, Page 15 of 56

16 recovery in equity markets, which has increased fee income and driven inflows into the variable annuity products. Aegon USA reported a pre-tax statutory operating gain of approximately $2.3 billion in 2013 as compared to a 2012 pre-tax statutory operating gain of approximately $2.3 billion and a ($2.9) billion loss for 2011, which was negatively impacted by the accounting treatment related to the structure of its sale of TARe (life reinsurance business) to SCOR S.E s results were supported by good top-line growth, driven by strong sales of variable annuities, as the company capitalized on competitors pulling back from the market. In 2014, the company reported a pre-tax statutory operating gain of approximately $1.1 billion, down about $1.2 billion or 53% from The year-over-year decrease has been driven by a significant amount of reinsurance transaction in which the company recaptured a number of contracts. Also impacting the decline was an increase in surrender benefits and withdrawals for life contracts, as well as difficult year-over-year comps of the release in AG 43 reserves. This was caused by relatively better performing equity markets and higher interest rates in 2013 vs IFRS results have been volatile of late. However, Aegon USA continues to be profitable on this basis as well. The Aegon Americas segment (which is largely made up of Aegon USA but also includes operations in Canada and Mexico) has recorded 2014 IFRS underlying earnings before tax of approximately $1.5 billion compared with $1.7 billion in 2013 and approximately $1.7 billion results were helped by improved new business margins, as well as good equity markets combined with strong growth in net deposits for its variable annuity products. The year-over-year decrease 2014 s IFRS underlying earnings before tax was driven mostly by charges related to revisions to life mortality assumptions for the older age cohorts. Going forward, we look for Aegon USA to maintain an underlying trend of profitability on both a Statutory and IFRS basis. However, margins may be challenged by the low interest rate environment. PROFITABILITY ANALYSIS ($000) Company Pre-tax Net Period Net Oper Operating Net Total Ending Income Gain Income Return , , , , , , , , , , , , ,679 82,298 83,573 84, ,193 94, , ,297 5-Yr Total 1,014, , , ,415 Company Industry Composite Period Operating Operating Operating Operating Ending ROR (%) ROE (%) ROR (%) ROE (%) Yr Avg PROFITABILITY TESTS Comm & Pre-tax Ben Paid Exp to NOG Operating Invest to NPW NPW to Tot NOG to Return on Net Total Year & Dep & Dep Assets Tot Rev Equity Yield Return Year Avg (*) Pre-Tax Invest Total Return quarterly calculation based on more limited quarterly data - see Calculation Specifications. NET OPERATING GAIN ($000) Product Line Ordinary life 26,212 22,094 65,295 5,427-70,972 Group life -25,383-40,439 8,933 6, ,838 Credit life Supplementary contr 1, ,090 3, Individual annuities -9-1 Group annuities Individual A&H 3,573 15,092 40,013 6,971 1,910 Credit A&H -1,404-1, Group A&H 91,393 87, , ,992 55,135 Total 94,709 82, , , , A.M. Best Company, Oldwick, NJ Printed July 15, Page 16 of 56

17 ACCIDENT & HEALTH STATISTICS ($000) position going forward. A.M. Best also notes that over recent years, Aegon Net Premiums Net Premiums Loss Exp. Underwriting USA has come to rely heavily on captive reinsurance to fund its reserves Year Written Earned Ratio Ratio Results associated with term life insurance and universal life with secondary , , ,014 guarantees. Financing provided to these captives include, but are not limited , , ,015 to, surplus notes, letters of credit and parental guarantees. As part of our , , ,869 assessment of a rating unit s balance sheet strength, A.M. Best considers not , , ,638 only the capital adequacy ratios, but also the quality of capital supporting such , , ,336 ratios. A.M. Best believes that the quality of capital for an operating company Current Year Experience: that has ceded XXX and/or AXXX reserves to a domestic or offshore captive Group 231, , ,096 as not as strong as for an operating company with similar