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Transamerica Finance Corporation has entered into securitization arrangements under which it sells designated pools of net finance receivables to qualified special purpose entities (QSPEs). Under the terms of the securitization arrangements, TFC retains the servicing of the securitized assets and generally receives a servicing fee on the outstanding balance of the securitized assets along with rights to future residual cash flows. 

Transamerica Finance Corporation maintains a provision for losses on net finance receivables at an amount that it believes is sufficient to provide adequate protection against losses in its loan portfolios. The allowance is provided through charges against current income and is adjusted for specific accounts as well as losses inherent in the portfolio. 

Transamerica Finance Corporation determines its allowance for losses by taking into account expected losses in each business, the ratio of the provision for losses to net finance receivables outstanding and the ratio of net credit losses to average net finance receivables outstanding. A specific provision is established for impaired receivables when it is deemed probable that not all future principal and interest payments will be collected in accordance with the applicable contractual terms. This provision is reviewed and updated quarterly. 

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