risk-adjusted capital Credit ,639 ratios that self-funds its XXX and AXXX reserves. Non-can. 19,220 19, ,089 Finally, Aegon USA has received capital contributions in the past from its Guarant renew 75,218 70, ,080 ultimate parent, Aegon N.V. Given that Aegon USA is such an integral part of Non-renew, S.R Aegon N.V., A.M. Best believes that they would likely provide additional Other accident capital if needed in the future. Other Current BCAR: 197 INVESTMENT GAINS ($000) Company CAPITAL GENERATION ANALYSIS ($000) Source of Surplus Growth Net Realized Unrealized Pre-Tax Net Realized Unrealized Inv Capital Capital Adjusted Capital Income Capital Year Income Gains Gains Year Gain Gains Taxes Gains ,898-2, ,303-2, , ,736-1,224 1, ,629-1,224 3,978 1, , , , ,535 2, ,463 1, ,679 1,276 9, ,451 7,160 3, ,193 7,160 14,484 3,428 5-Year Total 710,632 4,839 7,621 5-Yr Total 1,014,945 4, ,991 7,621 Company -Industry Composite- Source of Surplus Growth Pre-tax Change Change % Chg Invest in Other in in Inv Inc Inv Return on Total Inv Inc Inv Year AVR Changes C&S C&S Growth Yield Inv Assets Return Growth Yield ,797 51, , Year (%) (%) (%) (%) (%) (%) , , , ,217-47, ,520-5, ,992-58,309 41, Yr Total -8, ,127-31, Yr Avg QUALITY OF SURPLUS ($000) (*) Pre-Tax Invest Total Return quarterly calculation based on more limited quarterly data - see Calculation Specifications. Surplus Other Contributed Unassigned Year Notes Debt Capital Surplus BALANCE SHEET STRENGTH , , ,174 66, ,583 78, ,583 72,868 Capitalization: Aegon USA s overall risk-based capitalization is adequate to support its current insurance and investment risks. A.M. Best believes that Aegon USA has good statutory earnings capacity to support its capital , , A.M. Best Company, Oldwick, NJ Printed July 15, Page 17 of 56

18 Year-End Asset Valuation Adjusted Year C&S Reserve C&S ,533 15, , ,091 15, , ,746 16, , ,451 17, , ,447 22, ,324 LEVERAGE ANALYSIS Company -Industry Composite- C&S NPW & Dep Change C&S to Surplus to Total in NPW to Surplus Year Liab(%) Relief(%) Capital & Dep(%) Liab(%) Relief(%) CEDED REINSURANCE ANALYSIS Company -Industry Composite- Face Affil Unaffil Total Total Amount Reins Reins Reins Surplus Reins Reins Reins Year Reins Ceded Rec/C&S Rec/C&S Rec/C&S Relief Leverage Rec/C&S Leverage ,347, ,994, ,422, ,684, ,046, Loss Reserves: Aegon USA s reserve profile is displaying increasingly unfavorable risk characteristics as the company focuses on selling fee-based products, especially variable annuities with living benefit riders, while de-emphasizing spread-based products, especially fixed annuities. An additional consequence of this shift is that mortality reserves also are playing a less dominant role than in the past. In 2014, life reserves accounted for 13.7% of total statutory reserves, while annuities accounted for 75.6%. This compares to life at 14.5%, 15.7% and 18.0% in 2013, 2012 and 2009, respectively, while annuities were at 73.8%, 71.0% and 63.6% in 2013, 2012 and 2009, respectively. On a statutory basis, general account annuity reserves, which include mostly spread-based products, accounted for 15.0% of total reserves for 2014 vs. 15.3% in 2013 and 18.2% and 22.5% in 2012 and 2009, respectively. Separate account annuity reserves, which include mostly variable annuity products, accounted for 60.6% of total reserves for 2014 vs. 58.5% in 2013 and 52.8% and 41.1% in 2012 and 2009, respectively. While the broad shift in Aegon USA s reserve profile has been unfavorable, there have been some positive trends as it relates to the improved risk profile of the company s legacy block of variable annuities with living benefit riders. Strong equity market returns along with management actions, such as buyouts of variable annuities that are in the money, has caused the related net amount at risk, before hedging and reinsurance, as a percent of account value and surplus to decline significantly over the past three years. Liquidity: Aegon USA has adequate cash and liquid assets to protect against adverse liquidity scenarios. The company manages so that liquidity requirements could be met in stress scenarios which factor in a combination of events, including, but not limited to, a 6 month freeze in the capital markets. Aegon USA s liquidity is also supported by $1.5 billion in committed bank lines through Aegon N.V., with whom it has a standing line of credit, as well the ability to access the FHLB. LIQUIDITY ANALYSIS Company Operating Non-Inv Delnq & Cash Quick Current Grade Bonds Foreclsd Year Flow ($000) Liquidity Liquidity to Capital Mtg to Capital , , , , , Company Industry Composite Mtg & Cred Affil Ten Lns Invest Quick Current Year & RE to Cap to Capital Liquidity Liquidity Investments: Aegon USA employs an Asset Liability Management focused investment strategy utilizing fixed income securities for a majority of its invested general account assets. However, a small portion of the investments are managed on a total return basis utilizing hedge funds for the most part. Almost the entire investment portfolio is managed in-house, by Aegon Asset Management. As of year-end 2014, bonds represent 70.3% of Aegon USA s investment portfolio and 93.5% are of investment grade quality. Common stock accounts for about 2.5% of the portfolio, of which a large portion is affiliated. Direct commercial mortgage loans comprise approximately 10% of invested assets and are backed principally by office, retail, industrial and apartment properties. The commercial loan portfolio is performing well, with the vast majority of loans in good standing. Aegon USA s exposure to alternative assets, which consists of investments in higher risk and less liquid assets, such as hedge funds, private equity, mezzanine debt and real estate. A.M. Best notes that the alternative asset exposure is currently less than 4% of the investment portfolio. Over recent years, Aegon has taken steps to improve the risk profile of its investment portfolio with below investment grade (BIG) bonds and what A.M A.M. Best Company, Oldwick, NJ Printed July 15, Page 18 of 56

19 Best deems as high risk assets playing less of a role. BIGs as a percent of capital declined to about 38% as of year-end 2014, compared to 51% in 2013 and 60% in High Risk Assets as a percent of capital continued to decline to 53% as of year-end 2014, compared to 63% in 2013 and 75% in INVESTMENT YIELDS Cash & Invest. Net Short- Real Estate Exp. Year Yield Bonds Stocks Mortgages Term Gross Net Ratio A.M. Best notes as a positive INVESTMENTS - SECURITIES Current Year Distribution of Bonds By Maturity Years Yrs-Avg Maturity Government Gov t Agencies & Muni Industrial & Misc Hybrid Securities Total Bonds (000) 1,243,110 1,306,387 1,235,067 1,238,622 1,537,257 US Government Foreign Government Foreign - All Other State/Special Revenue - US Industrial & Misc - US Hybrid Securities Private Issues Public Issues Bond Quality (%) Class Class Class Class Class Class INVESTMENTS - EQUITIES Stocks (000) 414 3,449 3, Unaffiliated Common Affiliated Common Unaffiliated Preferred INVESTMENTS - MORTGAGE LOANS & REAL ESTATE Mortgages (000) 147, , , , ,365 Commercial Real Estate (000) 20,803 28,460 29,107 30,184 31,187 Property Occupied by Co Property Held for Inc 3.9 Property Held for Sale 14.7 Investments - Other Invested Assets: Aegon uses derivatives, such as swaps, options, futures and forward contracts to hedge some of the exposures related to both investments backing insurance products and company borrowings. Aegon s increasing use of equity futures contracts to hedge liability risk with the equity sensitive products, such as variable annuities. While this strategy may help mitigate some of the tail risk associated with these liabilities, there is still the presence of policyholder behavior risk, which cannot be hedged. As a result, there is the possibility of hedge breakage in a stressed market environment. INVESTMENTS - OTHER INVESTED ASSETS Other Inv Assets (000) 151, , , , ,796 Cash Short-Term Schedule BA Assets All Other HISTORY Date Incorporated: 11/19/1900 Date Commenced: 05/07/1906 Domicile: VT Originally incorporated as The Vermont Accident Insurance Company, the present title was adopted in Mergers: J. C. Penney Insurance Company, California, 1979; Veterans Life Insurance Company, Illinois, MANAGEMENT Officers: President, Edward H. Walker III; Chief Operating Officer, Brenda K. Clancy; Chief Financial Officer, C. Michiel van Katwijk; Chief Investment Officer, Joel L. Coleman; Senior Vice President, Secretary and General Counsel, Jay Orlandi; Senior Vice President and Controller, Eric J. Martin. Directors: Scott W. Ham, John R. Hunter, Glyn D. Mangum, Jr., Martha A. McConnell, Jay Orlandi, Brian A. Smith, Edward H. Walker III. REGULATORY An examination of the financial condition was made as of December 31, 2009, by the insurance departments of Iowa, Maryland, Ohio and Vermont. The 2014 annual independent audit of the company was conducted by Ernst & 2015 A.M. Best Company, Oldwick, NJ Printed July 15, Page 19 of 56

20 Young, LLP. The annual statement of actuarial opinion is provided by Donald Krouse. Reserve basis: (Current ordinary business): 1980 CSO 4 1/2% CARVM and net level, 5% and 5 1/2%; CRVM valuation. (Current group business): 1980 CSO 4 1/2% and 5%; CRVM valuation. REINSURANCE The company maintains reinsurance agreements with several non-affiliated insurance companies. Only nominal amounts of ordinary life and A&H insurance in-force are ceded. Approximately 15% of group life insurance in-force is ceded. Maximum net retention on any one life is $1,000,000 for both ordinary life and group life policies. FINANCIAL INFORMATION BALANCE SHEET ($000) - December 31, 2014 Assets Liabilities Total bonds 1,243,110 +Net policy reserves 766,128 Total common stocks 414 Policy claims 61,752 Mortgage loans 147,566 Deposit type contracts 11,556 Real estate 20,803 Interest maint reserve 21,336 Contract loans 28,175 Comm taxes expenses 29,392 Cash & short-term inv 10,100 Asset val reserve 22,876 Securities-colltrl assts 48,079 Funds held reinsurance 571,828 Other invested assets 64,935 Payable for securities lending 48,079 Net deferred tax asset 52,910 Other liabilities 27,863 Prems and consids due 26,505 Accrued invest income 16,097 Total liabilities 1,560,810 Other assets 52,562 Common stock 2,500 Paid in & contrib surpl 33,083 Unassigned surplus 113,629 Other surplus 1,236 SUMMARY OF OPERATIONS ($000) Premiums: Death benefits 40,608 Ordinary life 44,467 Matured endowments 11 Credit life 624 Surrender benefits 7,946 Group life 37,754 Acc & health benefits 157,137 Acc & health group 231,434 Int on policy funds 1,091 Acc & health credit 485 Incr life reserves 6,196 Acc & health other 93,695 Incr a & h reserves -3,388 Total premiums 408,459 Commissions 35,546 Net investment income 72,451 Comm exp reins assumed 12,875 Amort interest maint res 7,482 Insur taxes lic & fees 11,852 Comm & exp reins ceded 26,704 General ins expenses 153,507 Reinsurance income 19,000 Misc operating expense 188 Other income 20,870 Other disbursements 22,206 Total 554,967 Total 445,774 Gain from operations before FIT & div to policyholders ,193 Dividends to policyholders: life... 0 Gains from operations after dividends to policyholders ,193 Federal income taxes incurred... 14,484 Net gain from operations after FIT and dividends... 94,709 CASH FLOW ANALYSIS ($000) Funds Provided Funds Applied Gross cash from oper 531,534 Benefits paid 204,158 Long-term bond proceeds 325,592 Comm, taxes, expenses 238,094 Other invest proceeds 130,079 Long-term bonds acquired 263,451 Other cash provided 1,297 Other invest acquired 131,334 Decr cash & short-term 18,627 Other cash applied 170,092 Total 1,007,129 Total 1,007,129 Assets 1,711,257 Total 1,711,257 +Analysis of reserves; Life $196,842; annuities $38; supplementary contracts with life contingencies $11; accidental death benefits $4,267; disability active lives $95; disability disabled lives $119; miscellaneous reserves $3,655; accident & health $561,101. Ultimate Parent: Aegon N.V. TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY 425 West Capital Avenue, Suite 1800 Little Rock, AR Exec. Office: 4333 Edgewood Road N.E., Cedar Rapids, IA Web: Tel.: Fax: AMB#: NAIC#: Ultimate Parent#: FEIN#: A.M. Best Company, Oldwick, NJ Printed July 15, Page 20 of 56